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Thursday 17 May 2018

Sophos FY18 revenue and billings up 18% yoy

Sophos FY18 revenue and billings up 18% yoyAnother strong year for Sophos saw the Abingdon-headquartered cyber security supplier grow its revenue 18% in constant currency yoy to US$641m, with billings up by the same margin to US$769m.

Gross profit increased to US$497m from US$408m in FY17, with operating losses shrinking to US$32m from US$44m the year before. The company’s shares rose 2% on the news following a 19% gain after April’s trading update.

That bulletin, and Sophos’ H1 results, gave us an early indication of the company’s continued success in a buoyant cyber security market build on solid enterprise demand for hardware, software and services (see Cyber Security Market Trends and Forecasts 2017-2020) to combat the growing volume and diversity of cyber threats arrayed against UK organisations, including large scale ransomware attacks such as WannaCry and NotPetya.

The only questions we had were whether Sophos would turn a profit for the year and sustain the rate of its consecutive quarterly billings growth. The answers are “no”, and “don’t know”. Sophos’ comprehensive loss for FY18 widened to US$70m from US$44m in FY17 - swelled by currency fluctuations on debt revaluation and a larger than usual US$14m tax bill - whilst Q417 billings information was not published.

The biggest source of revenue and billings growth in FY18 came from the Sophos Central cloud-based security management platform, which saw turnover more than double yoy to US$186m. Across its predominantly software and service portfolio (hardware revenue makes up 20% of the total) Sophos added around 40,000 new net customers expanding the total client base to over 300,000.

Regardless of the ongoing questions around short-term profitability and any deceleration in billings growth we think the combination of Sophos’ cloud-orientated portfolio, SME focus and channel first sales strategy puts it in a good position to keep thriving in FY19 (read our Cyber security Supplier Prospects 2018 report).

Posted by Martin Courtney at '09:12'

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