SOPH shares up 20% since NHS ransonware attack, despite widening operating losses
Companies: Sophos Group
Shares in cyber-security firm Sophos jumped 9% on Wednesday morning, hitting an all-time high and furthering its recent rally after the FTSE 250 company reported better than expected FY results and said it was expecting strong growth in the coming years. SOPH, one of the NHS's largest IT security providers, has now jumped 20% since the WannaCry ransomware attack last week.
Reported revenues for FY17 rose nearly 11% to $529.7m, but were hit by currency headwinds following the Brexit-induced collapse in sterling last year. Sophos' subscription-based model (Saas) saw revenues grow to $632m, but some of this will be reported in future periods.
Despite improved revenue, the firm saw operating losses jump to $44.3m, more than a third higher YoY, due to increased costs relating to new customers.
Looking to FY18, the firm said it expected "mid to high-teens" billings growth, with a 50-100 basis point improvement (0.5-1%) to its cash EBITDA margin. In the medium term, Sophos is expecting to hit billings of $1bn, unleveraged FCF between $220m and $240m, and a 100-150 basis point (1-1.5%) improvement to cash EBITDA margin per year.
CEO Kris Hagerman said the firm had made significant progress against strategic goals, delivering operational and financial performance above expectations:
"We have a differentiated strategy of delivering innovative, simple, and highly effective cybersecurity solutions for mid-market enterprises, synchronizing across enduser and network security - all in partnership with our channel. Encouragingly, the strong momentum at the heart of this performance was manifest across all major regions and products, and in both new business and renewals. We have issued a medium term outlook as a sign of our confidence in delivering sustainable growth in billings and profitability over the longer-term."
