Sophos Group plc is a security software and hardware company. Sophos develops products for communication endpoint, encryption, network security, email security and mobile security as well as unified threat management. Sophos is focused on providing security software to organizations, businesses, and individual users. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.
Admission to trading on the London Stock Exchange 1 July 2015
LSE: SOPH

UBS today reaffirms its buy investment rating on Sophos Group Plc (LON:SOPH) and cut its price target to 645p (from 675p).

Deutsche Bank today reaffirms its buy investment rating on Sophos Group Plc (LON:SOPH) and cut its price target to 630p (from 700p).

StockMarketWire.com
Sophos reported cash earnings before interest, tax, depreciation and amortisation fell from $27.3m in the first quarter of FY18 to $20.3m in the first quarter of FY19.

The company said this reflected both lower than expected billings growth and a planned increase in annualised R&D and sales and marketing expenses.

HIGHLIGHTS:
- As previously announced, Q1 FY19 group billings growth of 6%, (or 2% constant currency), was lower than anticipated

- Overall the group continued to see a strong demand environment, with a double-digit increase in billings from new customers, and Sophos Central and Intercept X both continued to show good momentum in the quarter

- Enduser security billings declined by -1% (or -5% constant currency) versus the prior-year period, after a particularly challenging prior-year comparable, where billings growth was over 50% constant currency in Q1 FY18 after adjusting for the previously disclosed material contract in FY17

- Network security billings grew by 12% (or 7% constant currency) versus the prior-year period, and within this UTM growth was 19% (or 14% constant currency)

The net renewal rate was 114% in Q1 compared to 141% a year ago. This level was below what we believe are sustainable norms, and was principally caused by two factors:

- In Enduser security, we saw relatively lower levels of cross-selling activity than expected, in part due to accelerated demand in FY18 that resulted from the global Wannacry ransomware outbreak

- In Network security, the renewal rate was affected by a legacy product transition, as the migration from Cyberoam to Sophos XG Firewall nears its conclusion

Revenue increased by 24% (or 19% constant currency), principally driven by a 27% increase in subscription revenue.

Adjusted operating profit increased almost six-fold from $3.7m in Q1 FY18 to $21.9m in Q1 FY19, driven by strong revenue growth, demonstrating the operating leverage of the Sophos business model.

Cash generation in the period continued to be strong, with a 33% increase in net operating cash flow and a 31% increase in unlevered free cash flow compared to the prior-year period.

Proactive investor - Sophos's plunge prompts upgrade from Numis Securities
Share
12:06 30 Jul 2018
The price target stays the same but with the share price more than a quid lower than it was a month ago, Numis moves to 'add' from 'hold'

Renewals and up-selling account for about two-thirds of annual billings
There’s nothing like a share price plunge to get investment analysts to revisit a stock recommendation, as has happened with Sophos Group PLC (LON:SOPH).
Numis Securities has moved to it to ‘add’ from ‘hold’ after the July 5 trading statement from the cyber-security firm that prompted a fall from 615p to 486p in a single day.

READ: Sophos Group's warning catches market on the hop
The profit warning on July 5 meant that the scheduled trading update on July 26 contained few surprises.
For Numis, the key question is: how fast will billings recover?
“Management remains confident that easier End-user comparables will allow group billings growth to re-accelerate to low teens in H219. Estimating the precise pace of recovery is difficult, as demonstrated by Q1's guidance failure, but we expect this to be a material effect,” Numis said.
“Management also noted that the run-off of Cyberoam (now c.5% of Network billings) had a material effect on Network renewals in Q119, although we are unclear if there are other issues holding Network back. The release of XG v17.2 during FYH219 is seen as significant, adding Sophos Central cloud management and reporting from the firewall, which may help to improve renewal rates in time,” the broker added.
Numis is now projecting year-on-year billings growth of 8% on a constant currency (c/c) basis for the year ending March 31 of next year (FY19), down from its previous forecast of +13%.
It expects cost growth to match this, and has accordingly reduced its FY19 cash EBITDA (underlying earnings) forecast to US$209mln from $229mln.
Numis said the acceleration in billings growth from fiscal 2015 means there is potentially a boost on the way from renewals and up-selling.
Renewals and up-sells account for about two-thirds of annual billings, Numis noted.
Shares in Sophos currently trade at around 487p; Numis values them at 580p.

11:10 23/08/2018
Broker Forecast - Credit Suisse issues a broker note on Sophos Group Plc
Credit Suisse today reaffirms its outperform investment rating on Sophos Group Plc (LON:SOPH) and cut its price target to 713p (from 750p). Story provided by StockMarketWire.com Broker Forecasts data provided by www.sharesmagazine.co.uk

Deutsche Bank today downgrades its investment rating on Sophos Group Plc (LON:SOPH) to hold (from buy) and cut its price target to 530p (from 630p).

Liberum Capital today initiates coverage of Sophos Group Plc (LON:SOPH) with a buy investment rating and price target of 530p.

StockMarketWire.com
Cyber security company Sophos Group swung to a first-half profit as it boosted sales, though underlying earnings were hurt by lower margins.

Pre-tax profit for the six months through September amounted to $26.0m, compared to a loss of $35.5m on-year.

Cash Ebitda, however, fell 19% to $54.0m.

The fall in earnings reflected lower-than-expected billings and spending on R&D and marketing.

'Sophos continues to make solid progress in advancing our strategy of delivering advanced and highly effective cybersecurity solutions to IT professionals at organizations of all sizes,' chief executive Kris Hagerman said.

'We now expect a modest improvement in constant currency billings growth in the second half compared to the first half, as we continue to work through challenging year-on-year comparatives.'

For the 2020 financial year, we enter the year with strong growth in our subscription renewals base, and hence, assuming a stable renewal rate, we would anticipate a significant improvement in the rate of overall constant currency year-on-year billings growth.'

Liberum Capital today reaffirms its buy investment rating on Sophos Group Plc (LON:SOPH) and cut its price target to 400p (from 530p).

Deutsche Bank today reaffirms its hold investment rating on Sophos Group Plc (LON:SOPH) and cut its price target to 370p (from 530p).

Trading update

Summary Financial Performance

· Constant currency Billings1 grew 2% for the third-quarter and 2% for the nine-months year-to-date ("YTD")
o Continued subdued performance is set against the context of a challenging prior-year comparable
o A further sequential improvement in the renewal rate to existing customers in the third-quarter
to 122%
o Offset by a modest decline in billings from new customers as well as a decline in hardware billings
o Sophos Central billings up by 22% YTD and 29% in the third-quarter at constant currency
o Enduser billings rose by 6% in the third-quarter at constant currency, an improvement over the small constant currency decline experienced in the first-half of the fiscal year
o Positive initial customer response to Intercept X Advanced with EDR, following a successful launch at the end of the third-quarter
o Network saw a small benefit from the launch of XG Firewall v17.5 late in the period, albeit overall Network subscription growth was offset by lower hardware billings
o We now expect the trends in the third quarter to generally continue into the fourth quarter, which would result in a modest decline in full-year constant currency billings
· Revenue increased by 14% YTD on both a reported and constant currency basis, principally driven by continued growth in subscription revenue
o Subscription revenue increased by 18% YTD and 15% in the third-quarter at constant currency, benefiting from prior-period subscription billings and offsetting a reduction in hardware revenue
o Deferred revenue increased by 8% year-over-year ("YOY"), as a result of the deferral of billings net of the impact of currency movements from the strengthening of the US dollar in the period
· Profitability significantly improved
o Adjusted operating profit2 increased by 157% YTD, driven by strong growth in revenue
o Reported operating profit of $51 million YTD, compared to a prior-period loss of $25 million
o Cash EBITDA3 declined 8% YTD reflecting the subdued billings performance
· Cash flow performance was strong, in the context of a strong prior-year comparative period
o Net cash flow from operations of $100 million and unlevered free cash flow4 broadly unchanged YTD
· Over 25,000 net new customers added YTD, including more than 9,000 in the third-quarter, with total customers
of 327,000

Liberum Capital today downgrades its investment rating on Sophos Group Plc (LON:SOPH) to hold (from buy) and cut its price target to 320p (from 400p).