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Cyber security demand sends billings soaring at Sophos

The digital security giant posted higher sales across its territories and product types

As organisations increasingly embrace mobile devices and conduct business online, hackers and data thieves are jumping for joy. Recent cyber attacks on companies such as LinkedIn (US:LNKD) and TalkTalk (TALK) have fuelled demand at Sophos (SOPH), which provides end-user and network security software to more than 220,000 organisations worldwide. The upshot was adjusted cash profits of $121m (£82.4m) in the year to March, up almost a third at constant currencies.

IC TIP: Buy at 230p

The group's statutory losses (see table) reflect around $42m in one-off listing and litigation costs. Strong demand for its 'unified threat management' products propelled comparable network billings up 28 per cent, while upgrades to its cloud platform helped to drive end-user billings up 13 per cent. Indeed, like-for-like billings rose more than 15 per cent in all three of the group's territories.

Sophos made two acquisitions that boosted its email security and malware defence offerings. It also signed up new customers and sold more products to existing clients, meaning deferred revenues swelled 15 per cent to $499m.

Broker Numis expects to upgrade its forecasts: it previously expected adjusted cash profit of $76.5m for the year to March 2017, giving EPS of 16.7¢.

SOPHOS (SOPH)
ORD PRICE:230pMARKET VALUE:£1.0bn
TOUCH:229-230p12-MONTH HIGH:293pLOW: 157p
DIVIDEND YIELD:0.5%PE RATIO:na
NET ASSET VALUE:32¢*NET DEBT:177%

Year to 31 MarTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
2013362-144-35.4na
2014379-91-25.9na
2015447-54-14.7na
2016†478-68-16.41.80
% change+7---

Ex-div: 15 Sep

Payment: 14 Oct

£1=$1.47

*Includes intangible assets of $757m, or 167¢ a share †Sophos listed in July 2015