LONDON (Alliance News) - Shares in Sophos Group PLC rose on Thursday after the cybersecurity services provider revealed a swing to annual profit on the back of strong revenue growth, foreign exchange gains and lower costs.
Shares were 12% higher at 380.20 pence each in morning trade, the top performer in London's mid-cap FTSE 250 index.
For the financial year that ended in March, Sophos recorded pretax profit of USD53.6 million, compared with a USD41.0 million loss in financial 2018, on revenue of GBP710.6 million and USD639.0 million, respectively. The rise in revenue was attributed to 16% year-on-year growth in subscription revenue to USD593.9 million from USD512.4 million.
Adjusted operating profit - the company's preferred profit measure - increased 87% to USD109 million from USD58 million, driven by revenue growth and operating leverage, as well as a one-off benefit from the reduction in variable performance-related pay in the period.
Costs for the year fell to USD99.5 million from USD134.5 million. Gains on exchange rate movements totalled USD1.5 million versus a USD6.9 million loss the year before.
Billings for the year fell to USD760.3 million from USD768.6 million. Billings are the value of products and services invoiced to customers after receiving a purchase order and delivering products and services to them, or for which there is no right to a refund.
"Total billings were affected by a mix shift, with stronger growth in smaller customers particularly driven by managed service provider monthly billings, and a modest reduction in the number of larger transactions compared to the prior-year period," the company said.
"We believe the drivers are in place for continued future revenue growth, principally driven by growth in our subscription business, especially in our next-generation products. We also expect a return to operating profit margin leverage, following a reduction in the current year as the one-off benefit seen in FY19 from reduced variable performance-related pay unwinds," said Chief Executive Kris Hagerman
Sophos Group declared a final dividend of 3.7 cents per share, an increase of 6% over the prior year. The total dividend for the year amounted to 5.2 cents versus 4.9 cents.
