LONDON (Alliance News) - Sophos Group PLC on Wednesday said it swung to an interim profit with revenue growth solid, though it has lowered billings growth expectations going ahead.
Shares in the security software firm were down 22% in early trade on Wednesday at a price of 355.78 pence each.
Sophos posted pretax profit of USD26.0 million for the six months to September 30, improving from a loss of USD35.5 million a year before. Revenue was up 18%, or 16% at constant currency, to USD349.5 million.
Sophos attributed the swing to profit to increased revenue, a foreign exchange benefit, and fair value adjustments.
First half billings rose 3% to USD353 million, and by 2% at constant currency to USD361 million. Sophos' renewal rate was 118%, compared to 142% a year prior.
In July, Sophos had guided for mid-teens constant currency billings growth in its second half, but on Wednesday said it now expects a "modest" improvement in constant currency billings.
Interim billings growth was strongest in the Americas at constant currency, rising 4.3% year-on-year to USD121.5 million. In Europe, the Middle East, & Africa the figure increased 2.4% to USD186.2 million, but in Asia-Pacific & Japan it slipped 7.8% to USD45.0 million.
Sophos is paying an interim dividend of 1.5 US cents, compared to 1.4 cents a year before.
Chief Executive Chris Hagerman said: "The market opportunity remains significant, and we have continued to add new customers, whilst expanding and supporting our channel.
"We continue to invest in innovation, with the successful launch of Intercept X for Server in the first half, and we have already begun delivering on a strong product release cycle in the second half of the year, including Intercept X Advanced with EDR, and Sophos XG Firewall v17.5."
Hagerman continued: "We are confident we are well positioned to deliver future growth. 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 financial year ending 2020, 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."
