# Sophos Group Group revenue growth of 7% Next generation billings grew 43%

- Link: https://www.directorstalkinterviews.com/sophos-group-group-revenue-growth-of-7-next-generation-billings-grew-43/412787613
- Published: 2019-07-12T07:24:16+01:00
- Author: Giles Arbor

**Sophos Group plc** (LON: SOPH), a leading provider of next-generation cloud-enabled
enduser and network cybersecurity solutions, has today issued its trading update
for the quarter-ended 30 June 2019.

**Financial highlights**

· Revenue of $180.2M increased by 3% year-over-year (“YOY”), or by 7% at constant
currency

 * Strong subscription revenue growth of 10% at constant currency, offsetting a 
   reduction in hardware revenue of -11%
 * MSP(3) ARR(4) now at $31.8 million, an increase of 78% YOY at constant currency

· Billings of $183.1M increased by 5% in the period, or by 9% at constant currency

 * Next generation (“next-gen”) business, including Sophos Central and XG Firewall,
   grew 43% at constant currency to $100.2 million, and represented 54% of billings
   in the quarter
 * Within next-gen business, Sophos Central billings grew 49% to $64.3 million
 * Renewal rate(5) was 118% in the period, compared to 115% in the prior-year period
 * Enduser billings rose by 17% in the quarter at constant currency, whilst Network
   billings grew 1% reflecting as anticipated the phasing of new product releases,
   with subscription growth offset by lower hardware billings

· Profitability improved

 * Adjusted operating profit(6) increased by 10% YOY, reflecting revenue growth 
   and phasing of expenses
 * Reported operating profit at breakeven, compared to a profit of $6.2 million 
   in the prior-year; primarily impacted by a one-off exceptional restructuring 
   charge
 * Cash EBITDA(7) of $26.6 million increased by 31% YOY reflecting in equal proportions
   the strength of billings and the impact of IFRS 16 in the quarter

· Cash flow continued to be strong in the quarter

 * Net cash flow from operating activities of $54.4 million, compared to $40.4 million
   in the prior-year period, the improvement principally reflecting timing differences
   on working capital; with unlevered free cash flow(8) at $55.6 million, compared
   to $39.6 million in the prior-year period

· Total customers now exceed 397,000 when including MSP customers (Q1 FY19: 341,000)

**Sophos Group Group Chief Executive Officer, Kris Hagerman, commented:**

> “This has been an encouraging start to the year which underpins our confidence
> in our prospects for the full year. The demand environment continues to be strong,
> and as we noted at the full-year, we believe we have a highly effective and differentiated
> next-generation security product portfolio that positions Sophos very well. Along
> with encouraging overall company growth, we saw significant continued growth in
> our next-generation products, including Sophos Central, Intercept X endpoint, 
> XG Firewall, and our MSP business. Consequently, we believe we are well positioned
> for continued future growth.”

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