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Friday 12 July 2019

CFO departs after brighter Sophos TU

CFO departs after brighter Sophos TUSophos’ recovery is continuing if its latest trading update is anything to go by – the company grew its Q120 revenue by an estimated 7% yoy at constant currency to US$180m. Billings too, previously a source of concern for investors, expanded by 9% yoy cc to US$183m as the cyber security firm won more orders for its SME-focussed endpoint and firewall products and services. At the time of writing, the value of Sophos’ shares had risen by a modest 3% on the news.

The numbers illustrate the broader trend amongst cyber security suppliers which sees turnover from hardware sales, support and maintenance disappearing into SaaS subscriptions (read more in our latest UK SITS Market Trends and Forecasts 2019 report here). Sophos subscription revenue grew 10% cc yoy in Q120, with hardware turnover declining 11%. Networking billings too dropped 1%, as sales of on-premise firewalls stagnated.

After nine years with Sophos, chief financial officer (CFO) Nick Bray will take up a new position in a private equity-owned business “operating in a different segment of the technology market”. We don’t yet know what that is, but the intimation is it’s not cyber security and suspect the former Micro Focus International CFO was not short of suitors within the broader IT industry.

We think his departure will be a loss to Sophos. Though it has had its ups and downs over the last few years, Sophos long-term trajectory has been generally upwards. Bray helped engineer the UK IPO in 2015, at which point the company was valued at around US$1.6bn and had annual revenue of US$447m, since swelled to US$711m in FY19.

Wherever Bray ends up we wish him well but expect Sophos to continue the rest of the current financial year on a firmer footing than the last with or without his influence.

Posted by Martin Courtney at '08:30' - Tagged: cloud   tradingupdate   cybersecurity   SME's   Sophos  

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