Oxford, 8 November 2017.  Sophos Group plc (the “Group” / LSE: SOPH), a leading provider of cloud enabled enduser and network security solutions, today issues its interim results for the six-months to 30 September 2017 (“H1”).

Financial and operational highlights

• Strong cash generation, reflecting both a strong operating performance and good cash management
  • Net cash from operations increased by 28% to $80.7 million, and unlevered free cash flow¹ grew 15% to $71.4 million
• Billings² momentum strengthened further with growth of 22% in H1 and 29% in Q2
  • Enduser delivered 39% growth in H1, principally driven by Intercept X and Sophos Central
  • Sophos Central grew more than 220% to $78.5 million in H1
  • Accelerating momentum in Network with billings up 16% in Q2 driving a 10% increase in H1
  • Good growth in all regions, with 25% growth in the Americas, 22% in EMEA and 17% in APJ
  • Steady pace of new customer additions, with over 280,000 customers at the end of September, compared to 240,000 a year ago and 260,000 at the prior year-end
• Subscription business further supporting long-term visibility and sustainable growth
  • Revenue growth of 16% in H1 with subscription revenue up 21%
  • Deferred revenue increased by 28% over the prior-year to $654.4 million, with $372.3 million of the balance due for recognition in less than one year (up 27% on prior-year)
• Further progress toward margin expansion over time
  • Cash EBITDA³ up 31% in H1, with margins up 130 bps
  • Adjusted operating profit⁴ declined to $15.1 million in H1, reflecting upfront costs associated with the strong subscription billings performance, and a negative foreign exchange charge; on a GAAP basis operating loss improved slightly to $23.8 million
• Raising FY18 outlook
  • For FY18 we now expect 20-22% billings growth with a 50-100 bps improvement in Cash EBITDA margin and modest growth in unlevered free cash flow

Financial highlights

Kris Hagerman, Chief Executive Officer, commented:

“We continued to see strong momentum for our industry-leading cybersecurity solutions, across all regions and product areas, particularly in the Enduser segment where we are establishing a market-leading position in the high-growth new segment of next-generation endpoint.  We continue to offer cutting-edge technology, with robust third-party validation, that is easy to deploy and manage, through a single cloud console.  We also saw solid demand in Network security, with improved growth rates in Q2 versus Q1.  We view the second half with confidence, and we are raising our outlook for billings and unlevered free cash flow for the full year.”

Please see the full results on the Sophos Investor website.