Sophos grows in third quarter, but hurt by strong dollar

Cloud-enabled security provider Sophos reported a strong third quarter on Tuesday, with growth continuing through a major acquisition in the three months to 31 December 2015, though a strong dollar depleted some of its gains.

The FTSE 250's third quarter like-for-like billings were up 17.4% year-on-year, with growth across all major regions and product categories, though notwithstanding stronger quarterly comparatives.

Sophos' reported billings grew 10.6% year-on-year, reflecting significant currency headwinds including the devaluation of both sterling and the euro against the US dollar.

Reported revenue in the quarter was $121.4m (£84.16m), up 4.7% over 12 months earlier, or 11.9% growth on a constant currency basis.

Its reported cash EBITDA was $34.8m, up 5.5% year-on-year or 16.3% at constant currency.

The company's weighted average contract length in the last twelve months was 28.5 months, a modest increase on the prior year's 28 months, following a small number of longer term deals in Japan.

Chief executive officer Kris Hagerman said strong demand for comprehensive IT security was continuing to drive the business.

"We saw sustained growth across all regions in the third quarter, and continue to grow faster than the market in both our network and end user product groups", he said.

"We are pleased to reaffirm our full year outlook of like-for-like billings growth in the high teens to 20% range", he added.

During the period, the company also acquired 100% of SurfRight BV for a cash consideration of $31.8m. The company said the acquisition had an insignificant impact on results for the quarter, and was enabling Sophos to integrate SurfRight security technology into its line of endpoint solutions.

"The strength we experienced in the first half has continued through the third quarter as we remain focused on our strategy to be the best in the world at delivering complete, enterprise-grade IT security for mid-market organisations and the channel partners that serve them", Hagerman concluded.