Sophos soars after results beat expectations

Sophos shares rose strongly after the cyber security company posted results ahead of expectations following a string of disappointing updates.

Revenue for the year to the end of March rose to $710.6m - 1% ahead of forecasts - from $639m a year earlier as subscription revenue increased 16%. The company swung to a pre-tax profit of $53.6m from a loss of $41m, helped by lower finance costs.

Shares rose 14% to 384.4p at 0925 BST.

Billings fell 1.1% to $760.3m but were unchanged at constant currency and better than expected. Sophos's shares have fallen heavily in the past year after a series of unsatisfactory updates on billings, which the company blamed on results a year earlier boosted by a new product and a spate of cyber attacks.

Chief Executive Kris Hagerman said: "FY19 was a challenging year, primarily due to a difficult compare. However, we are pleased with the strategic progress we made during the year as we drive Sophos's transition to be a market leader in next-generation cybersecurity."

Sophos increased the final dividend by 6% to 3.7 cents a share, taking the annual dividend to 5.2p, also up 6%.

Alexandre Schmidt, an analyst at Liberum, said: "We see these results as positive, but the outlook comment of 'returning to operating profit margin leverage after FY20' is far more vague than previous year guidance, giving scope to a wide range of interpretation."