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Sophos CFO exits for private equity-backed firm; swings to loss in first quarter

Nick Bray has served as finance chief of the FTSE 250 antivirus software group since 2010
In a trading update, Sophos reported a US$4mln pre-tax loss despite a 3% rise in revenues

The chief financial officer of antivirus software firm Sophos Group PLC (LON:SOPH), Nick Bray, is to exit the firm to take up a new position at a private-equity owned technology business.

The FTSE 250 group said that Bray would continue in the position until mid-November, after its interim results, to support an orderly transition.

READ: Sophos surges as it swings to profit despite “challenges” and profit warnings in latest full year

“I leave the company both financially and operationally strong, and with a bright future ahead of it”, said Bray, who has served as Sophos’ CFO since 2010.

Swing to loss but revenue rises

The announcement was accompanied by a trading update for the company’s first quarter, which reported a swing to a pre-tax loss of US$4mln in the three months ended 30 June compared to a US$7.3mln profit a year ago.

Revenues, meanwhile, had risen 3% year-on-year (YOY) to US$180.2mln as a 10% rise in subscription revenues offset an 11% fall in takings from hardware sales.

Billings had grown by 5% in the period to US$183.1mln, while despite the fall in statutory pre-tax profits Sophos said its adjusted operating profit had increased 10% YOY.

Customer numbers had also risen to 397,000 from 341,000 a year ago.

Kris Hagerman, Sophos chief executive, said the company believed it was “well positioned” for future growth and that the demand environment was “strong”.

“We believe we have a highly effective and differentiated next-generation security product portfolio that positions Sophos very well”, Hagerman said, adding that the company had seen “significant continued growth” for its next-generation products.

"This has been an encouraging start to the year which underpins our confidence in our prospects for the full year", the CEO said.

Despite the loss-making quarter, investors took heart from the revenue growth, with the shares up 4.1% at 429.8p in late-morning trading on Friday.

Results "good to see" but investor confidence has fallen away, says analyst

George Salmon, an equity analyst at Hargreaves Lansdown, said that while the growth metrics were “good to see”, recent expectations of a “steeper growth curve” had been undermined by a succession of disappointing updates and, as a result, investor confidence had fallen away.

“Sophos has a strong position in a growing market, but that’s of little use to investors if it’s hard to know what’s coming in the next set of numbers”, Salmon said, adding that whoever succeeded Bray as CFO would not be tasked with delivering “fireworks” but merely “a few more quarters of stability”.

--Adds analyst comment and share price--

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