Sophos rallies as it swings to profit in 'challenging' year

Oxford-based cyber security company Sophos has warned that the "vast majority" of smaller businesses are still not protected against attacks, after a year in which it battled to keep up the strong growth seen after the WannaCry hack.

Chief executive Kris Hagerman said many of the smaller and media enterprises it was selling to were "a little been overwhelmed by the problem, so they don't have the IT teams, and just want to run their school or retailer or hospital".

He said there "probably is a level of misunderstanding" about the risks, but the "other thing that clearly applies here is there's an inertia", where people needed educating that updating their systems would be in their interest.

The comments come after Sophos managed to dispel fears over the strength of its business, swinging to a profit despite branding the year "challenging". 

Over the course of the year, Sophos warned a number of times that growth was likely to slow year on year, given the stronger comparables from the prior period in which high profile cyber attacks had driven a boom in demand.

The 2017 WannaCry attack, for example, which affected hundreds of thousands of computers and cost the NHS almost £100m, caused companies to bulk up their cyber security defences, buoying providers such as Sophos.

However, in the latest results, it said demand was still "robust" and that a growing number of companies were moving to adopt next-generation cybersecurity offerings.

Sophos said revenue had risen 11pc in the year to the end of March, to $711m (£554m) from $639m a year earlier, helping it post $53.6m in pre-tax profit, compared to a loss of $41m the prior year. 

The company, which makes network security and antivirus software, said it had seen the number of larger transactions dip, but that there had been "stronger growth" in smaller customers. 

"We believe the drivers are in place for continued future revenue growth, principally driven by growth in our subscription business, especially in our next-generation products," Mr Hagerman said.

The results caused shares in Sophos to rally, rising around 13pc.

Stifel analyst George O'Connor said progress may have been "uneven" at the business, but that it remained a "strong products company, executing on a tangible and exciting vision in a changing market".

Mr O'Connor said next year would be a welcome "re-set year" for the business, as comparables became easier.