Sophos financial results ahead of analyst expectations

Singapore. June 10, 2008 – IT security and control firm Sophos today reports results for the fiscal year ended March 31, 2008.

“Sophos generated 28 per cent year-over-year growth in billings, while also posting impressive deferred revenue and free cashflow results,” said Steve Munford, chief executive officer at Sophos. “Sophos continues to gain market share because its products explicitly address the growing market demand for a broader, yet simple, integrated solution equipped to manage the increased security complexity of the corporate network.”

According to IDC, Sophos is the largest privately-held vendor in the secure content and threat management market[1]. Focused on serving the enterprise market exclusively – which it defines to include small and mid-sized businesses, large corporations, educational institutions and government agencies – Sophos protects an estimated 100 million end-users and its products are used by over 65,000 customers worldwide. Within the fiscal year, Sophos garnered 259
new customers wins each worth over $100,000, which were mainly competitive displacements from Symantec or McAfee.

“Sophos enjoyed robust growth across all geographies, with excellent performances in North America and Japan demonstrating Sophos’s success in highly strategic and fiercely competitive markets,” said Paul Smolinski, chief financial officer at Sophos. “Fiscal 2008 billings for North America topped US$77 million while Japan’s billings growth grew 45 per cent year-over-year.”

In addition to its 20th year of consecutive growth in revenue, Sophos consistently generates strong levels of free cashflow. Cash holdings at the year end were at US$139.3 million, a rise of nearly 55 per cent year-over-year.

Over the year, Sophos made a number of enhancements to its overall product line. These included the general availability of Sophos Endpoint Security and Control 8 in addition to upgrade releases of Sophos Email Security Appliance and Sophos’s Web Security and Control offering. It was also a year where Sophos fully integrated last year’s acquisition of Endforce, which has led to building NAC functionality into Endpoint Security and Control 8 as well delivering-to-market Sophos’s standalone endpoint NAC offering – Sophos NAC Advanced.

These product line enhancements enabled Sophos to successfully capitalise on the growing market demand for broader integrated security solutions, a demand driven by the increased complexity of both the corporate network and the desire for corporations to simplify their security solutions. In addition to winning significant new accounts with a broader product line, Sophos has been especially successful with driving revenue growth by selling multiple products into its existing customer base.

Late in 2007, Gartner, Inc. published an updated version of its Magic Quadrant for Endpoint Protection Platforms, 2007, which ranks companies on their ‘completeness of vision’ and their ‘ability to execute’ and categorises them as either ‘niche players’, ‘visionaries’, ‘challengers’ and ‘leaders’. For the first time, Sophos was placed in the ‘leaders’ quadrant within the Gartner report. More recently Gartner recognised Sophos in its MarketScope for Network Access Control 2008 report. Within the report, Sophos received a “positive” rating, the highest marks given to any vendor by Gartner.

During the year, Sophos continued to strengthen its Board of Directors with both Jonathan Brooks and Nanci Caldwell being appointed as non-executive directors. Jonathan brings with him extensive experience serving on Boards such as Aveva Group Plc, ARM Holdings Plc, and E2V Technologies. Nanci has held senior management positions at PeopleSoft and at Hewlett-Packard Company.