(Reuters) - Sophos Group Plc’s (SOPH.L) shares fell about 39 percent and were on track for their worst day ever, after the cyber security company cut its billings forecast for the second half of fiscal 2019 and posted lower-than-expected billings numbers in the first half.
Sophos said on Wednesday it sees modest improvement in constant currency billable growth in the second half of the year, as it struggles to match the “dramatic acceleration in demand” it had last year for cybersecurity products in the backdrop of several high-profile, global ransomware attacks.
In July, Sophos had said it expected to return to mid-teens constant currency billings growth in the second half after warning that it would report lower-than-anticipated billings growth in the first quarter due to difficult year-ago comparables at one of its security businesses.
“I think these results caught everybody by surprise and hence the big share drop especially because peers have been reporting quite some substantial numbers in the past few weeks. What’s to be seen is what the real value of this business is,” Liberum analyst Alexandre Schmidt said.
Sophos shares were down 22.4 percent at 354.4 pence, hitting over a 18-month low and were the worst performer on the FTSE mid-cap index in early trading. The drop wiped out about half a billion pounds from the company’s market capitalization.
The company, which was founded in 1985 in Oxford, swung to profit in the first half of fiscal 2019, reporting a profit before tax of $26 million compared to a loss of $35.5 million in the prior year.
Billings rose about 3 percent to $353 million, but missed estimates of $358 million, according to analysts’ notes.
Reporting by Shariq Khan in Bengaluru; Editing by Bernard Orr