One Year Post-IPO, Sophos Extending Its Security Platform

By Sean Michael Kerner  |  Posted 2016-09-08 Print this article Print

Sophos' CEO discusses the challenges and opportunities of being a publicly traded security company in 2016.

In June 2015, security vendor Sophos Group made its initial public offering on the London Stock Exchange (LSE). Just over a year later, Sophos CEO Kris Hagerman remains confident that going public was the right decision for his company.

"The summary is that it has been a great year. We have had a very strong first year as a public company," Hagerman told eWEEK.

Sophos is growing faster than its rivals in the endpoint and network security markets, he said. It has a business focus of going after midmarket enterprises—organizations with less than 5,000 employees. The company has also benefited from its channel-based strategy for sales, he added.

Going from a private to a public company has not changed Hagerman's priorities or how the business is run.

"Going public has not affected Sophos in its strategy or operational priorities, really at all," Hagerman said. "We were already a substantial company when we went public, so we had already been operating like a public company internally, with regular quarterly reporting and an emphasis on year-over-year growth."

The only real difference as a public company, he said, is that there are now specific reporting requirements, including doing a public annual report.

A careful analysis was done prior to going public, and Sophos listed on the LSE as opposed to NYSE or NASDAQ for a number of reasons, according to Hagerman. One reason Sophos felt the LSE was the right choice was because the company was founded in the United Kingdom and has its headquarters there. Also, Hagerman said there aren't as many technology vendors listed on the LSE as there are on the NYSE and NASDAQ.

"We felt that there was a real opportunity to tap into a European investor base that really doesn't have the diversity of technology investment choices that U.S. investors have," he said. Hagerman added that at some point he might consider dual listing on a U.S. exchange, but for now he's satisfied with the LSE.

Despite the recent UK vote to leave the European Union (Brexit), Hagerman also isn't too concerned about remaining listed on the LSE. "Over 85 percent of our revenue comes from outside of the UK," he said. "If you look at Brexit from a financial perspective on Sophos, there really has been no change in the demand environment for cyber-security."

Cyber-security is typically the top priority for any organization, and Brexit doesn't change that, he said. Plus, Brexit initially triggered a decline in value of the British pound. The lower-value British currency has had a positive impact on Sophos' profitability.

Regarding the company's technology, over the course of the past year, Sophos has been promoting the idea of a synchronized security platform. In November 2015, Sophos announced its Security Heartbeat initiative, monitoring the security status across an organization.

As part of the synchronized security effort, Sophos announced a new XG series of Next Generation Firewall (NGFW) appliances. Hagerman noted that whenever a new platform is introduced, there are likely to be some customers that would rather stick with their existing platform. As such, Sophos is supporting and innovating on its existing SG series of firewalls as well.

Looking at new products, on Aug. 2, Sophos announced a public beta of an advanced endpoint threat detection technology called Sophos Intercept. Hagerman explained that Intercept handles threats such as ransomware, while providing root cause analytics for zero-day exploits.

"We already have quite effective technology today with Sophos Endpoint, but this [Intercept] will extend and supplement the security coverage even further," he said.

Sean Michael Kerner is a senior editor at eWEEK and Follow him on Twitter @TechJournalist.


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