Sophos has set a new goal to hit $1 billion in billings by 2020, as the security vendor outpaced the overall security market growth in 2017 with double-digit growth across the board as it closes out its fiscal year.
Sophos has not previously given medium-term guidance for growth. In addition to hitting $1 billion in billings, the Oxford, U.K.-based company anticipates it will have operating profit of more than $100 million by 2020.
In an interview with CRN, CEO Kris Hagerman said the predictions reflect the company's "continued confidence in our business and business model" after a "very strong set of numbers" for its fiscal 2017, which ended March 31.
"We feel we have a lot of running room and we're just getting started," Hagerman said.
Sophos reported sales for the year of $529.7 million, up 10.8 percent year over year, and billings of $632.1 million, up 18.2 percent year over year. Net loss for the quarter was $44.3 million, compared to a loss of $32.7 million in fiscal 2016.
Hagerman said that growth was driven in large part by a "dramatic acceleration" in Sophos Central, the company's centralized management platform. Sophos Central sales grew 220 percent to $87.7 million, the company said, and accounted for 17.1 percent of all subscription billings during the year. That growth has driven cross-selling and up-selling rates up, Hagerman said, with endpoint and UTM cross-sell reported at 9.6 percent, up from 7.4 percent in 2016.
"[Sophos Central] has been a huge hit with our channel and target use base," Hagerman said. "That's a real growth driver." Hagerman said Sophos will continue to build its portfolio around Sophos Central, looking to move the remaining products to be managed inside of the platform in the next 12 to 15 months.
Sophos also saw strong growth for its new Intercept X anti-ransomware solution, which Hagerman said has been growing at a "dramatic growth rate" since its launch in September. Sophos added more than 8,000 customers during the 2017 fiscal year he said, and is already approaching 9,000 customers. Hagerman said the company has seen a further "dramatic" increase in interest around the solution since the rise of the WannaCry ransomware threat last week.
Overall, Sophos saw its endpoint security portfolio grow 24.4 percent to $298.5 million and its network security portfolio grow 17.8 percent to $319.1 million.
Hagerman said Sophos' Invincea acquisition, announced in February for $100 million, is "full steam ahead." He said Sophos is working to integrate Invincea's machine learning technology, hiring additional team members and expects to deliver a standalone product by the end of the year.
Driving the company's product growth, in large part, is an expanding partner base and partner strategy, Hagerman said. He said there was a "tremendous amount of energy and excitement" about Sophos at the company's recent North American partner conference. In 2017, Hagerman said Sophos grew from around 20,000 partners to around 30,000, with 29 percent growth in the number of Blue Chip partners to 6,100. Driving that growth is recruitment, the Sophos Central platform, and helping partners be more active and productive overall, he said.
"There's just a lot of energy and momentum in the partner community… We bet 100 percent on the channel. They are not just one of our routes to market they are our only route to market. That commitment is really working," Hagerman said.
That's a commitment that Sophos intends to continue as it looks to hit its newly-stated growth goals, Hagerman said. He said partners can expect continued investments in the channel, new innovation around products like Intercept X and Invincea, and leveraging the Sophos Central platform to drive billings growth and cross-sell opportunities.