Shares in cyber security firm Sophos have plunged as much as 18 per cent as the markets opened in London on Thursday morning despite what analysts described as a "solid trading update".
Billings for the third quarter grew 14 per cent on a constant currency basis and 20 per cent for the nine months to the end of December 2017 to $536.3m, in line with forecasts.
Revenue came in at $464.5m for the same nine month period, up 19 per cent on a constant currency basis and ahead of the 19 per cent expected.
Mirabaud analyst Neil Campling called the share price reaction "insane", noting that billings in the third quarter were "technically" lower than in the first half, but still within forecasts.
"Reason for weakness [are] probably due to unlevered FCF [free cash flow] of $22.2m in Q3 which around 20 per cent below consensus, but this is due to the timing of investment in new product releases. And, ironically, these same new product releases will likely drive a very strong Q4 billings," he said.
Martin O'Sullivan at Shore Capital said: "Full year guidance on billings, cash EBIT margin and unlevered FCF are all unchanged, and we believe Sophos is well placed to deliver against expectations in Q4, underpinned by the recent launch of Intercept X deep learning and XG Firewall v17."
Sophos chief executive Kris Hagerman said its full-year outlook remained unchanged.