Sophos in £96m punt on machine learning

Cyber-security firm Sophos has made a $120 million (£96 million) bet on artificial intelligence, buying a US machine-learning company that can block new types of attacks on businesses.

The FTSE 250 company has bought Virginia-based Invincea for $100 million in cash and up to $20 million on top in earn-out payments, giving the firm its first machine-learning cyber-defence product.

“The technology in itself is clever enough to understand how a [malware] file behaves even if we’ve never seen it before. It really is very clever tech. It just consolidates and strengthens our leadership position,” said chief financial officer Nick Bray, who added that the threat of cyber attacks on companies is “only increasing”.

Invincea made a $12 million loss in the year ended March 2016 on revenue of $10 million.

Ben McSkelly, an analyst at Shore Capital, said the deal did not look cheap based on Invincea’s billings, which were $13.4 million last year, but added: “However, we must note that sophisticated assets in machine learning should attract high evaluations.”

Sophos shares rose 20.6p, or 8%, to 290.3p. The deal was unveiled as Sophos’s third-quarter update showed revenues up 11% to $135 million, helping Sophos swing to an operating profit of £1.7 million.

High-profile cyber attacks on companies have included TalkTalk and Tesco Bank.