Newly-listed Avast reports strong first half, sees margin improvement

LONDON (Reuters) - Avast, the cyber security firm that listed in May, said margins would improve this year after a first half that saw adjusted revenue grow 8.5 percent to $394.3 million.

The company, which pioneered the "freemium" model in security software by giving away its basic product, said it had performed strongly, with the top line growing in line with expectations and a slight outperformance on the bottom line.

"We are on track to deliver on full-year guidance of high single digit revenue growth, with slight EBITDA margin improvement," Chief Executive Vincent Steckler said, referring to earnings before interest, tax, depreciation and amortisation.

He said the company was seeing strong demand for its VPN product, which protects users on public networks, driving 2.6 percent growth in its paying customers to 11.67 million.

Shares in Avast, which have not traded above the 250 pence IPO price, rose 3.5 percent in early deals to 236 pence.

Analysts at Morgan Stanley, who have an "overweight" rating on the stock, said it was a "solid" delivery in the six months to the end of June.

The company reported adjusted core earnings of $222.1 million, up 10.6 percent, with a margin of 55.1 percent, putting it firmly on track to meet full-year consensus forecasts.

Before Wednesday's results, analysts were expecting the group to report adjusted earnings of $435.3 million for the year, according to a company-complied consensus.

(Reporting by Paul Sandle; Editing by Kate Holton and Mark Potter)