Shares of Darktrace are falling as it lowers forecasts despite rising earnings
Shares of Darktrace are falling as it lowers forecasts despite rising earnings
- Revenue increased 31.3% to $545.4 million (approximately £434 million) for the year ended June 30
- Net profit shot up nearly 4,000% to $58.96 million during the same period
AI-driven cybersecurity firm Darktrace lowered its future profit expectations, even as it delivered robust results, which showed sales were up and profits soared.
Darktrace Stocks was down 3.3 percent over lunch as it said it expected a “story of two halves” for the year ahead – with growth coming only in the second part.
The British company, which reports in US dollars, saw sales rise 31.3 percent from $415 million to $545 million (approximately £434 million) for the financial year ended June 30.
Darktrace’s net profit rose nearly 4,000 percent to $58.96 million during the same period. Pre-tax profit increased from $5.3 million (£4.2 million) to $41 million (£32.8 million).
Pre-tax profit increased from $5.3 million (£4.2 million) to $41 million (£32.8 million) at Darktrace
Despite the strong results, the London-listed company announced that it lowered its profit forecast for the coming financial year.
The company said this would “reflect the expected impact of changes in sales compensation structures.”
In a statement, the company said: “These changes have accounting implications that alter the timing of commission expense recognition, as well as accelerate cash outflow, driving expectations for adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and free cash flow. .
Balancing ongoing macroeconomic uncertainty with early signs of recovery, and reflecting the time that is expected to benefit from recent investments in its GTM strategy and teams, Darktrace frames fiscal year 2024 in terms of stabilization in the first half and a renewed acceleration in the second half. .
“Reflecting this ‘story of two halves’, Darktrace currently expects approximately 45% of its net ARR (annual recurring revenue) for fiscal year 2024 to be added in the first half and approximately 55% in the second half.”
Poppy Gustafsson, CEO of Darktrace, said: ‘Our financial performance for the year has been robust, delivering growth and demonstrating the underlying strength of the business model, while continuing to invest in the business.
“We now have 8,799 customers globally, but we have seen a 13.8 percent slowdown in new business from the prior year – as pressure on corporate budgets has led potential customers to become more reluctant to execute product testing.’
In July, Darktrace was given a clean bill of health following allegations of fraud.
A five-month evaluation by auditing giant EY shows that improvements can be made to the systems, processes and controls.
But it was said that while a “small number” of accounting errors were identified, there was no evidence of fraud and the previously filed financial statements did not need to be revised.
Gustafsson added: “The market opportunity ahead of us is huge – we believe there are over 150,000 companies that could benefit from our AI – and we have the right team and skills to ensure we capture the market opportunity. that they represent.
“All the investments we made in fiscal year 2023 laid the foundation for our next phase of growth and our resilient business model means we have the resources to support these continued investments as we continue to scale the business.”