Darktrace ‘in the clear’ after auditors hand the cyber security firm a clean bill of health following five-month fraud review
Darktrace ‘in the clear’ after auditors handed cybersecurity firm a clean bill of health after five months of fraud investigation
Darktrace has been given a clean bill of health following allegations of widespread fraud.
The British cybersecurity firm said a five-month review by auditing giant EY found improvements could be made to its systems, processes and controls.
But it 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.
Cleared: Darktrace, led by chief exec Poppy Gustafsson (pictured), said a five-month review by EY found improvements could be made to its systems, processes and controls
Following the update, Darktrace shares rose 27.8 percent — the biggest daily gain since going public in 2021.
The review was launched after notorious short-seller Quintessential Capital Management warned that Darktrace may have “overstated” sales and profits. Poppy Gustafsson, CEO of Darktrace, said these claims were “deeply offensive.”
But Quintessential hit back, saying the EY review “does little to allay our concerns.” Darktrace gave EY “unrestricted access” to the company and scrutinized marketing spend, contracts and revenue.
While the review found areas for improvement, as well as a “small number of bugs and inconsistencies” in some processes, Darktrace said it was addressing these issues.
Most of the investigation focused on financial audits rather than fraud claims.
“Neither management nor the board of directors consider EY’s report to have any influence on Darktrace’s previously filed financial statements, nor to change their belief that those financial statements fairly represent Darktrace’s financial position and results,” it said. company in a statement to the stock. market.
While Darktrace is not making the full EY report public, it has shared it with regulators at the Financial Reporting Council and the Financial Conduct Authority.
Analysts at Jefferies said the update gave Darktrace a “clean bill of health.” Separately, Darktrace said it expects revenue of at least £544.3 million for the year ended June 30, up about 31 percent.
These will be published in September