- Stock jumps 18% after accounts expert gives finances clean bill of health
- Short seller attack in January has cast a shadow over company this year
- Market will have far more confidence in growth trajectory now
The scale of relief across the investment space is tangible after Darktrace (DARK) got a clean bill of health over its books.
The company’s EPIC code has well reflected the mood hanging over the company since coming under attack from New York-based short seller Quintessential Capital Management in late January, and the shares have gone pretty much nowhere all year.
Darktrace calls in independent auditor in hope of erasing stink of alleged fraud
FINANCIALS GIVEN ALL CLEAR
But today’s report into the firm’s finances has essentially proved that the cybersecurity expert doesn’t have any skeletons in the closet, sending its share price soaring.
Yes, there is some improvement work needed, but nothing that impacts previous financial statements, nor anything to slow Grant Thornton’s current audit of the financial year to 30 June 2023.
‘EY reported several areas where systems, processes or controls could be improved around its channel processes and controls, where EY identified a small number of errors and inconsistencies,’ said Tom Kennedy, analyst at Megabuyte.
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Investors breathed a huge sigh of relief and sent the stock soaring, up 18% or so at 10.30am (18 July) at 348p.
DRAWING A LINE UNDER SUSPICIONS
Perhaps the report will have wider implications too on broader market murmurings that ‘something wasn’t quite right’ at Darktrace Towers.
Today’s update also notes Darktrace will report full-year revenues up 31% to $544 million, supported by 396 new logo wins in the fourth quarter, bringing its customer base up to 8,799, or +18% year-on-year.
Annual recurring revenue is said to have grown 29% to $627 million, with EBITDA margins (earnings before interest, tax, depreciation and amortisation) of 22%. Full year 2024 revenue growth expectations are being pitched in the 22% to 24% ballpark, implying a range of $664 million to $675 million, as improvements in the global economy drive customer confidence alongside its go-to-market investments.
‘Darktrace has had its fair share of detractors whilst listed, including at Megabuyte, and maybe the results of this report will put to bed worries that there was something not above board in its solid growth and profits trajectory,’ said Kennedy.
