08 March 2023
If you are covering Darktrace’s results, please see the following comment from Ben Barringer, equity research analyst at Quilter Cheviot:
"The stock opened very weak, but we feel that this is a too pessimistic view of an undervalued UK tech champion. The FTSE 250-listed cyber security firm results will be followed closely after a short-selling attack by US hedge fund QCM in January.
"Despite this history, the company’s revenues were up 36% and its customer numbers up 24%. A big positive for Darktrace is that it has been very disciplined on its costs, which is true of other tech companies in the sector as well.
"Darktrace maintained its guidance of a 30% growth in revenue which is a positive and we are not too concerned by its free cash flow guide down which is to do with share issuance around the IPO. Similarly, the churn rate has risen from 6.2% to 6.5% and while this is clearly in the wrong direction, the company has sold more to existing customers so once again is not too much of a cause for concern.
"However, the business has got to restore credibility, following the short selling attack and we look forward to the EY independent audit.
"Many cyber security companies have strong fundamentals, as illustrated by the recent results of peers such as Palo Alto and Cloud Strike, and Darktrace is undervalued in this pack."
