Investors looked past a big jump in full-year losses, which was driven largely by one-off costs associated with its stock market listing in April.
In its first set of results since then, Darktrace said its revenue had jumped 41% to $281 million in the 12 months to 30 June. Customer numbers rose 45% to 5,605. The stock rallied 9.5% on the numbers.
“At our first full-year earnings, we are very pleased to report robust financial and operational performance, and strong growth, during the period,” chief executive Poppy Gustafsson said. “In this new era of cyber-threat, Darktrace is helping organizations from every industry sector, including providers of critical national infrastructure, to protect their digital assets, and avoid the serious disruption that cyber-attacks can cause.”
Darktrace builds advanced cyber security software for businesses using artificial intelligence. The company’s software monitors an institution’s computer networks to look for unusual activity, flagging anything suspicious so bosses can stop criminals in their tracks.
“Not all AI is created equally,” Gustafsson told the Standard. “When you see the world shifting to working from home, it’s relatively easy for us to adapt.”
Darktrace works with everyone from Coca Cola and Vodafone to the City of Las Vegas and West Ham FC. Demand for its product has been supported by “a spate of advanced ransomware attacks that have caused severe disruption not only to businesses, but to critical national infrastructure,” the company said.
“The volume of attacks is just so significant it’s no longer a human-scale problem,” Gustafsson said. “These are big businesses, you see that in the automation of attacks.”
She highlighted the ransomware attack on the US Colonial Pipeline in May, which briefly halted oil supply to some southern US states. The attack was carried out using “ransomware as a service” program downloaded by the attacker from a third party.
Another common threat is fraudsters taking over corporate PCs to hijack computing power to mine cryptocurrencies like bitcoin.
“Modern businesses are under constant attack,” Gustafsson said.
Darktrace enjoyed “a particularly strong June” and upgraded its forecasts for the year ahead, saying momentum was likely to continue. It now expects revenue growth of between 35% and 37% in 2022, up from a previous range of 29% to 32%.
However, Darktrace’s bottom-line was hit by the cost of the company’s IPO in April. Professional fees and other one-off costs totaled $15.3 million and a complex deal to restructure the company’s shareholding ahead of IPO resulted in a $107 million non-cash charge. The cost of share-based payments to staff almost quadrupled to $38.6 million. The cost of its stock-based incentive scheme has increased since Darktrace’s IPO due to a rise in the company’s share price. The stock has almost doubled since April.
Rising costs across the board meant Darktrace’s net loss rose by 421% to $149.5 million last year.
Dan Lane, an analyst at Freetrade, said it was a “strong start” to listed life for Darktrace despite the loss.
“Revenues slightly pipping punchy expectations will be the cherry on top this morning and the market will sit up and take notice of a huge hike in customer numbers too,” he said.
But Lane added: “Investors need to keep a close eye on renewals as well as new business. It’s a competitive space and the easy money made by scaring unprepared companies into buying its products is in the bank. Darktrace has made its name by championing sales staff to shift its wares to the biggest names out there. But they aren’t the only gig in town and the opportunity set is shrinking.”
Gustafsson told the Standard Darktrace was “doubling down” on R&D after growing its research team by 50% last year. The company is looking into new areas of possible automation such as scanning networks for vulnerabilities and working on “clean up” after an attack.