UK enterprise cybersecurity firm Darktrace (DARK) is rediscovering its mojo after unveiling surprisingly strong growth and margin expansion in the six months to end December 2023.
Against a backcloth of intense geopolitical tension, governments and corporate clients are becoming increasingly wary of the threat of hacking attacks, while AI (artificial intelligence) tools are making it easier for hostile actors to carry out phishing attacks.
‘Against this backdrop and in the period ahead, we are preparing to roll out enhanced market and product positioning to better demonstrate how our unique AI can help organisations to address novel threats across their entire technology footprint,’ said Darktrace chief executive Poppy Gustafsson as the company reported half year results that had analysts upping expectations for the full year (to 30 June).
Darktrace said it expected revenue for the full year to increase by between 23.5% and 25%, up from a range of 23% and 24.5%. It forecast an adjusted core earnings margin of at least 21%, higher than the 18% to 20% previously guided.
Shares in Darktrace jumped more than 15% (8 March), hitting an 18-month high of 436p and pushing the FTSE 250 company’s market value beyond the £3 billion mark for the first time since September 2022.
Founded in Cambridge in 2013, Darktrace’s core cybersecurity solution is its Enterprise Immune System, a IT system-agnostic platform that uses behavioural analysis to detect the early signs of a cyberattack on a network. EIS creates a model of users, devices and network behaviours in normal conditions, and, through real-time analytics and AI pattern recognition, alerts IT teams on activities outside of the norm.
Darktrace’s rally came just days after US cybersecurity peer Crowdstrike (CRWD:NASDAQ) jumped more than 20% after it also posted forecast-beating earnings and a positive outlook.
In the fourth quarter to the end of January, the firm reported a 33% increase in revenue to $845 million and non-GAAP earnings per share of $0.95 against the $0.83 consensus. Earnings guidance for the first quarter to the end of April and the full year to next January also pleased the market.
‘CrowdStrike delivered an exceptionally strong and record fourth quarter,’ said chief executive George Kurtz. ‘CrowdStrike is cybersecurity’s consolidator of choice, innovator of choice, and platform of choice to stop breaches.’
‘There is no spending fatigue here,’ said Morgan Stanley analyst Hamza Fodderwala, referencing comments by the chief executive of fellow US firm Palo Alto Networks (PANW:NASDAQ), who last month blamed spending fatigue among customers for the firm’s lower revenue outlook sending its shares tumbling almost 30% in a single day.
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