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Probably not a lot better if had joined Nasdaq, take a look at SentinelOne share price.
Lending / Sanchez great posts
Price / Sales seems to be the way Crowdstrike/ Sentinel One are measured …
DT’s definition of the Cost of Sales below- Most sales and marketing costs are not part of the Cost of Sales For FY21, COS = $28mm., S&M =. $189mm in addition.
“ Cost of sales scaled largely in line with revenue growth, resulting in gross margins of 89.9% and 91.2% for FY 2021 and FY 2020, respectively. Cost of sales include all costs relating to the deployment of Darktrace's software, whether through physical appliances or in the cloud, and of providing both customer support and supplementary monitoring and response capabilities.”
On a personal note, the thing I find absolutely most distasteful about the whole sorry episode is how typical this is of UK markets to absolutely trash one of the very few genuinely market leading tech companies we have in the UK. DT is just getting started on its journey as a listed company and our friends at ShadowFail have gone for the lowest hanging fruit by picking at all the things you would expect to be found in said company in its growth stage. It leaves a very bad taste in the mouth. DT should be being backed by the City, not decimated by it.
It makes you wonder why any major tech co should even consider listing on this market equivalent of Jurassic Park.
Markets are being ramped into tonight's Fed speech the world over setting up a fall. Notice how the seller isn't too active today.
Seen it many times before a Fed speech and might mean tomorrow is a down day as the news gets digested. At that point it could present a perfect opportunity because much of what is going on in the world as regards to interest rates, Ukraine and so on is priced in.
If not then, the next opp will be the Mike Lynch news. Although no one can convince me that a negative outcome is not already priced in after a 65% fall. Either way, the SP is less than 10% away from the first days close after the IPO. So now everyone who has bought and held since the IPO barring a very small no of people is down.
You can also guarantee that there is a very large amount of money watching this for signs of a reversal.
Sanchez - great analysis
Let’s see short interest next week in the public information Feb 1 st
Dark seems well over sold and the shorts could buy back and ride the wave upwards and make more if they time it early
ML news could be a trigger
Dark technology is vetted successfully by Microsoft their partner, and Microsoft up 5 per cent today after results
Imo you can almost guarantee that the short is near its end. They won't be able to sustain the press coverage they have conjured up this last week or so and the SP is now very low. I think the next drop will see it closing. You can guarantee Shadowfall will want to close before any of the hangers on do so they get left holding the baby. I haven't seen anything in their coverage that is anything other than supposition, and the simple fact they alluded to looking for more angles to bash DT without describing them is rubbish. That's the work you so before you take a position. The fact they are putting out dodgy unsubstantiated lines like that tells me that is work that will never happen. There is only so long a short of less than 1% can keep knocking 100's of millions off a multi-billion market cap company.
The average customer spends £67,000 a year and there are 6500 of them and climbing. Well that bangs the revenue up to £435,500,000! Are you a creative accountant by any chance?
Getagrip - great post - maybe ask some questions directly to Investor Relations
They are not allowed to disclose their clients it seems !
Getagrip the big funds let’s say 3 dozen have looked within past few weeks .. let’s see
I think Dark should also try to educate the shorts that actually Sp could go up because Dark performing well
Until the shorts reverse their trades or until big investors Buy in , then the shorts are a heavy weight maybe , but when they unwind the shorts the share could do a Sheltie Rocket too …
I feel like most bad news is out , and Up is possible from here … let’s see
Valid points getagrip
The average customer spends 67000 a year , approx … is that a number anyone remembers
In Sales they have the Huge target account team
And the smaller companies target team
I hear more results in March , is that earlier than you expected !
Mr Anonymous contributor - A 90% Gross Margin is excellent, particularly if you parrot it often enough, but it is a figure sourced from a predominantly Marketing/Sales orientated company. It is unlikely to be a low margin business from the company "lines to take" perspective. You should be questioning the accuracy of this claim!
Out of a workforce of 1500, 60% are sales and marketing staff (source Guardian). They are part of the Cost of Sales i.e. they are part of the 10 % of sales, allocated in the Gross Margin calculation. Growth in customer numbers is impressive, but how does Dark define a customer. Churn rate is reducing, but how is it counted, is the value of customers acquired rising or falling - if the number of customers is rising significantly, is the churn-rate being massaged to show regular improvement.
I recall someone on the Board wanting a list of Dark customers. Come on think about it - please! Dark are simply not going to tell you or anyone else the identity of the big airline contract recently, or any other customer. The reasons why are so blindingly obvious. But, it is a 1000-flight a day airline, so that narrows it down to what 4 x US airlines, maybe 12 x World airlines in total. You cannot break this opaque facade, it is critical to Dark's product dynamics, reputation and sales. But, it also means that Dark can play games with the figures it releases - obviously this has resonance with other ML companies & don't they have the same DNA?
Let's say Dark has 1000 Sales and Marketing staff. It has 6500 customers, so pro rata they have pulled in 6 1/2 customers each at this point - is this a high or low number. Let's say they are paid £20-£30,000 each per year, with their apportionment of some office costs. So that the Cost of Customer Aquisition, could be £5,000 + a plethora of other costs - advertising, internet, travel expenses etc.
We should be asking - What is the Cost of Customer Acquisition, what is it today compared with say a year ago? How many are £100k + accounts, how many are repeat customers, which competitor are they going to, are they not convinced of the need for cyber-security, are they "buying" new customers with low price deals? Are they seen in the market as a slick Marketing and Sales led company, or a serious cyber-security player, or both!
You also state that big fund managers have been looking at Dark for a year, but have done nothing. This is an inordinately long thought to action gestation period!
Please don't tell everyone yet again what Jeffries target is! Everyone got that the 5000th time you said it!
Well the short interest - with these volumes seem to be controlling the price largely
Tesla had a lot of shorts last year , but the shorts eventually gave up as Tesla and Elon managed to shake the shorts out
Dark will need good results , Nasdaq stable or up , plus big new investors who buy into Dark growth and cheap Price/ Sales … Today Dark should be closer to 550 p / 600 p if we follow a similar per cent age as Crowdstrike and other similar leaders in Usa
Ok great - positive is good ! Thanks Watchman
The key now is Big new investors who are considering to invest in Dark , go ahead and pull the Trigger …
The latest TU had the line "Darktrace is also increasing the guidance for its FY 2022 adjusted EBITDA margin to between 3% and 6% (previously 2% to 5%), applied to a now higher expected revenue range.".
EBITDA as I hope you've googled if you didn't already know is Earnings BEFORE tax, interest, depreciation and amortization. Whilst positive is better than negative they'll still have interest etc to pay.
I think Profit in next 12 months was a misunderstanding by me .. the paragraph I typed today , I believe correct …., mid 2020s but there was something else that showed positive adj EBITDA this year ? Any thoughts on this ?
Hi watchman - large funds are always ready to do something. Perhaps the "?" means we aren't supposed to treat it too seriously? I know you don't but others here may not be so discerning.
So you left us hanging on "and since the start of the Ipo , Dark have had a steady state economic model and they made it clear their business is capable of delivering an Adj EBIT margin in mid 2020s …" which indicates 2025?
Gross margins are not the same thing as profitable.
You say you're no expert on financial jargon but surely you need to have some to glean that they'll be making a profit within the next 12 months.
I am not expert on all the accounting terminology
Dark have said from the start that their 90 per cent gross margins ( top end peer group range ) are a great starting point and efficiencies in Sales and Marketing and G and A can over time make Dark a very profitable business , so Dark does not need to pivot like many of the high growth / loss making businesses need too
Also Investor Interest in Dark is High
Lots of new big investors are hearing about Dark and many are considering investing in Dark
I will type out the rest , no link
Link Charles?
Watchman sure - let me check where I heard that fact .
Ok here it is
Darktrace is guiding to adj EBITDA positive this FY 2022 to June ….and since the start of the Ipo , Dark have had a steady state economic model and they made it clear their business is capable of delivering an Adj EBIT margin in mid 2020s …
The markets appetite for loss making businesses has changed rapidly ( Netflix has 222 million subscribers but is not making ++ FCF and the market is punishing them , Peloton had the biggest demand tailwind due to Covid but because they spending too much …..see next post
Charles, you referenced more than once that DT will be 'profitable' by next year.
I can find no mention by the company or anyone else that this will be the case.
In fact by their projections even with increased revenue we are looking at three years to 'break even'.
Can you give us the data that supports your assertion?
Dark has been doing one on one and group Investor meetings over the past year and also recently to educate big Funds on their growth story and success
Imagine if when dust settles if just 10 of these Big funds buy in from Usa and Europe … Jeffries has been educating investors in Usa and has a 800 p Target Price so surely their clients might buy a good amount of shares quite soon - win win for everyone if that happens !
Check the two news articles I sent which talks about Price / Sales in Valuation - again not my words but the views in the wider markets on valuation
Dark has profitability by 2023 and is investing in the product and getting the product into as many Organizations and Governments as possible ! The Sheltie Rocket could happen :)
Buy Lloyds too !