Trustpilot and Darktrace restore confidence in London tech stocks

(Alliance News) - Reassuring trading updates from Trustpilot Group PLC and Darktrace PLC have rewarded faith in London's recent technology listings.

Trustpilot on Wednesday said it is on-track to report a double-digit rise in revenue for 2021, marking an "excellent financial result" for the online review platform. Darktrace, the cybersecurity firm, on Tuesday upgraded its annual sales guidance after reporting "significant" growth over the first six months of its financial year.

Shares in Copenhagen-based Trustpilot were 2.2% higher at 284.80 pence on Wednesday afternoon in London. The stock is now up 7.5% from its initial public offering price of 265p back in March last year.

Cambridge, England-based Darktrace was up 2.6% on Wednesday to 432.80p, having gained 6.9% on Tuesday. It is now up 73% from its IPO price of 250p in April.

Both recent debutants are members of the FTSE 250 index, after Darktrace was demoted from the FTSE 100 in December following a poor run for the its shares in the autumn amid concerns over the competitiveness of its products.

London's technology sector suffered a crisis of confidence last year amid doubts about the business model of online retail platform THG PLC and the disastrous debut of Deliveroo PLC in March. Meanwhile, longer-in-the-tooth tech listing Ocado Group PLC struggles to be consistently profitable and the stock is down 37% in the past year.

"UK technology IPOs have been receiving a bad press in recent months, but today's update from Trustpilot, following on from the beat and raise from Darktrace yesterday shows that there are good quality businesses coming to market who are delivering ahead of expectations," commented Dan Ridsdale, managing director of technology, media & telecommunications at investment research firm Edison Group.

"Both are now trading ahead of their IPO price, despite share price slides over the last quarter and provide a good platform for appreciation from here."

For 2021, Trustpilot expects to report USD131 million in revenue, a 29% rise from USD102 million the year before. On a constant currency basis, revenue grew 24% year-on-year.

Trustpilot expects annual recurring revenue to increase 22% to USD144 million from USD119 million, while bookings are seen up 32% year-on-year to USD150 million from USD113 million.

"We are very encouraged by this excellent financial result, with revenue ahead of expectations and strong growth in bookings and ARR. Over the past twelve months, we have continued to make strong progress against our strategic ambitions for Trustpilot to be the most trusted and most used global consumer reviews platform," said Chief Executive Officer Peter Holten Muhlmann.

Trustpilot will publish its annual results on March 22. Peel Hunt noted that Trustpilot made no comment on Wednesday about profitability. "Though revenue is marginally ahead of expectations, for the moment we leave our [2021 pretax profit and earnings per share] forecasts unchanged," the broker said. It has a Buy rating and 470p price target on the stock.

Darktrace on Tuesday said it expects revenue for the half-year that ended December 31 to be at least USD190 million, reflecting year-on-year growth of over 50%.

Financial second quarter sales had been better than expected, Darktrace highlighted, both because of strong new customer acquisition and improvements in customer retention rates.

"I am very pleased that we have continued to deliver strong growth across our customer base, annual recurring revenue and revenue in the first half of financial year 2022," commented Chief Finance Officer Cathy Graham.

By Dayo Laniyan; dayolaniyan@alliancenews.com; and Tom Waite; thomaslwaite@alliancenews.com

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