We would love to hear your thoughts about our site and services, please take our survey here.
The company reported a loss of $107 million on sales of $133 million.
Dear me. Huge losses. Darktrace makes a profit.
The share price crashed 35% today.
"SentinelOne reported disappointing Q1 results, with revenue missing guidance by 3%," Wells Fargo analyst Andrew Nowinski said in a note to clients. He added: "Management said they are seeing smaller deal sizes, longer sales cycles, and lower pipeline conversion rates, in addition to lower usage and consumption trends."
The threat of cyberattacks is growing at an “unprecedented” pace, according to the chief security officer at BT, who has spoken about the challenge of protecting the telecoms network.
Howard Watson said the ever-increasing pressure on digital infrastructure after the Covid lockdowns has had a “big impact on security monitoring” because the business has to analyse larger quantities of data to identify suspicious or malicious activity.
He added the business was grappling with new types of hackers and hacks: “We also now have to contend with ‘cybercrime for hire’ and increasingly automated attacks which can rapidly find vulnerabilities and cause a huge amount of damage, with minimal human input or effort.”
BT employs 3,000 people working in cybersecurity to protect operations and customers, out of a total workforce of 130,000. Its services include the EE mobile network, Openreach broadband and the BT Sport joint venture.
The NCSC’s latest annual report found 18 ransomware incidents in 2022 required a nationally co-ordinated response, including attacks on a supplier to NHS 111.
The most significant threat facing the public and small businesses continued to be from cybercrime, such as phishing, while there were 2.7 million cyberrelated frauds in the 12 months to March 2022.
US courts have frozen tens of millions of dollars of Darktrace shares owned by Mike Lynch as the British entrepreneur awaits trial on fraud charges.
Mr Lynch has put up $54m (£44m) worth of shares in the London-listed cybersecurity company to meet his bail demands after being extradited to the US last week.
They will remain in the custody of the US court system until Mr Lynch’s legal battle is resolved, which could take years.
The development is the latest cloud over Darktrace, which has sought to distance itself from Mr Lynch, its founding investor, since he was charged with fraud in 2018. The charges related to the sale of Mr Lynch's business Autonomy to Hewlett Packard 12 years ago.
Darktrace, which provides cyber security software, is also battling to repair relations with City investors after being targeted by short sellers who claimed the company has used aggressive accounting and sales tactics to boost growth figures.
Shares have fallen by more than a quarter over the last 12 months and the stock fell by 10pc on Friday after the Wall Street giant Bank of America told investors to sell.
"Hundreds of millions of pounds were wiped from the value of Darktrace after analysts warned it risked falling behind in the artificial intelligence race.
A Bank of America report poured cold water on its technology. Their analysts said DT's "self-learning AI" was neither "unique nor a silver bullet". They warned DT could become less competitive as a result.
The research note added that Microsoft had committed £16bn on research and development for security solutions, while the cyber-security sector was increasingly "crowded and becoming highly competitive".
The analysts also questioned how much DT was spending on developing new products, after it spent just £44m on R&D in 2022.
DT sells cyber-security products to blue-chip clients including BT, using AI tools to identify anomalies or intrusions on a customer's system. However, a new wave of AI companies such as OpenAI has led to an explosion of interest using machine learning technologies in cyber-security.
Last month, Microsoft announced a fresh batch of cyber-security tools built using AI tools developed by OpenAI. Microsoft's Security Copilot is designed to help IT experts quickly identify threats and answer security questions.
However, analysts at Liberum on Thursday had a buy recommendation on DT, arguing it traded at a steep discount to US rivals.
Darktrace refused to comment."
--------------------
So one broker brings out a bearish report and thousands of people read it in the Times and Telegraph. DT brings out a report to say it identifies hackers in a company's emails 13 minutes earlier than its rivals, but how many people did read that?
I hope DT issues a rebuttal of Bank of America's report.
It was a dark day for Darktrace as the formerly high-flying cybersecurity specialist faced questions about whether could handle its competition, doubts that in turn hit its shares, making it the steepest faller on the mid-cap FTSE 250.
While analysts at Bank of America acknowledge that Darktrace has generated strong revenue growth over the years, Victor Cheng, its distinctly bearish analyst, expects growth to “significantly decelerate”. Why? For one thing, he anticipates much stronger competition in the next 12 months, as well as a weaker economic backdrop that will put “significant pressure” on new contract wins.
“In a weak macro environment, customers are often likely to buy additional solutions from existing providers than from new ones,” Cheng said, as he started coverage of the company with an “underperform” recommendation. The market heeded the bank’s concerns and Darktrace’s shares fell sharply by 32p, or 11 per cent, to 260p.
Go into Google and type 'Gartner Peer Reviews'
Then in the search box at the top of the page type Darktrace
Overall score 4.8. The best. Microsoft got 4.4.
https://www.gartner.com/reviews/market/email-security/vendor/darktrace/product/darktraceemail/reviews?marketSeoName=email-security&vendorSeoName=darktrace&productSeoName=darktraceemail
Mike Lynch has lost his appeal against extradition and will have to undergo a trial in the USA.
I think Capita used Palo Alto, not Darktrace.
The attack by Russian cybercriminals on one of the UK’s biggest outsourcing companies, Capita, appears far more serious than the company has admitted. Personal bank account details, addresses and passport photos are now being leaked online, having apparently been stolen by the hacking group Black Basta.
Capita, which has £6.5 billion in government contracts — including for the NHS, the army and the Cabinet Office — handles the personal details of millions of members of the public. It admitted it had been infiltrated earlier this month, but stressed that people’s personal details had remained secure. However, security experts showed The Sunday Times how pages of details apparently obtained from Capita were being touted for sale on the dark web page of Black Basta.
This trove of information features people’s phone numbers, details of more than 100 bank accounts with sort codes, and home addresses. The documents appear to be a sample of what was have obtained, as the web page states that anyone wanting access to more can buy it in bitcoin. The link to purchase more data on the portal is currently not working when clicked.
The data includes personal details of teachers applying for jobs at schools. Other information appears to be the bank account details of people and firms supplying Capita with goods or services.
It is believed that the breach was caused by a phishing scam, when employees receive seemingly legitimate emails that encourage them to click on malicious links, allowing hackers to seize their data.
This is what I think. I may be wrong.
The directors ensured that they would be very well rewarded at the IPO
This is why nearly all the profit went to them in the results this week
Mike Lynch was disgusted and so voted against the directors' remuneration at the last AGM
Buffetology were disgusted and so sold all their shares
Thoma Bravo were disgusted and so walked away
The stock market was disgusted, which is why the share price dropped from £10 to £2.10
However, now that the directors have filled their boots, they won't be doing it again
The next results will therefore be much better
The share price will now start to show a steady increase
Almost all the profits in the last half year have gone to only two directors, and in share option costs to a small number of key employees that Darktrace wants to keep. Not to us. That's why the share price is so low.
Makes me feel ill.
Some more:
Markedly more serious (of Quintessential) are the allegations of so-called channel stuffing — where resellers are compelled to buy product before they agree to an onward sale. Examples of potential channel stuffing in Quintessential’s report are “at best suspicious, and at worst fraudulent,” say Stifel analysts.
Berenberg argues otherwise. All examples appear to be linked to one individual who no longer works at Darktrace, it says, and “even if true we suspect they are immaterial to revenues”:
In short, we doubt this is a systemic issue across all of Darktrace’s operations. If it were, we suspect the report would have tried to present similar examples in Darktrace’s core markets (eg the UK, North America). After speaking with some of the UK’s largest listed VARs [value-added resellers] in recent days, some of whom are large partners of Darktrace, we came away encouraged by their comments that Darktrace’s contracts have top-tier governance in place. In short, they have not experienced any form of “channel stuffing”. We therefore suspect that any instances of this practice, if it has occurred in a few markets, are isolated and not widespread. We also believe that all allegations precede the company’s current CFO, whom we believe is highly prudent on these matters."
I managed to copy this part:
"Numis repeated its “buy” advice on the stock. Of the 11 brokers that have published on Darktrace this year, nine retain buy ratings and only one, Stifel, has downgraded.
Among the most bullish is Jefferies, whose price target of 425p is approximately double the current share price. Jefferies is Darktrace’s joint house broker, alongside Berenberg.
It told clients:
We have seen our fair share of debates in the sector, including names such as AIT, iSOFT, and Wirecard. While circumstances always vary, one consistent theme tends to be a mismatch between profits and cash flow. With that in mind, we think it is worth dwelling on the track record at Darktrace. Notably, cumulative cash flow (operating cash flow after capex and leases) from 2018-2022 of $58mn far outstrips the cumulative -$31mn of reported adj EBIT"
Sorry. It's blocked.
....in case you haven't been able to read it. Well worth reading.
https://www.ft.com/content/9abdd17a-b34b-4613-b299-fbf341e32d62?ftcamp=traffic/partner/feed_headline/us_yahoo/auddev
I go to the AGMs and have met most of the directors. One thing they would never do is follow Mike Lynch's behaviour.
Mike Lynch is looking at years in an American prison. The fines he may pay could bankrupt him, and his reputation will be ruined if the American courts confirm that he was guilty of fraud. It doesn't help that his finance director was found guilty of fraud and is spending several years cooped up in an American prison.
Amazingly, Quintessential are claiming that the directors are doing the same things as Mike Lynch, and so want to end up in prison themselves. Unbelievable. In fact, I found them all very reputable.
The auditors of Autonomy, Deloittes, were fined a huge amount for their failures in the Autonomy audit. Grant Thornton are not going to do the same, and so will be taking much greater care in their audit.
The new products, Prevent which is being sold and looks to be very successful, and Heal which will come out later this year, make Darktrace's products all the more marketable. I haven't sold any of my shares and will keep them for a long time yet.