Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
Perhaps this has something to do with it:
https://simplywall.st/stocks/gb/software/lse-dark/darktrace-shares/news/as-darktrace-plcs-londark-market-cap-dropped-by-uk276m-insid
https://www.helpnetsecurity.com/2022/06/23/darktrace-antigena-email/
From Investor's Chronicle today
Part of the article about Darktrace (too much to type)....
" In the past nine months, there has been a major swing in expected profitability here. In September, the forecast consensus was for a pre-tax loss of £20mn-£25mn even by 2024, but today, following positive trading updates, consensus is now for profits of £20mn-£25mn. The shares are trading on 7.5 times sales (although the PE ratio is still more than 100 times two years out), which is not exactly high for a fast growth market. Profits are growing at around 30% and Ebita margins are 14%, which gives DARK a rule-of-40 score of c44, which is positive, albeit marginally.
When we last wrote in September 2021, we suggested that DARK should probably be in the 500p to 600p range, making it expensive then but likely too cheap now. Part of the drag on the share price has been the ongoing travails of one of the groups founders, Mike Lynch. But Dark continues to grow its revenues, increasingly this should be viewed as a sideshow. Anyone buying DARK at 350p should expect to see healthy total returns over two to five years as, although it is hardly cheap, there is value here and the rising tide in the US sector should also lift this boat."
Their results also came out yesterday.
Sales doubled. Wonderful. They went up to $78million.
Losses also went up from $62million to $89million. Catastrophic. The losses are more than the sales!
Crowdstrike's results for the quarter to 31 March 2022 were released last night. They show that sales increased by 61% compared with the same quarter a year ago.
However, the company is still trading at a loss. The loss in the quarter was $31million, compared to $85million a year ago.
Share prices depend on profits, not sales, so their shares will be down today. When Darktrace's results come out in late July or August, the only figure that will matter is whether the company has made a profit.
https://www.fool.co.uk/2022/05/30/are-darktrace-shares-a-no-brainer-growth-buy-right-now/
Darktrace was under the cosh on Wednesday as JPMorgan reiterated its 'underweight' rating on shares of the cybersecurity firm and slashed the price target to 320.0p from 400.0p, saying reputation risk has muddied the investment case further.
"While we believe that demand for cybersecurity solutions will remain robust despite the macro headwinds, investors are likely to favour high-quality companies with a sticky customer base, healthy free cash flow generation, and a clear path towards sustainable profitable growth," JPM said.
"With higher SMB/mid-market exposure and the prospect of higher competition potentially challenging the company’s ability to deliver profitable growth, we do not expect Darktrace’s discount relative to its peer group to narrow."
More recently, JPM said, the combination of reputational risks associated with links to Autonomy and the overhang from stock held by employees and pre-IPO shareholders, further supports the bank’s view that Darktrace will continue to underperform.
It noted that the shares slid 15% on 18 May following press reports that Nicole Eagan - CSO and ex co-CEO - was named as ‘part of a clique’ responsible for misrepresenting the success of Autonomy and was previously a subject of a Department of Justice investigation.
"Darktrace shares have since partially reversed the single-day loss, primarily driven by the company’s response to the press reports and share purchases by certain Darktrace executives (CEO and CTO).
"However, we believe that this is unlikely to firmly reassure on the potential reputational risks associated with its historical links to Autonomy."
In the half year to 31 December 2021 Darktrace made a profit of $5.9m. If we halve that, to estimate the profit for the quarter to 31 December 2021, this would be about $3m. (These figures are not audited, by the way.)
I then looked at the latest quarterly results for our competitors.
Zscaler .....loss of $100m
Palo Alto.....loss of $93m
SentinelOne....loss of $71m
Crowdstrike....loss of $41m
It's about NCC, a competitor to Darktrace. It says,
"The global cyber security market is expected to grow at a compound annual growth rate of 11 % from 2023 to 2028, according to business consulting firm Grand View Research. It's these market forecasts that go a long way to explaining the excessive multiples most cyber companies trade on.
Darktrace is currently on a forward price/sales ratio of 11, while in the US Crowdstrike is worth 23 times its forward revenue - despite being yet to turn a profit."
Darktrace Says Neither It Nor Executives Target Of Any Investigation
May 19
* STATEMENT IN RELATION TO RECENT MEDIA SPECULATION
* NOTES RECENT SHARE PRICE MOVEMENT AND ALSO MEDIA
SPECULATION
ABOUT COMPANY IN RELATION TO CIVIL PROCEEDINGS IN CONNECTION
WITH SALE OF AUTONOMY
* NEITHER DARKTRACE NOR ANY OF ITS ACTING EXECUTIVES WAS A
PARTY
TO CIVIL PROCEEDINGS
* NEITHER DARKTRACE NOR ITS ACTING EXECUTIVES ARE TARGET OF
ANY
INVESTIGATION
* WE SEE NO LINK BETWEEN DARKTRACE AND CIVIL ACTION AGAINST
DR
MIKE LYNCH BY HEWLETT PACKARD OR ITS SUBSIDIARIES
* THERE HAS BEEN NO CHANGE TO PROSPECTS OR TRADING OF
BUSINESS
SINCE OUR LAST UPDATE
She appears to be very useful, so it will be a shame if she goes.
"Nicole Eagan is Chief Strategy Officer and AI Officer of Darktrace. Her extensive career in technology spans 30 years working for Oracle and early to late-stage growth companies. Nicole identifies and shapes Darktrace’s strategic plan, leads the Company’s AI vision together with our CTO, and provides product strategy and direction. A core part of the executive team, during Nicole’s tenure, Darktrace has won more than 100 awards, and the company has been named one of WSJ’s ‘Tech Companies to Watch’, Fast Company’s ‘Most Innovative Companies’, and a CNBC ‘Disruptor 50’. Nicole was named ‘AI Leader of the Year’ and was awarded the top position on The Software Report’s ‘Top 25 Women Leaders in Cybersecurity’ in 2020."
However, she's in no position to commit fraud at Darktrace.
Getafgrip: you may be right.
"After leaving Autonomy, Eagan set up Darktrace with a number of other tech experts and became co-chief executive alongside fellow founder and current head Poppy Gustafsson. Eagan, currently Darktrace’s chief strategy officer and AI officer, remained in the role until mid 2020."
Rightly or wrongly, I've just invested a very considerable amount of money in Darktrace shares. To me it's a marvellous opportunity to bottom fish.
Nicole Eagan is not on the board. She's just an ordinary employee working on new strategies for Darktrace's software. She works under somebody else - I tried to talk to that somebody else at the last AGM but missed him.
I met all the board. I can assure you they are all honest.
Our main competitors make losses. Crowdstrike has never made a profit. The same with SentinelOne, whose losses are enormous and have to be financed by new share issues. In the six months to 31 December 2021 Darktrace made a profit of $5,917,000. I look forward to the next results, which I think are in July. If they show a bigger profit, the share price will increase substantially after that.
Investors noticed (on 13 April 2022) that Darktrace had warned that geopolitically driven foreign exchange headwinds have increased as heightened volatility remains.
However, the cybersecurity company, which floated in spring last year, had raised its full-year revenue growth outlook to 40-41.5% from 38.5-40%, thanks to strong net new customers.
"Today’s update comes as a welcome boost and could help pave the way for further gains,” said Victoria Scholar at Interactive Investor, while Benjamin May at Berenberg said, "what is clear though is that the company is not experiencing any slowdown in growth..[and] we do not think this will be the last guidance upgrade".
....the FactSet 2024 consensus EPS has risen from -0.70p to 2.80p." Sorry - typing mistake.
Anyway, I dunno what that means.
"Darktrace has been on a bumpy ride since its listing last April. The share price almost trebled by October before losing all its gains by the end of the year, partly as a result of a sell call by Peel Hunt. The reasoning was that the market size for its Network Detection Response unit was only expected to grow to £5.1bn by 2025 - and Darktrace's low customer review score meant it was unlikely to to take the majority of said market.
Darktrace has recovered slightly since then thanks to a strong set of half-year results. Annual recurring revenue (ARR) rose to 105% from 100% last year, reflecting existing customers upping their spend. Management increased its full-year ARR growth by 5%, to between 24 and 29%
The share price also got a 25% bump at the start of the war. At the time, management said it hadn't seen an increase in attacks, but has seen "an increase in enquiries for its product."
This may not be enough for investors to jump in yet, as the company is still struggling to turn a profit because of its large marketing spend. But analysts do expect it to start returning a profit earlier than previously expected. Since the beginning of the year, the FactSet 2024 consensus EPS has risen from -0.70p top 2.80p."
Some of the above I agree with, and some I don't.
About 60% of Darktrace's staff are in sales and marketing. When you have a new product, you have to spend a lot of money on marketing.
Berenberg says that Darktrace's strong client retention as well as its scope for winning new customers merits a £10 target. It says, "A lifetime value-to-customer acquisition cost ratio close to 6 times is nearly double the norm for healthy companies." (I've no idea what that means.)
Dunno what this means either - "Darktrace's enterprise value of 8 times forward sales does not look expensive compared with US peers on multiples several times higher."
When customers are reviewed, they say they like the product, they are growing rapidly in number, and are spending more.
We get nothing but good news from the company.
Analysts at Jefferies issued cyber-defence company Darktrace with a 'buy' rating on Friday following the group's "positive" third-quarter trading statement.
Jefferies stated Darktrace's quarterly update indicated that annual recurring revenue growth was 46.3%, while overall revenue growth was 50.1%, supported by 37% growth in customer numbers, suggesting broad-based and sustainable growth. The investment bank highlighted that faster ARR growth than customer growth implied higher ARR per customer.
Meanwhile, Jefferies, which has a 730p target price on the stock, noted that the statement revealed that gross margins, ARR churn, and net ARR retention rates were consistent with prior periods, resulting in what the analysts called "a very balanced quarter, with strong momentum".
"We update our numbers for the positive 3Q22 trading statement which leads to yet another upgrade to FY22 guidance. ARR and revenue growth guidance is raised by c.1%-1.5%, while there is a meaningful upgrade to EBITDA margins from 11% to 16% (at the midpoint)," said Jefferies.
"We think this clearly highlights the operational leverage which is inherent in the business model. Darktrace remains one of our favoured names in the sector."
"Cybersecurity firm Darktrace has raised its guidance for the fifth time since listing. The firm, which uses behavioural analysis to detect the early signs of a cyberattack, is well placed in a critical sector: the US cybersecurity market was valued at $156bn in 2019 and is expected to grow to $326bn by 2027.
Darktrace is delivering rapid growth - annual recurring revenue of $462m is up by 46% year-on-year. The shares have been volatile as investors fret over inflation and rising interest rates, but could fly once markets calm down."