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Good article in The Times today covering, amongst other, why DT’s approach requires less R&D expenditure (self learning) when compared with others, and some thoughts on the short attacks. Worth a read if you have access.

DT will be updating on Q3 progress over the next fortnight and will commenting on some of the key metrics that inform annual revenues such as the RPO, ARR, and Deferred Revenue. These metrics are more-or-less unique to subscription based business models.

For anyone new to SAAS (Software As A Service) companies that are based on subscriptions , I thought the attached contribution in the US MF chat site may be of interest as I think it explains it all quite well.

In an article in TheTimes today they reiterate how SAAS companies are poorly understood by the investment community in the UK.

https://discussion.fool.com/t/making-sense-of-rpo-arr-and-deferred-revenues/64423

Excellent Bobocaca - you are becoming a “true” investor according to the gospels of B Graham and W Buffett (my investing heros).

To quote from BG:

“In the end, how your investments behave, is much less important than how you behave.”

“The investor with….stocks should expect their prices to fluctuate and should neither be concerned by sizeable declines or sizeable advances. He should always remember that market quotations are there for his convenience to be taken advantage of or ignored “ and “at other times he will do better to forget about the stock market and pay attention …..to the operating results of his companies”

And Buffet “what is needed (to be a successful investor) is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework”

The advice taken from these two gentlemen has served me, and evidently an few others on this bb, well. Others will have a different view.

I don’t know who uttered the curse but, surely, we live in “interesting” times.

OK Charles now I understand your reverse logic. Law of gravity says “what goes up, must come down” not visa versa. So whenever you say the SP will rise in future, I will understand you to mean it will fall. All is revealed - cunning code!

As for Archimedes Principle?

Bacchusll - IC stated that the SBP was paid for by share buybacks. What I was trying to say is that it wasn’t - it was paid for by issuing shares and diluting the share of the company held by existing shareholders. The difference between, say, EBIT and Adjusted EBIT is the cost of diluting the shareholding which is the cost of SBP and the related tax charge which together amounts to about $32m.

Personally I think the IC article is poor. It talks of the share based payments being paid for by share buy-backs. They weren’t - they were paid for mostly by share dilution except when bought back through the EBT. Then they talk only of the adjusted profitability figures which essentially are the IFRS profitability figures to which the losses to shareholders from share dilution are added back.

From a shareholder perspective the only figures of relevance, IMO, are the iFRS figures in the profit/loss statement.

When shares are diluted to pay for SBC the cost to shareholders of doing this (number of shares issued times the prevailing SP) is recorded as a cost suppressing profitability. So the greater the number of shares issued and the higher the prevailing price the lower the profitability and these costs reflect the dilution in shareholder value. The adjusted profitability and free cash flow figures ignore these costs.

This raid on the intrinsic value of our shares is a form of a loan to the company by the shareholders IMO. and therefore the company are indebted to us. At least that is the way I see it - if is not a debt what is it? I think DT said on announcing the share buyback programme that it was a way of giving something back to the shareholders. Repaying the debt owed?

Buffett et al explain this better than I can.

Aadj & W007. A little more complex as the volume depends upon whether the trades are through a Market Maker (“O” trades) or the automated SETS trading system (“AT it UT” trades).

Market Makers hold some inventory, so if 1 share is sold to them then this is added to the inventory and recorded as 1 in volume and if 1 is sold by them from their inventory this too is recorded as 1 in volume making a total of 2 in volume.

In SETS there is no inventory so every single share sold by somebody has to be exactly balanced by one bough by somebody. So the volume recorded is different from trades through MMs as 1 share bought and 1 sold sold in this system is recorded as 1 in volume. Therefore the volume shares sold and bought in SETS is recorded as half of that recorded if transacted through a Market Maker.

So volumes are not necessarily what they seem..

Then whether it recorded as a sell or buy Is different in the two trading systems, but that would require a further explanation. . Suffice it to say, except for some inventory carry over by the Market Makers the number of shares sold in a day must equal the number of shares bought. The volume recording system is not perfect in this regard, nor in assigning a buy or sell to any transaction. The way I see it the latter is more a recording of the dynamic of the market reflecting on the balance of those wanting to sell and those wanting to buy - in other words who is driving the agenda.

Sw/77 - I too was surprised at the time - it is not the type of share Buffett would buy and the manager of the fund is is a disciple. Maybe that is the primary reason for sale - not a good fit in philosophy. I still believe in the potential and I am still holding.

Sorry - ref February factsheet.

The CFP SDL Buffetology Fund ( 1.5% plus holding ) sold their position in Darktrace in February.

This is disappointing and concerning as they have been a great supporter up until now having bought in at the IPO.

The reasons given are in line with concerns expressed on this BB. Namely changing the benchmark for bonuses after the event, fall off in sales and the questions raised by you know whom on governance matters. They spoke to DT and did not get satisfactory answers so…………

Tomorrow is going to be “interesting” - fasten your seat belts and good luck all who hold. Just hope they can pull a rabbit out of the bag.

SW77.- I fully concur with your views. The SP is only of interest to me, as a long term SH, at the time I want to buy or sell. If you ask me what the SP did over the last few weeks I couldn’t say not having taken much notice. What it is tomorrow or next week is also of no consequence to me as I’m not intending to buy or sell at the moment. Focusing on the SP would be a distraction from understanding how DT, as a business, and me as a co-owner of that business is doing and the SP, short term, doesn’t properly reflect that.

Most on this bb will not understand that as they are mostly speculators and not “true” investors in the Graham/Buffett understanding of those concepts.

Should any newcomer to the DT be interested in the historical Revenue growth rates and the year-end forecasts given since IPO I attach below the figures from my notes. All growth rate figures in %

FY19 Results Sept19 – Actual 72.5
FY20 Result Sept20 – Actual 45.3
FY21 – IPO Prospectus Mas 21 – Outlook FY22 - 27 to 30
FY21 Update July21 – Outlook FY22 – 29 to 32
FY21 Result Sept 21 –Actual 41.3 Outlook FY22 - 35 to 37
Q1FY22 Update Oct21 -- Outlook FY22 – 37 to 39
1HFY22 Update Jan22 - Outlook FY22 – 42 to 44
1HFY22 Results Mar 22 - Outlook FY22 – 44.5 to 46.5 (date of Results pre-announced)
Q3FY22 Update Apr22 - Outlook FY22 – 45.5 to 47.6
FY22 Update Jul22 - Outlook FY23 – 29 to 32
FY22 Results Sep22 – Actual 45.7 - Outlook FY23 – 30 to 33 (date of Results pre-announced)
Q1FY23 Update Oct22 - Outlook FY23 – 30 to 33 (reiteration)
1HFY23 Update Jan23 - Outlook FY23 – 29.5 to 31
1HFY23 Results – On 08 March at 0700BST. Outlook on Revenue and of course profitability.

Updates only give some select indicators like Revenue growth (IFRS) and ARR, Churn rate, Customer numbers etc (non- IFRS). The Results cover the full whack and, importantly, all the profitability and Cash Flow numbers. Both cover expectations (outlook) of what might be achieved FY for the select indicators.

The picture is certainly not as rosy as it was this time last year. But we live in hope- and perhaps expectation - that with the DT's offer becoming even more robust, a turnaround will occur in the not too distant future.

SW - I believe you can only display bid-offer spreads to 2 decimal places but actual trades can be conducted to any level of precision. At least that is the case in the US (SEC). On occasion I have had trades in the UK transacted at up to 5 decimal places (or thereabouts) so I guess it is not that unusual. My last forex transaction was quoted to 7 decimal places (£/€).

What are you trying to say SWacker, and for what purpose?

No shares held in treasury have voting rights - and they were bought- back at the end of 2021 reportedly to satisfy pre-existing obligations arising from its share incentive programmes or for other purposes. They have nothing, whatsoever, to do with the present buyback programme.

Panda 69. Great post. One of the few who had an investor’s mentality rather than a speculator’s one (following the definition of Graham/Buffett).

When I invest I like to think that I am buying a piece - albeit a small piece - of a business and look at from that point of view. My preferred holding period is forever like all disciples of Budffett et al and so would not like to see my business sold.

Some, but very few, on this bb are like minded.

PI/W. The question posed is whether the expected revenue growth rate is “excellent” or not. To me it isn’t having slowed from 45% to 30% and has been much lower that it has been against the two mentioned competitors. They need high growth rates and increasing earnings and free cash flow margins to justify much higher SPs

Are these your words or are they copied and pasted? If so you need to give the source or else it is plagiarism.

Is “excellent” the right word to describe DT’s expected FY23 revenue growth rate? It is half that of CRWD, a third of SentinelOne’sand down from 45% FY22.

And of course KKR have a seat on the BOD of Darktrace so he will have intimate knowledge of the company.

So KKR ( having had a holding in DT since 2016, resulting in 13% of shares at IPO and now 10%) currently owns 35% of Marshall Wace who is currently shorting DT.

Very strange indeed!