Darktrace on a high amid escalating cybersecurity concerns

Amid escalating cybercrime threats, UK cybersecurity company Darktrace has reported a robust quarter, with revenues up more than 25 percent, thanks to increased demand from concerned businesses.

In the three months ended March, Darktrace witnessed a significant 26.5 percent increase in revenue, rising to $176.1 million, compared to $139.2 million in the same period last year. This strong increase has led the company to revise its revenue growth forecast for the year to 25.5 percent, marking the third upward adjustment this year alone.

Darktrace’s share price responded positively to the good results, rising 6.3 percent to close at 462p. The Cambridge-based company, founded in 2013 with the backing of technology mogul Mike Lynch, uses artificial intelligence and machine learning to identify cyber threats within corporate computer systems.

Cathy Graham, the CFO of Darktrace, highlighted the evolving tactics of cybercriminals, who are exploiting generative AI and automation to improve the speed and sophistication of their attacks. Despite these challenges, Darktrace remains optimistic about the future and anticipates an increase in revenue from new customers as economic conditions stabilize.

With an annual growth of 11.9 percent in the number of customers, Darktrace added 170 new customers in the past quarter and almost 1,000 in the past year. The company also upgraded its core profit margin guidance for 2024, showing confidence in its ability to deliver sustainable growth.

Analysts at Jefferies rate Darktrace positively, citing its strong position in the cybersecurity industry and potential for rapid growth. However, not all cybersecurity companies share the same optimistic outlook as spending fatigue becomes a concern for some market players.

Darktrace’s journey has not been without challenges and has faced criticism from short sellers and controversy surrounding its ties to Lynch, who is currently embroiled in legal proceedings in the United States. However, Darktrace recently severed formal ties with Lynch, marking a major milestone on the path to independence and increasing investor confidence.