By Jess Jones
Shares in Darktrace shot up over 20 per cent this morning after it revealed that a review of its accounts found a “number of areas” for improvement but were not “material” to its financial reporting.
The London-listed cybersecurity company hired EY in February to review its books after a short seller questioned its accounts.
New York-based hedge fund, Quintessential Capital Management, took a short position on the firm’s shares after published a 70-page report raising concerns that Darktrace’s “sales, margins, and growth rates may be overstated” and said the company’s accounts contained “serious accounting red flags”.
But EY’s investigation appears to have appeased investors concerns.
Darktrace’s chairman Gordon Hurst said the review “further reinforced the board’s confidence that management has set a tone and culture consistent with good governance.”
Cathy Graham, Darktrace’s chief of finance said: “We have a culture of continuous improvement at Darktrace.”
“We have developments already underway, on our roadmap or under consideration across relevant areas of the business, including those covered in EY’s review. EY provided some valuable recommendations for how we could implement these planned improvements as we move through this journey,” she added.
Reacting to the review, Danni Hewson, head of financial analysis at AJ Bell, said the findings have “essentially proved that the cybersecurity expert doesn’t have any skeletons in the closet.”
In their final quarter update, also released this morning, Darktrace reported a 31 per cent year on year growth in revenues and forecast an annual revenue increase of 21 – 23 per cent for 2024.
