Darktrace PLC (LSE:DARK) shares fell to 20% below their float price in January after cutting revenue guidance and investors will be hoping that at its interim the company can reassure on the quality of its finances and send the rollercoaster ride on another upswing.
Since its April 2021 initial public offer at 250p, which had been much reduced after shade cast by early tumbles for Deliveroo following its flotation earlier that year, the AI-powered cybersecurity group quickly began a storming run that took it close to 950p by the autumn of that year, before dropping back last year and attracting potential suitor Thoma Bravo into talks.
With the approach having melted away new troubles have weighed, with the price returning to its IPO level as management cut full-year revenue growth guidance to 29.5-31%, from its previous 31% to 34%, with first-half revenue expected to come in at US$258mln while the number of customers has risen by 741 since the end of the last fiscal year to 8,178.
Then a short-selling campaign from New York-based hedge fund Quintessential Capital Markets, which released a damning report accusing Darktrace of overstating sales, margins, and growth rates, sent the shares momentarily below 200p at the end of that troublesome month.
According to QCM, Darktrace “appears to be profoundly linked to Autonomy through common leadership, key investors, offices and… alleged business practices” such as “channel stuffing” whereby revenues are inflated immediately prior to earnings calls, and “fabricated sales”.
Darktrace refuted the allegations, with chief executive Poppy Gustafsson saying she wanted to "push back in the strongest terms on any suggestions that this is a business that is not being run with the greatest integrity", and has since also appointed accountant Ernst & Young to review its financial controls and processes.