Cybersecurity group Darktrace PLC (LSE:DARK) netted US$27mln (£21.6mln) in annual recurring revenue (ARR) on a constant currency basis in the third quarter, representing a year-on-year decline of 6.3% under a “difficult environment for new customer acquisitions”, per today’s trading update.
For the first nine months to 31 March 2023, net ARR added was $98.7mln, an increase of 3.2% above the comparable period in 2022.
Total revenues for the third quarter were US$139.3mln, reflecting year-on-year growth of 28.1%, while gross margins remained “in the range of recent reported periods” and adjusted EBITDA margins were “at or above the top end” of its previously communicated 16% to 18.5% guidance range.
Net new customers totalled 225, fewer than in the same period in 2022, though total customers on the books remain 22% higher year on year at 8,403.
Darktrace noted a slight increase in churn rates of 6.9%, 0.7 percentage points higher year on year.
The group warned of inevitable headwinds impacting full-year projections, so the group is adjusting its full-year ARR guidance to the lower end of its previous guidance range, though revenue expectations remain at the top end.
Net ARR is expected to grow around 29% to US$140.6mln with total revenues ticking 31% higher and EBITDA margins at or around 19%.
Chief financial officer Cathy Graham said: "I am pleased that we have been able to maintain high ARR and revenue growth in the period, as well as preserving profitability and cash generation.
“Clearly, however, the current macroeconomic environment continues to pose challenges to winning new customers, as requirements to hold or cut spend have made prospects more reluctant to run product trials.
“Despite macro-driven, and most likely temporary, slower growth expectations, it is a testament to our resilient business model that we can drive an increase in our profitability expectations.”