The Darktrace share price is up over 22.5% over the past 5 days despite a drop of 1.8% so far today thanks to booming demand for cybersecurity. A flood of new business has seen the company, founded in 2013 through a collaboration with British intelligence agencies and Invoke Capital, a company owned by the technology entrepreneur Mike Lynch, raise its revenue and margin guidance for the second time in three months.
The company’s heightened optimism in its own future performance has been transferred to investors who have been snapping up shares in the company this week. The biggest leap in Darktrace’s valuation came yesterday when after an announcement that the company now expects annual recurring revenue growth of between 38.5% and 40% this year from 37% to 38.5%. The share price gained 11% yesterday.
The company, which uses AI to detect attacks and vulnerabilities inside IT networks, listed through an IPO last April at a share price of 250p. The current share price is 501.5p.
The new forward guidance, said Darktrace, implies annual growth in constant currency recurring revenue of between 24% and 29% for this year compared to the previous prediction for between 19% and 24%. The previous guidance for revenue growth of between 42% and 44% has also been revised up to between 44.5% and 46.5%, helped along by less of an impact from foreign exchange rates than expected.
Darktrace’s adjusted earnings margin before interest, tax, and other charges is also now expected to come in at 10%-12% from earlier guidance for between 3% and 6%. Pre-tax earnings over the second half of 2021more than doubled to $46.7 million thanks to a 52.3% increase in revenue to $192.6 million. All the company’s geographies and customer size categories enjoyed growth and the latest guidance takes into account the recent acquisition of Cybersprint.
Oyvind Bjerke, an analyst at the investment bank and broker Peel Hunt, commented for The Times:
“The main positive for us is the improvement in the net retention rate and annual recurring revenue per customer. A key concern among investors was the potential deterioration in average annual recurring revenue … so it was positive to see this grow.”
