Cyber security firm Darktrace has published its FY 2023 financial results, recording 31% year-on-year growth in revenue against a backdrop of now-quashed allegations of financial wrongdoing.
The firm expects revenue of at least $544.3 million for FY 2023 and reported Annualised Recurring Revenue (ARR) of at least $626.5 million as of 30 June, a 29.2% year-on-year increase.
It attributed its strong performance to its subscription model and product innovation, having launched a number of products this year such as its Prevent Attack Surface Management, which uses AI to track organizational assets.
At the same time as its financial report, it was announced that Ernst and Young (EY) had finished its independent review of Darktrace’s key financial processes and controls.
The review found areas that needed improvement, such as new channel contracts which contained inconsistencies, but the Darktrace board and management considered none of the discoveries to materially impact its financial statements.
"We have a culture of continuous improvement at Darktrace,” said Cathy Graham, CFO at Darktrace.
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“As you would expect and as we said in our FY22 Annual Report, we have an ongoing program to advance our systems, processes, and controls. 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."
Quintessential Capital Management claimed that Darktrace had supplied unreliable financial reports, and compared it to software startup Autonomy.
HP won a multi-billion fraud case against Autonomy’s CEO Mike Lynch in 2022, after the firm alleged it had been given an inflated value prior to acquiring Autonomy for $11 billion in 2011.
In February 2023, Darktrace called in EY auditors to disprove QCM’s claims that it had ‘stuffed’ its revenue figures, and strongly denied the accusations.
Looking to FY 2024, the company anticipates a slow start to the financial year with a rise in sales expected towards H2 2024 in line with recovering consumer confidence.
It has projected 45% of net ARR to be added in H1 2024, with the rest in H2, which could negatively impact the overall take of contracts as the majority will generate revenue for only a fraction of the year.
In all, Darktrace has predicted revenue growth of 22-23.5% for the forthcoming year driven by the ever-growing demand for cyber defenses in a tumultuous threat landscape in which AI plays an increasing role.
"The release of ChatGPT late last year created a significant shift impacting consumers and, perhaps more importantly, enterprises,” said Poppy Gustafsson, CEO at Darktrace.
“The risks of IP loss, data protection breaches, and evergreen novel attacks at scale are now much higher. AI is increasingly fighting against AI so building a bigger database of known attack data is not enough.
“Deploying Darktrace's enterprise cyber-AI allows organizations to respond at machine speed to attacks that have never been seen before, making our technology core to cyber-defense in this evolving ChatGPT era.”
