Darktrace claims rise in ‘hacktivism’ and AI will boost future sales, despite 92 per cent fall in profits

Troubled cybersecurity firm Darktrace reported a plunge in profits in the first half of its financial year today amid a slowdown in new business and a rise in employer tax charges.

In a trading update on the six months to the end of December, the firm said operating profit had fallen 91.6 per cent to $577,000 compared to the same period in 2021.

Bosses blamed the fall on “elevated share-based payment and associated employer tax charges” relating to block of share grants it made when it floated in 2021, but claimed the fluctuation would settle in the second half of the year.

Revenues rose 35.8 per cent however, Darktrace said, despite a “noticeable second quarter slowdown” in new business. The number of customers on its books rose 24.4 per cent to 8,178 in the six months.

The results come after a tricky period for the feted cybersecurity outfit, whose shares have tumbled below their IPO price this year amid questions over its financial processes and controls.

Darktrace announced at the end of last month that it would call in EY to inspect its financial processes and controls in a bid to settle the nerves of investors.

In a statement today, Darktrace chief Poppy Gustaffson said the business “continues to deliver against a challenging macro-economic backdrop”, citing the strong year-on-year revenue growth. 

“Although there has been a slowdown in new customer wins, I am pleased that our investments in retaining customers and increasing the value of both new and existing contracts are paying off,” she said. 

“Our strong cash position and ongoing cash generation means that we can continue to invest in expanding our product pipeline and evolving our go-to-market strategies. 

“Making these investments now should not only allow us to successfully navigate this challenging economic period, but set us up for success when economic tides eventually begin to turn.”

Gustaffson said the cybersecurity landscape was now shifting and cited the rise of ChatGPT and new “hacktivist” threats as a potential driver of demand in the period ahead.

“We’ve built our whole product set around the notion of defending against threats never seen before through our AI’s bespoke understanding of each individual organisation,” she said. “So, from increases in Ransomware-as-a-Service to the rise of generative AI, Darktrace ensures that our customers are resilient not only in the face of today’s threats, but also the emerging threats of tomorrow.”

Bosses doubled down on their revenue, and earnings before deductibles targets for the year.