Darktrace admits to £3.25m accounting error

The British-American information technology company that specialises in cyber-defence, Darktrace, reportedly failed to reveal that $3.8m (£3.25m) of its revenue should have been booked in 2021, instead of in its H1 2022 results. 

Despite the disclosure, the group’s full-year results showed an increase in sales as Darktrace reported its sales soared by almost 46% to $415m (£355.2m), which turned last year’s $144m (£123.2m) pre-tax loss into a $5m (£4.2m) profit.  

In addition, its shares slumped by nearly 35% after the US private equity firm, Thoma Bravo, backed out from a potential takeover of the business as the founder, Mike Lynch, is fighting extradition to the US on fraud charges.

The Guardian reported that earlier this year the high court also ruled that Lynch had “duped” HP into overpaying for Autonomy, resulting in the US buyer taking a $9bn (£7.7bn) writedown on the value of its acquisition.

The case focused on accounting trickery allegedly used by Autonomy staff to paint a false picture of how well its software was selling, including bringing forward revenues that should not yet have been booked.

Nevertheless, Darktrace’s board “supports” management’s continuous enhancements of its systems, processes and controls as it ensures its ability to grow and scale effectively.

Poppy Gustafsson, CEO of Darktrace, said: “We are one of the world’s most innovative cyber security companies, with a mission of freeing the world of cyber disruption. Since listing on the public markets, we’ve turbo-charged our growth by adding ground-breaking products to our platform, including our new Pevent offerings. 

“We have a proven business model, which is generating cash. Today’s results are yet another example of our strong performance. Being listed on the London Stock Exchange is exactly where we want to be right now.”

Gordon Hurst, chair of Darktrace, said: “Having delivered another strong set of full year results, invested further in its R&D team and continued to grow our customer base, Darktrace is well-positioned to continue building on a successful track record in an expanding market for our products. 

“As we continue to accelerate the deployment of our technology worldwide, we are excited about our future both in the short and longer term.”