Darktrace hires EY to review finances after short-seller attack

Darktrace, a British cyber security group, has appointed EY to conduct an independent review of its finances after a US-based short-seller accused it of accounting irregularities in a report last month. 

New York-based short-seller Quintessential Capital Management (QCM) had said it was “deeply skeptical about the validity of Darktrace’s financial statements and fear that sales, margins, and growth rates may be overstated and close to a sharp correction”.

In response to the report, Darktrace said it had commissioned EY to provide an additional independent third-party review of the group’s key financial processes and controls.

The Big Four firm will report to the chair of the Darktrace Audit and Risk committee, Paul Harrison.

Darktrace said its board and management were “confident that Darktrace’s independently audited public company financial statements fairly represent Darktrace’s financial position and results”. 

Gordon Hurst, chair of Darktrace, said: “The board believes fully in the robustness of Darktrace’s financial processes and controls. As a sign of that confidence, we have commissioned this independent third-party review by EY. We look forward to the outcome of this review.” 

Darktrace will report the key findings of the EY review once it is complete.

Earlier this month, in response to QCM’s report, CEO Poppy Gustafsson said: “We embrace the scrutiny of the public markets. However, it is also important to refute any unfounded inferences about the listed business we are today and push back in the strongest terms on any suggestions that this is a business that is not being run with the greatest integrity. 

“The purpose of our statement today is to explain what we’ve done to establish and enforce robust processes in our business. I stand by my team and the business I represent. We are a business that is growing fast and generating cash. Our technology is world-class, created here in the UK by some of the brightest minds, and we are solving one of society’s most pressing challenges – the terrible costs of cyber disruption. We will continue to address any legitimate questions that may arise.”