11th Jan 2024 11:01
(Alliance News) - Darktrace PLC eased some investor worry on Thursday, as a key measure of new business fell at a slower pace, suggesting the cybersecurity firm has reached an inflection point.
The stock shot up 9.2% to 366.52 pence each in London on Thursday morning, among the best FTSE 250-listed performers.
Darkttrace said net constant currency annualised recurring revenue fell 11% on-year in the first half to December 31. In the second quarter alone, it declined 5.3%.
The pace of decline slowed markedly from the 22% slide suffered in the first quarter.
"Importantly, these show an inflection in net ARR added, setting Darktrace up for accelerating momentum in 2H24," investment bank Jefferies said, describing net annualised recurring as the "best measure of new business momentum".
"Significantly, this reverses a progressive slowdown in recent quarters, and following significant investments internally it suggests we are now at a positive inflection point."
The Cambridge, England-headquartered company said it expects to report total revenue of USD329.6 million for the first half of financial 2024, indicating growth of 27%. In the first half of financial 2023, the firm posted revenue of USD259.3 million.
Darktrace anticipates reporting an adjusted earnings before interest, tax, depreciation and amortisation margin above the top end of its previous 17% to 19% guidance range for all of financial 2024.
Looking to the full year, Darktrace said it now expects revenue growth between 23% and 24.5%, increased from its previous guidance of between 22% and 23.5%, which it said reflects its continued strong conversion of annualised recurring revenue to revenue.
Darktrace also increased its expectation for adjusted Ebitda margin to a range of 18% to 20%.
German bank Berenberg said "momentum is back" for Darktrace. It said Darktrace trades at a "70% discount" to a group of US peers, despite "expected sales growth marginally above the peer group average".
"In our view, there is clear opportunity for upward re-rating," Berenberg added.
Both Jefferies and Berenberg rate Darktrace at 'buy', with price targets to 550.00p and 600.00p, respectively.
Darktrace Chief Financial Officer Cathy Graham said: "Following the roll-out of significant go-to-market changes that impacted performance in our first quarter, we were very pleased to see the resulting benefits play out in our strong second quarter financial performance. Today's results, along with continued acceleration in top and mid-funnel prospect engagement across our key partner and large strategic customer segments, support our belief that we are seeing a return to positive and sustainable growth and reinforces our view of first half stabilisation and second half re-acceleration."
By Eric Cunha, Alliance News news editor
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