1st Feb 2023 11:36
(Alliance News) - Darktrace PLC on Wednesday announced a share buyback, a day after a short-seller attacked Darktrace's management and operations.
Noting surplus cash, Darktrace, Cambridge, England-based cybersecurity business said it will buy back up to 35 million shares, starting on Wednesday. It aims to complete the buyback by October 31 and will spend up to GBP75 million.
Darktrace shares were up 4.9% to 220.80 pence each in London on Wednesday morning. That would make 35 million shares worth GBP77.3 million.
Darktrace Chair Gordon Hurst said: "The board believes that this share buyback programme is the best use of Darktrace's surplus cash in current market conditions. Notwithstanding the challenging macro-economic climate, we remain confident of Darktrace's business model. Its industry-leading technology developed by its talented research & development team is producing exciting new products and it continues to grow its loyal global customer base."
The company explained that its current cash position of USD368 million has grown by more than USD100 million since its initial public offering in May 2021, which has helped it "to sufficiently invest in its product pipeline, go-to-market strategy, business foundations and targeted mergers & acquisitions. Darktrace will continue to prioritise investment in its business and the maintenance of appropriate cash reserves."
On Tuesday, Quintessential Capital Management published a 69-page long report, criticising Darktrace's management and operations and issuing warnings "about the gravity of the situation".
Quintessential said Darktrace's operating practice included "reciprocal transactions: a form of round-tripping with a company selling an unused product or service to a reseller, agreeing to buy back an item of similar same price."
Quintessential added: "Our opinion is based primarily on numerous transactions we detected during the period leading to DT's IPO seemingly involving simulated or anticipated sales to phantom end-users through a network of willing resellers. Darktrace seems to have repeatedly used marketing activities to channel funds back into its partners as payment for apparently fictitious purchases. These alleged channel stuffing and round-tripping activities seem to have even involved shell companies in offshore jurisdictions manned by individuals with ties to organized crime, money-laundering, and fraud."
Darktrace's initial public offering was back in April of 2021, debuting at 250p.
By Tom Budszus, Alliance News reporter
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