Darktrace (DARK Stock) Share Price Drops Over 25% After Talks With Thoma Bravo End

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In August, Darktrace’s share price jumped sharply following reports that it was in talks with private equity fund Thoma Bravo, although no numbers were attributed to the talks.

This morning it was confirmed that those talks had ended with no prospect of an offer in the near future, although the option was left open for this to be reconsidered after 6 months.

With shares already well below their post-IPO peaks of last year, there is a significant gap among investors on whether the company can live up to expectations.

This means today’s full year results will likely be lost in the noise of this morning’s announcement that Thoma Bravo will not be bidding for the company.

For the London market, the news will be a mixed blessing as it means we can maintain a tech success story, but on the other hand, shares have fallen sharply as debate continues over its business model.

On the one hand, he was presented as an award-winning pioneer in the field of cybersecurity, a sector more important than ever in these difficult times and the Russian invasion of Ukraine.

On the other hand, there are questions about his ties to Autonomy owner Mike Lynch, with some investors questioning the depth of those ties. There have also been questions about the amount of money the company spends on R&D, which they say is too low for such an important industry.

Full-year revenue was $415.5 million, up 45.7% from last year’s restated $285.1 million, and slightly below expectations. That shortfall appears to be reduced to $3.8 million in revenue that was reported in that fiscal year and reallocated to 2021 results.

Darktrace said the increase in revenue was primarily due to subscription contracts averaging approximately 33 months in length, which helped increase remaining performance obligations (RPOs) for the next three years to $942 million.

Darktrace then reiterated its previous guidance set in July that it expects to see its recurring revenue increase between 31% and 34% for the coming fiscal year.

That’s down from a 42.6% rise this year that took the sum to $514.4 million. The company posted an operating profit of $7.6 million, compared to a loss of $34.7 million. After taxes and other expenses, that number fell to a net profit of $1.5 million from a loss of $145.8 million.

This is despite a considerable increase in operating costs which reached $358.2 million, with sales and marketing accounting for $232.8 million of that total.

The number of customers increased by 32.1% to 7,437 from 5,629.

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