Darktrace says it is run with integrity after critical report

Darktrace says it is run with integrity after critical report
By Reuters
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LONDON – Darktrace Plc said on Wednesday it was run with “the greatest integrity” after a short-seller’s report questioned the British cybersecurity company’s financial statements.

Chief Executive Poppy Gustafsson said it was “importantto 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”.

New York-based Quintessential Capital Management said it was “deeply skeptical about the validity of Darktrace’s financial statements,” in a 70-page report published on Tuesday.

Shares in Darktrace, which listed in April 2021 at 250 pence a share, fell to a new low of 198 pence after the report was published. The company has lost more than 5 billion pounds in market value since its stock hit a record high in September 2021.

The shares were up 5% at 221 pence after Darktrace’s statement and its announcement of a 75 million-pound buyback earlier on Wednesday.

Gustafsson said Darktrace’s board and management had focused on ensuring the robustness of its financial systems and processes before it listed, and the company would continue to answer any legitimate questions that may arise.

Darktrace was backed by Mike Lynch, the tech entrepreneur who was ruled by a British judge to have masterminded an elaborate fraud when he sold his company Autonomy in 2011. Lynch had denied the charges.

Lynch and his wife remain investors, according to Refinitiv data, but he plays no part in running it and is not on its board, Darktrace has said.

Darktrace said it would start a buyback plan of up to 35 million shares worth 75 million pounds ($92.36 million).

The buyback, which based on Refinitiv data represents nearly 13% of Darktrace’s shares in free float, would be completed by Oct. 31, the group said.

Berenberg analysts said in a note on Wednesday that many of the Quintessential report’s conclusions were “based on issues taken out of context and at minimum hard to validate”.

Earlier this month, Darktrace had cut its annual revenue forecast after prospective customers turned more reluctant to run product trials due to the worsening economic environment.

($1 = 0.8120 pounds)

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