Darktrace results preview: Will its revenue climb 40%?

• Darktrace (LON: DARK) share price falls to 670p on Monday (13 September)
• Its operating loss may narrow to US$10.7 million, analysts estimate
• Needham’s research team sees an improving outlook for growth
• Keen to take a chance on Darktrace shares? Open an account with us to start trading the stock.

Darktrace stock price: what’s the latest?

Shares of Cambridge-headquartered Darktrace, which listed its stock a few months ago, tumbled 8% day-on-day to close at 670 pence on Monday.

Still, they have surged 168% from the initial public offering (IPO) price of 250p.

The cybersecurity artificial intelligence (AI) startup made its London stock-market debut in April, with the shares jumping 32% to 330p in the first day of trading.

As of Monday, four analysts recommended ‘buy’ on DARK shares, one suggested ‘hold’ and another one rated it ‘sell’. Their average 12-month target price stood at 739.60 pence, according to Bloomberg data.

Darktrace uses self-learning AI to detect and respond to threats in businesses’ IT systems at machine speed.

Darktrace results: What are research teams expecting?

On Wednesday (15 September 2021), the company will report its FY2021 results for the fiscal year ended 30 June 2021.

Analysts on average estimated that full-year revenue would come in at US$278 million, according to Bloomberg data. That is a 40% increase from the US$199 million revenue in FY2020 stated in Darktrace’s IPO prospectus.

In July, Darktrace said in a trading update that it expected its FY2021 revenue to grow at least 40% year-on-year to reach US$278 million or more.

Meanwhile, analysts predicted that operating loss for the latest financial year might narrow to US$10.7 million, from the US$24.9 million loss a year ago, Bloomberg data showed.

Darktrace said in July that it ended FY2021 with about 5,600 customers, up 42% year-on-year.

It also increased its expectations for FY2022 from those presented at the time of its IPO. ‘The group is balancing strong sales trends exiting the second half of FY2021, including particularly strong June performance,’ the company said.

What might be in store for Darktrace next year?

Darktrace said it is working on expanding and optimising the structure of its sales force, with the efforts to begin in the first half of FY2022.

These efforts will support the anticipated growth and continued scaling of its business, but may potentially cause ‘temporary sales productivity impacts’, the startup added.

Needham analysts, giving a ‘buy’ rating and a price target of 778p, wrote that Darktrace’s business ‘is strengthening and the selling process is maturing’, with increasing specialisation, superior support, and targeting.

In early 2022, Darktrace is looking to expand into additional areas to address security needs such as automated or continuous penetration-testing and self-healing automation, as well as recovery technologies.

‘We see these as natural logical extensions to the AI (artificial intelligence) capabilities and solid incremental revenue opportunities,’ Needham wrote.

Its analysts see an improving outlook for growth, with Darktrace’s management citing improving productivity, accelerating sales expansion, and soon-to-be-released new products.

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_{*Based on revenue excluding FX (published financial statements, June 2020)}