Darktrace shares rise as EY accounting review 'clears the decks'
(Reuters) -British cyber-security company Darktrace said on Tuesday a review by auditing firm EY showed "a number of areas" where its systems, processes or controls could be improved, but added that it would not impact its previous financial statements.
Shares in the company, which listed in London in 2021, surged 23% by 0733 GMT after the statement addressed questions over its accounting.
"The EY report has cast a shadow of uncertainty over the shares, but we think this statement clears the decks in all respects," analysts at Jefferies wrote in a note.
Darktrace commissioned a third-party review in February of its finances by EY after a short-seller questioned its results.
The company's financial processes were criticised by New York-based Quintessential Capital Management in a 70-page report on Jan. 31, which said it was "deeply skeptical" about the validity of Darktrace's financial statements.
The British company said the EY report does not change the management and board's belief that those financial statements fairly represent Darktrace's financial position and results.
"For example, as part of its work around channel processes and controls, EY reviewed a risk weighted sample of new channel contracts which identified a small number of errors and inconsistencies," Darktrace said.
"We have developments already underway, on our roadmap or under consideration across relevant areas of the business, including those covered in EY's review," Chief Financial Officer Cathy Graham said.
In a separate statement, the company forecast annual recurring revenue growth of 21%-23% for 2024, saying growth would be weighted towards the second half of the new financial year.
Darktrace, which expects revenue for the year-ending June 30 of at least 544.3 million pounds ($712.71 million), up about 31%, is scheduled to report annual results on Sept. 6.
($1 = 0.7637 pounds)
(Reporting by Yadarisa Shabong in Bengaluru; Editing by Janane Venkatraman, Dhanya Ann Thoppil and Mike Harrison)
