Darktrace cyber-security customer base surges 24% in first half

Darktrace, a cyber-security company in Britain, has ended H1 fiscal 2023 with a customer base of 8,178 customers, registering growth of 24.4 percent. Darktrace’s customer base has grown by 741, or 10 percent, since 30th June 2022.
VC funding for techDarktrace has maintained stability in its customer and ARR bases during the first half of the financial year that ended on 31 December 2022 — leveraging the multi-year investments made in its customer success function.

Gross ARR churn and net ARR retention rates at 31st December 2022 expected to be not more than 6.6 percent (6.6 percent at 30th June 2022), and at least 105.0 percent (105.3 percent at 30th June 2022), respectively.

Darktrace expects revenue for 1H FY 2023 of at least $258.0 million, reflecting growth of at least 35.2 percent.

Darktrace cut its full-year revenue forecast on Wednesday after prospective customers turned more reluctant to run product trials due to the worsening economic environment.

The company, which listed in April 2021, said it now expected its constant currency annual recurring revenue (ARR) to increase by between 29.0 percent and 31.5 percent in the year to end-June, down from its previous forecast of 31 percent to 34 percent.

It said ARR in the six months to end-December had increased by at least 36.5 percent to a minimum of $556.3 million, but there had been a noticeable slowdown in new customer additions recently.

Darktrace Chief Financial Officer Cathy Graham said profitability had been preserved, helped by operating efficiencies that it would maintain in its second half, resulting in an improvement to its full-year core earnings margin forecast.

“Clearly, however, the current macro-economic environment is creating challenges to winning new customers, with prospects more reluctant to run product trials and, in regions with historically higher conversion rates, those rates are starting to decline,” she said in a statement.

She said the slowdown was “very pronounced” in December, one of the strongest months in Darktrace’s annual sales cycle.

“This is largely a new customer win issue and it is more pronounced at the smaller end,” she told Reuters.

Darktrace also expects that gross margin for 1H FY 2023 has remained in the range of recent reported periods and that its 1H FY 2023 adjusted EBITDA margin will be at or above the top end of its previously communicated 15 percent to 18 percent FY 2023 guidance range.