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Darktrace, one of the UK’s largest cybersecurity firms, was founded in 2013 by a group of former intelligence experts and mathematicians.
Omar Marquis | SOPA Pictures | LightRocket via Getty Images
LONDON — Shares of British cybersecurity firm Darktrace rose 26% on Tuesday after the company said audit firm EY had completed a review of the company’s financial operations and controls.
The company was the target of a short-selling campaign in February, with New York-based asset management firm Quintessential Capital Management accusing it of engaging in potentially fraudulent practices to artificially inflate its sales.
But in a press release Tuesday, Darktrace said EY has completed its review of the company’s contracts and internal financial processes, finding “a small number of errors and inconsistencies” with some of the contracts — but nothing that would be “material” to it. Financial Statements.
Darktrace shares temporarily closed up 26% at £3.72.
Darktrace said it has benefited from the growing interest in AI thanks to ChatGPT and tools like it.
Darktrace said it expects annual recurring revenue of at least $626.5 million for the full fiscal year ending June 30, up at least 29% year-over-year. The company also said it acquired 396 new customers in the June quarter, and 1,362 during the fiscal year, bringing its total customer base to 8,799.
The cybersecurity company said its sales got a boost from customer interest in generative AI. The company uses AI itself to try to combat cyber threats, but it also said companies are turning to its tools to detect and prevent cyberattacks deployed via generative AI systems.
Darktrace said EY has conducted a “thorough review” of its policies, processes and controls. The company “identified a number of areas already known to Darktrace where systems, processes, or controls could be improved,” and when evaluating channel operations, “reviewed a risk-weighted sample of new channel contracts that identified a small number of errors and inconsistencies.”
“Management or the board of directors considers these matters to be material to the financial statements, and improvements to controls in this area are already underway,” Darktrace said.
EY declined to comment when asked by CNBC about its findings.
Darktrace said copies of the EY report are voluntarily shared with the Financial Conduct Authority and the Financial Reporting Council.
Quintessential said the findings “only validate our initial concerns.”
“We call on Darktrace to fully disclose the details of EY’s review and to facilitate an open dialogue about its findings,” Quintessential said in a statement posted to Twitter.
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