British cyber-security firm Darktrace on Thursday raised its forecasts for full-year revenue and margins on strong demand for its services, reflecting growing threats from digital attacks amid geopolitical tensions.
The company’s shares were up 12% to 396 pence ($5.04), a five-month high, after its positive outlook and after half-year results beat forecasts.
Darktrace said it expected revenue for the 12 months to the end of June to increase by between 23.5% and 25%, up from a range of 23% and 24.5%. It forecast an adjusted core earnings margin of at least 21%, higher than the 18% to 20% previously guided.
The company’s margin for the six months to the end of December came in at 25.6%, beating a consensus forecast.
Cyber attacks are a rising threat to all businesses, given tensions with Russia and China, and Darktrace said generative AI tools were making it easier for hostile actors to carry out phishing attacks.
“We are preparing to roll out enhanced market and product positioning to better demonstrate how our unique AI can help organisations to address novel threats across their entire technology footprint,” Chief Executive Poppy Gustafsson said.
Darktrace’s U.S.-based competitor CrowdStrike also reported upbeat forecasts on Wednesday, boosting its shares.
“We believe that the demand backdrop remains positive, driven by the incidence of attacks and regulation,” Liberum analysts said on the outlook for Darktrace.
Analysts say the British company’s stock has been undervalued compared to U.S. peers, partly due to concern in recent years over shareholder and founding investor Mike Lynch, who faces fraud charges in the U.S. over his former company Autonomy.
Lynch has denied the charges.
The company also attributed its upgraded forecasts to controls on discretionary spending and a change last year in the timing of its sales commission payments, which it said would help it to attract better talent to grow sales.
(Reporting by Sarah Young, Editing by Paul Sandle and Sharon Singleton)
