Darktrace suffered another blow today after the New York-based investment business which earlier produced a short-seller report into the cybersecurity firm said its results failed to address its concerns.
In a Tweet, Quintessential Capital Management, which previously expressed its “fear that sales, margins, and growth rates may be overstated” today said: “Darktrace’s recent financial results are consistent with our thesis: growth, new customers, cash generation and profits are all shrinking fast.
“The company has failed to provide a satisfactory explanation for most of the issues we raised.”
Darktrace has denied the reports and commissioned auditors EY to investigate the claims. EY were unable to complete the investigation in time for the company’s full-year results, but Darktrace promised to release the accountancy firm’s report as soon as its investigation was concluded.
The firm posted revenues of $259 million for the six months to end December, while profits slumped 86% to $581,000. Darktrace also signalled an unexpected dip in cash flow, which it said was because of taxes paid on share-based bonuses to execs. Awards of over 7 million shares worth a combined £20 million were made during the period.
Darktrace has also sounded the alarm on the power of ChatGPT to scam and attack individuals online as the firm reported a slowdown in new customers.
The cybersecurity business said ChatGPT “ may have helped increase the sophistication of phishing emails, enabling adversaries to create more targeted, personalised, and ultimately, successful attacks.”
“Darktrace has found that while the number of email attacks across its own customer base remained steady since ChatGPT’s release, those that rely on tricking victims into clicking malicious links have declined, while linguistic complexity, including text volume, punctuation, and sentence length among others, have increased, the firm said.
Darktrace shares initially dropped before recovering later in the morning. The stock is down 44% over the past year.