Darktrace

Darktrace is a British cyber security company, established in 2013 and headquartered in Cambridge, England. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

History

Darktrace was founded in 2013 in Cambridge, where the Darktrace AI Research Centre is based, with the company's second R&D centre located in The Hague, Netherlands. It was founded by mathematicians and cyber defense experts at Invoke Capital, a company owned by Mike Lynch. Lynch was co-founder of Autonomy, sold to Hewlett-Packard in 2011 in a transaction leading to accusations of fraud and to a legal fight over extraditing him to the United States. In its stock market listing registration documents Darktrace rated the potential liability relating to the fallout of the action against Lynch as "low risk".

Many of Darktrace's management personnel, including chief executive Poppy Gustafsson, chief technology officer Jack Stockdale, and chief strategy and artificial intelligence officer Nicole Eagan, were recruited from Autonomy.

In April 2021, Darktrace listed on the London Stock Exchange with a market value of circa £2.5 billion. The market value reached a peak of £7 billion within months, with a share value peak of £10, but later fluctuated. On 6 March 2022, Darktrace opened with a share value of £6.46, with a market cap of £3.43 billion.

There has been criticism about the company's technology and its founding investor by short-seller Matthew Earl, head of the Shadowfall fund, and analysts Peel Hunt. In January 2022, Earl questioned Darktrace's model and culture, warning clients that the company's model was "watery-thin", based more on sales style than business substance.

In March 2022, Darktrace acquired Cybersprint, a Dutch attack surface management company, for €47.5 million.

Short seller attack

On 31 January 2023, Quintessential Capital Management, a New York-based hedge fund and short seller, published a detailed report alleged potential accounting errors at Darktrace, making claims about potential irregularities in contracts with resellers and customers, predominantly dating from before Darktrace’s public listing in 2021. Darktrace has disputed this. Quintessential pointed towards connections between Darktrace and HP Autonomy, the UK software company with which Darktrace shares many ties. Autonomy was accused of irregular accounting practices relating to its $11.7bn sale to Hewlett-Packard in 2011.

The company’s share price fell 12 per cent when Quintessential first disclosed its short position on 30 January 2023. The shares then fell a further 8 per cent the following day, after the report was published, down to 200p.

On 18 July 2023, EY concluded its review into the company’s contracts and internal financial processes. EY found a “small number of errors and inconsistencies” with some of the contracts but nothing that would be “material” to Darktrace's financial statements.

Take-over

In April 2024, the private equity business, Thoma Bravo, offered to acquire the company for $5.3 billion.