Darktrace Share Discussion Threads

[one_frankel] 02/2/2023 15:51

Upward pressure building hehe!...The instituitional shorts are in full control here as you'll see in the not so distant future!

[crosswires] 02/2/2023 08:17

Spot on Sally. ☑️

Looks like there’s upward pressure building on the SP, would suspect many PI shorts will have to close before weekend as it starts to get a risky proposition for them. Possibly we see £2.50 by close of play tomorrow.

[longtallsally] 02/2/2023 08:15

Lol there is often smoke without fire, change the record dullard.

How sure are these PI shorters? I’m not convinced they are really, just typical sheep following and now DARK can buy back at similar levels or higher for weeks/months and at the same time constrain the shares the shorts can buy back. Share price will rise

[timmy11] 02/2/2023 08:15

by the way half penny, do they pay you when you copy and paste?

[timmy11] 02/2/2023 08:10

hahahahaha one day you will grow up to be a full penny

[halfpenny] 02/2/2023 08:01

Do you really believe or Trust Dark CEO after such a scathing report?

Interesting day ahead or is it to be a DARK day!!

DARK can TEST 200p Again and can fall below 200 if Auditors delay signing off Dark Audit.

DEAD CAT BOUNCE …. Be careful!! Can fall very quickly.
There is No Smoke without Fire!!

[jubberjim] 02/2/2023 07:31

Now the fun begins

Will be buying more when opportunity presents

Good luck all

[one_frankel] 01/2/2023 16:45

Reiterating the same old guff doesn't make it anymore believable Chairman_Reject but why has it had past shady dealings with corrupt entities and is it still continuing!

...A simple enough question that they continue to fail in answering accordingly!

[timmy11] 01/2/2023 16:34

Date Broker Recommendation Old Target New Target Rating Type
01-Feb-23 Numis Buy - 520.00 Reiteration

[wheeze] 01/2/2023 16:30

Quintessential's attempt to destroy this company seem frankly lazy. Look forward to seeing their shorts burn.

As someone pointed out UK tech companies come across as an easy target but they have taken on more than they can chew.

[one_frankel] 01/2/2023 16:12

A very broad rebuttal but doesn't really explain those all important questions about its relationships with those corrupt entities!

[the chairman elect] 01/2/2023 15:53

Darktrace plc ("Darktrace") (DARK.L), a global leader in cyber security AI, notes the recent Quintessential Capital Management reports and makes the following initial response to the allegations.

Commenting on the reports, Poppy Gustafsson, CEO of Darktrace said:

"We embrace the scrutiny of the public markets. However, it is also important to refute any unfounded inferences about the listed business we are today and push back in the strongest terms on any suggestions that this is a business that is not being run with the greatest integrity. The purpose of our statement today is to explain what we've done to establish and enforce robust processes in our business. I stand by my team and the business I represent.

We are a business that is growing fast and generating cash. Our technology is world-class, created here in the UK by some of the brightest minds, and we are solving one of society's most pressing challenges - the terrible costs of cyber disruption. We will continue to address any legitimate questions that may arise."

Private to public transition

Since joining Darktrace as CFO in February 2020, Cathy Graham and her finance team have led a comprehensive transition from private to public company, which provided the Board and Management with confidence to IPO the business in April 2021 and to continue to support its fast-growth.

As part of that process the Board and Management focused on:

o Ensuring the robustness of financial systems and processes;

o The scalability of that finance infrastructure; and

o The accuracy and consistency of the data required, not only to run the business but to report accurately and with integrity.

Cathy Graham has also hired in-house specialists into key areas such as:

o Tax;

o Audit;

o Compliance;

o FP&A; and

o Technical accounting

All of these people, as well as Darktrace's independent auditors and specialist advisors worked, and continue to work, to help ensure that its systems and processes can support Darktrace as a fast-growing public company.

Partner Channel Controls

The channel is a significant area of risk for every software vendor. Both Darktrace and its independent auditors have reviewed this area very extensively and continue to monitor all partners and channel contracts through the robust processes that were put in place in the run up to the IPO.

Key to Darktrace's channel approach is that its contracts with partners and the partner's contracts with their customers must be "back-to-back". This means that they have the same start and end dates and that all other material contract terms must also be aligned. Processes are in place to validate that all contracts signed meet these standards and Darktrace only recognises agreements that meet its criteria. Darktrace requires visibility into the signed end user contract and will not just rely on partner assurances.

Also, as part of its IPO preparations, Darktrace carefully reviewed its contract portfolio as well as the control procedures surrounding the channel. Where processes could be strengthened, Darktrace has done so, including in partner onboarding processes, contract booking and post-contract auditing.

Contracts that did not meet Darktrace's policies were not included in Darktrace's financial statements either in the IPO prospectus (which included not only Darktrace's 2020 statements but also the 2019 and 2018 comparative periods) or Darktrace's Annual Reports since the IPO.

There were a small number of contracts that were not validated under the reviews done in the run up to the IPO and these have not been included in any of our public company financial statements.

Appliance Sales

In the vast majority of contracts, Darktrace does not sell appliances to customers.

Darktrace deploys its technology on an appliance that it owns or virtually as a cloud deployment, based on the customer's needs, with deployment fees related to appliance-based deployments being broadly equivalent to hosting fees for cloud-based deployments.

As part of adopting IFRS 15, Darktrace conducted an extensive analysis on this area and because these appliances are used for different purposes, across multiple customers and prospects, over their useful lives, Darktrace holds hardware appliances as assets and depreciates them over a five-year life. Appliances are often used for different deployments after a full data wipe.

There are exceptions to this, for example, where a customer needs to own all the infrastructure in their data centre, usually because they're a government or regulated entity, and in those circumstance Darktrace will sell the customer the hardware appliance.

Where Darktrace sells a hardware appliance, Darktrace recognises all of the revenue and the costs up front on the appliance portion of the contract only, in line with the required accounting treatment.

Over 99.5% of Darktrace's revenue is subscription based, namely a single unit of accounting, meaning there are a limited number of customers who buy hardware appliances from Darktrace.

There is full disclosure of our accounting policies with respect to appliances within Darktrace's financial statements.

Partner Marketing Events

Organisations that transact with the channel will typically co-host marketing events with their partners. Partner marketing events are a normal course of business for almost all software businesses and Darktrace is no different

This has been, and remains, a very small part of Darktrace's marketing and the costs of them over the last five years has consistently been substantially below 0.5% of Darktrace's revenue.

A preliminary review of Darktrace's events in the regions highlighted in the original QCM report has not shown any evidence of unusual practises.

Contract Cancellations

Darktrace now avoids opt-outs or other cancellation rights in its contracts, wherever possible. However, there are some contracts, mainly historical, that do still have these terms.

For any contracts that have opt-outs, none of the contract value beyond the opt out date is in Darktrace's backlog; therefore the $1bn+ recurring performance obligations (RPO) are only fully contracted, non-cancellable revenue.

As Darktrace recognises revenue on a straight-line basis from the first day of the contract to the last, for any contract that does have an opt out, Darktrace recognises only the pro rata portion of the revenue related to the service period actually provided.

To reiterate, Darktrace only recognises revenue on fully contracted transactions and only the portion of a transaction that is fully committed is included within backlog.

One year Gross Constant Currency Annual Recurring Revenue Churn

Darktrace reports gross constant currency ARR churn on a one-year basis, in line with the vast majority of publicly listed software companies, in order to make it easier for investors to compare Darktrace to its peers.

Non-Current Deferred Revenue

Non-current deferred revenue is future committed revenue invoiced for periods more than 12 months before revenue is scheduled to be recognised.

The majority of Darktrace's customers are invoiced annually in advance and most longer invoices are one-off situations to align future invoicing dates; it is rare for customers to be invoiced and pay for substantially longer periods up front.

Rarely, customers will pay full contract values in advance but because this is infrequent, non-current deferred revenue balances will decline as these contracts run down unless there is another unusual, large, in-advance payment.

[longtallsally] 01/2/2023 15:50

How come was Mr. Corrado Broli hired at Darktrace with the same position he held at Autonomy despite the allegations that emerged during the Autonomy lawsuit?


Sounds like chat bot put this together.

Probably did 😂

[one_frankel] 01/2/2023 15:29

Ohh my, that requires quite a thorough rebuttal from Darktrace, best get their glad rags in order but its certainly looking like a wirecard MK2!

[mbdx7em21] 01/2/2023 15:29

Feels like QCM barking up the wrong tree here.

[zam1] 01/2/2023 15:28

Dark £75m buy back Results 8th MarchWhat does everyone think of this buy back instead of dividend?I don't trust this management any moreNot buying at these levels

[bbmsionlypostafter mk2] 01/2/2023 15:15

Wednesday, February 1, 2023
Re: Follow up questions concerning Darktrace

Darktrace has issued a lame “non-response” to our 70-page report issued yesterday. We note that in its recent RNS, management has not denied any of our allegations, limiting themselves to express “full confidence” in their own accounting practices. In our book, confidence is reserved for the Divine Providence, and we invite DT’s investors to instead follow Ronald Reagan’s advice: “trust, but verify”.
Or rather, given Darktrace’s association with Autonomy, “don’t trust and verify”.

Given the gravity of what we allege, Darktrace should provide quick, concise, and factual answers as a duty to its investors and to the market. Should the substance of the allegations be confirmed correct, we expect Darktrace’s executives to admit their responsibility and resign at once.

None of our concerns have been addressed, so we have compiled a list of follow up questions for the company:

1) What is the nature of Darktrace’s relationship with Strategic Bridge Monaco and why did Strategic Bridge present its partnership with Darktrace sponsoring a motorcycle team whose CEO had just been arrested for fake invoicing and money laundering for the Italian mafia?

2) Why are there as many as four companies named “Strategic Bridge” in different countries all claiming to be resellers of Darktrace? Why do these companies have similar beneficial owners, websites and show few signs of obvious operations?

3) What is the relationship between Darktrace, I-quasar and Strategic bridge? Have any circular transactions been taking place between these entities?

4) Which clients bought Darktrace’s product through Strategic Bridge, I-Quasar, and Strategic Risk Consulting?

5) Why does a former director of Strategic Bridge and current director of I-Quasar figure in a criminal investigation concerning a $2bn VAT dodging fraud?

6) Has Darktrace sold anything to suspected shell company Alfatrade & Services? Why does this company have seemingly no employees, website traffic or an office but has a turnover of $31m?

7) Has Darktrace sold its products to Bolton Group via HWG? Has that revenue been booked? Why does Bolton’s Group IT manager claim that no sale took place?

8) Has Darktrace sold its system to the Verona airport through its partner Eurosystem? Has the Airport ever paid for such purchase? Why did Eurosystem hold three cyber events sponsored by Darktrace shortly after that “sale”? Why were the related webpages deleted? How much did Darktrace pay for such sponsorship?

9) What was the amount of Darktrace’s sale to Bonfiglioli through its partner Yarix/VAR? Was there a price gap between the price paid by the end user and the one paid the partner? Was the event in Rimini hosted by Yarix/VAR sponsored by Darktrace for a comparable amount of the price gap?

10) Has Darktrace booked a sale to Maserati (a renewal) in July 2020? Has Maserati renewed the sale? Was such sale ever charged back?

11) What is the nature of Darktrace’s relationship with Multicomputos? Which clients have purchased Darktrace’s product through such Central American partner? Why did Darktrace sponsor a marketing event organized by this partner? What was the amount of the sponsorship? Was the amount comparable to the amount of the purchases made by Multicomputos?

12) Please provide a table comparing the amounts purchased and the end user identities for the purchases made by the following partners:
a. PC System srl
b. Project Informatica
c. Alkimia Consultores
d. Newtech (Malta)
e. Omnitech IT
f. Eurosystem
g. Strategic Risk Consulting (RHO), Strategic Bridge (Pavia), Strategic Bridge (Lugano),
Strategic Bridge (Monaco)
h. Infinite Insight, Nap IT Solutions, Calibra, Inquest, TBSEK, Proctiv, AVB Group,
Hanzolo, Ipway Networks, ALASCOM SRL, Quantum Security Solutions, GlobalSequr,
NetSpec, Kilele, Ifinet Srl, HadronBit, Perfitcom, Bolton Technologies

13) What is the nature of Darktrace’s relationship with the Innovation Group?

14) Why has deferred revenue (long term) dropped from 33% to 8% of sales in five years? Which procedures are in place to make sure that deferred revenue is not booked as actual revenue?

15) Has Darktrace sold a sizeable portion of its product up to 2020 as “capex” rather than “opex” as stated in the annual reports?

16) Why have we found multiple instances of contracts online clearly pointing to Capex sales?

17) What is meant by the mixed “capex/opex” contracts that partners routinely offer to their clients? Is the same hardware appliance depreciated simultaneously by both DT and the end users?

18) How many “immaterial” instances of “missing end users” were found by DT’s auditors? Which partners were involved?

19)How much revenue does Darktrace generates from Malta, Cyprus and Monaco (relatively small markets)?

20) What % of DT’s marketing budget is used to sponsor partners’ events?

21) Is the huge % of SG&A expenses (mostly marketing) explained by the fact that DT frequently rewards its partners through sponsorships and participation to marketing events as an incentive to engage in anticipated sales and ‘backfilling”?

22) Why is there an apparent 15% gap between the 5% commission salespeople claim to receive [source: Glassdoor] and the 20% that we estimated appeared on the 2021 financial statements?

23) According to DT’s statements, Darktrace was paying Invoke Capital over $4m for
“management support services”. Please clarify in detail the nature of the services provided by Invoke Capital to Darktrace. Were Mike Lynch and Sushovan Hussain remotely running the company?

24) How come most of the executives we profiled in our report did not disclose their prior affiliation with Autonomy Plc in their biography appearing on DT’s website?

25) How come was Mr. Corrado Broli hired at Darktrace with the same position he held at Autonomy despite the allegations that emerged during the Autonomy lawsuit?

26) Why has the quality of account receivables been rapidly deteriorating in the last couple of years reaching as much as 12% of sales (including bad debt and credit loss provisions)?

27) Why have many executives and directors been selling stock aggressively in the recent months?

Sincerely

QCM Team

[one_frankel] 01/2/2023 14:54

Have you used ChatGPT HHH?...Not only is it intelligible but incredibly dynamic!

[timmy11] 01/2/2023 14:38

whats the matter halfpenny qcm not paying you enough

[scepticalinvestor] 01/2/2023 14:37

It is an excellent business and will be buying in but will wait for weak holders to panic and drop the price before buying in. Looking for sub 170p

[jonnywalker77] 01/2/2023 14:29

Rather than using shareholder money to fight the shorts, why don’t the directors who have been sellers all the way down from >600 get their wallets out given they aren’t yet in a closed period? Actions speak louder than words.

[halfpenny] 01/2/2023 14:18

DARK can TEST 200p Again and can fall below 200 if Auditors delay signing off Dark Audit.

DEAD CAT BOUNCE …. Be careful!! Can fall very quickly.
There is No Smoke without Fire!!

[wheeze] 01/2/2023 13:01

Pile in chaps. Looking forward to seeing those shorting American barstewards get their comeuppance.

[timmy11] 01/2/2023 12:03

now i am positive you are paid by them to write your drivel