Darktrace plc Pre-Open Trading Update
Strong 1H FY 2022 performance leading to increased FY 2022 expectations
Darktrace plc (DARK.L) (together with its subsidiaries, “Darktrace” or “the Group”) a global leader in cyber security AI, today provides a trading update for the six months ended 31st December 2021.
Highlights
- Year-over-year growth of:
- 39.6% in number of customers
- at least 45% in constant currency ARR
- at least 50% in revenue
- Significant improvement in one-year ARR gross churn and net ARR retention rates
- Raising FY 2022 constant currency ARR and revenue guidance as well as adjusted EBITDA margin based on strong 1H FY 2022 performance and unchanged view of 2H FY 2022 expectations
Operating and Financial Performance
Darktrace continued to demonstrate the power of its business model, delivering significant growth over the first six months of its financial year. The Group ended 1H FY 2022 with 6,531 customers, having grown its customer base by 39.6% year-over-year.
The Group also delivered strong results in its constant currency Annualised Recurring Revenue (ARR). At its FY 2022 constant currency rates (1) , Darktrace expects ARR at 31st December 2021 of at least $426 million, which represents year-over-year growth of at least 45%. Darktrace also reports that its one-year gross ARR churn and net ARR retention rate have improved over the past six months and at 31st December 2021, are expected to be not more than 6.9% (7.6% at 30th June 2021) and at least 104.6% (102.9% at 30th June 2021), respectively.
Further, Darktrace expects revenue for 1H FY 2022 of at least $190 million, reflecting year-over-year growth of at least 50%. It also expects that gross margin for 1H FY 2022 has remained in the range of recent reported periods.
(1) The Group's primary currency exposures are the British Pound and the Euro converting to its US Dollar reporting currency. For FY 2022, it is using constant currency rates of 1.3835 and 1.1878 for the Pound and the Euro, respectively.
FY 2022 Outlook
Q2 FY 2022 sales performance was better than expected, both because of strong new customer acquisition and improvements in ARR churn and net ARR retention rates. Based on 1H FY 2022 outperformance, and management's unchanged view of the 2H FY 2022 balance between positive sales momentum and potential impacts from efforts to evolve its salesforce structure, Darktrace is increasing constant currency ARR guidance. For FY 2022, Darktrace now expects a year-over-year increase in its constant currency ARR of between 37% and 38.5% (previously 34% to 36%).
Foreign exchange headwinds have continued to be less than previously forecasted, accelerating the conversion of constant currency ARR to US dollar denominated revenue. Based on this, and higher than expected ARR growth in 1H FY 2022, Darktrace is now expecting year-over-year revenue growth of between 42% and 44% (previously 37% to 39%),
Darktrace is also increasing the guidance for its FY 2022 adjusted EBITDA margin to between 3% and 6% (previously 2% to 5%), applied to a now higher expected revenue range.