Darktrace Share Price Gapped 9.95% on Its H1 Fiscal 2024 Result

The Darktrace PLC (LON: DARK) share price gapped up 9.95% after releasing a trading update for the six months to 31 December 2023. The company projects a minimum Annualised Recurring Revenue (ARR) of $701.7 million at the period’s end, marking a 24.3% increase from the previous year. 

The growth in ARR is attributed to the company's strategic shift in the latter half of the year despite an initial decline in the first half. Specifically, Darktrace added at least $64.4 million in net ARR in the first half of FY 2024, a decrease from the previous year, but showed improvement in the second quarter with an addition of at least $43.3 million in ARR.

The company anticipates a revenue of at least $329.6 million for the first half of FY 2024, a 27.1% increase year-over-year. Its gross margin is expected to stay within previously reported ranges, and the Adjusted EBITDA margin is predicted to surpass the upper limit of the 17% to 19% forecast.

Darktrace's customer base grew by 12.9% year-over-year, reaching 9,232 customers by the end of the first half 2024. This growth is driven by a 10% increase in the average contract ARR across its customer base, with a 12% increase in average ARR for existing customer contracts older than a year. 

The company expects its customer-related metrics to improve slightly in the first half of the fiscal year. The company's one-year gross ARR churn and Net ARR retention rates as of December 31, 2023, are anticipated to be around 6.6% and 105.0%, respectively.

For FY 2024, Darktrace has adjusted its guidance for year-over-year ARR growth to 21.5% to 23.0%, an increase from the previous 21.0% to 23.0% range. This adjustment implies net ARR additions of $137.0 million to $146.6 million for the fiscal year. The company expects to add approximately 45% of its FY 2024 Net ARR in the first half and 55% in the second half.

Additionally, Darktrace has raised its FY 2024 revenue growth forecast to 23.0% – 24.5% and its Adjusted EBITDA margin expectation to 18.0% – 20.0%. The company also maintains its Free Cash Flow (FCF) guidance within 50% – 60% of the increased Adjusted EBITDA projection.

Darktrace share price. 

The Darktrace share price gapped up 9.95% to trade at 366.8p from Wednesday’s closing price of 333.6p.