The Darktrace PLC (LON: DARK) share price plunged 7.36% after releasing a trading update for the first quarter (Q1) of its 2024 financial year, covering the three months to 30 September 2023. The company revealed that its Annualised recurring revenue (ARR) at the end of September was $658.4 million, representing a 26.9% increase from last year.
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The global leader in cyber security artificial intelligence(AI) attributed the significant constant currency ARR growth to its multi-year contract structure, which helped reduce the effects of a stabilising but challenging macroeconomic environment.
Darktrace also noted that the multi-year contract structure helped cushion it from the temporary impacts of the massive changes made across its Go-to-Market strategy during the first quarter.
The cyber security firm took advantage of the first quarter, which is typically its slowest to train its staff on new product sales techniques, altering its targeting and sales tactics and workflows. The company also revised its commission plans and introduced other crucial changes to its teams and Go-to-Market approach.
The above actions did impact the sales generated in Q1 2024, but Darktrace believes these changes are the right steps to best capture the large market opportunity and has seen early signs that gave it confidence in the outlook.
Darktrace added a net constant currency ARR of $21.1 million in Q1 2024, representing a 21.6% decline compared to the same quarter in fiscal 2023. The company noted that most of its ARR additions come from acquiring new customers, adding 126 net new customers during the quarter.
Cathy Graham, CFO of Darktrace, said: “Though recent changes to our Go-to-Market teams and tactics had the expected, noticeable impact on first-quarter sales, our long-term contract model, which dampens the effect of short-term sales swings, allowed us to maintain sizeable ARR and revenue growth. More importantly, we started to see early signs that the transformations we have been targeting are starting to take hold. Previously, we said two key targets for investment were increasing focus on larger prospect opportunities and driving deeper engagement with the partner channel. I'm pleased that in both cases, the first quarter delivered early, but clear indicators of gaining traction.”
Darktrace share price.
The Darktrace share price plunged 7.36% to trade at 363.8p, from Wednesday’s closing price of 392.7p.
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