Darktrace warns of sales drop amid ‘macro-economic environment’

Darktrace sales Image credit: rarrarorro via Shutterstock

Darktrace has warned it expects a slowdown in sales and new customers amid the difficult macro-economic environment.

In its latest financial update, the London-listed cybersecurity firm reported a 6.3% drop in annual recurring revenue (ARR) growth in Q3, compared to the same period last year.

The company cited “continued uncertainty” in the global economy as having a “significant impact” on new customer additions and ARR growth. Darktrace has updated its full-year 2023 ARR growth predictions to the “low end of its previous range” of 29% to 31.5%.

Cathy Graham, CFO of Darktrace, said: “The current macro-economic environment continues to pose challenges to winning new customers, as requirements to hold or cut spend have made prospects more reluctant to run product trials.”

Because of this, Graham said the company would be “prudent” and expect a “slower than normal sales environment for the remainder of the financial year”.

The company said it added 225 net new customers in the last quarter, which is fewer than the customer additions in the comparable prior year period.

“Despite macro-driven, and most likely temporary, slower growth expectations, it is a testament to our resilient business model that we can drive an increase in our profitability expectations,” added Graham.

The latest report follows a difficult start to the year for the Cambridge firm. Shares in the company dropped to a record low price in February, after US asset manager Quintessential Capital Management accused Darktrace of inflating its value.

Share prices have recovered slightly from the February low-point but are still far from the peak value seen in October 2021.