Darktrace raises sales and margin targets after strong first half

(Sharecast News) - Shares in FTSE 250-listed Darktrace rose strongly on Thursday after the cyber security group increased both its sales and margin guidance for the full year following a strong first half. The company now expects sales for the year to 30 June rising by between 23.0% and 24.5% on last year's $545m, up from previous guidance for growth of between 22.0% and 23.5%.

This is a result of continued strong annualised recurring revenue (ARR) to revenue conversion and a relatively stable exchange rate environment, Darktrace said.

Meanwhile, a tight control on discretionary spending means the adjusted EBITDA margin guidance is moving to 18.0% to 20.0%, up from a range of 17.0% to 19.0% previously.

"Following the roll-out of significant Go-to-Market changes that impacted performance in our first quarter, we were very pleased to see the resulting benefits play out in our strong second quarter financial performance," said chief executive Cathy Graham.

First-half sales rose 27.1% to $329.6m as customer numbers rose 12.9% to 9,232, while adjusted EBITDA margins will be above the top end of its previously communicated guidance range.

"A year-over-year increase in average contract ARR of at least 10% across its customer base, has largely been driven by an increase in average ARR of existing customer contracts, which is up at least 12% year-over-year for contracts aged one year or more," Darktrace said.

Graham added: "Today's results, along with continued acceleration in top and mid-funnel prospect engagement across our key partner and large strategic customer segments, support our belief that we are seeing a return to positive and sustainable growth and reinforces our view of first half stabilisation and second half re-acceleration."

The stock was up 5.6% at 354.3p by 0820 GMT.