Darktrace, the security startup worth $1.65 billion, posts massive growth as its executives get dragged into a $5 billion fraud trial
- British tech unicorn Darktrace, which is valued at $1.65 billion, British tech unicorn Darktrace posted a 93% revenue jump in 2018 to £59.4 million ($78 million).
- That revenue growth outpaced a smaller growth in losses, and the firm boasted of a healthy increase in bookings for the year to 30 June 2018.
- The growth story is positive, but the firm is about to be embroiled in a $5 billion court case because of its connections to investor Mike Lynch, who is being sued for by HP.
- The suit relates to Lynch's former company, Autonomy, which HP acquired for $11 billion in 2011.
- Although Darktrace has distanced itself from the suit, its co-CEO and board director are both former Autonomy execs and will act as witnesses for Lynch during the trial.
British tech unicorn Darktrace posted a 93% jump in revenue last year, striking a positive note as the company tries to distance itself from a $5 billion courtroom drama involving one of its major backers.
According to filings with the UK's Companies House, Darktrace saw an increase in its pre-tax losses, but the overall story through 2018 was one of growth. It has more than doubled its headcount, with the new employees mostly across sales and marketing, and research and development.
The firm said it had bookings worth $209 million in the year to the end of June 2018, although it's worth noting that this isn't the same as revenue.
Here are the key financial numbers for the year to 30 June 2018:
- A big jump in revenue to £59.4 million ($78 million), from £31 million ($41 million) in 2017.
- Losses increased too, though at a slower pace. Pre-tax losses came to £39 million ($51 million) in the year to June 2018, from £24.7 million ($32 million) in 2017.
- The firm spent £58 million ($76 million) on marketing in 2018, up from £34.6 million ($45 million) the previous year.
- The number of employees stood at 750 as of October 2018.
Darktrace did not immediately respond to a request for comment on its results.
Darktrace bills itself as a cybersecurity startup that uses artificial intelligence to detect viruses and other threats to an organisation's IT systems. It hit a valuation of $1.65 billion after raising $50 million last September from backers such as Vitruvian Partners.
Darktrace execs are about to be embroiled in a $5 billion fraud trial
Darktrace's origins are deeply connected to British investor and entrepreneur Mike Lynch and his investment fund Invoke Capital. Lynch was Darktrace's first backer through Invoke, which filings show currently holds 41% of the startup's shares.
He made his money after founding UK enterprise software firm Autonomy, and selling it to HP for $11 billion in 2011. It remains one of the biggest acquisitions of a UK tech company to date.
The deal was a disaster and HP is now suing Lynch and another former executive for $5 billion in the UK's High Court, alleging that the pair committed fraud and made Autonomy appear more valuable than it really was. Lynch is also facing criminal charges in the US.
Darktrace has sought to distance itself from its backer's legal troubles, with Lynch resigning from the firm's board in November 2018 to avoid "distraction."
But Darktrace and Invoke Capital are both inextricably linked to Autonomy, a connection that is being highlighted in the ongoing High Court trial which kicked off last week.
Darktrace co-CEO Poppy Gustafsson and its board member Andrew Kanter are acting as witnesses for Lynch, his lawyers told the court last week. Gustafsson was formerly Autonomy's corporate controller, while Kanter, now an Invoke Capital partner, was its COO.
Darktrace's other CEO, Nicole Eagan, was also a former Autonomy executive, and a second board member, Vanessa Colomar, was Autonomy's SVP of communications.