Cybersecurity firm Darktrace is planning a London IPO and targeting a valuation as high as $4 billion

  • UK security firm Darktrace confirmed on Monday that it plans to go public in London.
  • Insider understands the company is eyeing a valuation as high as $4.1 billion.
  • It’s the latest test of investor appetite for tech listings in the UK after Deliveroo’s IPO flopped.
  • See more stories on Insider’s business page.

Cybersecurity firm Darktrace is set to become the latest tech startup to go public in London this year in a deal that could value the business at up to £3 billion ($4.12 billion).

The Cambridge-based company, which uses a so-called “AI immune system” to detect abnormalities in a customer’s network, will follow on from the likes of food delivery firm Deliveroo and online review site Trustpilot in listing on the London Stock Exchange (LSE).

The company is a “software as a service” business, making money from subscription-based contracts with customers. In its filing documents, the firm said its clients typically pay it upfront. Oracle, Quest, and Imperva are among its blue-chip clients.

The firm published financials that broadly painted a picture of growing revenue and narrowing operating losses.

Here are the key numbers you need to know:

  • In the year to the end of June 2020: Revenue of $199 million, up from $137 million from the previous year. Loss before taxation was $26.9 million, down from $37.5 million in 2019.
  • In the six months to the end of December 2020: Revenue of $126.5 million, up from $91 million a year previously. Loss before taxation surged to $47.9 million from $22.2 million. Insider understands the increase was due to non-cash financing costs associated with convertible loan notes.
  • Operating losses narrowed to $24.9 million in the 12 months to the end of June from $36.2 million a year earlier. In the six months to December, operating losses were down to $4.9 million from $21.5 million.
  • Darktrace’s number of customers stood at 4,677 at the end of December, up from 3,270 at the end of 2019.
  • The company also claimed its total market opportunity was worth up to $40 billion.

The public bow will provide the LSE with another chance to prove itself as a hospitable home for tech listings after Deliveroo flopped 30% on its debut last month.

One of Darktrace’s earliest investors, billionaire Autonomy founder Mike Lynch, is currently fighting extradition to the US on charges of fraud related to the sale of Autonomy to HP in 2011. He is also awaiting a UK High Court verdict on a civil claim filed by HP. Lynch has denied wrongdoing.

His investment firm, Invoke, remains Darktrace’s top investor. The company has said Lynch no longer has involvement in the company and is no longer on its board. Invoke is represented on the startup’s board by Vanessa Colomar, a former Autonomy employee. Darktrace CEO Poppy Gustafsson was former corporate controller at Autonomy.

While Darktrace did not outline a pricing range in the document, Insider understands the company expects to list at a value of between £2.5 billion and £3 billion ($3.4 billion to $4.12 billion).

News of the valuation was first reported by Sky News, which also reported that the upper range value for chief executive Poppy Gustafsson’s stake at around £20 million ($28 million).

Gustafsson, who was first chief finance officer when Darktrace was founded, received an Officer of the order of the British Empire (OBE) in 2019 in recognition for her services to cybersecurity. Speaking in January, Gustafsson said there had been a “big shift” in cybersecurity throughout the pandemic.

The company also said it would have a free float of at least 20% of issued share capital and that a further 15% could be made available as part of an over-allotment option.

Darktrace is not expected to include a dual-class share structure, which may have been partly to blame for the tepid response to Deliveroo’s listing last month.

Gustafsson said the intention to list was a “major milestone” in the company’s history.

“Darktrace’s success has been built on the shoulders of giants: our world-leading position is testament to the strength of the UK’s world-leading science base and long history of mathematical discovery and computing inventions, from Charles Babbage and Ada Lovelace to Alan Turing,” she said.

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