Cybersecurity firm Darktrace (LON: DARK) announced its results for the third quarter ended March 31 on Thursday, helping to lift its shares around 1% higher as the company pointed to its “resilient business model” helping to support its “sustained strong FY revenue outlook.”
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The company reported revenue of $139.2 million for the quarter, up 28% year-over-year. Meanwhile, annual recurring revenue (ARR) as of March 31 was $583.6 million, representing year-over-year growth of 33.7%, with added net constant currency ARR of $27 million, representing a decline of 6.3% compared to the same quarter of FY 2022. For the nine months year-to-date, net ARR added was $98.7 million, rising 3.2%.
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Darktrace said the decline in added net constant ARR in the quarter represented “what continues to be a difficult environment for new customer acquisitions,” with Darktrace adding 225 net new customers in the quarter, less than in the comparable prior year period. However, the company's total customer base grew 22% year-over-year to 8,403 customers as of March 31.
There was also a slight rise in churn and a corresponding slide in net ARR retention during the quarter, with one-year gross ARR churn and net ARR retention rates at 6.9% and 104.6%, respectively.
Darktrace warned that continuing uncertainty in the macroeconomic environment is still significantly impacting new customer additions and related ARR growth, and as a result, it is now putting its FY 2023 constant currency ARR guidance around the low end of its previous range.
For FY 2023, Darktrace expects a year-over-year rise in its constant currency ARR to be at or around 29%, in the region of $140.6 million. In addition, year-over-year revenue growth is seen at or around 31%, while the company also increased its expectations for its FY 2023 adjusted EBITDA margin to approximately 19%.
“I am pleased that we have been able to maintain high ARR and revenue growth in the period, as well as preserving profitability and cash generation,” commented Darktrace CFO Cathy Graham. “Clearly, however, 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.”
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