Darktrace ‘in the clear’ after auditors hand the cyber security firm a clean bill of health following five-month fraud review

Darktrace has been given a clean bill of health following allegations of widespread fraud. 

The British cyber security company said a five-month review by auditing giant EY found improvements could be made to its systems, processes and controls. 

But it said that while a ‘small number’ of accounting errors were identified, there was no evidence of fraud and its previous filed financial statements did not need revising. 

Cleared: Darktrace, led by chief exec Poppy Gustafsson (pictured), said a five-month review by EY found improvements could be made to its systems, processes and controls

Following the update, Darktrace shares jumped 27.8 per cent – the biggest daily gain since it went public in 2021. 

The review was launched after notorious short-seller Quintessential Capital Management warned Darktrace may have ‘overstated’ sales and profits. Poppy Gustafsson, Darktrace’s chief executive, said these claims were ‘deeply insulting’. 

But Quintessential hit back, saying the EY review ‘does little to mollify our concerns’. Darktrace gave EY ‘unrestricted access’ to the business, probing its marketing spend, contracts and revenues. 

Although the review found areas could be improved, as well as a ‘small number of errors and inconsistencies’ in some processes, Darktrace said it was fixing these issues. 

The majority of the probe focused on financial controls rather than fraud claims. 

‘Neither management, nor the board, consider EY’s report to have any impact on Darktrace’s previously filed public company financial statements nor to change their belief that those financial statements fairly represent Darktrace’s financial position and results,’ the company said in a statement to the stock market. 

Although Darktrace is not making the full EY report public, it has shared it with regulators at the Financial Reporting Council and Financial Conduct Authority. 

Analysts at Jefferies said that the update gave Darktrace a ‘clean bill of health’. Separately, Darktrace said it expects revenue for the year ending June 30 of at least £544.3million, up around 31 per cent. 

These will be published in September