British cyber security software company Darktrace (DARK) has confirmed long-mooted plans to list shares on the London stock market, a timely boost for UK technology investors after the disappointing IPO (initial public offering) of Deliveroo (ROO) recently.

While there’s still no official word on pricing, latest market speculation points to a £3 billion enterprise value target, which would represent the second largest cyber security IPO on the London market after Avast (AVST).

Its planned premium segment listing would allow the Cambridge-base company to take its place among UK indices, probably the FTSE 250 at first.

LYNCH MOB

Darktrace is backed by Invoke Capital, the technology investment company set up by tech entrepreneur Mike Lynch. He founded UK firm Autonomy and has been dragged into a long-running blockbuster £4 billion legal battle after selling that company to US tech giant HP in 2011.

Lynch sits on Darktrace’s science and technology committee and there are several former Autonomy executives on board, including chief executive officer Poppy Gustafsson and chief strategy officer Nicole Eagan.

Financials, revealed for the first time today, helped put some context on the investment case. Latest results from Darktrace, for the year to June 2020, show revenue jumping 45% to $199 million alongside a 39% increase in annual recurring revenue to $236 million and a 41% increase in RPO to $540 million.

RPO, or remaining performance obligations, is an increasingly popular growth metric being used by companies to describe billed and unbilled subscriptions and services. Think of them as an equivalent metric to order book for industrial companies.

SHOCK PROFITS

‘Growth was supported by a 41% increase in customers to around 3,900 and a 101% retention rate,’ said Megabuyte analyst Indraneel Arampatta.

‘The biggest surprise for us was the fact that the company is now profitable, generating $20.8 million of adjusted earnings before interest, tax, depreciation and amortisation,’ the analyst said. ‘We wonder how pricing discussions will progress, especially given the soggy reception to Deliveroo’s recent IPO.’

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Issue Date: 12 Apr 2021