Darktrace, one of the UK’s largest cybersecurity companies, was founded in 2013 by a group of former intelligence experts and mathematicians.
Omar Marques | SOPA images | LightRocket via Getty Images
LONDON — Cybersecurity company Darktrace said on Monday it had appointed audit firm EY to review its “significant financial controls and processes,” in an attempt to assuage investor fears after a short seller reported force the company to manipulate their accounts.
“The board has full confidence in the robustness of Darktrace’s financial controls and processes. As a sign of that trust, we have authorized E&Y to conduct this independent third-party review,” Geoffrey Hurst, chairman of the board, said in a statement. “We look forward to the outcome of this review.”
EY will report to Darktrace’s audit and risk committee chair, Paul Harrison, Darktrace said. Darktrace said it doesn’t expect to be able to update the market as of March 8 when it reports first-half earnings, and did not provide a timeline or timing for the results.
Shares of Darktrace jumped more than 2% on the Monday following the announcement. Shares are up 4% year-to-date despite a sharp drop in late January.
Darktrace, the tool that enables companies to fight cyberthreats with artificial intelligence, was targeted last month in a report by New York-based asset manager Quintessential Capital Management. , which investigated Darktrace’s sales and business model.
QCM said it found alleged errors in Darktrace’s accounting, including “channel stuffing” and “channel stuffing” practices that sought to inflate revenue. The company said it “deeply doubts the validity of Darktrace’s financial statements” and believes that sales and growth rates may have been exaggerated.
Darktrace has denied the claims, with CEO Poppy Gustafsson defending the company from what she called “baseless inferences” made by QCM and saying it has “robust processes in place”. our business.” She added: “I stand with my team and the business I represent.”
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