ENGLAND — In an effort to allay investor concerns after a short seller accused Darktrace of manipulating its financial statements, the cybersecurity company announced on Monday that it had hired auditing firm EY to evaluate its “critical financial processes and controls.”
“The Board has complete faith in Darktrace’s financial systems and controls to be reliable. We have hired E&Y to conduct this impartial third-party study as a demonstration of our trust,” board chair Geoffrey Hurst said in a statement. “We anticipate this review’s conclusion,”
Paul Harrison, chair of Darktrace’s audit and risk committee, will get reports from EY, according to Darktrace. When asked when it would reveal the review’s results, Darktrace said it didn’t anticipate being in a position to do so by the time of its first-half earnings announcement on March 8. It also didn’t give a timetable.
After the news was released, shares of Darktrace increased by more than 2% on Monday. After a significant decline in late January, shares are up 4% year to date.
Last month, a report by New York-based asset management Quintessential Capital Management focused on Darktrace, whose solutions enable businesses to battle cyberthreats with artificial intelligence. The report looked into Darktrace’s business strategy and selling procedures.
In order to boost income, QCM claimed to have discovered “round-tripping” and “channel stuffing” techniques used by Darktrace. The company claimed it had “serious doubts regarding the accuracy of Darktrace’s financial statements” and thought sales and growth rates may have been exaggerated.
Darktrace responded to the allegations by asserting that it has “strong processes in our business” and defending itself against what she called QCM’s “unfounded judgments.” “I stand by my colleagues and the company I represent,” she continued.
Source (CNBC)
