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US private equity group Thoma Bravo has decided not to make an offer for the cyber security group Darktrace after it emerged last month that the companies had been in discussions.
“Early stage discussions took place with Thoma Bravo about a possible offer for the company but an agreement could not be reached on the terms of a firm offer,” Darktrace said in a statement on Thursday.
“The board continues to be very confident in the company’s future prospects as demonstrated by its FY22 results released today.”
Darktrace specialises in artificial intelligence-based software. It floated on the London Stock Exchange last year.
Shares in Darktrace fell as much as 30 per cent in early trading in London on Thursday.
The company reported a 46 per cent rise in full-year revenues to June, from $285mn in 2021 to $416mn, and an eight-fold increase in earnings before interest, tax, depreciation and amortisation to $64mn.
It now has more than 7,400 customers, most of which are small to medium-sized companies, a 32 per cent increase on last year.
Darktrace acknowledged, however, that it had made an accounting mistake and that $3.8mn it had recognised in the year to April 2022 was actually related to prior periods, but noted that the combined revenue of both years “remains unchanged”.
Last October, the company’s stock plummeted after the brokerage Peel Hunt published a note arguing that it was worth half its market valuation and the potential customer base it was targeting was not as big as claimed.
News that Thoma Bravo was considering a bid helped the shares recover, and they are up nearly 30 per cent since then.
Some analysts and investors have remained sceptical about the company. UK hedge fund ShadowFall, which holds a short position, believes Darktrace continues to overestimate its potential customer base and underspends on research and development compared with its peers.
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