Darktrace storms back towards former glories in profitable phishing expedition

The share price, in the doldrums for much of last year, surged around 50p and 14 per cent to 401.50p at the time of going to Press – heading back towards its 52-week high of 428.10p.

Revenues soared 27 per cent to £330 million in the six months to December 31 and underlying profit rocketed 87 per cent to £84.5m.

Now Darktrace has upped its full year forecast for revenue growth of between 23.5 and 25 per cent from 23-24.5 per cent.

Darktrace's performance track in the first half of FY 2024 supports what it believes is a change in trajectory following a period of transformation and stabilisation.

Encouragingly, Darktrace increased its customer base by almost 13 per cent in the first half. CEO Poppy Gustafsson believes Darktrace has the perfect technology to help organisations repel a record level of phishing attacks from cyber gangsters.

She said: “Following the impact in the first quarter of our significant Go-to-Market changes, I was very pleased to see the team adapt quickly, delivering significantly improved second quarter sales, which enabled our strong financial performance in the first half of the year.

“At the start of this financial year, we characterised our FY 2024 expectations as first half stabilisation and second half re-acceleration, and performance indeed stabilised in our second quarter.

“Now, it is the improvement in early cycle operating measures that underpins our confidence in a return to net new business growth in the second half.

“We see progress in longer cycle initiatives such as large strategic, channel and government pipeline development, and upsell momentum continues. In addition, ramped salesperson tenure has lengthened, increasing by 28 per cent, including a 31 per cent increase in our key North American markets.

“Our conversion rate also rose, again driven by noticeable improvements in North America, as more tenured salespeople followed a more disciplined process to pursue better targeted and qualified sales prospects.

“We continue to see the cyber-crime landscape evolve rapidly in a challenging geopolitical environment and as the availability of generative AI tools lowers the barrier to entry for hostile actors.

“Against this backdrop and in the period ahead, we are preparing to roll out enhanced market and product positioning to better demonstrate how our unique AI can help organisations to address novel threats across their entire technology footprint.”

She said the widespread availability of generative AI tools continued to impact security operations across organisations. The immediate impact Darktrace has seen is on phishing, the most common form of attack.

In April last year, Darktrace released research showing a 135 per cent increase in 'novel social engineering attacks' in the first two months of 2023, corresponding with the widespread adoption of ChatGPT, suggesting generative AI was providing an avenue for threat actors to craft sophisticated and targeted attacks at speed and scale.

Both the scale and the sophistication of these types of attacks continues to grow. Darktrace customers received around 2.9 million phishing emails in December 2023 alone, a 14 per cent increase on September 2023.

Between September and December 2023, phishing attacks that use novel social engineering techniques grew by 35 per cent on average across the Darktrace customer base.

Chief Information Security Officers believe these types of AI-augmented threats will continue to grow. New research commissioned by Darktrace shows that 89 per cent of IT security teams polled globally believe AI-augmented cyber threats will have a significant impact on their organisation within the next two years, yet 60 per cent believe they are currently unprepared to defend against these attacks.

Their concerns are led by increased volume and sophistication of malware that targets known vulnerabilities (rated 3.84 by respondents on a 1-5 scale of risk) alongside increased exposure of sensitive or proprietary information from using generative AI tools (also rated 3.84).

Darktrace warns that to ensure their continued security, organisations must pivot from a reactionary posture – built on known attack data for threat detection and response – to proactive cyber readiness by taking a preventative and automated approach to visualising and correlating incidents across the entire IT footprint of the business.

Against this backdrop, and since the start of the fiscal year, Darktrace has delivered on its promise of completing the industry's first Cyber AI Loop with the introduction of Darktrace HEAL, which ensures readiness to recover from an active cyber-attack and to rapidly restore the business to an operational state.

It has also launched Darktrace/Cloud, which provides comprehensive visibility of cloud architectures, real-time cloud-native threat detection and response, and prioritised recommendations and actions to help security teams manage misconfigurations and strengthen compliance.

Darktrace recently announced that its Federal business had received a High Impact Level ‘In Process’ designation from the Federal Risk and Authorization Management Program, a US government-wide program that provides a standardised approach to security assessment, authorisation, and continuous monitoring for cloud products and services.

Darktrace Federal's Cyber AI Mission Defense™ and Cyber AI Email Protection™ products are now listed in the FedRAMP Marketplace. This designation marks a critical milestone for Darktrace Federal as it seeks to deliver information technology, operational technology, Internet of Things and email security to the US federal government via cloud-native deployments, empowering agencies to combat threats ranging from stealthy insiders to zero-day attacks and supply chain compromises.