According to Darktrace, EY will provide a report to Paul Harrison, the chair of Darktrace’s audit and risk committee. The company does not anticipate being able to update the market on the review by the time of its first-half earnings report on March 8 and has not provided a timeline for the release of the findings.
Following the announcement, Darktrace shares rose more than 2%. Despite a sharp drop in late January, shares are up 4% year-to-date.
Last month, New York-based asset manager Quintes
sential Capital Management investigated Darktrace’s business model and selling practices in a report, alleging flaws in the company’s accounting, including “round-tripping” and “channel stuffing” practices that aim to inflate revenue. QCM stated that it was “deeply skeptical about the validity of Darktrace’s financial statements” and believed that sales and growth rates may have been overstated.
However, Darktrace defended itself against the claims, with CEO Poppy Gustafsson refuting what she called “unfounded inferences” made by QCM and stating that the company had “robust processes in our business.” She added, “I stand by my team and the business I represent.
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