213800PC5S5P9CSNFC892022-07-012023-06-30213800PC5S5P9CSNFC892021-07-012022-06-30213800PC5S5P9CSNFC892023-06-30213800PC5S5P9CSNFC892022-06-30213800PC5S5P9CSNFC892021-06-30ifrs-full:CapitalRedemptionReserveMember213800PC5S5P9CSNFC892021-06-30ifrs-full:IssuedCapitalMember213800PC5S5P9CSNFC892021-06-30ifrs-full:SharePremiumMember213800PC5S5P9CSNFC892021-06-30ifrs-full:MergerReserveMember213800PC5S5P9CSNFC892021-06-30ifrs-full:ReserveOfExchangeDifferencesOnTranslationMemberiso4217:USDiso4217:USDxbrli:shares213800PC5S5P9CSNFC892021-06-30darktraceplc:StockCompensationReserveMember213800PC5S5P9CSNFC892021-06-30ifrs-full:TreasurySharesMember213800PC5S5P9CSNFC892021-06-30ifrs-full:RetainedEarningsMember213800PC5S5P9CSNFC892021-06-30213800PC5S5P9CSNFC892021-07-012022-06-30ifrs-full:CapitalRedemptionReserveMember213800PC5S5P9CSNFC892021-07-012022-06-30ifrs-full:IssuedCapitalMember213800PC5S5P9CSNFC892021-07-012022-06-30ifrs-full:SharePremiumMember213800PC5S5P9CSNFC892021-07-012022-06-30ifrs-full:MergerReserveMember213800PC5S5P9CSNFC892021-07-012022-06-30ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800PC5S5P9CSNFC892021-07-012022-06-30darktraceplc:StockCompensationReserveMember213800PC5S5P9CSNFC892021-07-012022-06-30ifrs-full:TreasurySharesMember213800PC5S5P9CSNFC892021-07-012022-06-30ifrs-full:RetainedEarningsMember213800PC5S5P9CSNFC892022-06-30ifrs-full:IssuedCapitalMember213800PC5S5P9CSNFC892022-06-30ifrs-full:SharePremiumMember213800PC5S5P9CSNFC892022-06-30ifrs-full:CapitalRedemptionReserveMember213800PC5S5P9CSNFC892022-06-30ifrs-full:MergerReserveMember213800PC5S5P9CSNFC892022-06-30ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800PC5S5P9CSNFC892022-06-30darktraceplc:StockCompensationReserveMember213800PC5S5P9CSNFC892022-06-30ifrs-full:TreasurySharesMember213800PC5S5P9CSNFC892022-06-30ifrs-full:RetainedEarningsMember213800PC5S5P9CSNFC892022-07-012023-06-30ifrs-full:IssuedCapitalMember213800PC5S5P9CSNFC892022-07-012023-06-30ifrs-full:SharePremiumMember213800PC5S5P9CSNFC892022-07-012023-06-30ifrs-full:CapitalRedemptionReserveMember213800PC5S5P9CSNFC892022-07-012023-06-30ifrs-full:MergerReserveMember213800PC5S5P9CSNFC892022-07-012023-06-30ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800PC5S5P9CSNFC892022-07-012023-06-30darktraceplc:StockCompensationReserveMember213800PC5S5P9CSNFC892022-07-012023-06-30ifrs-full:TreasurySharesMember213800PC5S5P9CSNFC892022-07-012023-06-30ifrs-full:RetainedEarningsMember213800PC5S5P9CSNFC892023-06-30ifrs-full:IssuedCapitalMember213800PC5S5P9CSNFC892023-06-30ifrs-full:SharePremiumMember213800PC5S5P9CSNFC892023-06-30ifrs-full:CapitalRedemptionReserveMember213800PC5S5P9CSNFC892023-06-30ifrs-full:MergerReserveMember213800PC5S5P9CSNFC892023-06-30ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800PC5S5P9CSNFC892023-06-30darktraceplc:StockCompensationReserveMember213800PC5S5P9CSNFC892023-06-30ifrs-full:TreasurySharesMember213800PC5S5P9CSNFC892023-06-30ifrs-full:RetainedEarningsMember
“
The market opportunity
ahead of us is enormous - we
believe there are over 150,000

from our AI - and we have
the right team and skills in
place to ensure we can go
after the market opportunity
that they represent.
Poppy Gustafsson OBE,

“
CONTENTS







STRATEGIC REPORT 2
BUSINESS MODEL 4
HIGHLIGHTS 8
CHAIR STATEMENT 10
CEO STATEMENT 12
STRATEGIC OBJECTIVES 16
s) 18
CFO STATEMENT 28
MARKET OVERVIEW 36
DELIVERING VALUE TO CUSTOMERS 40
STAKEHOLDER ENGAGEMENT & SECTION 172 50
ESG 56
RISK 66
VIABILITY STATEMENT 74
GOVERNANCE 78
CORPORATE GOVERNANCE REPORT 80
THE BOARD 82
THE EXECUTIVE TEAM 86
REPORT OF THE BOARD 88
REPORT OF THE NOMINATION COMMITTEE 94
REPORT OF THE AUDIT & RISK COMMITTEE 96
REPORT OF THE REMUNERATION COMMITTEE 106
DIRECTORS’ REPORT 130
FINANCIAL STATEMENTS 136
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DARKTRACE PLC 138
CONSOLIDATED FINANCIAL STATEMENTS 152
COMPANY FINANCIAL STATEMENTS 190
DARKTRACE PLC INFORMATION 198
FINANCIAL HISTORY 200
SHAREHOLDERS 202
GLOSSARY 204
PART 1
STRATEGIC REPORT
STRATEGIC REPORT / 2 - 3
STRATEGIC REPORT INDEX
BUSINESS MODEL 4
HIGHLIGHTS 8
CHAIR STATEMENT 10
CEO STATEMENT 12
STRATEGIC OBJECTIVES 16
s) 18
CFO STATEMENT 28
MARKET OVERVIEW 36
DELIVERING VALUE TO CUSTOMERS 40
STAKEHOLDER ENGAGEMENT & SECTION 172 50
ESG 56
RISK 66
VIABILITY STATEMENT 74
BUSINESS MODEL
People
Product
Positioning
Performance





Create unique, efficiently developed
cybersecurity products based on
proprietary AI innovation




STRATEGIC REPORT / Business model / 5
             
 

































 



Positioning


6 / STRATEGIC REPORT / Business model





2




            


         
   
            







page 50
 page 36
             




            




People





1
STRATEGIC REPORT / Business model / 7

Free the world
of cyber disruption
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















8 / STRATEGIC REPORT / Highlights
HIGHLIGHTS






    
   


MILLION
REVENUE
NET ARR
RETENTION RATE*
MILLION
NET ARR ADDED*
MILLION
RPO*
OPERATING
PROFIT MARGIN
MILLION
FREE CASH FLOW*

GROSS CHURN*
MILLION
ARR*
CUSTOMERS
ADJUSTED
EBITDA MARGIN*
FY 2023  

FY 2023 

FY 2023   

FY 2023 

FY 2023    

FY 2023

FY 2023    

FY 2023 

FY 2023  

FY 2023    

$545.4
6.7%
6.8%$628.4
104.7%
25.5%
8,799
$93.8
$143.6
$1,258.4
STRATEGIC REPORT / Highlights /
NET ARR
RETENTION RATE*
8,799
110 2,200+
CHAIR STATEMENT

       
         





     
         
      




         


       
         

       
       

          
         
       


page 88




       
         


      

       

        
      
       




       
      
       


FY 2023 has been a busy year for Darktrace. The Board has continued
to support Management’s investments in the business to enable
the next stage of its growth, despite the more challenging macro-
economic conditions and while embracing a great deal of external
          
to continue to drive the business forwards in line with Darktrace’s
purpose, and believe that the changes we have already made, and
continue to make, put us in a stronger position to capitalise on the
opportunities that lie ahead for our business.
STRATEGIC REPORT /  /  - 
CHAIR STATEMENT




       












       







        




          

page 56


        


          
          

          
        






          



         




pages 4 to 77 



5
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
CEO STATEMENT


        
      
        
          
         
        

         
       

        


        






         
        
       

  




          



       
      
       

        
           


     


year as a publicly listed company and our 10th year since founding. We

foundations for our future growth; strengthening our executive team,
upgrading our systems, and bringing exciting new products to the
market that have expressly been developed to tackle a fast-changing
cybersecurity environment as we relentlessly pursue our mission to
free the world of cyber disruption. I would like to thank our employees,
partners, suppliers, and everyone else who has brought us one step
closer to this mission this year.
STRATEGIC REPORT / CEO Statement /  - 
CEO STATEMENT


         



     
  







         
  
       



Continuing to innovate



        
        

  


         


        





  

         

        

       
       


 / STRATEGIC REPORT / CEO Statement


        


   


        
       
 






        


     
        
         
        
        



          
         
      
        
          
        

    





       
         
       
         

      
     


      
      
      

     










         

        







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
STRATEGIC REPORT / CEO Statement / 
STRATEGIC OBJECTIVES














             

           
          
           












 
            







           


          

Positioning













STRATEGIC REPORT /  /  - 
STRATEGIC OBJECTIVES

             

            
 
        




          

             
         

     

          
             



        
   
           


           






          
           




          



       

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  

      




        









       
       
      
       
       


     
       
      

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
         
       

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
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
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
         
     

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       
     
      
       
        


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STRATEGIC REPORT /  /  - 
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             
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20 / STRATEGIC REPORT / 
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
% 30 June 2023 30 June 2022
  
$’000 FY 2023 FY 2022
  
  

$143.6
million
Net ARR added






     
 

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          


           



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



STRATEGIC REPORT /  / 







         
  


            

            

           


$’000 FY 2023 FY 2022
  
  


25.5%
Net ARR

104.7%



             


     








           

% 30 June 2023 30 June 2022
  
22 / STRATEGIC REPORT / 

$’000 FY 2023 FY 2022 % Change
 545,430 415,482 
 58,958 1,457 
   
   
   
 36,512 7,602 
   
   
EBITDA 109,890 63,787 
   
  - 
   
   
 139,163 91,412 
   n/a
















CFO statement
STRATEGIC REPORT /  / 23
FY 2023

to EBITDA
FY 2023
Adjusted FY 2022

to EBITDA
FY 2022
Adjusted
$’000 $’000 $’000 $’000 $’000 $’000
  -   - 
  -   - 


 -   - 
    
 489,788 489,788 370,634 370,634
  -   - 
   -   -


  -   -
  61,499   46,079 


 -   - 
   -   -


  -   -
  16,587   19,628 


   - 
   -   -


  -   -
  24,564   18,103 
  -   - 
    
 36,512 36,512 7,602 7,602
  
 139,163 91,412
  

24 / STRATEGIC REPORT / 


            












             





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
    


$’000 30 June 2023 30 June 2022 % change
 36,512 7,602 380.3%
  - 
   
   
Adjusted EBIT 82,506 49,816 65.6%
 15.1% 12.0% n/a
$’000 FY 2023 FY 2022
  
  


15.1%
STRATEGIC REPORT /  / 25


8,799

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
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

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   
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
$71,422
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              

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             
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


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   
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  
  
26 / STRATEGIC REPORT / 
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           
         

             

            

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      

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
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
         

$’000 30 June 2023 30 June 2022 % Change
   
$’000 30 June 2023 30 June 2022
  
  
  
  
  
 1,258,350 1,003,932


25.3%


STRATEGIC REPORT /  / 27
$’000 FY 2023 FY 2022 % Change
Adjusted EBITDA 139,163 91,412 52.2%
   
   
   
   
   
   
 134,047 140,244 
   
   
   
 93,753 99,517 
   n/a



              





          
            









$’000 FY 2023 FY 2022 % Change
   

$93.8
million
CFO STATEMENT



          



     
       
Income Statement Analysis
$’000 FY 2023 FY 2022 % Change
   
   
   
   
   
Leveraging its multi-year contract model,
Darktrace delivered strong revenue growth
and operating performance against a
challenging macro-economic backdrop.
Despite a 13.8 percentage point reduction in

contracted revenue backlog (Remaining
performance obligations or RPO) supported
31.3% year-over-year revenue growth for
FY 2023.

  note 4   









STRATEGIC REPORT / CFO Statement / 28 - 
CFO STATEMENT


   
     




       
    
          

     


$’000 FY 2023 FY 2022 % Change
   
   
   
   
Total COS   24.1%
         

 




  

       
         
     


$’000 FY 2023 FY 2022 % Change
   
   
   
   
   
   
   
Total S&M costs   24.5%
         
        
         
     

      

  
        
      

        
  
          
       
         

30 / STRATEGIC REPORT / CFO Statement



 
         

       

       

$’000 FY 2023 FY 2022 % Change
   
   
   
   
   
   
Total R&D costs   8.2%
       
        
      



        
   
       

        

        
       



     


         


      
















 to the

STRATEGIC REPORT / CFO Statement / 
         
     
       

       
 

      
         
      
           
      
        


      
        
                




$’000 FY 2023 FY 2022 % Change
   
   
   
   
   
   
   
Total G&A costs   43.2%
FY 2023 FY 2022 % Change
   

        

        

      
       


 

        




32 / STRATEGIC REPORT / CFO Statement
Financial Position Analysis
$’000 30 June 2023 30 June 2022 % Change
Total assets
   
   
   
   
   
   
   
  - 
   
   
   
Total liabilities
   
   
   
   
Equity
   
   
  - 
   
   
   
   
   

       

     
     



          
          



          

  


       
 

  
     

STRATEGIC REPORT / CFO Statement / 33

        

          

      

       




      
         





note 25
        


          
   






note 25 to


        

        
         
 
     


    
         
        
        

         



        
          
         

          
            
        
       




      


       
      
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
       
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
34 / STRATEGIC REPORT / CFO Statement


      
       

       

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
         
        
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   
   
  56,365 n/a
 390,623 342,358 14.1%
   
 356,986 390,623 -8.6%


          


      

         

 







5
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
STRATEGIC REPORT / CFO Statement / 35
MARKET OVERVIEW


       
       







       

      


   
         
      

         


        
         
    


       


       
         

        
 
      
 
          



 


       

        
       
       
        

 
       
       
       
        
       



       
        

      
        




           



STRATEGIC REPORT /  / 36 - 37
MARKET OVERVIEW

       
       


       
      

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
 


        
    
       
       
        
         
       



     

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
     
       
     
 
        
     
      
         

 
    
      
 
3
   
      
       


    
          
      
     
       



 

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





            



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



       

          



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
       
        
       

        
        
       

38 / STRATEGIC REPORT / 

         
        


       
       
4
 

      

        



       
     




        


       






       

       
        

      
          
      
       






        
        









       

        

      

   
       
       





 


STRATEGIC REPORT /  / 

         
      


         


       
     
       


        

        
         
      
        

         

       
    
   ,  
 
       
       
       
        
         


     
       
      

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     

    
     

        


      
       


     
      
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
        
     
      
  
          




       
     
        
       






       
         
      
        

Prospectus FY 2022 
   
   


  
 2 2 2
   
   
 40 47 48






           
           

DELIVERING VALUE TO CUSTOMERS
CTO Statement
       

       
      
       
      
      



      
      








         
         

    



    


         
   
       



        

         

       
         

        

    


        
        
      
        
        
      
          



5


Jack
Stockdale
STRATEGIC REPORT /  / 40 - 
DELIVERING VALUE TO CUSTOMERS
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
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

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
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42 / STRATEGIC REPORT / 
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      
      
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      
      
      
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       
      
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       
      
     
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
 
     



 

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
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
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
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
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
STRATEGIC REPORT /  / 43

       

        


        
       
        


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






PREVENT/ASM

      
  


       


       
      

PREVENT/E2E
      
       










     



      

        


        
         
         





     

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44 / STRATEGIC REPORT / 

        

      

        





         
       



  


       
      
      


 

     
       



      
     

       


  

       
     

         

   

       
            


STRATEGIC REPORT /  / 45


         



       


       
        
       

  

       
         
      
 
        



       
        



       
         












DARKTRACE SERVICES

      








46 / STRATEGIC REPORT / 
“Using Darktrace’s AI has been a huge timesaver
for our security team and for our employees. The AI
knows when the language within an email is out of
character and as such, we’ve been able to intervene
in attempts at solicitation, which could have
resulted in downtime or disruption to the business.
Darktrace enables us to identify threats across our
network in a timely manner, and we have built trust
in its decision making.

data across email, software-as-a-service and the
network. With this cross-platform visibility, we can
see every stage of an attack from an initial phish, all
the way through to impact on the wider business.”




        

      

  
        





         
       









“
PRODUCTS USED:
DARKTRACE DETECT™
DARKTRACE RESPOND™
CUSTOMER CASE STUDIES
STRATEGIC REPORT /  / 47
Qatar
World Cup 2022
“Darktrace AI has been instrumental in
supporting our people on the ground to
produce remarkable results. Their team has
played a crucial role in ensuring the success
of this World Cup in Qatar and delivering an
amazing tournament for the fans free from
cyber disruptions.”


         





 


  
        

         

        

         



       
      











“
PRODUCTS USED:
DARKTRACE DETECT™
DARKTRACE RESPOND™
48 / STRATEGIC REPORT / 

an AI teammate that is continually learning how
our entire ecosystem operates, strengthening our
defences and looking out for any abnormal activity.
“Having Darktrace with us at every stage of an
incident lifecycle is so important. Having AI that
knows the nuances of our digital environment helps

operation.”
     

           
         


       






    

         




  

          














“
PRODUCTS USED:
DARKTRACE DETECT™
DARKTRACE RESPOND™
DARKTRACE PREVENT™
DARKTRACE HEAL™
City of Las Vegas





   

STRATEGIC REPORT /  / 
“Darktrace combines many capabilities like visibility
in the cloud and network protection, and its AI tools
help the security team to operate more precisely

posture while not having people dedicated to do
that all the time is a blessing.”



        
      
      

      
  



      

        
          







      
       

      










“
PRODUCTS USED:
DARKTRACE DETECT/APPS™
DARKTRACE DETECT/CLOUD™
STAKEHOLDER ENGAGEMENT & SECTION 172








     
    
      




       


          
     
          
     

        
        

       
        

   
       



            

        
       
       
       
        



       





        

        
         
         
      

         


         
     




       


        
        



     
     
       





      
       

        


        
         




STRATEGIC REPORT /  / 50 - 
STAKEHOLDER ENGAGEMENT & SECTION 172

        
       


      

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

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



        











       
/

      
        

      
       

       
     

       


        


 




       


       


        



        
         







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
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
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




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52 / STRATEGIC REPORT / 


-

         
    
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
-



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-



      
        -

      
     
       

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


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
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
        
       
       
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      

     
      
       

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

     
      
     

       
        -
-

      



       
        


-
       
      

-


-
-
-





        
-

-
-


-

STRATEGIC REPORT /  / 53
Stakeholder considerations:   

       


Strategic Actions supported by the Board:  
       
      
       

        
Darktrace: 

      



Context:     
       







Stakeholder considerations:   

       
        
      
     
    

Strategic Actions supported by the Board: 
       

        
Darktrace:




Context:     




      

     
         
       

       
     


       


       

Stakeholder considerations:

Strategic Actions supported by the Board: 
       

       

        
Darktrace:




Context:

       
      
    
       


54 / STRATEGIC REPORT / 







        

s. 172 Factor 
Page

The likely

decision in the long

 4-6


68-7


 
 
 64-65
 50


68-7



 7




the Group’s business
relationships with

and others
 
 



 64-65
 50


68-7




Group’s operations on


 


64-65
 50




conduct


64-65
 50


the Group
 7


64-65



 50

Context:
         


   

Stakeholder considerations:     
      
      

     
      

Strategic actions supported by the Board: 
     
     

       
      

        
Darktrace:       




        

STRATEGIC REPORT /  / 55



     
       




          
       
      




        


       
     



       




      


 
Darktrace's Business Model 4-6

Indicators

Principal Risks 68-7
Ethics and Governance

2 64-65

 68-7



 
 

 60-62 64-65
 50
 60-62
Social Matters
 60-62
 60-62


60-62
ESG


      
        
         
      
        

       
      
        
   

        


        
      



     
      




         
       
        
       
     
pages 66-73



       

         
      

        


      

      
      
      

         

        

       

       







           

         


The Board
The Audit and
Risk Committee
ESG Strategy Team
Business Functions
STRATEGIC REPORT / ESG / 56 - 57
ESG

2021
2021


2022
2022


2023
2023


2

   
2
e/FTE)

















tC0
2
e
tC0
2
e



2
e)

2
e)







Governance


 


 
Strategy



 



 
 
-

   -








 
 

    
   -



-
  
      

Risk



 


 



 
Metrics and
Targets



 



 



 
58 / STRATEGIC REPORT / ESG



        
       
     





        

1.        
        

2. 


3.      
     




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
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
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

       
        

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





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


7
       




   
data-and-statistics



        

        
     

5

 
6
     
 


       




         
      
        
      


         
      

       









      
        
      

         







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
     
  - -  
Scope 1 Subtotal 19.5 46.0 56.5 190.0% 22.9%



   -  
     
 487.0 680.0 35.7 -92.7% -94.7%



     
     
 450.1 594.0 568.5 26.3% -4.3%


     
     
     


    
     
     


    
     


    
     
Scope 3 Subtotal 38,459.2 47,491.5 51,868.4 34.9% 9.2%
 38,966.2 48,217.5 51,960.6 33.3% 7.8%
 38,928.8 48,131.5 52,493.4 34.8% 9.1%



    


    




    

FY21 FY22 FY23
UK
Global
 Total UK
Global
 Total UK
Global
 Total




        




        
60 / STRATEGIC REPORT / ESG
Social


7



8

      








        
         



    
       
     
         
     

       
     
      
      
      



       


         
          


      

    
         

        
       









         



        
     


         
       
         





       
  

        

      

       
       
       
         

       



       
       

       

      

         

          

       
        


STRATEGIC REPORT / ESG / 




       
           

        




         
        



        
       


       
        
       
       




         




       
      
        



         
         





       
      


        
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62 / STRATEGIC REPORT / ESG
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        
      
      
       
      



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       
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

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


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






       




        
           
       
     
      
  


          
       

        


     

       
 

        

PEOPLE STORIES
STRATEGIC REPORT / ESG / 63
PEOPLE STORIES
Ishana Gupta



             


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
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      
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            
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              
                


           



64 / STRATEGIC REPORT / ESG




       
          
       



        
     
        
      
        
       
       
       
       
      
    


    



       
      



          
       

Suzanna Beanland

               



               


         

 











PEOPLE STORIES
STRATEGIC REPORT / ESG / 65
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




         



      
      

       




      


 










       
     
          


      

        

        
        

       

       
  
       

        
      
        
       

      




      
        
      





         

        

     
       
          
      

       





RISK










       







         

 

    



       
      

       


        












The Board




The Audit and Risk Committee






Risk Steerco





Business Functions

















STRATEGIC REPORT /  / 66 - 67
RISK

      
       

         
     



      

       

  

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


 

    






 





        

         
       


          
  
      





 
        
       
      
         



     

        
        
       










-








68 / STRATEGIC REPORT / 


       

        

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5
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
Low
Low


High
High

















1
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5 7
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Risk Description  Mitigating Actions Risk Posture Change












  





   
     




-

























Positioning

Risk Description  Mitigating Actions Risk Posture Change
     
   
    



























8
STRATEGIC REPORT /  / 
Risk Description  Mitigating Actions Risk Posture Change

-
















Risk Description  Mitigating Actions Risk Posture Change





















Positioning





Risk Description  Mitigating Actions Risk Posture Change
-

























People

70 / STRATEGIC REPORT / 
Risk Description  Mitigating Actions Risk Posture Change


-


-











-




-
-




Risk Description  Mitigating Actions Risk Posture Change












-






-


















-













Positioning




People
Positioning


STRATEGIC REPORT /  / 
Risk Description  Mitigating Actions Risk Posture Change





























Positioning

72 / STRATEGIC REPORT / 




COVID-19: 



 

Failure


Inability to innovate
Darktrace products

Inadequate Channel Sales
and support

Cloud Service Providers


Failure to retain and attract



or exposure

Darktrace Cyber incident






               













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STRATEGIC REPORT /  / 73
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
        





      
         



       
      
      
        
        





        




 Risk Description  Mitigation Actions
AI Market
Product
Saturation





























-








AI & Cyber
Regulatory
uncertainty




















-






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


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


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

      
       
       
        


      
       
      
      

         







         
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
      


        



        
 
         
       
   
         


      



        
        

      
         
 

       



        
     




       
       
        
       

         
       
       

        

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
      





      
     

     
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STRATEGIC REPORT /  / 74 - 75
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
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












        






Impacts on employees, retention and wider company culture;

Forecast churn rates for all employees were increased relative to base
case churn levels by at least 20%, with particular focus given to increased
salesforce churn, which was increased by 25% vs base case assumptions for
the entire period;


and go-to-market personnel) considered;

Supply chain and deployment risks considered, combining extended periods

appliances, hosting, IT equipment);

No active cost saving measures; and


Overall the increased costs and reduced revenue in the scenario reduced

             

1. Revenue/
ARR Scenario
    

    

   
   
 
     
     
    
   
    
    
     
    

2. Cost Scenario
     
  
    
     

   
    
     
   
    
  

    
     
   
      



76 / STRATEGIC REPORT / 
























Impacts to employees, retention and wider company culture;

Material deterioration in trends of new logo ARR growth, ARR upsell, churn, and


Supply chain and deployment risks;



Payment terms, direct and indirect customer and creditor relationships;

Covenant compliance; and


           

          



While employee compensation expectations were left unchanged, reductions
were made to non-sales related headcount targets, reducing forecast total






/ 

/ 
/ 
3. Balance Sheet
Scenario

   
   
   
      
   
   
   
      

4. Combined
Worst-Case
Scenario
   
  
    
    

-
    -
    
       
     
     

     -
    
     

STRATEGIC REPORT /  / 77
      

         




        






       
       



        
        
       
  

      
         



         
       

       
  

          


       

       
         
        

PART 2
GOVERNANCE
 / 78 - 
GOVERNANCE
CORPORATE GOVERNANCE REPORT 80
THE BOARD 82
THE EXECUTIVE TEAM 86
REPORT OF THE BOARD 88
REPORT OF THE NOMINATION COMMITTEE 94
REPORT OF THE AUDIT & RISK COMMITTEE 96
REPORT OF THE REMUNERATION COMMITTEE 106
DIRECTORS’ REPORT 130
CORPORATE GOVERNANCE REPORT

         



        


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        
       
     

       

         
       
       

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

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         
      


        

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      
         

         
           
      
       
      
  

           
       
     


     



1.         

2.         

3.       
    

4.         


5. 
   



5



 /  / 80 - 
CORPORATE GOVERNANCE REPORT
THE BOARD


           

 







       








              
         






      


/ 

/ 

/ 

/ 
/ 
/ 
/ 
/ 

/ 

/ 
/ 
/ 
/ 
/ 
/ 
/ 

/ 

/ 

/ 
/ 
/ 
/ 
/ 

/ 

/ 
/ 
/ 
/ 
/ 
/ 
 /  / 82 - 83
THE BOARD
A, R, N, I

        






       



 N, R, I


            
          






A, R, I








            






/ 

/ 

/ 
/ 
/ 
/ 
/ 
/ 
/ 

/ 
/ 
/ 
/ 
/ 

/ 

/ 
/ 
/ 

/ 
/ 
/ 
/ 
84 /  / 
 I
                 
             




            
          

            




/ 

/ 

/ 

/ 
/ 
/ 
/ 
/ 

/ 

/ 
/ 
/ 
/ 
/ 

/ 

/ 

/ 
/ 
/ 
/ 
/ 
/ 
/ 
/ 
A, R, N, E, I















 /  / 85
 S




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S

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           

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S
             
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    
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            


/ 

/ 

/ 
/ 
/ 
/ 
/ 
/ 
/ 
/ 

/ 

/ 

/ 
/ 
/ 
/ 
/ 

/ 

/ 
/ 
/ 
/ 
/ 
/ 
/ 
/ 

/ 

/ 
/ 
/ 
/ 
/ 
/ 
/ 
THE EXECUTIVE TEAM





      

             
          











       



              
          



          






            



 / The Executive Team / 86 - 87
THE EXECUTIVE TEAM




   





          
























    


             
            






REPORT OF THE BOARD
      
      
     




      

          
       
        







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      

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      


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
     
    
       
     

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

        


pages 86-87

         

        
      


       


      




        

       
        



page 6


Board roles 
 1
 2
 4


3

 2
 6
 /  / 88 - 
REPORT OF THE BOARD

       
  
     


       





         
       

     





setting its purpose, values
and standards, assessing and



and standards.
             
                







             











strategic




operating and capital
expenditure budgets and any

      





business plan and budgets and
ensuring that any necessary
corrective action is taken.



   


        

       








      

 /  / 


        

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
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
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

        
         

   
          

       


       
        

         



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      




      
       







 


       
         

 /  / 








Total Meetings Board Audit & Risk  


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













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 /  / 

       
        



        


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

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
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
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

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        

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      

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

      

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
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

       




        
       

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

      

         

 /  / 


        

         
        
         

        
 
       
   


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         
        



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
       
      

  
      
         

       
      

    
page 20
       
        
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          
       


        



         
        
        
        





      
 

   
      
      


      
       
      






        
       
        


 





        
       
      
        
       




5


REPORT OF THE NOMINATION COMMITTEE
 
        


    
       







        
       
     

          


            
        




         


       
   


     







       



     




        
      




    
     
          







  
       








       


      

           



5


 /  /  - 
REPORT OF THE NOMINATION COMMITTEE
REPORT OF THE AUDIT & RISK COMMITTEE
Annual statement

1.   

2.          



           

          








          

          
       
    








          


         


       
        
      

        





      
      



      





       
      
          



5


 /  /  - 
REPORT OF THE AUDIT & RISK COMMITTEE

       
        

Role and activities


   
        
           
        
       
       

      
      
        
       
        


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

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



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






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


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



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




 /  / 




     
     
       
      
       



     


        
        

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
      



       

        
    



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






    


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



       
       



     

        
      
         
       

      


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







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



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

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


note 4




page 3
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



      

       
       


 /  / 
       
        

     
       





     

        

        
     




    
    



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
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



         
         


 



       


       






       


      

        
      
      
         
       


     note 4   


  

 

  




 
       
 



        3   

         

       
       


KPIs section 

        


 /  / 

 
      



       
      
      
       
       
      
       
       

         
      
      






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
        
      

        




       
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







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        
     
       
    
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

  


         
        
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
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


         
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



       
 

       
   

        
        

        
 



        


         



   



       
      
      
      
        

 /  / 
      

         



      
note 4
      


        


        


       
      
       
        
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       
      







        


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
         

        





    


       
       



         
        
        




      












        






     
       
         
       

         


        



        



        
         
       
       
          
        
        
         


 /  / 





      
    

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

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



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







       
        
         
        

       
       

        
        
         
           
         
        
    


 note 25     




        


         




       








  
         
 

       
 


        
 
        
      
         



         




note 25

 /  / 

  
        




       


      



     



        
        


pages 68-73

         
       
        

   



       


ith the






    
 
        

         

       
       




         
       

        
      



      
       

          


       
       


  

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
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
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 /  / 
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
5
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
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
       





      


  
   
 


         

  
note 5
      
       
      

          
         

       
 

         
    


       
        
       



 
          


          


 /  / 
REPORT OF THE REMUNERATION COMMITTEE
Annual statement
          



1. 

2.       

3.        


         

           
     pages 50-56  
       

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


       
      





      
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      
       
        


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       
      
      


       
           
       
 

       
      
       

        
        







 


     
        


        

 /  /  - 
REPORT OF THE REMUNERATION COMMITTEE



       

      
      
        

        
  
        
        
         
     
       
         
      


      





       



        



        




       
         
       
       
        

          
         


       

       
           


         




 
   




       



      

  
  


  

        

          
      
        

        
          
         
       

 /  / 



 






         
     










         

      



         
         
        




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        


         







         





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



       


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
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




         

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

       
         
       
      

          
        

         

         

         
   


        
    

 /  / 
          
          

       




        
        

       
         
       

          
     




        
          


       




      


        
       
       

         
       
      
      




5




         
    

        

        
         
       



        
 


 /  / 
Directors’ Remuneration policy
CEO - Poppy Gustafsson OBE CFO - Catherine Graham
Annual Base Salary









Annual Bonus  




Award Incentive Plan (“AIP”) Award level: Award level:





Minimum Share Ownership
Guidelines





Clarity





Risk




Predictability

Proportionality



to culture





       


          

       
     
      
      

 
      
      
       
        




 /  / 
Pay Element and Purpose Operation Opportunity
Performance Metrics,
Weighting and Assessment
Base Salary


acquire, retain and engage
top talent ensuring no over
reliance on variable pay.



























































Pensions













 /  / 
Pay Element and
Purpose
Operation Opportunity
Performance Metrics,
Weighting and Assessment
Annual Bonus
To reward annual




sustainable growth

shareholders’ interests

shares.






























































 /  / 
Pay Element and
Purpose
Operation Opportunity
Performance Metrics,
Weighting and Assessment
Award Incentive Plan (“AIP”)

sustainable growth and

shareholders’ interests.






































































All-employee Share Plans
 /  / 
Pay Element and
Purpose
Operation Opportunity
Performance Metrics,
Weighting and Assessment



ownership.








Shareholding Requirement

with shareholders’
interests.


























 
Non-Executive Directors
To provide an appropriate

retain Non-Executive
Directors and to
appropriately recognise
the responsibilities and





































 /  / 

   


       

      

 








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
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

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

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


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





    
       


 
        
       

1. 
2. 
3. 


4. 
5. 
  



          









On-Target:





















 /  / 

41%


 
 
 
 
 
79%
66%
49%
41%
21%
34%
30%
25%
21%
34%







               
                

 /  / 

     
      










      
      
      

       
        
     
      



      

       


     

         

 Policy

Salary 
Relocation



Buy-out Awards








Annual Bonus



AIP


 





Non-Executive Directors



 /  / 






 
        



Executive Director



Contract

Darktrace

Individual

Service Contract
     
     
 

and Pension




              



Annual Bonus








AIP
          










Other Matters
            







 /  / 



         
 
        




        
      

Non-Executive Directors





Darktrace

the Individual
    
Stephen Shanley    
Han Sikkens    
    
Paul Harrison    

CBE FREng
   
Patrick Jacob    
Elaine Bucknor    

        

          

 


       


       


 /  / 
Annual report on remuneration



         
       

    
     
       
        


        
       
       





         
       
       
     

       
   
        




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
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
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
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

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


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
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

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



      
        




          









 
 






 /  /  - 















Year
Salary
£000

£000
1
Pension
£000

pay £000
Annual
bonus
£000

incentives
£000
2
Total
variable
pay £000
Total

£000
Total

$000
Poppy
Gustafsson
OBE
      -   
         
Catherine
Graham
      -   
         
Year Fees £000 
2

£000

$000
Gordon Hurst
    
  -  
Han Sikkens
1
 - - - -
 - - - -
Stephen Shanley
 - - - -
 - - - -
Patrick Jacob
1,5
 - - - -
 - - - -

3,1
 - - - -
 - - - -

CBE, FREng
    
  -  

  -  
  -  
Paul Harrison
    
  -  
Elaine Bucknor
4
  -  
 - - - -
 /  / 
Measure Weighting
Threshold







Stretch


 
Weighted %

Constant Currency
Net ARR Added
       
Constant Currency
Gross Churn
       
ESG targets     
Total 60.6%

Weighted %


10%
Targets

          









 

10%
Target
           

           


    

 









 /  / 
Executive Director
Max opportunity

Bonus outturn as a




£000
    
    






          



         




             


Executive 
Shares over
which awards
granted
Market price
at award
Face value



Face value at
threshold
Face value


Poppy

OBE
      
Catherine

      
Measure Weighting
Treshohold
 
   
3 year Constant Currency ARR CAGR   
Director
Ordinary Shares Held
at 30 June 2023
 
 
 
 -
 -
 -

1

 
 
 

2
-
 /  / 
Director

Owned Shares
on 30 June
2023
Options
Exercised
in Year
Vested
Unexercised
Share Options
Unvested
Share Awards
Subject to

Conditions
Unvested
share awards
subject
to service

Shareholding



Current
Shareholding



Met
Poppy

OBE
 - -  -   
Catherine

 - -  -   
Gordon Hurst  - - - - - 
Vanessa

 - - - - - 
Sir Peter

FREng
 - - - - - 
  - - - - - - 
Paul Harrison  - - - - - 
Han Sikkens - - - - - - 
Stephen
Shanley
- - - - - - 
Patrick Jacob - - - - - - 
Elaine
Bucknor
- - - - - - 
/ 
/ 

/ 
/ 





 /  / 





2021 2022 2023

1
  
   

2,3
  



 /  / 




% change in 2022/23
  % change in annual bonus
Executive Directors

  

  
Non-Executive Directors

  

  

  

  

  

  

  

  




 /  / 




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


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


Financial year Method  Median 

1
  
   

2
  
   

3
   


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

CEO  Median 
2023
    
    
    



             


 /  / 


Annual Base Salary

      












Annual Bonus
        


      
       
      
         




        





     

Measure Weighting
Threshold

Stretch

   
Constant currency Annualised Recurring Revenue   


 FY 2023 FY 2022 % change
Distribution to shareholders - - 
   
 /  / 

      


  
       

       



      
  

Non-Executive Director Annual Fee FY 2024 Annual Fee FY 2023
  
  
  
  
  
  
  


        
        

          




      

5


Resolution Votes For % For Votes against % Against
Total
votes cast
Votes withheld




     


     




       









Darktrace was incorporated under the UK Companies Act
2006 (the “Act”) on 12 March 2021 as a public company limited
by shares under the name Srenoog plc with registered number
13264637 and was renamed Darktrace plc on 30 March 2021.


   4-77     
         
        
       
        





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
pages 60-65
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


pages 56-65
      
    



        

   
        
       

 

        
       





        

        






          
         



       

Results and dividends

          
       
         






       


      





 /  /  - 



      

        




      

         
        


     
      



       

        








        

        




       
      
       
        

       


     
note 22


         
pages 66-70

         


     





     
  
        
        
       
      




Employee Engagement

        
statement       
          

        



      
       

       

        


      

 /  / 







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

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
        
         
           


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     



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
       
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        
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




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














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








 /  / 

       

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


note 22
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


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
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 /  / 
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

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




     
           
note 






  
        



       
          
      

   
      
       

    
 








        
          
       


        


       
         note 22 to the


       
       

         
 page 80
       
     

Political donations
        
        



         



       





 /  / 





       




 


    

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
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



        
       
         

 



        

    

     

       
      
      
   

        
  pages 82-84       
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
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
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
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          
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






       
         
        
          




5


PART 3
FINANCIAL STATEMENTS
 /  - 
FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DARKTRACE PLC 138
CONSOLIDATED FINANCIAL STATEMENTS 152
COMPANY FINANCIAL STATEMENTS 190

THE MEMBERS OF DARKTRACE PLC













            




Opinion
 /  /  - 

THE MEMBERS OF DARKTRACE PLC

       

  
        


         


       
        
        


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
     


        




        




 
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
     
    
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    

      


       
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     
     
   
        

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
      

       

    
       









      
      
    








       







       
      

       
 

 /  / 


       







       


             








       

       
        
         
          

        


 /  / 


         
        
      

         
         

          





Low
 


Low




Occurrence and accuracy
of revenue recognition and
completeness of deferred revenue
Management override of
controls – response to
short-seller allegations
Management
override of
controls - other
Accuracy of
deferred tax
assets
 /  / 

-
    
revenue
      



      

     



  

       
     
     
     
       


      
      
     
     
      
      


    
       
    


          




         



       

       



           
         
       
         





           






        
          

   




        

          
        

         

 /  / 

Relevant disclosures in the Annual Re-
port and Accounts 2023
note 4 

      


      
         
     

        



       

     
    
      
      
    
     



    
      


Relevant disclosures in the Annual Re-
port and Accounts 2023
note 25
      

          

         




    







         
         

       
       

         
       


           
        
          

Our results



Our results
          
     

 /  / 


response to short-seller allegations

     



     
    

   


      


     
     
       
      
      
      




       


          

  
       


         







/ 


/        



/ 


Relevant disclosures in the Annual Re-
port and Accounts 2023
      

 
    
page 50
Our results



 /  / 




  


as a whole




    



 
   



    
   
     
    
    
    

      

   
     
     
   
    
    
  

  
   
    



     




    
   
    


   
    

  
   
    



     

     

 /  / 
  
-
riality used to drive

testing
            





     

     

 
  
 


    


    


   


   


   

    
     
     



    


    
   


   


  


   

    
     
     



       
          
           

 















   


   


 /  / 
               


Revenue
$545m
PM
$3.4m, 70%
TFPUM
$1.5m, 30%
FSM
$4.9m, 0.9%
Total assets
$364m
PM
$2.5m, 70%
TFPUM
$1.1m, 30%
FSM
$3.6m, 1%
 
An overview

       
       




      






     


      



       
       
      
       



         
          
       
   


 

       
      

 /  / 







              



Audit approach  % coverage revenue % coverage total expenses % coverage total assets
Full-scope audit 2 100% 62% 86%

procedures
2 0% 22% 6%
Analytical
procedures
16 0% 16% 8%
Total 20 100% 100% 100%



      
      
       
        

     


     
      


       

       


      


 /  / 




 



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
       
          


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    
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
     

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
      
        

          
        

       

      

   
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    

page 
       
        

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      



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
       
page 
   

 /  / 

       






       
       



          



       
         



         


        




       
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

     
      

       
    
  
      





       


/ 

/ 
/       
       


        
  

      
     




       

        

/       

       

/ 
        
       
      



/        
       



/     



  

         
      

 /  / 

     

/ 


/      
     

/ 
/ 

      
     


    
       
        
     

      
       

     
    
      

      
       

      
       
         
     

        

   


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

CONSOLIDATED FINANCIAL STATEMENTS
FY 2023 FY 2022
Notes $’000 $’000
Revenue 4 545,430 415 ,482
Cost of sales (55,642) (44 ,848)
Gross profit 489,788 370,6 34
Sales and marketing costs (289,703) (23 2, 77 2)
Research and development costs (47,894) (44 ,262)
General and administrative costs (116,218) (81, 167)
Foreign exchange differences (2, 127) (6,502)
Other operating income 24 2,666 1,6 71
Operating profit 36,512 7 ,602
Finance costs 8 (3 ,493) (2,807)
Finance income 8 8,0 16 518
Profit for the year before taxation 41, 035 5,313
Taxation 25 17 , 923 (3,856)
Net profit for the year attributable to shareholders of Darktrace plc 58, 958 1,45 7
Items that are, or may be, subsequently reclassified to profit or loss:
Exchange differences on translating foreign operations - (3, 7 28)
Total comprehensive income/(loss) for the financial year 58, 958 (2,271)
Earnings per share
Basic earnings per share 7 $0. 09 $0.00
Diluted earnings per share 7 $0. 09 $0.00
These financial statements were approved by the Board of Directors and authorised for issue on 5
th
September 2023.
They were signed on its behalf by:
Catherine Graham
Chief Financial Officer
Company No. 13264637
Consolidated statement of comprehensive income
The notes on pages 156 - 189 are an integral part of these financial statements.
FINANCIAL STATEMENTS / Consolidated financial statements / 152 - 153
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statement of financial position
The notes on pages 156 - 189 are an integral part of these financial statements.
30 June 2023 30 June 2022
Notes $’000 $’000
Non-current assets
Goodwill 16 38, 164 38, 164
Intangible assets 17 12,5 71 15,649
Property, plant and equipment 18 65 ,789 61,0 01
Right-of-use assets 19 4 4,4 39 58, 160
Capitalised commission 12 42, 182 32,5 19
Deferred tax assets 19 ,849 1,0 41
Deposits 13 8,234 9 ,260
231,2 28 21 5,794
Current assets
Inventory 18 100 -
Trade and other receivables 13 123,5 95 95, 481
Capitalised commission 12 34,47 1 2 4,635
Tax receivable 25 5,485 2 ,828
Cash and cash equivalents 20 356, 986 390, 623
520,6 37 5 13,56 7
Total assets 75 1,865 729,361
Current liabilities
Trade and other payables 14 (109, 959) (81,6 90)
Deferred revenue 4 (283,6 78) (222 ,419)
Lease liabilities 19 (4,873) (3, 710)
Provisions 15 (6, 927) (15, 954)
(405, 43 7) (32 3, 77 3)
Non-current liabilities
Deferred revenue 4 (28 ,439) (29,432)
Lease liabilities 19 (52, 735) (60 , 130)
Provisions 15 (1, 7 41) (1,338)
(82, 915) (90 , 900)
Total liabilities (488,35 2) (414, 673)
Net assets 263,5 13 314,688
Equity
Share capital 9 9,7 7 9 9 ,812
Share premium 9 16,308 16, 117
Share capital redemption reserve 9 255 -
Merger reserve 9 305, 7 89 305, 78 9
Foreign currency translation reserve 9 (8, 126) (8, 12 6)
Stock compensation reserve 9,10 50,333 7 4,883
Treasury reserve 9 (104, 946) (11,683)
Retained earnings (5,87 9) (72, 104)
Total equity attributable to equity shareholders of Darktrace plc 263,5 13 314,688
154 / FINANCIAL STATEMENTS / Consolidated financial statements
Consolidated statement of changes in equity
Share
capital
Share
premium
Share capital
redemption
reserve
Merger
reserve
Foreign
currency
translation
reserve
Stock
compensation
reserve
Treasury
shares
Retained
earnings
Total
equity
Notes
$’000 $’000 $'000 $’000 $’000 $’000 $’000 $’000 $’000
1 July 2021
9,7 5 6 224,782 - 305, 7 89 (4 ,398) 35, 7 23 (761) (308,87 3) 262,0 18
-
Profit for the year
- - - - - - - 1,45 7 1,45 7
Other comprehensive loss
- - - - (3, 7 28) - - (3, 7 28)
Total comprehensive profit
- - - - (3, 7 28) - - 1, 45 7 (2,271)
-
Shares issued for acquisition
9 34 15 ,782 - - - - - - 15,816
Shares premium cancellation
9 - (224,782) - - - - - 224,782 -
Share buyback
9 - - - - - - (13,5 25) (89) (13,6 14)
Options exercised
9 22 335 - - - (6,609) 2,603 10,6 19 6, 970
Share-based payment charge
9 - - - - - 4 5 ,769 - - 4 5 ,769
Transactions with shareholders
56 (208,665) - - - 3 9,1 6 0 (1 0, 9 22) 235,312 54,941
30 June 2022
9 ,812 16, 117 - 305, 7 89 (8, 126) 7 4,883 (11,683) (72, 104) 314 ,688
Profit for the year
- - - - - - - 58, 958 58, 958
Other comprehensive
income/(loss)
- - - - - - - - -
Total comprehensive profit
- - - - - - - 58, 958 58, 958
Share cancellation
9 (255) - 255 - - - 43,665 (43,665) -
Shares buyback
9 - - - - - - (145,214) (284) (145, 498)
Options exercised/awards vested
9 222 191 - - - (6 1,5 91) 8,286 5 1,216 (1, 676)
Share-based payment charge
9 - - - - - 37 ,041 - - 37,041
Transactions with shareholders
(33) 191 255 - - (24 ,550) (9 3,263) 7, 2 6 7 (110, 133)
30 June 2023
9,7 7 9 16,308 255 305, 78 9 (8, 12 6) 50,333 (104, 946) (5,8 79) 263,5 13
The notes on pages 156 - 189 are an integral part of these financial statements.
FINANCIAL STATEMENTS / Consolidated financial statements / 155
Consolidated statement of cash flows
FY 2023 FY 2022
Notes
$'000 $'000
Cash generated from operations
Profit for the period after tax 58, 958 1,45 7
Depreciation of Property, Plant and Equipment (PPE) and Right-of-use Assets 18,19 35,310 28, 295
Amortisation of intangible assets 17 5, 597 6,073
Amortisation of capitalised commission 12 32,47 1 21,817
Impairment of capitalised commission and Right-of-use Assets 3,336 996
Loss on disposal of PPE 1,406 2, 121
Unrealised foreign exchange differences (3,00 1) 9, 4 6 7
Credit loss charge 2,0 49 145
Share-based payment charge 10 39 , 989 43, 740
Net settled share-based payment 10 (9, 696) -
Finance costs 8 3,49 3 2,80 7
Finance income 8 (8,0 16) (518)
Other operating income 24 (2,666) (1,6 71)
Taxation 25 (17 , 923) 3,856
Operating cash flows before movements in working capital 141,30 7 118,585
Increase in trade and other receivables (30,5 77) (19 ,60 1)
Increase in capitalised commission (53,52 5) (40, 952)
Increase in trade and other payables 26, 177 27 , 1 29
Decrease in provisions (8,62 5) (5,653)
Increase in deferred revenue 4 60 ,266 65,5 75
Increase in inventory (100) -
Net cash flow from operating activities before tax 134, 923 145,083
Tax paid (876) (4, 839)
Net cash inflow from operating activities 134, 047 140,2 44
Investing activities
Cybersprint acquisition - (35, 72 8)
Development costs capitalised (1,813) (1,2 92)
Purchase of PPE (2 4,306) (31,863)
Finance income 8,0 16 518
Cash outflow from investing activities (18, 103) (68,365)
Financing activities
Proceeds from share issues and exercises 8,0 14 7 ,020
Shares buyback (145,4 98) (13,614)
Repayment of borrowings - (1,347)
Repayment of lease liabilities (10 ,682) (4, 837)
Payment of interest on lease liabilities (3 ,493) (2, 735)
Cash outflow from financing activities (15 1,658) (15,5 13)
Net changes in cash and cash equivalents (35, 714) 56,365
Cash and cash equivalents, beginning of year 390, 623 342,358
Unrealised exchange difference on cash and cash equivalents 2,0 77 (8, 100)
Cash and cash equivalents, end of year 356, 986 390, 623
The notes on pages 156 - 189 are an integral part of these financial statements.
156 / FINANCIAL STATEMENTS / Consolidated financial statements
Notes to the consolidated financial statements
1. Basis for preparation
The Company and Group Information
The parent company, Darktrace plc has been defined as ‘the
Company’ and Darktrace plc group as ‘the Group’ or ‘Darktrace’.
Basis of Preparation
These consolidated financial statements are for the year
ended 30 June 2023.
The consolidated financial statements of the Group have
been prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting
under those standards.
They have been prepared under the historical cost convention
except for certain financial instruments which are measured at
fair value.
The policies set out below have been applied consistently
throughout all periods presented.
All amounts in the consolidated financial statements and
notes have been rounded off to the nearest thousand USD,
unless otherwise stated.
New Standards, Amendments, IFRIC Interpretations
and new Relevant Disclosure Requirements Adopted
by the Group
There are no amendments to accounting standards, or
IFRIC interpretations that are effective for the period ended
30 June 2023 that have a material impact on Darktrace’s
financial statements.
New standards and interpretations not yet adopted
Certain new accounting standards, amendments to accounting
standards and interpretations have been published that
are not mandatory for 30 June 2023 reporting periods and
have not been early adopted by the Group. These standards,
amendments or interpretations are not expected to have a
material impact on the Group in the current or future reporting
periods and on foreseeable future transactions.
Going Concern
In adopting the going concern basis for preparing the financial
statements, the Directors have considered Darktrace’s
principal risks and uncertainties in the current operating
environment and assessed these risks via a series of scenario
analyses designed to evaluate the capacity of Darktrace to
withstand a prolonged period of adverse financial conditions.
The Directors have further reviewed liquidity and covenant
forecasts for the period to 30 September 2024 as part of their
assessment of going concern.
The Directors have considered how a change in circumstances
might impact the Group’s expected financial performance for
the period. Specifically, testing has been performed on the
base case forecast for the period and a number of adverse
scenarios have been modelled, including but not limited to:
Annualised Recurring Revenue (ARR)/revenue scenarios:
The impact of material reputational damage on new
customer acquisition and existing customer churn arising
as a result of a data breach or cyber incident, combined
with significant operational disruption and declines in
salesforce productivity, as a result of a service provision
downtime or a lack of future product innovation. Each of
the scenarios would materially reduce the Company’s ARR
and revenue, and it was assumed, for example that there
would be zero new logo ARR across the entire period along
with a material deterioration in net ARR retention trends.
No active cost saving measures were implemented during
the period.
Cost scenarios: Either as a result of increased industry
competition and/or reputational damage, the impact of
a material and prolonged failure in the Company’s ability
to attract and retain employees was considered, leading
to significant increases in employee churn and hiring
and compensation related costs. For example, expected
employee churn rates for the entire salesforce and the
remaining wider workforce were increased by 25% and
20% respectively. Meanwhile hiring and compensation
costs were materially increased, particularly for technical
and sales-related personnel, and extended general cost
inflation was considered, with material increases to key unit
costs (such as appliance and hosting costs). No active cost
saving measures were implemented during the period.
Balance sheet scenarios: Either as a result of a significant
macro-economic event with recessionary impact and/or
inadequate channel partner management and support,
the impact of changes to direct and indirect customer
payment terms and increased customer insolvencies was
considered. For example, forecast collection rates were
Company Information
Darktrace plc is a company incorporated in England and Wales under company number 13264637. The principal place of business
is Maurice Wilkes Building, St John’s Innovation Park, Cowley Road, Cambridge.
FINANCIAL STATEMENTS / Consolidated financial statements / 157
modelled to drop lower than at any point during the worst
of the COVID-19 uncertainty and corresponding payment
delays. Meanwhile estimated bad debt expense for the
period was increased fivefold vs. the base case forecast,
and the Group’s base case forecast invoicing profile was
amended to include a material shift towards quarterly and
monthly invoicing.
Combined, ‘worst case’ scenario: This scenario sought
to present an extreme and unreasonable ‘worst case’
outcome by combining the three aforementioned
scenarios. No active cost saving measures were enacted
during the period and the Group remained viable and in
compliance with its covenants within the period.
In each variation and combination of the adverse scenarios,
the Group is forecast to have sufficient resources to continue
to meet its liabilities as they fall due for at least 12 months from
the date of approval of the financial statements, and for each
scenario, active cost saving actions were not instigated as part
of the analysis. In the event that any of these adverse scenarios
were to occur, controllable mitigating actions are available to
the Group should they be required.
As an additional provision, the Directors also reviewed
the results of reverse stress testing performed to provide
an illustration of the level of churn and deterioration in
new customer acquisition and customer payment terms
which would be required to trigger a breach in the Group’s
covenants or exhaust cash down to minimum working capital
requirements. The conditions necessary to approach either of
these parameters are extreme and would ultimately require no
active cost saving actions to be enacted at any point. As such,
the Directors consider their likelihood as highly remote given
the resilient nature of the business model, as demonstrated by
the growth in revenues, customer numbers and employees in
recent reporting periods. The robust consolidated statement
of financial position, with $357.0 million of cash available and
continued strong receivables collection rate of the Group
demonstrated during the COVID-19 pandemic and the macro-
economic uncertainties through FY 2023 gives further support
to the resilience of the Group’s business model.
The results of these assessments have enabled the Directors
to assert a reasonable expectation that the Group has
adequate resources to continue as a going concern for a
period of at least 12 months from the date of approval of the
financial statements. Accordingly, the Directors are of the view
that the preparation of the consolidated financial statements
on a going concern basis continues to be appropriate and
in accordance with UK-adopted International Accounting
Standards and with the requirements of the Companies
Act 2006.
Foreign Currency Translation
Functional and Presentation Currency
The consolidated financial statements are presented in
U.S. Dollars (“USD”) which is the functional currency of the
Company.
Group Companies
Items included in these consolidated financial statements
are measured using the functional currency for Darktrace plc.
The functional currency of Darktrace plc is also the functional
currency of all subsidiaries.
In the previous year, goodwill and fair value adjustments arising
on the acquisition of a foreign operation are treated as assets
and liabilities of the foreign operation and translated at the
closing rate, since 1 July 2022 the functional currency of that
foreign operation has changed to USD.
In the previous year, the results and financial position of
foreign operations (none of which has the currency of a
hyperinflationary economy) that have a functional currency
different from the presentation currency are translated into
the presentation currency as follows:
assets and liabilities for each statement of financial position
presented are translated at the closing rate at the date of
that statement of financial position;
income and expenses for each statement of profit
or loss and statement of comprehensive income are
translated at average exchange rates (unless this is not a
reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case
income and expenses are translated at the dates of the
transactions); and
all resulting exchange differences are recognised in other
comprehensive income.
Transactions and Balances
Foreign currency transactions are translated into the
functional currencies of Darktrace plc and all of its subsidiaries
using the exchange rate as at the time of transaction. Foreign
exchange gains and losses resulting from the settlement
of such transactions, and from the translation of monetary
assets and liabilities denominated in foreign currencies at
month end exchange rates, are generally recognised in the
consolidated statement of comprehensive income. All foreign
exchange gains and losses are presented in the consolidated
statement of comprehensive income on a net basis within
foreign exchange differences. Translation differences on
assets and liabilities carried at fair value are reported as
part of the fair value gain or loss. Realised foreign exchange
differences relating to working capital balances are included
in the relevant lines within the cash flow statement; unrealised
foreign exchange differences are reported separately in the
cash flow.
158 / FINANCIAL STATEMENTS / Consolidated financial statements
Basis of Consolidation
These financial statements present the results of Darktrace plc
and its subsidiaries as the Group. Intercompany transactions
and balances between Darktrace and its subsidiaries are
therefore eliminated in full.
Subsidiaries are entities over which Darktrace plc is exposed
or has rights to variable returns from its involvement with
the subsidiary, and it can affect those returns through its
power over the subsidiary. Darktrace plc can direct decisions
through its ownership and, if applicable, voting rights. Except
for Darktrace Netherlands B.V., all the Company’s subsidiaries
have been created by, rather than acquired by, Darktrace
plc, and no subsidiaries have been closed or otherwise
disposed of. Where subsidiaries are acquired, the profit or loss
attributable to shareholders includes the profit or loss of the
subsidiary from the date of acquisition. Were subsidiaries to be
disposed of during the year, the profit or loss attributable to
shareholders would include the profit or loss of the subsidiary
to the date of disposal.
The Directors have determined that they control a company
called Darktrace Employee Benefit Trust (“EBT”), even though
Darktrace plc owns 0% of the issued capital of this entity.
Equiniti Trust (Jersey) Limited is the trustee of EBT. It is a
controlled entity of Darktrace plc, because Darktrace plc is
exposed to, and has right to, variable returns from this entity
and is able to use its power over the entity to affect those
returns, therefore EBT has been consolidated.
Impairment of Non-Financial Assets
Assets are tested for impairment whenever events or changes
in circumstances indicate that the carrying amount may
not be recoverable. Intangible assets that are not subject
to amortisation because they are not yet in use are tested
annually for impairment, or more frequently if events or changes
in circumstances indicate that they might be impaired. An
impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value
less costs of disposal and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash inflows which
are largely independent of the cash inflows from other assets
or groups of assets (cash-generating units). Non-financial
assets that suffered an impairment are reviewed for possible
reversal of the impairment at the end of each reporting period.
Reversals of impairment losses are limited such that the value
of the asset cannot exceed the carrying amount it would have
had no impairment been recognised.
Key judgements and estimates
The preparation of consolidated financial statements in
accordance with IFRS requires Management to make
judgements, estimates and assumptions that affect the
reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the year end and the reported
amount of revenues and expenses during the reported period.
Actual results may differ from these estimates. Estimates and
underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the
period in which the estimates are revised and for any future
periods affected. The areas involving significant judgements
and estimates are:
Significant judgement in revenue recognition in
determining one performance obligation exists – see
note 4;
Significant judgement in assessment of control of
appliances – see note 18;
Significant estimate in deferred tax asset recognised on
losses carried forward – see note 25; and
Significant estimate in share price used to calculate the
provision for share option related employer tax changes –
see note 15.
2. Previous year acquisition
On 1 March 2022 Darktrace acquired the entire issued share
capital of Cybersprint B.V. (“Cybersprint”), an attack surface
management company that provides continuous, real-time
insights from an outside-in perspective to eliminate blind spots
and detect risks. The acquisition of Cybersprint is aligned with
Darktrace’s vision of delivering a ‘Continuous Cyber AI Loop’
and complements its Self-Learning technology and inside-out
view. On 16 January 2023 Cybersprint B.V. changed its name to
Darktrace Netherlands B.V.
Darktrace acquired Cybersprint for €47.5 million ($53.7
million), paid 75% in cash and 25% in equity. Following
adjustments for cash balances, third party debt and working
capital the consideration has been adjusted to $36.1 million
cash consideration and $8.2 million equity consideration. In
particular certain shares issued were treated as a remuneration
under IFRS 2- Share-based payment (note 10).
In the four months to 30 June 2022 the subsidiary contributed
revenue of $1.4 million, with a net loss of $0.3 million to the
consolidated statement of comprehensive income. If the
acquisition had occurred on 1 July 2021, Group revenue would
have been an estimated $2.3 million higher and consolidated
net profit would have been $4.8 million lower. In determining
these amounts, Management has assumed that the fair value
adjustments that arose on the date of acquisition would have
been the same if the acquisition occurred on 1 July 2021.
FINANCIAL STATEMENTS / Consolidated financial statements / 159
Effect of acquisition
The software acquired was valued using an income approach
model by estimating future cash flows generated by the
technology and discounting them to present value using
rates in line with a market participant expectation. As part of
the acquisition, goodwill of $40.9 million has been recognised
which is not deductible for tax purposes. Since the acquisition
date, up to 30 June 2022, the goodwill balance has decreased
by $2.7 million as a result of foreign exchange effects. On 1
July 2022 Darktrace Netherlands B.V. changed its functional
currency to USD, in line with other Darktrace subsidiaries and
therefore no further foreign exchange effects are accounted
for in the current year.
The acquisition had the following effect on the Group’s assets
and liabilities.
building a competing product but ultimately concluded that
the time taken, plus the opportunity cost against competitors,
warranted acquiring the technology.
The residual economic goodwill reflects the significant
opportunity for future growth in integrating Cybersprint’s
development team and selling the technology to new
customers and cross-selling to Darktrace’s existing
customers, as well as further exploiting and developing the
current technology over time to improve its functionality
and wider synergies deriving from the integration of the
two business and development teams. Given the relatively
insignificant customer relationships acquired and the fact that
the technology acquired has significant obsolescence over
time (the UEL has been determined to be five years), a lot of
the value of the acquisition derives from future potential of the
ongoing technology development and the generation of new
customer income streams which are not attributable to any
intangible assets at acquisition.
Refer to note 16 for details on goodwill.
Equity instruments issued
2,573,648 shares in Darktrace plc were issued as consideration
to the sellers (Cybersprint shareholders before acquisition).
The fair value of the acquirer’s equity interests issued has
been determined as consideration for the acquired business.
Fair value was the quoted share price, on the acquisition date
(£4.59/ $6.15), multiplied by the number of shares issued for
publicly traded shares.
The rights to 1,235,741 shares issued to certain employees of
Cybersprint is contingent on continued employment. In the
event that within 3 years from completion certain Cybersprint
employees (and Sellers) are no longer employed by Darktrace,
they will be required to pay a cash penalty to Darktrace in
an amount which varies from 89% to 33% of the fair value of
the instruments, depending on the employee leaving before
completion of the first, second or third anniversary from the
completion date. These shares have therefore been treated as
remuneration and have been accounted for as equity-settled
share-based payments under IFRS 2. The related share-based
payment charge has and will be expensed over the 3 year
period from acquisition subject to service conditions. The
charge related to the year was $3.7 million (from acquisition
to 30 June 2022 was $1.4 million) and the remaining value to
be taken in future years of $2.5 million has been included in
prepayments at 30 June 2023 ($6.2 million at 30 June 2022).
Acquisition related costs
The Group incurred acquisition related cost of $0.9 million
related to legal and professional fees. These costs have
been included in administrative expenses in the Group’s
consolidated statement of comprehensive income in FY 2022.
Fair values
on acquisition
Acquiree’s net assets
at the acquisition date $'000
Intangible assets: (note 17)
- Customer Relationship 930
- Software 9,647
Property, plant and equipment (note 18) 108
Right-of-use assets (note 19) 239
Trade and other receivables 892
Cash and cash equivalents 411
Interest-bearing loans and borrowings (1,347)
Trade and other payables (4,267)
Deferred revenue (2,172)
Lease liabilities (248)
Deferred tax assets (note 25) 1,950
Deferred tax liabilities (note 25) (2,655)
(A) Net identifiable assets and liabilities 3,487
Cash consideration relating to business
combination
36,140
Equity instruments issued 8,224
(B)Total consideration 44,364
Goodwill (B-A) 40,877
Goodwill
The acquisition of Cybersprint accelerated Darktrace’s entry
into the fast-moving attack surface management market,
whilst complementing existing offerings in Darktrace’s
product line. The Cybersprint technology has been integrated
into Darktrace’s Prevent product line. Darktrace considered
160 / FINANCIAL STATEMENTS / Consolidated financial statements
Performance of the Group
3. Operating Segment
Segment Reporting policy
The Group has concluded that it operates in one business
segment as defined by IFRS 8: Operating Segments, being the
development and sale of cyber-threat defence technology.
The Chief Operating Decision Makers (the “CODMs”), which
have been identified as the Chief Executive Officer (CEO) and
Chief Financial Officer (CFO), make operating decisions for a
single operating unit and operating performance is assessed
as a single operating segment. The information used by the
CODMs includes the information presented in these financial
statements, as well as various alternative performance
measures as disclosed in the strategic report. Further there are
no separately identifiable assets attributable to any separate
business activity or business unit.
The information used by the Group’s CODMs to make decisions
about the allocation of resources and to assess performance
is presented on a consolidated Group basis.
Refer to note 4 for disaggregated analysis on revenue from
contracts with customers.
The non-current assets presented below exclude any deferred
tax assets and deposits.
4. Revenue from contracts with customers
Revenue Recognition policy
The Group does not recognise any revenue until there is a
legally binding contract in place direct with a customer or with
a reseller partner acting on behalf of a customer (i.e. end-user),
the commencement date of that agreement has passed,
and the obligations to fulfil that contract have been met. It
applies the IFRS 15: Revenue from Contracts with Customers,
principles-based, five step model to all contracts as follows:
Identify the contract with the customer;
Identify the distinct performance obligations in
the contract;
Determine the transaction price;
Allocate the transaction price to the performance
obligations in the contracts, on a relative stand-alone
selling price basis; and
Recognise revenue when the entity satisfies its
performance obligations.
The Group has only a single performance obligation for most
contracts, giving access to the Group’s Cyber AI Platform and
ancillary services to its customers as such the transaction
price is the total amount charged to the customer over the
service period.
Most of the Group’s revenue is derived from multi-period
subscription or licence contracts that allow access to the
Cyber AI Platform. This revenue is recognised on a straight-line
basis over the subscription or licence period as the customer
simultaneously receives and consumes the benefits from the
products it purchased within the Group’s Cyber AI Platform
as throughout the life of the contract. The Group’s efforts
are expended evenly throughout the subscription period
and therefore using the input method under IFRS 15, it is
appropriate to recognise revenue on a straight-line basis. The
Group does not have any variable consideration as defined
under IFRS 15.
In a very small number of cases, the Group sells supplementary
training or extra appliances separately from its software
product deployments, but always to customers who have
software product deployments. The revenue from these
contracts is recognised at the point in time when the training
or appliance is delivered.
Contracts where terms are subsequently modified (for upsells,
license expansions, etc) are assessed in accordance with IFRS
15 and are treated either as a separate contract with revenue
recognition commencing from the modification date or as a
cumulative catch-up adjustment to revenue recognised at the
point of modification based on the new contractual terms.
Non-current assets
by geographical market
30 June
2023
30 June
2022
$’000 $’000
USA 62,827 63,408
United Kingdom 76,743 83,223
Europe 36,355 34,357
Rest of world 27,220 24,505
203,145 205,493
FINANCIAL STATEMENTS / Consolidated financial statements / 161
Contracts where it is not probable that the entity will collect
the consideration to which it will be entitled in exchange for
the goods or services that will be transferred to the customer
and for which a suspension notice has been applied and
the performance obligations relating to future services is
considered curtailed, are considered ceased and therefore
related deferred revenue balances are derecognised and any
receivable balance fully provided or written off. In this case,
Management accounts for the remainder of the contract as if
the criteria to be a contract had not been met (IFRS 15).
The Group deploys a significant portion of its software on
appliances that it delivers to the customer. These appliances
are encrypted devices that can only be used to run the Group’s
software. They cannot be used for any other purpose and have
no separate value to the customer, and as the Group retrieves
its appliances at the end of deployments, each appliance may
be redeployed multiple times, in multiple situations over its
useful life. The Group considers that the appliances it deploys
are an integral part of the delivery mechanism for the service
to the customer and are not normally sold to the customer
unless required for legal or regulatory reasons.
Customers are generally billed in advance, with credit terms of
typically 30-60 days, in line with market practice. In instances
where payment for the subscription is within 12 months or
less of the service being provided Darktrace has taken the
practical expedient under the standard of not adjusting for
any financing component. In some instances, the Group
bills in advance for periods of greater than one year. In these
instances no financing component is deemed to be present
as this arrangement is customer driven.
Principal vs agent assessment
Darktrace sells its products and services either directly to end-
users or through channel partners. The business operates two
types of partner relationships, one where the contract is with
the reseller partner and another where it is with the end-user
but the partner receives a referral fee.
Most partner deals involve a reseller partner who takes
Darktrace to the end-users. In these instances, Darktrace
sells to the reseller partner, who is the contracting entity, and
therefore different from the end-user that will be provided with
the services. Darktrace will only invoice the partner and it is the
partner who controls pricing with the end-user, and bears the
credit and foreign currency risk.
When revenues are generated through a reseller partner,
Darktrace requires that every partner contract be related to a
specific end-user (Darktrace has a direct operating relationship
with the end-user as most partner contracts are co-sold and
Darktrace employees carry out the vast majority of pre-sale
product scoping directly with the end-user). Darktrace only
recognises revenue for the contract value between Darktrace
and the partner, it does not recognise any benefit from any
mark-up that the partner adds to determine its price to the
end-user. Once the Darktrace/partner and partner/end-user
contracts have been finalised and the end-user is able to
deploy the purchased products and services, Darktrace will
recognise revenue as required under IFRS 15.
An intermediary partner is the principal in an arrangement
with the end-user, and therefore, Darktrace’s customer, if it
controls the offering before it is transferred to the end-user.
As Darktrace controls all aspects of the products and services
it sells, including setting the price to the reseller partner (but
not the end-user), and bears the credit and foreign exchange
risk in its contract with the reseller partner, it has concluded
that Darktrace is a principal in its contracts with reseller
partners. Darktrace has also considered the role of the reseller
partner in their contract with the end-user, and based on all
information available, primarily considering the control of
pricing and the assumption of credit and foreign exchange
risk, has concluded that the reseller is principal in their contract
with the end-user. While Darktrace has responsibility under its
Master Service Agreement for fulfilment of the products and
services provided to the end-user, the reseller partner has
responsibility for the pricing of Darktrace products to the end-
user, and any invoicing and credit concerns.
There is a smaller cohort of referral partners who Darktrace
works with who will initiate the customer contact, but who do
not take on the contractual risk. In these cases, Darktrace
enters into a direct contract with the end-user and is therefore
the principal in these transactions. The partner will earn
usually a commission or a fee which is classified as sales and
marketing cost.
Significant Judgement in Revenue Recognition in
Determining one Performance Obligation Exists
Group revenue is from subscription contracts and is recognised
over the term of the contract.
Management considers that these contracts consist of a
single performance obligation, which is the ongoing access
to the portions of the Cyber AI platform purchased by the
customer. The Cyber AI platform is a single combined solution,
with customers able to choose the appropriate product mix
based on their own needs. The key contractual elements
considered by Management included the deployment of
the software (on appliances or virtually), the core software
products and subsequent updates. Appliance deployments
typically take an hour or less once the appliance is received
by the customer, and virtual deployments can be enabled
immediately, so deployment is in line with start of the
162 / FINANCIAL STATEMENTS / Consolidated financial statements
Contract Assets and Liabilities Related to Contracts
with Customers
The following table provides information on accrued revenue
and deferred revenue from contracts with customers.
Revenue Recognised in Relation to Deferred Revenues
(Contract Liabilities)
The following table shows how much revenue recognised
in each reporting period related to brought-forward
contract liabilities:
Revenue from customers has been attributed to the
geographic market based on contractual location. No single
customer accounted for more than 10% of revenue in FY 2023
or FY 2022.
Accrued income has decreased year-over-year due to timing
in raising invoices, and remains a reasonably small value
relative to revenue recognised.
Contracts are typically invoiced between one month and more
than three years in advance, with the majority of contracts
being invoiced annually in advance. Deferred revenue reflects
the difference between invoicing and associated payment
terms, and fulfilment of the performance obligation and has
increased year-over-year as expected with the continued
growth in revenue.
Details of costs to obtain contracts with customers are shown
in note 12.
subscription contract that has, on average, a three-year
life. Subsequent updates to the platform ensure that the
latest software is available with the latest capabilities but do
not materially change the functionality of the platform. The
products and, to a lesser extent, services are significantly
integrated to provide a combined output and services which
are highly interdependent with (and are not separately
available from) the subscription to products within the Cyber
AI platform. Some customers may purchase ancillary services
or training, but these are immaterial to the total contract value
and are not deemed to impact the assessment of there being
only a single performance obligation.
Disaggregation of revenue
Revenue recognised at a point in time is not significant to the
reported results in any year. This includes revenue generated
by separate contracts for training and sale of appliances. In
the year ended 30 June 2023, this revenue amounted to $0.3
million (year ended 30 June 2022: $1.5 million).
Management has assessed that the single performance
obligation that it is providing to customers is access to
products, primarily software, within the Darktrace Cyber AI
platform to protect customers’ digital estates from the impact
of cyber threats.
FY 2023 FY 2022
$'000
% of
revenue $'000
% of
revenue
USA 188,808 34.6% 142,697 34.3%
United Kingdom 82,841 15.2% 69,228 16.7%
Europe 135,667 24.9% 100,244 24.1%
Rest of world 138,114 25.3% 103,313 24.9%
545,430 100% 415,482 100%
30 June
2023
30 June
2022
$'000 $'000
Accrued income 3,445 4,152
Total accrued income 3,445 4,152
Current deferred revenue 283,678 222,419
Non-current deferred revenue 28,439 29,432
Total deferred revenue 312,117 251,851
Revenue Recognised in Relation to
Contract Liabilities
FY 2023 FY 2022
$’000 $’000
Revenue recognised that was included in the
contract liability balance at the beginning of
the period
222,419 154,505
% of total revenue recognised in the period 40.8% 37.2%
FINANCIAL STATEMENTS / Consolidated financial statements / 163
Future contracted revenue
(formerly revenue expected to be recognised)
Future contracted revenue represents revenue expected
to be recognised over the term of the contract, i.e. over the
subscription period, from the contract commencement date
to the end of the subscription period as identified in the
contract, calculated by valuing all uninvoiced future contract
value, including one-time product or service purchases, at
the exchange rates in effect on the reporting date, and all
previously invoiced future revenue at the relevant transaction
exchange rates. In line with IFRIC 22, the date of the transaction
for the purpose of determining the exchange rate to use on
initial recognition of the related asset, expense or income (in
whole or part) is the date on which an entity initially recognises
the non-monetary asset or non-monetary liability arising from
the payment or receipt of advance consideration. One-time
revenue is included in the calculation but because of the high
proportion of subscription revenue in Darktrace’s revenue
base, it is not material. Future contract value does not include
any opt-out clauses i.e. revenue expected after opt-out date,
up to the termination date of the contract.
Prior year adjustment to the disclosure
However, subsequent to the publication of its FY 2022 Annual
Report, Darktrace identified that ‘’Revenue expected to be
recognised’’ i.e. future contracted revenue mistakenly included
expected revenue after the opt-out date, inconsistent with
IFRS 15 paragraph 11. This error accounts for $33.0 million
mistakenly disclosed in the expected future revenue to be
recognised. Darktrace has corrected the error in its disclosure
in these financial statements as presented below. This did
not affect any reported numbers in the primary financial
statements and the error was limited to this disclosure only.
30 June 2022
Reported Restatement
30 June 2022
Restated
$'000 $’000 $'000
Due within 12 months 477,025 (25,595) 451,430
Due within 1-2 years 330,045 (4,335) 325,710
Due within 2-3 years 196,546 (1,833) 194,713
Due within 3-4 years 60,793 (433) 60,360
Due over 4 years 4,621 (41) 4,580
1,069,030 (32,237) 1,036,793
30 June 2023
30 June 2022
Restated
$'000 $'000
Due within 12 months 576,326 451,430
Due within 1-2 years 397,783 325,710
Due within 2-3 years 216,513 194,713
Due within 3-4 years 72,263 60,360
Due over 4 years 3,552 4,580
1,266,438 1,036,793
5. Material Profit or Loss Items
Cost of Sales
Cost of sales is made up of two primary cost categories: the
cost of software deployment and labour costs for support or
supplemental monitoring and response services.
The largest of the deployment costs is depreciation on
appliances used to deliver the software to customers under
contracts. The depreciation of appliances is apportioned to
cost of sales based on the proportion of the Group’s appliance
pool deployed to customer sites and all appliance depreciation
related to customer contracts is recognised in cost of sales.
Where the Group deploys software to a contracted customer
virtually, the associated hosting costs are also recognised in
Cost of sales. Cost of sales also includes shipping costs and
other costs necessary to deploy the Group’s software products.
Operating Cost Apportionment
Wherever possible, operating costs are attributed to either
Sales and marketing, Research and development or Other
administrative costs by the direct method. When costs apply
to more than one cost category, they are apportioned using an
allocation methodology based on the most appropriate direct
data source.
The Group apportions the depreciation of appliances used to
run Proof of Value (“POV”) demonstrations for prospects (see
note 18 for additional detail) to Sales and marketing. Similarly,
for POVs of virtually deployed products, the associated hosting
costs are recognised as Sales and marketing costs. Also, pre-
sales support staff, whose costs are primarily attributed to
Sales and marketing, may also perform post-sales support
functions. This work is tracked, and the compensation costs
associated with that work are allocated to Cost of sales.
Research and development (“R&D”) primarily consists of
compensation and other directly attributable costs of the
staff who develop the Group’s software products. The Group
capitalises the costs of development work that meets the
criteria for capitalisation and amortises those costs beginning
once the software is released to production and/or brought
into use. Developers and Analysts working in the Group’s
R&D function may also provide supplemental monitoring and
response services to customers. This work is tracked and the
compensation costs associated with that work are allocated
to Cost of sales. Research and development expenditures
that do not meet the criteria for capitalisation, are recognised
as expenses when incurred. Development costs previously
recognised as expenses are not recognised as assets in any
subsequent period. Development costs for features and
enhancements that are available to all customers without
additional charge, are expensed as incurred. Amortisation
of capitalised development costs is recognised as R&D
cost (note 17).
164 / FINANCIAL STATEMENTS / Consolidated financial statements
Audit related assurance services includes the fees in relation
to the review of the Group interim consolidated financial
statements as at 31 December 2022. Other non-audit services
are in relation to the review of the FRC corporate reporting
letter to the company.
Auditors’ remuneration
FY 2023 FY 2022
$’000 $’000
Audit of the Group and parent company
accounts
1,167 700
Audit of the accounts of the Company’s
subsidiaries by the Group auditors and its
associates
735 623
Total audit fees 1,902 1,323
Audit-related assurance services 124 75
Other non-audit services 16 -
Total non-audit fees 140 75
6. Employee Costs
Employees Benefits
Short-Term Obligations
Liabilities for wages and salaries, including non-monetary
benefits, annual leave and accumulating sick leave that are
expected to be settled wholly within 12 months after the end
of the period in which the employees render the related
service are recognised up to the end of the reporting period
and are measured at the amounts expected to be paid
when the liabilities are settled. The liabilities are presented
as current employee benefit obligations in the statement of
financial position.
Post-Employment Obligations - Defined Contribution Plans
For defined contribution plans, the Group pays contributions
to publicly or privately administered pension insurance plans
on a mandatory, contractual or voluntary basis. The Group has
no further payment obligations once the contributions have
been paid. The contributions are recognised as expense when
they are due. Prepaid contributions are recognised as an asset
to the extent that a cash refund or a reduction in the future
payments is available.
The Company operates a stakeholder pension scheme and
contributes to several personal pension schemes on behalf of
its employees. The Group also contributes to State-sponsored
pension schemes in multiple countries as legislated.
Bonus Plans
The Group recognises a liability and an expense for bonuses
based on Management’s best estimate of the expected
payment for discretionary bonuses and then will make the
appropriate adjustments if necessary, at the time these
bonuses are paid. The Group recognises a liability where
contractually obliged or where there is a past practice that has
created a constructive obligation.
Employee Benefits Expense
Expenses recognised for the Group’s employee compensation
and benefits are presented below:
*Prior year wages and salaries figure was incorrectly disclosed net of $19.1 million,
being the capitalised commission cost net of the related amortisation.
FY 2023 FY 2022*
$’000 $’000
Wages and salaries 268,766 194,744
Social security 26,247 20,166
Pension 4,489 3,319
Employee cost 299,502 218,229
Share-based payment charge (note 10) 39,989 44,018
Total cost 339,491 262,247
Share-based payment cost and related share-option related
employer tax charges are apportioned on a direct basis
depending on the department the employee reports into.
The Group has identified a number of items which are material
due to the significance of their nature and or amount. These
are listed separately here to provide a better understanding
of the financial performance of the Group, if not presented
elsewhere in these financial statements.
Hosting fees related to customer contracts are classified
within cost of sales for an amount of $16.9 million (FY 2022
$10.7 million) and those related to POV are classified to sales
and marketing costs for an amount of $4.5 million (FY 2022
$4.5 million).
Legal and professional fees increased as a result of costs spent
in preparation for Darktrace Federal Inc trading activity and
other corporate activities including the equity transactions, the
refinancing activity and some legacy litigation cost. Accounting
advice costs increased due to the EY independent review and
other advisory services in relation to corporate activities.
Brand strategy costs in the prior year related to costs for
Darktrace’s new branding and logo change.
FY 2023 FY 2022
$'000 $'000
Hosting fees 21,353 15,191
Legal and professional fees 11,588 7,208
New software implementation costs 3,873 -
Accounting advice costs 3,765 1,604
Auditors' remuneration 2,042 1,398
Brand strategy costs - 2,030
FINANCIAL STATEMENTS / Consolidated financial statements / 165
7. Earnings Per Share (“EPS”)
Earnings per Share
Basic Earnings per Share
Basic earnings per share is calculated by dividing the profit
attributable to owners of Darktrace, excluding any costs of
servicing equity other than ordinary shares, by the weighted
average number of ordinary shares outstanding during the
reporting period, adjusted for bonus elements in ordinary
shares issued during the year.
Diluted Earnings per Share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account
the after-income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares, and
the weighted average number of additional ordinary shares
that would have been outstanding assuming the conversion of
all dilutive potential ordinary shares.
*Prior year wages and salaries figure was incorrectly disclosed net of $19.1 million,
being the capitalised commission cost net of the related amortisation.
Employee costs include a total of $53.5 million (FY 2022: $41.0
million) of capitalised commission costs which are amortised
over the expected contract life.
Total cost is split as follows:
The average number of employees, including Executive
Directors, during the year was as follows:
Total amounts payable to the highest paid Director were
$2,043,564 (2022: $1,585,972) in respect of emoluments. Three
Directors were members of the Group’s defined contribution
pension scheme in 2023 (2022: Three). The highest paid
Director’s pension was $24,017 (2022: $25,430).
Information on Directors’ remuneration for the year ended 30
June 2023 is set out on page 121.
Directors’ emoluments and benefits were as follows:
FY 2023 FY 2022*
$’000 $’000
Cost of sales 18,577 13,320
Sales and marketing 204,748 160,506
Research and development 45,058 28,418
Other administrative 71,108 60,003
Total cost 339,491 262,247
FY 2023 FY 2022
Number Number
Sales 1,501 1,202
Research and development 345 269
Administration and operations 423 371
2,269 1,842
FY 2023 FY 2022
$’000 $’000
Emoluments 3,579 3,479
Gains on exercise of share options 20,567 1,760
24,146 5,239
FY 2023 FY 2022
$'000 $'000
Profit attributable to ordinary
shareholders
58,958 1,457
Weighted average ordinary shares 714,928,452
698,145,263
Effect of treasury shares (54,608,143) (54,866,296)
Weighted-average number of
ordinary shares at period end
660,320,309 643,278,967
Add dilutive effect of share-based
payment plans
17,590,707 52,302,067
Weighted-average number of
shares for calculating diluted
earnings per share at period end
677,911,016 695,581,034
Basic earnings per share
$0.09 $0.00
Diluted earnings per share $0.09 $0.00
166 / FINANCIAL STATEMENTS / Consolidated financial statements
Merger reserve: At IPO Darktrace plc issued equity
shares in consideration for securing a holding of 100%
of the nominal value of each class of equity in Darktrace
Holdings Limited, therefore the application of merger
relief is compulsory. Merger relief is a statutory relief
from recognising any share premium on shares issued.
Instead, a merger reserve is recorded equal to the value
of share premium which would have been recorded if the
provisions of section 612 of the Companies Act 2006 had
not been applicable. Furthermore, as Management has
used the retrospective presentation method (merger
accounting), the equity structure (that is, the issued
shares capital) reflects that of the new entity (Darktrace
plc), with other amounts in equity (such as retained
earnings or cumulative translation reserve) being those
from the consolidated financial statements of the previous
Group holding entity (Darktrace Holdings Limited). The
resulting difference has been recognised as a component
of the equity as a merger reserve.
Foreign currency translation reserve: result of translating
the financial statement items from the functional currency
into the presentational currency using the exchange
rate at the statement of financial position date before
Darktrace Holdings Limited and its subsidiaries changed
their functional currency on 1 July 2019. Cybersprint
changed its functional currency from Euro to US Dollar on
1 July 2022 (see note 2 for details).
Stock compensation reserve: The grant-date fair value
of share-based payments awards granted to employees
(note 10) is recognised as an employee expense, with
a corresponding increase in stock compensation
reserve, over the period that the employees become
unconditionally entitled to the awards.
Treasury reserve: includes shares bought back by
Darktrace plc during the year and shares that are held
by the Equiniti Trust (Jersey) Limited for the purpose of
issuing shares under the Darktrace plc employee share
scheme. Shares issued to employees are recognised
using the weighted average price method.
Retained earnings: represents retained profits and losses.
Debt and Equity
8. Finance costs and finance Income
Finance costs and finance
The Group earns interest on its cash balances through its
deposits with banks.
Interest income on financial assets at amortised cost
is calculated using the effective interest method and is
recognised in the consolidated statement of comprehensive
income as part of finance income. All finance costs are
recognised in the consolidated statement of comprehensive
income as part of finance costs in the period in which they are
incurred. Interest income has increased by $7.5 million due to
increases in interest rates.
FY 2023 FY 2022
$’000 $’000
Finance costs
Interest on lease liabilities 3,493 2,735
Interest expense - 72
3,493 2,807
Finance income
Interest income from cash and cash
equivalents
8,016 518
8,016 518
Share capital and share premium
9. Share capital and share premium
Contributed Equity
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds.
Equity comprises the following:
Share capital: represents the nominal value of equity
shares. Where shares are redeemed or purchased
wholly out of profits available for distribution, a sum
equal to the amount by which the company’s share
capital is diminished on cancellation of the shares
(the nominal value of the shares) is transferred to the
capital redemption reserve in line with section 733 of
Companies Act.
Share premium: represents the excess over nominal value
of the consideration received for equity shares, net of any
transaction costs associated with the issue of shares.
FINANCIAL STATEMENTS / Consolidated financial statements / 167
FY 2022 Share premium cancellation
The share-premium cancellation received shareholder
approval prior to the IPO on 29 April 2021. The share premium
was cancelled on 28 September 2021 following the registration
of the order of the High Court of Justice (Chancery Division)
by the Registrar of Companies. The total amount of share
premium at the time of cancellation has been reclassified to
retained earnings.
FY 2022 Shares issued
During FY 2022 certain employees have exercised their
options (see note 10 for details on share-based payment
transactions). These have been satisfied through the issuance
of new shares before the shares buy back happened or if
Darktrace Employee Benefit Trust (see below) could not
satisfy the request for legal reasons.
FY 2022 Shares issued for acquisition
2,573,648 shares in Darktrace plc were issued as part of the
business combination (see note 2).
FY 2023 Preference and deferred shares cancellation
On 15 May 2023 50,000 redeemable preference shares were
cancelled. On 23 May 2023 120,063 deferred shares were
redeemed for a consideration of £1 and cancelled.
Treasury Reserve
FY 2022 Company Shares buyback
During December 2021 the company purchased 2,460,678
shares on-market to satisfy, in part, Darktrace’s pre-existing
obligations arising from its share incentive programmes. The
shares were acquired at an average price of £4.11 ($5.47) per
share, with prices ranging from £3.90 ($5.19) to £4.31 ($5.74).
The total cost of $13.6 million, including transaction costs, was
deducted from equity.
FY 2023 Share Buyback Programme and Cancellation
On 1 February 2023, Darktrace commenced a share buyback
programme of up to 35 million of its ordinary shares to be
completed no later than 31 October 2023. The maximum
Share capital
Number of
ordinary
shares of
£0.01 each
Number of
preference
shares of £1
each
Number of
deferred
shares of
£0.01 each
Total
number of
shares
Share
capital
$’000
Share
premium
$’000
Share capital
redemption
reserve
$’000
1 July 2021 697,630,127 50,000 120,063 697,800,190 9,756 224,782 -
Share cancellation - - - - - (224,782) -
Shares issued 1,581,578 - - 1,581,578 22 335 -
Shares issued for acquisition 2,573,648 - - 2,573,648 34 15,782 -
30 June 2022 701,785,353 50,000 120,063 701,955,416 9,812 16,117 -
Shares issued in the year 18,250,239 - - 18,250,239 222 191 -
Preference and deferred shares
cancellation
- (50,000) (120,063) (170,063) (71) - 71
Ordinary shares cancellation (13,280,100) - - (13,280,100) (184) - 184
30 June 2023 706,755,492 - - 706,755,492 9,779 16,308 255
amount allocated to the Programme is £75.0 million and
Darktrace is making and will continue to make appropriate
disclosures during the Buyback Period of the number of
Shares it has repurchased.
The purpose of the Programme is to reduce Darktrace’s issued
share capital and the purchased shares will be cancelled. As
at 30 June 2023 15,440,726 shares have been bought back
and 13,280,100 have been cancelled. At cancellation a capital
redemption reserve equal to the nominal amount of ordinary
shares cancelled is created. The shares were acquired at an
average price of £2.68 ($3.72) per share, with prices ranging
from £2.20 ($3.5) to £3.40 ($4.72). The total cost of $0.3 million,
including transaction costs, was deducted from equity.
At 30 June 2023 the company holds 3,621,634 shares in
treasury (30 June 2022: 2,038,774).
FY 2023 EBT Market Purchase Programme
During the year Equiniti Trust (Jersey) Limited, as Trustee of the
Darktrace Employee Benefit Trust (‘EBT’), completed market
purchases of ordinary shares of £0.01 each in the Company.
The January EBT Market Purchase Programme completed
on 18 April 2023 with the purchase of 28,301,976 shares for a
total aggregate consideration of £80.0 million ($94.3 million
inclusive of brokerage and dealing charges) which has been
deducted from equity. Shares purchased under the January
EBT Market Programme are used to satisfy existing, planned
and anticipated options and awards under Darktrace’s
employee share schemes, or as otherwise permissible within
the terms of the EBT trust deed. The shares were acquired at
an average price of £2.83 ($3.33) per share, with prices ranging
from £2.09 ($2.53) to £3.98 ($4.58).
At 30 June 2023 the EBT holds 63,121,031 shares (30 June
2022: 43,900,170).
168 / FINANCIAL STATEMENTS / Consolidated financial statements
10. Share-based payments
Share-based payments
The Group operates equity settled share-based payment
schemes. The equity settled share-based payments are
measured at fair value at the date of grant. Having a graded
vesting schedule, the fair value determined is expensed on a
straight-line basis over the requisite service period for each
separately vesting portion of the award as if the award was,
in-substance, multiple awards. The charge for the period is
allocated to the relevant statement of comprehensive income
categories where the employment costs of the employee who
is granted the equity options are charged.
The fair value of options and awards granted is recognised as
an employee benefits expense, with a corresponding increase
in equity. The total amount to be expensed is determined by
reference to the fair value of the options granted:
including any market performance conditions (e.g. the
entity’s share price);
excluding the impact of any service and non-market
performance vesting conditions (e.g. profitability, sales
growth targets and remaining an employee of the entity
over a specified time period); and
including the impact of any non-vesting conditions (e.g.
the requirement for employees to save or hold shares for
a specific period of time).
The total expense is recognised over the vesting period, which
is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each period, the entity revises
its estimates of the number of options and awards that are
expected to vest based on the non-market vesting and
service conditions. It recognises the impact of the revision to
original estimates, if any, in profit or loss, with a corresponding
adjustment to equity. When the options or awards are
exercised, the appropriate number of shares are issued to the
employee. The proceeds received from exercised options,
net of any directly attributable transaction costs, are credited
directly to equity.
Modification of share-based payments
Where the effect of the modification is to increase the value
of the award to an employee, the incremental fair value
is recognised as a cost. The incremental fair value is the
difference between the fair value of the original award and
that of the modified award, both measured at the date of
modification.
FY 2023 FY 2022
$'000 $'000
Sales and marketing 16,524 20,084
Research and development 6,712 6,522
Other administrative 16,753 17,412
Total share-based payment expense 39,989 44,018
WAEP $
FY 2023
Options
Number WAEP $
FY 2022
Options
Number
Outstanding
at 1 July
1.94 38,886,044 1.56 54,970,631
Lapsed 5.02 (158,074) 4.67 (948,289)
Exercised 0.98 (10,086,689) 0.46 (15,136,298)
Outstanding
at 30 June
2.23 28,641,281 1.94 38,886,044
Exercisable
at 30 June
2.39 26,605,865 1.66 33,226,669
Share-based payment charges have been made in the
consolidated statement of comprehensive income within the
following functional areas.
Other administrative share-based payment expense includes
$3.7 million related to shares issued in connection with the
acquisition of Cybersprint, treated as remuneration under IFRS
2 Share-Based Payments (FY 2022: $1.4 million) see note 2 for
details. $0.7 million of the share-based payment expense has
been capitalised under software under development (FY 2022:
$3.2 million).
Share-based payments are calculated in accordance with IFRS
2 – Share-based Payment. The Company has used a Black-
Scholes valuation model to value the options and growth shares
granted up to the IPO and a Monte Carlo Model for the awards
granted at and since IPO. Where an option scheme has no
market-based performance conditions attached to the award,
a Black-Scholes model is typically appropriate. The growth
shares have a hurdle, which is a market-based performance
condition, however, this is used as a proxy for an exercise price.
Therefore, Black-Scholes is still an appropriate model.
Option Schemes in Place Before IPO
Share options are exercisable at prices determined at the date
of grant. All awards vest over three years from the grant date
in six-month intervals, (i.e. 1/6 of the Awards will vest every six
months over 36 months) subject to continued employment.
Movements in the number of share options outstanding and
their related weighted average exercise prices (“WAEP”) are
as follows:
FINANCIAL STATEMENTS / Consolidated financial statements / 169
FY 2023 FY 2022
Range of exercise
prices WACL
Options
number WACL
Options
number
$0.00 - $0.23
(£0.00 - £0.18)
1.40 7,577,970 2.40 12,712,035
$0.41 - $0.67 (£0.32
- £0.53)
3.19 2,647,949 4.19 4,032,118
$1.37- $1.45 (£1.07
- £1.13)
4.45 1,703,785 5.45 2,564,592
$2.09 - $2.21 (£1.61
- £1.70)
4.89 2,059,364 5.89 2,270,226
$2.76 - $2.87 (£2.06
- £2.14)
5.98 8,818,333 6.98 11,218,529
$5.20 (£3.73) 7.72 5,833,880 8.72 6,088,544
5.72 28,641,281 6.72 38,886,044
Options exercised during the year had an average share price
at exercise of £3.87 ($4.91) (FY 2022: £4.75 ($5.99)).
The table below presents the weighted average remaining
contractual life (‘WACL’) and the price range for the options
outstanding at each year end:
AIP Awards
Performance Based Conditional Award
(the ‘Performance Awards’)
Vesting of Tranche 1 is dependent on Darktrace’s total
shareholder return (‘TSR’) performance over the period
from the Grant Date to the end of the second Financial Year,
ranked in comparison to the constituents of the FTSE 350
(ex. Investment companies). Tranche 2 vests dependent on
the same terms, albeit the measurement period runs from
the Grant Date to the end of the third Financial Year (i.e. an
additional year). Awards do not incorporate an exercise price.
Awards issued during the year also have market-based vesting
criteria with up to 80% of the awards vesting in accordance
with the conditions of the TSR Tranche and up to 20% of the
awards vesting in accordance with ARR growth targets at the
end of the performance period.
Executive Director Conditional Awards (‘Executive Awards’)
The Executive Awards carry the same market-based vesting
criteria as Tranche 2 of the Performance Awards. Additionally,
they have a holding period which determines that vested
shares must be retained for a period of five years from grant.
Awards do not incorporate an exercise price.
Top-Up Awards and modification
These awards vested according to a share price performance
hurdle measured over a one-year period following the
Admission Date. In essence, no shares vest where the closing
share price was £2.50 or less, where closing share price was
£5, 100% of the shares vest and where the closing share price
was between £2.50 and £5 the number of awards vests on
a straight-line basis. Those awards did not incorporate an
exercise price.
The performance period for the vesting of Top-Up awards
ended on 6 May 2022 with the original calculation based
on the share price for the 30-days up to the 6 May 2022.
Management determined that a much longer measurement
period was needed to ensure that the share price used to
determine vesting of the awards reflected Management’s
performance and the underlying performance of the business.
Management offered a modification to the employees to
extend the performance averaging period to 12 months ending
on the first anniversary of IPO resulting in 100% of the award
vesting but extending the service period to 31 October 2022.
The effect of the modification was to increase the value of the
award to the employees through removal of market conditions
and allowing the employee to have the maximum number of
shares although with a small extension of the employment
period i.e. vesting period, the incremental fair value increase
must be recognised as a cost over the vesting period. The
incremental fair value is the difference between the fair value
of the original award (measured using the Monte Carlo model)
and that of the modified award (time-based award means the
valuation is the share price at grant date), both measured at the
date of modification. There were no compensation payments
for this modification.
Time-based Awards
These awards vest according to time only. There is no market-
based vesting criteria and awards do not incorporate an
exercise price. The value of the time-based awards will simply
be the value of the underlying equity.
Movements in the number of share awards outstanding are
as follows:
In the UK, an award of shares or options to an employee
gives rise to a personal tax liability for the employee, related
to the fair value of the award when it vests. In order to meet
this tax liability, two executives surrendered as many shares
as are needed to raise proceeds equal to the tax liability (‘net
settlement’). This tax collection arrangements meant that the
equity–settled awards resulted in a cash cost for the Company
for the income tax for $9.7 million and an equal deduction
from equity.
FY 2023 FY 2022
Awards
number
Awards
number
Outstanding at 1 July 23,903,647 21,959,096
Granted 14,173,831 3,311,747
Lapsed (1,250,518) (1,055,798)
Exercised (19,872,266) (311,398)
Outstanding at 30 June 16,954,694 23,903,647
Exercisable at 30 June 179,290 26,000
170 / FINANCIAL STATEMENTS / Consolidated financial statements
Valuation
The fair value of share-based payments haas been calculated
using the Monte Carlo option pricing model. Monte Carlo
models are used to simulate a distribution of TSRs/share
prices. The model utilises random number generation with
the distribution determined by volatility, risk free rate and
expected life.
The Performance Awards carry market-based vesting criteria
which must be incorporated into the valuation. Vesting is
dependent upon the Company’s TSR performance ranked
against the constituents of the FTSE 350 (ex. investment
trusts) (‘FTSE Index’). TSR is defined as the change in Net
Return Index for a company over a relevant period. The Net
Return Index is equal to the index that reflects movements in
share price over a period, plus dividends which are assumed to
be reinvested on a net basis in shares on the ex-dividend date.
Up to 80% of the Awards will vest in accordance with the
TSR conditions and up to 20% in accordance with the
ARR conditions.
TSR is calculated over the ‘Performance Period’ using the
following formula: (TSR2-TSR1)/TSR1.
TSR1 is the Net Return Index at admission date
TSR 2 is the average Net Return Index over each weekday
during the three months period ending on the last day of
the TSR performance period.
The Company’s annualised recurring revenue (ARR) growth
will be measured between the basis year and the year ending
on the performance period end date.
A correlation coefficient is included to model the way in which
the price of a listed company’s stock tends to move in relation
to the stock of other listed companies. Expected volatility was
determined based on the historic volatility of comparable
companies. The expected life is the expected period from
grant to exercise based on Management’s best estimate.
Time-based Awards vest according to time only. There is
no strike price, no market-based vesting criteria and no
expectation of dividends. For purposes of the valuation, the
fair value of the time-based awards will simply be the value of
the underlying equity at the time they were granted.
The table below presents the key assumptions for the awards
valued at different grant dates during the prior year:
Performance awards
Time based
Awards
Top Up
Awards Modification
Grant date (Range) 23/08/21 - 28/06/22 05/11/21 - 26/05/22 14/04/22 - 17/06/22
Share price at grant date (Range) £3.29 ($4.04) - £5.78 ($7.87) £3.63 ($4.55) - £5.78 ($7.84) £3.24 ($3.97) - £4.11 ($5.35)
Exercise price - - -
Fair value per award (Range) £2.04 ($2.57) - £5.19 ($7.07) £3.63 ($4.56) - £5.78 ($7.84) £1.04 ($1.26) - £1.48 ($1.94)
Expected life in years (Range) 1.01 - 3.00 n/a 0.03 - 0.04
Expected volatility (Range) 40% - 50% n/a 70%
Risk free interest rate (Range) 0.34% -2.19% n/a 0.26% - 0.42%
Cancellation rate 10% n/a 10%
Dividend yield 0% n/a 0%
Correlation (Range) 15% - 20% n/a 0%
Number of awards 840,013 2,471,734 18,586,362
FINANCIAL STATEMENTS / Consolidated financial statements / 171
11. Capital Management Policies
and Procedures
The Group’s objectives when managing capital are to:
safeguard the ability to continue as a going concern, to
provide adequate returns for shareholders, and
maintain an optimal capital structure to reduce the cost
of capital.
In order to maintain or adjust the capital structure, the Group
may issue new shares or sell assets to reduce debt. The Group
monitors capital based on the carrying amount of the equity
less cash and cash equivalents as presented on the face of the
consolidated statement of financial position.
The table below presents the key assumptions for the awards valued at different grant dates during the current year:
Time based awards Performance awards
Grant dates (Range) 21/09/22 - 22/05/23 21/09/22 – 17/05/23
Share price at grant date (Range) £2.62 ($3.23) - £3.69 ($4.25) £2.62 ($3.23) - £3.69 ($4.25)
Exercise price - -
Fair value per award (Range) £2.62 ($3.23) - £3.69 ($4.25) £0.95 ($1.17) - £3.69 ($4.25)
Expected life in years (Range) n/a 1.78 - 3.00
Expected volatility n/a 50%
Risk free interest rate (Range) n/a 3.07% - 3.94%
Cancellation rate n/a 10%
Dividend yield n/a 0%
Correlation (Range) n/a 20 - 25%
Number of awards 7,179,220 6,994,611
FY 2023 FY 2022
$’000 $’000
Capital
Total equity 263,513 314,688
Less cash and cash equivalents (356,986) (390,623)
Total capital (93,473) (75,935)
Overall financing
Total equity 263,513 314,688
Deduction of leasing liabilities,
borrowings and other financing
liabilities
(57,608) (63,840)
Total financing 205,905 250,848
172 / FINANCIAL STATEMENTS / Consolidated financial statements
Working Capital
12. Capitalised Commission
Commission Cost Recognition
Commission costs are all recognised as Sales and marketing
costs. The Group pays commissions to sales staff and to
referral partners. IFRS 15 requires that certain costs incurred
in both obtaining and fulfilling customer contracts be deferred
on the statement of financial position where recoverable and
amortised over the period that an entity expects to benefit
from the customer relationship. The only significant cost
falling within the remit of IFRS 15 is the portion of commission
costs classified as a cost of contract acquisition. Depending
on their role in sales, staff receive either the first 50% or
100% of commission at the point of contract signing, which is
deemed to meet the criteria of being incurred solely to acquire
the contract. These transaction related commission costs,
including related social security and similar contributions,
are therefore capitalised and amortised over the customer
contract term, with the amortisation being recognised as
a Sales and marketing cost. Commissions paid to referral
partners are also capitalised and amortised to Sales and
marketing costs over the life of the related contracts.
30 June 2023 30 June 2022
By Geographic market $’000 $’000
USA 23,303 17,321
United Kingdom 10,933 10,142
Europe 23,742 17,060
Rest of World 18,675 12,631
76,653 57,154
Current 34,471 24,635
Non-current 42,182 32,519
76,653 57,154
Amortisation in the year 32,471 21,817
Impairment in the year 1,555 996
The remaining 50% of sales staff commission is paid on the
earlier of the full contract value being paid, or, most frequently,
after one year. Because these commissions have additional
service and performance requirements, they are not eligible
to be capitalised under IFRS 15. Instead, the commission
and associated social security costs are accrued based on
the expected period between the sale and payment. The
accrual is released when the commission is paid or earlier if
commission is recouped due to the customer defaulting on
payments, or salesperson ceases to be employed prior to the
commission becoming payable. Refer to note 14 for treatment
of the commission accruals.
Refer to note 1 for impairment of non-financial asset.
Capitalised commissions, which primarily represent
approximately 50% of commissions paid to the Group’s
salesforce and partners, are deemed to be a cost of obtaining
a contract and are spread over the expected contract term.
FINANCIAL STATEMENTS / Consolidated financial statements / 173
13. Trade and Other Receivables
Trade receivables are recognised initially at the amount
of consideration that is unconditional, unless they contain
significant financing components when they are recognised at
fair value. They are subsequently measured at amortised cost
using the effective interest method, less expected credit loss
provision.
The Group has adopted the simplified model of recognising
lifetime expected credit losses for all trade receivables on a
collective basis as there are shared credit risk characteristics,
grouped on basis of geography and days past due. The
amount of the provision is determined as the difference
between the asset’s carrying amount and the present value
of estimated future cash flows, discounted using the original
effective interest rate. See note 1 for a description of the
Group’s impairment policies.
The Group writes off trade receivables when in its view there is
no reasonable expectation of recovery.
Short term deposits represent the short-term portion of
deposits mostly related to lease deposits for the Group’s
offices or future marketing events.
Deposits
Deposits are financial assets measured at amortised cost,
primarily related to cash deposits in connection to leases
for the Group’s offices. Where the agreement is for a term
longer than one year, the related deposit is classified as long
term. Refer to note 20 for accounting treatment of short-term
deposits classified as cash and cash equivalent instead.
The carrying value of trade receivables is considered a
reasonable approximation of fair value due to the short-term
nature of the balance.
Prepayment includes $2.5 million related to shares issued at
acquisition of Cybersprint (30 June 2022: $6.2 million), treated
as remuneration (see note 2).
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss
allowance for all trade receivables. To measure the expected
credit losses, trade receivables have been grouped based
on shared credit risk characteristics and the days past due.
The expected loss rates are based on the payment profiles
of receivables in a 36 month period before 30 June 2023 and
30 June 2022, and the corresponding historical credit losses
experienced within these periods. Historic loss rates are
adjusted to reflect current and forward-looking information
on macro-economic and other factors affecting the ability of
customers to settle the receivables.
The Group has recorded an expected credit loss provision
for trade receivables as determined under the requirements
of IFRS 9, at 30 June 2023 of $5.2 million (30 June 2022:
$3.1 million).
The movement in the expected credit loss provision is
as follows:
The expected credit loss for trade receivables was determined
as follows:
The net movement in the expected credit loss provision has
been included in administrative expenses in the consolidated
statement of comprehensive income.
FY 2023 FY 2022
$’000 $’000
Trade receivables 93,744 63,907
Prepayments 22,961 25,955
Accrued income 3,445 4,152
Deposits 1,961 1,082
Other receivables 1,484 385
As at 30 June 123,595 95,481
FY 2023 FY 2022
$'000 $'000
At the beginning of the period 3,119 5,461
Charge for the period 3,954 453
Reversal on collected amounts (1,905) (2,795)
Expected credit loss provision at year end 5,168 3,119
Receivables written off during the year 1,024 2,608
up to
30 days
up to
60 days
up to
90 days
more
than
90 days Total
$’000 $’000 $’000 $’000 $’000
30 June 2023
Expected credit
loss rate
0.9% 3.2% 20.6% 73.3% 5.0%
Gross carrying
amount for trade
receivables and
accrued income
88,092
6,810
2,471
4,985
102,358
Lifetime expected
credit loss
(789) (219) (508) (3,652) (5,168)
30 June 2022
Expected credit
loss rate
0.2% 2.6% 23.2% 76.3% 4.4%
Gross carrying
amount for trade
receivables and
accrued income
63,464 3,608 1,230 3,399 71,701
Lifetime expected
credit loss
(149) (92) (285) (2,593) (3,119)
174 / FINANCIAL STATEMENTS / Consolidated financial statements
14. Trade and other payables
These amounts represent liabilities for goods and services
provided to the Group prior to the end of the financial year
or any other period which are unpaid. The amounts are
unsecured and are usually paid within 30 days of recognition.
Trade and other payables are presented as current liabilities
unless payment is not due within 12 months after the end of
the reporting period. They are recognised initially at their fair
value and subsequently measured at amortised cost using the
effective interest method.
Commission accruals
For certain sales staff, the second 50% of sales commission
is paid at the earlier of full payment of the contract or most
frequently, after one year. As payment requires additional
service and performance requirements, this cost is not eligible
to be capitalised. This cost is accrued over the expected
period between the sale and the payment to the sales staff,
with the accrual released when the commission is paid or
earlier if commission is recouped due to customer defaulting
on payments. Estimation of the effect of leavers has been
incorporated into the commission accrual calculation in-line
with IAS 19 ‘Employee Benefits’.
Amounts falling due within one year:
15. Provisions
Dilapidation provision
Darktrace is required to restore the leased premises of its
offices to their original condition at the end of the respective
lease terms. A provision has been recognised for the present
value of the estimated expenditure required to remove any
leasehold improvements. These costs have been capitalised
as part of the right-of-use asset and are amortised over the
term of the lease.
Provision for share-based payment tax
The Group accounts for a provision on tax payments when the
employer has the primary liability to pay for social security-type
contributions on share-based payments. In some jurisdictions,
the employer rather than the employee has the legal obligation
to pay taxes on employee awards. Darktrace recognises
the cost and liability in relation to those countries where this
type of payment is required. Management calculates the
liability arising from the obligation to pay taxes as a provision
in accordance with IAS 37 using the market value of the total
options at each reporting date to estimate the provision
to be accrued over the vesting period. Also, provisions are
recognised where a legal or constructive obligation exists at
the balance sheet date, as a result of a past event, where the
amount of the obligation can be reliably estimated and where
the outflow of economic benefit is probable.
Significant estimate in the share price used to
calculate the provision for share-option related
employer tax charges
The provision represents the best estimate of the amount
payable by the Group at year end if all options were exercised at
that date. The key input for the calculations is the percentage
applicable for each country and the share price at each period
end. The key element subject to change in future periods is
the share price, and for this reason the Group has prepared the
following sensitivity analysis:
Accruals includes:
$53.6 million accrued commission and bonuses
(30 June 2022: $34.1 million)
$13.1 million accrued salaries and partner fees
(30 June 2022: $8.2 million)
$9.5 million accrued hosting fees and professional fees
including audit and accountancy
(30 June 2022: $5.2 million)
$4.0 million accrued marketing and recruitment costs
(30 June 2022: $4.8 million)
$1.5 million accrued legal fees
(30 June 2022: $1.4 million)
30 June 2023 30 June 2022
$’000 $’000
Trade payables 14,965 11,206
Social security and other taxes 13,249 15,499
Accruals 81,745 54,985
Total 109,959 81,690
FY 2023 FY 2022
$’000 $’000
+/- 10% share price value –
change in value of provision for
the year ($’000 absolute value)
933 3,852
FINANCIAL STATEMENTS / Consolidated financial statements / 175
The Group accounts for a provision on tax payments when the employer has the primary liability to pay for social security-type
contributions on share-based payments at the time of exercise.
In the UK, an award of shares or options to an employee gives rise to a personal tax liability for the employee, related to the fair value
of the award when it vests.
In most other countries where social security-type obligations arise on share awards, the obligation to accrue applies irrespective
of whether the shares are RCAs or not. Calculation of social security-type contributions can be complex as they involve changing or
tiered cost ceilings and differing percentages applied depending on the salary level of the employees.
Other provision includes an estimate of tax charges related to new permanent establishments in countries where Darktrace plc
does not currently have a subsidiary and provision for dilapidation previously classified within lease liabilities.
FY 2023 FY 2022
Provision for
share-based
payment tax Other provision Total provision
Provision for
share-based
payment tax Other provision Total provision
$'000 $'000 $'000 $'000 $'000 $'000
Opening provision 15,192 2,100 17,292 22,945 - 22,945
Accruals/(release) 4,315 (316) 3,999 (1,526) 2,100 574
Reclassification
from lease liability (note 19)
- 1,528 1,528 - - -
Utilisation (13,351) (800) (14,151) (6,227) - (6,227)
Closing provision 6,156 2,512 8,668 15,192 2,100 17,292
Current 5,943 984 6,927 14,654 1,300 15,954
Non-current 213 1,528 1,741 538 800 1,338
Total provision 6,156 2,512 8,668 15,192 2,100 17,292
176 / FINANCIAL STATEMENTS / Consolidated financial statements
Long Term Assets
16. Goodwill
Goodwill arising on the acquisition of a subsidiary is
recognised as an asset at the date that control is acquired (the
acquisition date).
Goodwill is measured as the excess of:
the sum of the consideration transferred,
the amount of any non-controlling interest in the
acquiree and
the fair value of the acquirer’s previously-held equity
interest (if any) in the entity
over the net fair value of the identifiable net assets recognised.
If, after reassessment, the Group’s interest in the net fair value
of the acquiree’s identifiable net assets exceeds the sum of the
consideration transferred, the amount of any non-controlling
interest in the acquiree and the fair value of the acquirer’s
previously-held equity interest (if any), the excess is recognised
immediately in profit or loss as a bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at
least annually. Any impairment loss is recognised immediately
in the consolidated statement of comprehensive income and
is not subsequently reversed.
Impairment testing is applied in the order set out by IAS
36.98: assets within a CGU first, where there is indication of
impairment, then the CGU, then the group of CGUs to which
goodwill has been allocated.
Management performed an impairment test at 30 June
2022 where the recoverable amount of the group of CGUs
has been calculated based on its value in use, estimated as
the present value of projected future cash flows for the next
5 years covered by the most recent approved budget and
forecasts. Cash flow projections beyond the period covered
by the most recent budgets/forecasts, had been estimated by
extrapolating the projections based on the budgets/forecasts
using the long-term growth rate.
The key assumptions used in the estimation of the recoverable
amount as at 30 June 2022 are set out below. The value
assigned to the key assumptions represented Management’s
assessment of future trends in the relevant industries and
have been based on historical data from both external and
internal sources.
Discount rate: 12.0%. This rate was calculated as pre-tax
rate and reflects both the market assessment of the time
value and the risk of the specific assets.
Long-term growth rate: 3% This rate was in line with
the growth-rate for the primary countries in which the
business operates.
Budget EBITDA growth rate (average for the next 5 years
up to FY 2027): 49.8%. The VIU scenario was broadly based
on Managment’s forecasts which assumed a gradual
realisation of the Group’s publicly disclosed long-term
economic model but adjusted to exclude the expected
income that might be derived from future products that
have not yet been developed and released for sale.
For FY 2023 Management has decided to perform
the impairment test by using the fair value less cost to
disposal (FVLCD):
Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date
– as at 30 June 2023 this is estimated to be the market
capitalisation for the company at reporting date i.e.
$2.2 billion.
Costs of disposal are incremental costs directly attributable
to the disposal of an asset or CGU, excluding finance costs
and income tax expense.
Cost for disposal has been estimated at $138 million and giving
a significant headroom ($2.0 billion) between the FVLCD
at reporting date and the carrying value of the GCU assets
subject to impairment, no impairment identified and no further
analysis necessary.
30 June
2023
30 June
2022
$’000 $'000
Goodwill
As at 1 July 38,164 -
Business combination (note 2) - 40,877
Foreign exchange difference - (2,713)
Total 38,164 38,164
Goodwill arose upon the acquisition of Darktrace Netherlands
B.V. (formerly Cybersprint B.V.) during FY 2022. The asset is
allocated to both Cybersprint and Darktrace CGUs combined
(corresponding to the single operating segment) and is
monitored, therefore at the consolidated group level. IAS
36 requires Management to perform impairment tests
annually for goodwill and indefinite life assets. Since 1 July
2022 Darktrace Netherlands functional currency has been
determined to be the same currency as the Group i.e. USD and
therefore there will be no foreign exchange differences going
forward on goodwill.
FINANCIAL STATEMENTS / Consolidated financial statements / 177
17. Intangible assets
Intangible assets
Software
Software acquired in a business combination is recognised
at fair value at the acquisition date. It has an estimated useful
economic life of 5 years and is subsequently carried at cost
less accumulated amortisation and impairment losses.
The Group capitalises allowable costs related to the
development of new products and related significant
functional enhancements to its Cyber AI platform. The directly
attributable costs capitalised are employee costs including
the appropriate portion of relevant compensation-related
overheads. Costs are only capitalised when the following
criteria are met:
it is technically feasible to complete the software so that it
will be available for use;
Management intends to complete the software so that it
will be available for use;
there is an ability to use or sell the software;
it can be demonstrated how the software will generate
probable future economic benefits;
adequate technical, financial and other resources to
complete the development and to use or sell the software
are available; and
the expenditure attributable to the software during its
development can be reliably measured.
These capitalised development costs are recorded as
intangible assets and amortised from the point at which the
developed assets are released for use, typically as a part of
major version or product releases.
Capitalised development costs are amortised on a straight-
line basis over a three-year period unless the related software
is removed from service prior to that date, in which case the
remaining amortisation related to the software removed
from use would be accelerated. Amortisation is classified as
research and development costs.
Costs associated with maintaining software programmes are
recognised as an expense as incurred.
Customer relationship
Customer relationships acquired in a business combination
are recognised at fair value at the acquisition date. It has an
estimated useful economic life of 12 years and is subsequently
carried at cost less accumulated amortisation and
impairment losses.
Software consists of capitalised development costs being
internally generated intangible asset of $2.2 million (30 June
2022: $4.9 million) and acquired software from acquisition
of $6.6 million (30 June 2022: $8.6 million) with a remaining
useful life of 3.7 years. The Group has not identified any
impairments to the intangibles.
All amortisation of intangible assets is charged to the
consolidated statement of comprehensive income and is
included within research and development costs.
FY 2023 FY 2022
Customer
Relationship
Software
Software
under
development
Total
Customer
Relationship
Software
Software
under
development
Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Cost
As at 1 July 869 25,535 1,517 27,921 - 13,286 - 13,286
Additions - - 2,519 2,519 - 2,391 2,368 4,759
Business combination - - - - 930 9,647 - 10,577
Reclassification - 1,082 (1,082) - - 851 (851) -
Foreign exchange difference - - - - (61) (640) - (701)
As at 30 June 869 26,617 2,954 30,440 869 25,535 1,517 27,921
Amortisation
As at 1 July (26) (12,246) - (12,272) - (6,199) - (6,199)
Charge for the year (72) (5,525) - (5,597) (26) (6,047) - (6,073)
As at 30 June (98) (17,771) - (17,869) (26) (12,246) - (12,272)
Net book value as at 30 June 771 8,846 2,954 12,571 843 13,289 1,517 15,649
178 / FINANCIAL STATEMENTS / Consolidated financial statements
18. Property, Plant and Equipment
Property, plant and equipment is stated at historical cost
less depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount
or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item can be
measured reliably. The carrying amount of any component
accounted for as a separate asset is derecognised when
replaced. All other repairs and maintenance are charged to
the statement of comprehensive income during the reporting
period in which they are incurred.
The depreciation methods and periods used by the
Group are as follows:
Appliances
Most of the Group’s property, plant and equipment is
comprised of the appliances used to deploy its software.
Appliances are encrypted with the Group’s software and
deployed both to customers for the fulfilment of contracts
and potential customers for POV demonstrations. These
appliances are deployed, retrieved and redeployed many times
over their useful lives and may be on customer or prospect
sites, interchangeably, at any given time. The Group retains
ownership of these appliances and depreciates them over an
estimated five-year useful economic life. The depreciation of
these assets is apportioned to either cost of sales or sales and
marketing based on the proportion of appliances deployed to
customers and prospects in each period.
Significant Judgement in Assessment of Control of
Appliances
The Group is required to assess if, as part of the assessment
of the performance obligations, there is an embedded lease
within the contract relating to the appliances used to deploy
its software. Due to the length of the contracts, averaging
approximately three years, and the underlying asset value, it is
appropriate to assess if there is an inherent lease embedded
within the contract.
The Group considered its continued ownership of the
appliances, the appliances having a useful economic life
in excess of the typical contract length (appliances are
accounted for on an estimated useful life of five years based
on the Group’s experience to date) in determining if there
was a lease. It is Management’s judgement that the Group
retains control of the appliances throughout the performance
period as the Group directs the use of the asset. It is also
Management’s judgement that the Group’s contracts do not
contain leases under IFRS 16.
Appliances 5 years straight line
Leasehold
improvements
Lower of EUL
and lease term on straight line
Equipment 2-5 years straight line
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
Gains and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in the
consolidated statement of comprehensive income.
Other assets
Other assets included within property, plant and equipment are
generally IT equipment for employee use and a small amount
of infrastructure equipment. The Group also has office fit out
costs, furniture, other tangible property including leasehold
improvements.
FINANCIAL STATEMENTS / Consolidated financial statements / 179
FY 2023 FY 2022
Leasehold
improvements Equipment Appliances Total
Leasehold
improvements Equipment Appliances Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Cost
As at 1 July 2,327 16,583 112,301 131,211 - 12,161 92,606 104,767
Additions 11,622 1,199 18,409 31,230 2,327 4,951 24,585 31,863
Business combination (note 2) - - - - - 108 - 108
Foreign exchange difference - - - - - (7) - (7)
Disposals - (685) (5,141) (5,826) - (630) (4,890) (5,520)
As at 30 June 13,949 17,097 125,569 156,615 2,327 16,583 112,301 131,211
Depreciation
As at 1 July - 9,621 60,589 70,210 - 6,634 45,237 51,871
Charge for the year 935 4,185 19,864 24,984 - 3,391 18,355 21,746
Impairment loss - - 52 52 - - - -
Disposals - (510) (3,910) (4,420) - (404) (3,003) (3,407)
As at 30 June 935 13,296 76,595 90,826 - 9,621 60,589 70,210
Net book value as at 30 June 13,014 3,801 48,974 65,789 2,327 6,962 51,712 61,001
Depreciation of appliances is apportioned to cost of sales
based on the proportion of the Group’s appliance pool
deployed to customer sites in each period, and all appliance
depreciation related to customer contracts is recognised in
Cost of sales. Depreciation of appliances used to run POV
demonstrations for prospects is apportioned to Sales and
marketing based on the proportion of the Group’s appliance
pool deployed to prospect sites in each period. Where
appliances are at client sites or in transit and there is doubt
about their recoverability, they are impaired, the impairment
for the year amounted to $0.1 million (2022:nil).
The depreciation charges for Property, Plant and Equipment
have been made in the consolidated statement of
comprehensive income within the following functional areas:
FY 2023 FY 2022
$’000 $’000
Depreciation
Cost of sales 16,721 14,589
Sales and marketing 4,599 4,945
Research and development 1,262 1,018
Other administrative 2,402 1,194
24,984 21,746
Inventory – appliances for Federal use
Inventory includes those appliances that are purchased for
the purpose of being sold to potential and future customers
for Darktrace Federal Inc. Under the specific requirements of
segregation of this entity, those future customers require that
the appliances used to deploy the software as POV or for future
contracts to be sold to them. Those appliances are distinct
from appliances used in any other country or for any other
Industry as they are purchased specifically for this subsidiary
and retained in a dedicated space before they are deployed to
the potential or future customer.
Inventory is stated at the lower of cost and net realisable value.
Cost is determined on the basis of weighted average costs and
comprises direct materials and, where applicable, direct labour
costs and those overheads that have been incurred in bringing
the inventories to their present location and condition.
FY 2023 FY 2022
$’000 $’000
Inventory 100 -
180 / FINANCIAL STATEMENTS / Consolidated financial statements
19. Leases
The Group leases various offices and equipment. Rental
contracts are typically made for fixed periods of 6 months to
8 years but may have extension options as described below.
Contracts may contain both lease and non-lease components.
Under IFRS 16 ‘Leases’ the Group allocates the consideration in
the contract to the lease and non-lease components based on
their relative stand-alone prices. Lease terms are negotiated
on an individual basis and contain a wide range of different
terms and conditions. The lease agreements do not impose
any covenants other than the security interests in the leased
assets that are held by the lessor. Leased assets may not be
used as security for borrowing purposes.
Assets and liabilities arising from a lease are initially measured
on a present value basis. Lease liabilities include the net
present value of the following lease payments:
fixed payments (including in-substance fixed payments),
less any lease incentives receivable;
variable lease payment that are based on an index or a
rate, initially measured using the index or rate as at the
commencement date;
amounts expected to be payable by the Group under
residual value guarantees;
the exercise price of a purchase option if the Group is
reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the lease
term reflects the Group’s exercising of that option.
Lease payments to be made under reasonably certain
extension options are also included in the measurement of
the liability. The lease payments are discounted using the
interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the
Group, the lessee’s incremental borrowing rate is used, being
the rate that the individual lessee would have to pay to borrow
the funds necessary to obtain an asset of similar value to the
right-of-use asset in a similar economic environment with
similar terms, security and conditions.
To determine the incremental borrowing rate, the Group:
uses a build-up approach that starts with a risk-free interest
rate adjusted for credit risk for leases held by subsidiaries,
which do not have recent third-party financing;
makes adjustments specific to the lease, e.g. term, country,
currency and security; and
if a readily observable amortising loan rate is available to
the individual lessee (through recent financing or market
data) which has a similar payment profile to the lease, then
the Group entities use that rate as the basis to determine
the incremental borrowing rate.
Right-of-use Assets
Right-of-use assets are measured at cost considering
the following:
the amount of the initial measurement of lease liability;
any lease payments made at or before the commencement
date less any lease incentives received;
any initial direct costs; and
restoration costs.
Right-of-use assets are generally depreciated over the shorter
of the asset’s useful life (typically first expected break clause
to be executed if this is expected) and the lease term on a
straight-line basis. If the Group is reasonably certain to exercise
a purchase option, the right-of-use asset is depreciated over
the underlying asset’s useful life.
Payments associated with short-term leases of equipment
and all leases of low-value assets are recognised on a straight-
line basis as an expense in the consolidated statement of
comprehensive income. Short-term leases are leases with
a lease term of 12 months or less without a purchase option.
Low-value assets are generally comprised of IT equipment
and small items of office furniture.
Extension and Termination Options
Extension and termination options are included in several
property and car leases across the Group. These are used
to maximise operational flexibility in terms of managing the
assets used in the Group’s operations. Most of the extension
and termination options held are exercisable only by the Group
and not by the respective lessor.
Refer to note 1 for impairment of non-financial assets.
Right-of-use assets capitalised on the consolidated statement
of financial position are as below:
FY 2023 FY 2022
$’000 $’000
Cost
As at 1 July 83,942 49,121
Additions 2,840 35,068
Business combination (note 2) - 239
Foreign exchange difference - (11)
Impairment (1,781) -
Disposals and lease incentives (6,948) (475)
As at 30 June 78,053 83,942
Depreciation
As at 1 July 25,782 19,700
Charge for the year 10,326 6,549
Disposals (2,494) (467)
As at 30 June 33,614 25,782
Net book value at 30 June 44,439 58,160
FINANCIAL STATEMENTS / Consolidated financial statements / 181
The depreciation charges for right-of-use assets have been
made in the consolidated statement of comprehensive
income within the following functional areas:
Disposals and lease incentives include $4.5 million receivable
from the landlord for the restructuring work completed at the
New York office. Restructuring works were completed in March
2023 and confirmation of the amount receivable was received
in June 2023. This incentive was not recognised as at the
lease inception date, as the lease incentive was not recievable
until 2023.
Lease liabilities are presented in the consolidated statement
of financial position as follows:
The Group has leases for office space around the world. With
the exception of short-term leases and leases of low value
underlying assets, each lease is reflected on the consolidated
statement of financial position as a right-of-use asset and a
lease liability.
The Group must keep the offices it leases in a good state of
repair and return the offices in a condition as good as their
original condition at the end of the lease. Further, the Group
must insure any leasehold improvements made to the offices
and incur servicing fees in accordance with the lease contracts.
$1.5m of restructuring cost provision has been reclassified to
provisions (note 15) in the year.
The following table describes the nature of the Group’s leasing
activities by type of right-of-use asset recognised on the
consolidated statement of financial position:
FY 2023 FY 2022
$’000 $’000
Depreciation
Cost of sales - -
Sales and marketing 6,931 3,970
Research and development 1,589 890
Other administrative 1,806 1,689
10,326 6,549
FY 2023 FY 2022
$’000 $’000
Current 4,873 3,710
Non-Current 52,735 60,130
Total 57,608 63,840
Year Right-of-use asset
No. of right-of-use
assets leased
Range of
remaining term
Average remaining
lease term
No. of leases with
extension options
No. of leases with
early break clause
FY 2023 Office space 24 1-10 years 5 years 8 5
FY 2022 Office space and Cars 30 1-11 years 5 years 8 5
FY 2023 FY 2022
Lease maturity analysis $’000 $’000
Lease liabilities, short term 7,951 7,078
1 – 2 years 13,852 11,179
2 – 5 years 33,019 36,614
Over 5 years 15,004 22,793
Total liabilities 69,826 77,664
The lease liabilities are secured by the related underlying assets.
The table below shows undiscounted lease maturity analysis:
Amounts recognised in the consolidated statement
of comprehensive income
The Group has elected not to recognise a lease liability for
short term leases (leases with an expected term of 12 months
or less) or for leases of low value assets. Payments made
under such leases are expensed as incurred. The expense
relating to payments not included in the measurement of the
lease liability is disclosed below.
The future minimum rentals under non-cancellable leases are
as follows:
The Group also holds leases for office equipment such as
photocopiers for which it has taken the small value exemption.
Amounts Recognised
in the Consolidated Statement of Cash Flows
FY 2023 FY 2022
$’000 $’000
Short term leases 3,445 2,376
Low value lease rentals 93 2,738
Total 3,538 5,114
FY 2023 FY 2022
$’000 $’000
Cash outflows for leases 10,682 4,837
Cash outflows for interest on leases 3,493 2,735
Total cash outflow 14,175 7,572
182 / FINANCIAL STATEMENTS / Consolidated financial statements
Financial Risk Management
20. Cash and Cash Equivalents
Cash and Cash Equivalents
For the purpose of presentation in the consolidated statement of cash
flows, cash and cash equivalents includes cash on hand and other short-
term, highly liquid investments with original maturities of three months or
less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
Deposits at call are presented as cash equivalents if they have a maturity
of three months or less from the date of acquisition and are repayable
with 24 hours’ notice with no loss of interest.
21. Changes in Liabilities Arising From Financing Activities
The changes in the Group’s liabilities arising from financing activities can be classified as follows:
FY 2023 FY 2022
$’000 $’000
Cash at bank and in hand 132,396 156,912
Deposits at call 224,590 233,711
Cash and cash equivalents 356,986 390,623
Soon after the acquisition, the pre-existing loan with Rabo Bank
($1.3 million) acquired through the Cybersprint acquisition has
been repaid in full for an amount of $1.3 million.
The Group entered a multi-currency $25.0 million Revolving
Credit Facility (RCF) agreement with Silicon Valley Bank on 15
January 2021 with a maturity date of 15 January 2023. Further
extensions were granted in the financial year, initially to 30
June 2023 and again, post year end, to 31 August 2023 and
subsequently to 30 November 2023. Borrowings under the
Facility are secured pursuant to various security agreements,
mortgages and other collateral granted to the Lender. Interest
is charged subject to an all-in floor of 3.75% and the facility
contains a letter of credit sublimit of $10.0 million equivalent.
Following the failure of SVB in March 2023, and the subsequent
separation of Silicon Valley Bank UK (now HSBC Innovation Bank)
Lease liabilities Loans Total
$’000 $’000 $’000
As at 1 July 2021 (35,248) - (35,248)
Changes from financing cash flows
Repayment of loans - 1,347 1,347
Repayment of lease liabilities 4,837 - 4,837
Interest payment 2,735 - 2,735
Other changes
Business combination (248) (1,347) (1,595)
Interest expense (note 19) (2,735) - (2,735)
New leases (35,068) - (35,068)
Foreign exchange movements 1,887 - 1,887
As at 30 June 2022 (63,840) - (63,840)
Changes from financing cash flows
Repayment of lease liabilities 10,682 - 10,682
Interest payment 3,493 - 3,493
Other changes
Interest expense (3,493) - (3,493)
New leases (2,840) - (2,840)
Foreign exchange movements (1,610) - (1,610)
As at 30 June 2023 (57,608) - (57,608)
from Silicon Valley Bank US, the credit facility remained with SVB
UK, now HSBC Innovation Bank, whilst Letters of Credit remained
on the SVB US Balance sheet (to the value of $5.0m), counter
backed by HSBC UK, to allow HSBC Innovation Bank to set up
new Trade Finance Platforms. Therefore, as no drawdowns have
been made on the facility as of 30 June 2023, the total available
RCF remaining was $25 million.
Under the terms of the facility the Group must report certain
financial covenants. The Group must meet at least one of the
following three covenants:
An Asset Quick Ratio (AQR = current assets to adjusted total
liabilities) minimum 1.20 : 1.00
Minimum trailing-6-month EBITDA of $7.5 million
Unrestricted cash held with Lender of more than $40.0 million
The Group met two of the three financial covenants as at 30
June 2023.
FINANCIAL STATEMENTS / Consolidated financial statements / 183
FY 2023 FY 2022
$’000 $’000
Cash at bank and in hand 132,396 156,912
Deposits at call 224,590 233,711
Cash and cash equivalents 356,986 390,623
The aggregate net foreign exchange loss recognised in other
administrative expenses are:
As shown in the table above, the Group is primarily exposed
to changes in USD/GBP and USD/EUR exchange rates. The
sensitivity of profit or loss to changes in the exchange rates
arises mainly from EUR or GBP denominated financial assets
and liabilities.
Price Risk
The Group has no significant exposure to equity securities
price risk.
Credit Risk
Credit risk arises from cash and cash equivalents, contractual
cash flows of deposits with banks and financial institutions, as
well as credit exposures to customers, including outstanding
receivables.
Credit risk is managed on a Group basis. Significant partners
are independently rated through credit agencies, if there is
no independent rating an internal review is carried out. The
Credit manager assesses the credit quality of the partner,
taking into account its financial position, as well as experience
for customers and partners in the same region. There are
no significant concentrations of credit risk, whether through
exposure to individual customers or partners, specific industry
sectors or regions.
The Group’s main financial assets that are subject to the
expected credit loss model are trade receivables. While cash
and cash equivalents are also subject to the impairment
AUD CAD EUR GBP JPY Other Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000
As at 30 June 2023
Trade receivable 1,659 1,992 22,576 15,663 339 1,735 43,964
Deposits 244 161 325 5,146 57 692 6,625
Cash and cash equivalents 3,696 7,244 12,657 42,323 879 3,854 70,653
Trade payables (26) (99) (665) (7,530) (7) (451) (8,778)
Total 5,573 9,298 34,893 55,602 1,268 5,830 112,464
As at 30 June 2022
Trade receivable 980 2,206 16,783 12,746 294 1,233 34,242
Deposits 258 106 214 1,709 74 660 3,021
Cash and cash equivalents 4,211 3,616 10,207 48,244 287 3,092 69,657
Trade payables (127) (59) (1,504) (2,462) (114) (228) (4,494)
Total 5,322 5,869 25,700 60,237 541 4,757 102,426
FY 2023 FY 2022
$'000 $'000
Net foreign exchange loss (2,127) (6,502)
FY 2023 FY 2022
$'000 $'000
USD/EUR exchange rate +/- 10% (3,172) / 3,877 (2,336)/2,856
USD/GBP exchange rate +/- 10% (5,055) / 6,178 (5,476)/6,693
22 Risk Management Objectives and Policies
The Group’s financial risk management is controlled by a central treasury department (“Group treasury”) under policies approved
by the Board of Directors. Group treasury identifies and evaluates financial risks in close co-operation with the Group’s CFO and
other Executive Directors and Senior Managers. The Board authorises written principles for overall risk management, as well as
policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative and non-derivative
financial instruments, and investment of excess liquidity.
Market Risk
Foreign Exchange Risk
The table below details the Group’s exposure to foreign currency risk, in currencies different from the Company functional currency:
The Group operates a natural hedging strategy where possible
to mitigate its foreign exchange risk.
184 / FINANCIAL STATEMENTS / Consolidated financial statements
Less than 12
months
Between 1 - 2
years
Between 2 - 5
years
Over 5 years
Carrying amount
liabilities
$’000 $’000 $’000 $’000 $’000
30 June 2023
Trade payables 14,965 - - - 14,965
Accruals 21,203 - - - 21,203
Lease liabilities 7,951 13,852 33,019 15,004 69,826
44,119 13,852 33,019 15,004 105,994
30 June 2022
Trade payables 11,206 - - - 11,206
Accruals 15,100 - - - 15,100
Lease liabilities 7,078 11,179 36,614 22,793 77,664
33,384 11,179 36,614 22,793 103,970
requirements of IFRS 9, the identified impairment loss
was immaterial. Refer to note 13 for a trade receivable
impairment analysis.
The Board approved Treasury policy governs the credit limits
for deposits with banks and financial institutions. Credit ratings
and limits are reviewed on monthly basis by Group Treasury.
The credit ratings for the deposits classified as cash and cash
equivalents ranges from A to A+.
Trade receivables are fully provided where there is no
reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others,
the failure of a debtor to engage in a repayment plan with
the Group, and a failure to make contractual payments for a
period of greater than 6 months past due. The general credit
loss provision will begin to be provided from thirty days past
due based on the historic default rates adjusted for regional
performance. Impairment losses on trade receivables are
presented as net impairment losses within operating profit.
Subsequent recoveries of amounts previously written off are
credited against the same line item.
Liquidity Risk
Prudent liquidity risk management involves maintaining
sufficient cash and marketable securities, and the availability
of funding through an adequate amount of committed credit
facilities, to meet obligations when due and to close out
market positions. Due to the dynamic nature of the underlying
businesses, Group treasury maintains flexibility in funding by
maintaining both liquid cash and availability under committed
credit lines.
Maturity of Financial Liabilities
The table below presents the Group’s financial liabilities
by relevant maturity grouping, based on their contractual
maturities. The amounts disclosed in the table are the
contractual undiscounted cash flows. Balances due within
12 months equal their carrying balances as the impact of
discounting is not significant.
23. Summary of Financial Assets
and Liabilities by Category
The carrying amounts of the assets and liabilities as recognised
at the statement of financial position date of the years under
review may also be categorised as follows:
FY 2023 FY 2022
$’000 $’000
Financial assets at amortised cost
Deposits 10,195 10,342
Trade and other receivables 97,189 68,059
Cash and cash equivalents 356,986 390,623
Total financial assets at amortised
cost
464,370 469,024
FY 2023 FY 2022
$’000 $’000
Financial liabilities at amortised cost
Trade payables (14,953) (11,206)
Accruals (21,203) (15,100)
Lease liabilities (57,608) (63,840)
Total financial liabilities at
amortised cost
(93,764) (90,146)
Accruals include all the financial liabilities at amortised cost,
hence exclude payroll accruals in note 14.
FINANCIAL STATEMENTS / Consolidated financial statements / 185
Other notes
24. Other Operating Income
R&D Tax Credit / Government grants
The Group has made claims for tax credits under the HMRC
RDEC scheme since 2019 which is reflected as other operating
income on the consolidated statement of comprehensive
income. This accounting treatment is in accordance with IAS
20 Government grants.
25. Income tax
Income Tax
The income tax expense or credit for the period comprises
current tax for the year, based on the applicable income tax
rate for each jurisdiction, adjusted by changes in deferred tax
assets and liabilities attributable to temporary differences and
to unused tax losses, where applicable.
Current tax is the expected tax payable or receivable on
the taxable income for the year, using tax rates enacted or
substantively enacted at the end of the reporting period, and
any adjustment to tax payable in respect of previous periods
in the countries where the Group operates and generates
taxable income. Any uncertain tax treatments are reviewed,
documented and communicated to the Board as appropriate.
The Group finance function monitors any uncertain items
on a regular basis, working closely with the head of tax to
understand any potential changes to the associated risk.
The amount of current tax payable or receivable is the best
estimate of the tax amount expected to be paid or received
that reflects uncertainty related to income taxes.
Deferred tax assets are recognised only if it is probable that
future taxable amounts will be available to utilise those
temporary differences and losses.
Deferred tax assets and liabilities are offset where there is
a legally enforceable right to offset current tax assets and
liabilities and where the deferred tax balances relate to the
same taxation authority. Current tax assets and tax liabilities
are offset where the Group entity has a legally enforceable
right to offset and intends either to settle on a net basis, or to
realise the asset and settle the liability simultaneously.
Deferred income tax is determined using tax rates (and laws)
that have been enacted or substantively enacted by the end
of the reporting period and are expected to apply when the
related deferred income tax asset is realised, or the deferred
income tax liability is settled.
FY 2023 FY 2022
$’000 $’000
R&D tax credit under HMRC RDEC scheme 2,666 1,671
Income tax is recognised as an expense or income and
included in the consolidated statement of comprehensive
income for the period, except to the extent that the tax arises
from a transaction or event that is not itself recognised in
the consolidated statement of comprehensive income,
for example when it relates to items recognised in other
comprehensive income or directly in equity. In this case, the
tax is also recognised in other comprehensive income or
directly in equity, respectively.
Significant judgement and estimate in
deferred tax asset (DTA) recognised on UK losses
carried forward
At 30 June 2023 the Group has significant tax losses in the UK
available for offset against future taxable profits. The Group has
recognised a DTA on UK losses carried forward of approximately
$10.9 million (30 June 2022: nil) and an unrecognised DTA on
UK losses carried forward of approximately $50.7 million (30
June 2022: $51.7 million) as Management believes there is
insufficient convincing other evidence that the potential asset
will be utilised in the foreseeable future, which is required for
recognition under IAS 12 when there is a history of losses.
Significant judgement
When assessing if it is probable that future taxable profits will be
available, given the long history of tax losses, Management has
determined whether sufficient positive evidence outweighs
existing negative evidence. The longer the estimates or
forecasts extend into the future, the less reliable they are.
Management believes the most appropriate period to be
used in order to make the assessment on the future taxable
profit and the recoverable deferred tax asset on UK losses
carried forward is two years. In particular, whilst from a cash
flow perspective given the strong cash position, a three-year
period for a viability analysis is considered appropriate, the
profitability is sensitive to changes that depend much more on
the current and future macro-economic environment, inflation
and foreign exchange trends.
Had a three-year period been considered, a further $6.3
million UK deferred tax asset on losses carried forward would
have been recognised at 30 June 2023.
Significant estimate
The estimates or forecasts used for the determination of
the future taxable profits for the UK entity used consistent
assumptions to those used elsewhere. Currently there is
sufficient convincing other evidence on the certainty of
sufficient future taxable profits in the UK over the next two years,
which will enable Darktrace Holdings Limited to start utilising
its brought forward tax losses, therefore an initial recognition
of the deferred tax asset in relation to losses carried forward
has been done in the year for an amount of $10.9 million.
186 / FINANCIAL STATEMENTS / Consolidated financial statements
FY 2023 FY 2022
$’000 $’000
Current tax (credit)/expense:
Current period 936 3,454
Foreign taxation 764 1,612
Adjustments for prior period (816)
Total current tax expense 884 5,066
Origination and reversal of temporary
differences
(5,713) (1,210)
Deferred tax recognised (13,033) -
Adjustments in respect of prior periods (61) -
Total tax (credit)/charge (17,923) 3,856
FY 2023 FY 2022
$'000 $'000
Profit for year before taxation 41,035 5,313
Tax rate 20.5% 19%
Tax on profit on ordinary activities at standard
CT rate 20.5% (FY 2022 - 19%)
8,412 1,010
Effects of:
Effect of tax rates in foreign jurisdictions 1,683 831
Fixed Asset Differences - Super deduction
net of Ineligible depreciation
(1,202) (1,740)
Non-deductible expenses 3,744 6,955
Overseas taxes deducted at source 607 817
Tax cost on research and development tax
credit
560 186
(Over)/under provided in prior years (877) 1,403
Deferred tax recognised (13,033) -
Current year utilisation of deferred tax not
previously recognised
(17,817) (5,606)
Total tax (credit)/charge on ordinary
activities for the year
(17,923) 3,856
The relationship between the expected tax expense based
on the UK effective tax rate of the Group at 20.5% (FY 2022:
19%), and the tax expense recognised in the consolidated
statement of comprehensive income can be reconciled
as follows:
The tax charge in the current and prior years primarily relates
to overseas tax. With reference to the unrecognised tax asset
on losses carried forward please refer to note below.
The estimates take account of the inherent uncertainties
constraining the expected level of profit as appropriate,
however part 12 deductions have not been taken into account
given the uncertainty of the tax deduction in excess of IFRS2
change recognised for share-based payments. Possible
changes in the estimates made, will affect future profits and
therefore the recoverability of the deferred tax assets. An
increase in operating costs by 10% would bring the UK entity
into tax loss position over the next two years and therefore
no DTA ($10.9 million) on UK losses carried forward should be
recognised. In contrast, a decrease in operating costs by 10%
would bring a significant increase in the tax profit for the UK
entity increasing the recognisable DTA by $16.5 million.
30 June 2023 30 June 2022
Gross amounts
Unrecognised
DTA* Gross amounts
Unrecognised
DTA*
$’000 $’000 $’000 $’000
Fixed Asset temporary differences - - (2,151) (538)
Short term temporary differences 3,401 850 17,222 4,306
Losses carried forward 202,952 50,738 206,498 51,665
Share-based payments 101,669 26,687 147,293 37,775
Total 308,022 78,275 368,862 93,208
Deferred Tax Assets and Liabilities
The tax rate applied considers 25% for UK and 27% for US as these are the tax rates expected to be applicable by the time the loss
will be unwound.
The unrecognised deferred tax asset is comprised of:
FINANCIAL STATEMENTS / Consolidated financial statements / 187
30 June 2023 30 June 2022
Recognised deferred tax asset
and deferred tax liabilities $'000 $'000
Fixed Asset timing differences (2,272) (76)
Short term temporary differences 4,859 1,573
Losses carried forward 19,271 2,032
Intangible asset arising
on business combinations
(2,009) (2,488)
Total 19,849 1,041
30 June 2023 30 June 2022
Recognised deferred tax asset $'000 $'000
Opening 1,041 544
(Charged)/Credited through the
income statement:
Deferred tax asset recognised on
acquisition
- 1,950
Deferred tax liability recognised on
acquisition
- (2,655)
Deferred tax asset movement 19,276 1,034
Deferred tax liability movement (468) 168
Closing 19,849 1,041
26. Related Party Transactions
The Company and the Group has no ultimate controlling
party. There were no related party transactions with Directors
to disclose in any of the years presented. Refer to note 6 for
directors’ remuneration.
Key Management Remuneration
The Group considers to be part of the key management
personnel the members of the Board (including the Executive
Directors) and three Senior Managers who exert control over
the strategy and direction of the Group.
27. Capital Commitments
The Group had no capital commitments at 30 June 2023 or
30 June 2022 .
FY 2023 FY 2022
$'000 $'000
Wages and salaries* 2,353 2,744
Bonus* 1,291 2,235
Social security costs* 693 453
Pension costs 60 62
Benefits* 879 39
Share-based payment charge 8,810 7,376
Share-option related
employer tax charges
266 2,516
14,353 15,425
Transaction value Balances outstanding
FY 2023 FY 2022
30 June
2023
30 June
2022
$'000 $'000 $'000 $'000
Fees for management
support services
- - 43 -
Recharge of staff
expenditure
- 1 - -
Income from recharge
of office space
- (270) - -
Revenue received (734) (712) (235) (249)
Hosting fees - 7 1 1
(734) (974) (191) (248)
Given the uncertainty of the tax deduction in excess of
the IFRS2 charge recognised for share-based payments,
demonstrated by the high volatility of Darktrace share
price since IPO, the related deferred tax asset has not been
recognised at 30 June 2023 or in the prior year.
*short-term benefits
Short term employee benefits of the Group’s key management
personnel include salaries and non-cash benefits. Long term
benefits include payments to defined contribution pension
scheme only.
Other related party disclosures
Other related parties include transactions with companies
under common directorship.
Their costs in the period were as follows:
188 / FINANCIAL STATEMENTS / Consolidated financial statements
28. Subsidiaries
As at the 30 June 2023 the subsidiaries of the Group were as follows:
Subsidiary
Country of
registration
Registered office
Year of
incorporation
Class of
share capital
Proportion
held
Darktrace Holdings Limited UK
Maurice Wilkes Building
St John’s Innovation Park,
Cowley Road, Cambridge,
United Kingdom, CB4 0DS
2013
Common
shares
100%
Darktrace, Inc USA
C/O Paracoprt Incorporated, 2140 S DuPont
Highway, Camden, Delaware 19934, USA
2013
Common
shares
100%*
Darktrace Singapore Pte Ltd Singapore
4 Shenton Way, #28-03 SGX Centre 2,
Singapore 068807
2015
Common
shares
100%*
Darktrace Australia Pty Ltd Australia
C/O BP Woodward & Associates, Level 5 Suite
501, 83 York Street, Sydney NSW 2000, Australia
2015
Common
shares
100%*
Darktrace Japan KK Japan
12-1-605 Okahigashi-cho
Hirakata City, Osaka, Japan
2017
Common
shares
100%*
Darktrace South Africa Pty Ltd South Africa
BDO Building, Wanderers Office Park,
52 Corlett Drive, Illovo, Gauteng, 2196
2016
Common
shares
100%*
Darktrace Ireland Limited Ireland
38 Upper Mount Street,
Dublin 2, Ireland
2019
Common
shares
100%*
Darktrace SaS France
38 avenue des Champs-Élysées.
75008 Paris, France
2019
Common
shares
100%*
Darktrace Hong Kong Ltd Hong Kong
31/F Tower Two Time Square,
Matheson Street, Causeway Bay, Hong Kong
2019
Common
shares
100%*
Darktrace Colombia SaS Colombia
Cra 16 # 97-46 Torre 1 piso 6,
Bogota, Colombia
2019
Common
shares
100%*
Darktrace Canada, Inc Canada
585 16th Street, Suite 201, West Vancouver,
British Columbia, V7V 3R8, Canada
2020
Common
shares
100%*
Darktrace Mexico, SA De CV Mexico
Boulevard Manuel Avila, Camacho No 76 PB
Colonia: Lomas de Chapultepec
Alcaldia: Miguel Hidalgo
Ciudad de Mexico C.P. 11000
2020
Common
shares
100%*
Darktrace GmbH Germany Nonnenbrücke 12, 96047 Bamberg, Germany 2020
Common
shares
100%*
Darktrace Employee Benefit Trust Jersey 26 New Street, St Helier, Jersey, JE2 3RA 2021 n/a 0%
Darktrace Netherlands B.V. Netherlands
Wilhelmina van Pruisenweg 35,
(2595 AN) The Hague, the Netherlands
2015
Common
shares
100%*
Darktrace Federal Inc. USA
C/O The Corporation Trust Company,
Corporation Trust Center 1209 Orange Street,
Wilmington, New Castle, Delaware, United
States, 19801
2022
Common
shares
100%
Darktrace Korea Limited South Korea
4th Floor, LS YongSan Tower, 92, Hangang-
daero, Yongsan-gu, Seoul, Republic of Korea,
04386
2022
Common
shares
100%*
Darktrace Sweden AB Sweden
c/o TMF Sweden AB, Sergels Torg 12, 111 57
Stockholm, Sweden
2022
Common
shares
100%*
*Indirectly owned through Darktrace Holdings Limited.
FINANCIAL STATEMENTS / Consolidated financial statements / 189
Darktrace Holdings Limited is the main trading company,
responsible for research and development activities and
global delivery of Darktrace operations.
All other subsidiaries provide sales and marketing services,
with the exception of Darktrace Netherlands B.V. Darktrace
Holdings Limited has also a branch office in Dubai and in Italy.
The Dubai branch was registered in 2019 with registered office
address at Level 42, Emirates Towers, Sheikh Zayed Road Dubai,
UAE. The Italian branch was registered in 2023 with registered
office address: Via Tiziano 32 , Milano, Cap 20145 Italy.
Darktrace Federal Inc, a directly controlled subsidiary
of Darktrace plc, was incorporated in April 2022 with the
purpose of serving the U.S. Department of Defense (DoD),
the Intelligence Community, Federal Civilian Agencies, and
the National critical infrastructure sector, allowing them to
strengthen their cybersecurity defences with Self-Learning
AI. At 30 June 2023 Darktrace Federal Inc had inventory
of appliances purchased for the purpose of being sold to
potential and future customers as POV or for future contracts
to be sold to future customers. Darktrace Federal Inc did not
have any trading activity during the year.
29. Post Balance Sheet Events
Assignment of previous London office lease
On 4 August 2023 the assignment of the lease for the previous
London office has been completed. This will result in the de-
recognition of the related right-of-use asset of $2.7 million and
the de-recognition of the lease liability of $3.9 million as at the
date of assignment.
RCF extension
On 31 August 2023 the RCF agreement with Silicon Valley
Bank (now HSBC Innovation Bank) has been extended to
have an expiry date of 30 November 2023. All other terms and
conditions (see note 20) remain unchanged. The company is
currently considering the proposals from a number of financial
institutions to increase the amount of the facility before the
end of the agreement with HSBC Innovation Bank.
COMPANY FINANCIAL STATEMENTS
Company statement of financial position
As permitted by section 408 of Companies Act 2006, a separate Statement of comprehensive income for Darktrace plc has
not been included in these financial statements. Darktrace plc total comprehensive profit for the year amounted to $1.9 million
(FY 2022: loss of $2.1 million).
These financial statements were approved by the Board of Directors and authorised for issue on 5 September 2023. They were
signed on its behalf by:
30 June 2023 30 June 2022
Notes $'000 $'000
Non-current assets
Investments 4 222,275 129,214
222,275 129,214
Current assets
Trade and other receivables 5 45,690 4,064
Cash and cash equivalents 6 104,902 224,068
150,592 228,132
Total assets 372,867 357,346
Current liabilities
Trade and other payables 7 (48,570) (20,402)
(48,570) (20,402)
Total Liabilities (48,570) (20,402)
Net Assets 324,297 336,944
Equity
Share capital 8 9,779 9,812
Share premium 8 16,308 16,117
Share capital redemption reserve 9 255 -
Merger reserve 8 55,160 55,160
Stock compensation reserve 9 25,542 50,389
Treasury Shares 8 (15,281) (11,105)
Retained earnings 232,534 216,571
Total equity 324,297 336,944
The notes on pages 192 to 197 are an integral part of these financial statements.
Catherine Graham
Chief Financial Officer
Company No. 13264637
FINANCIAL STATEMENTS / Company financial statements / 190 - 191
COMPANY FINANCIAL STATEMENTS
Company statement of changes in equity
Share
capital
Share
premium
Share
capital
redemption
reserve
Merger
reserve
Stock
compensation
reserve
Treasury
shares
Retained
earnings
Total
equity
Notes $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
30 June 2021 9,756 224,782 - 55,160 5,660 - (10,036) 285,322
Loss for the year - - - - - (2,146) (2,146)
Other comprehensive income/
(loss) for the year
- - - - - - - -
Total comprehensive loss for
the year
- - - - - - (2,146) (2,146)
Share premium cancellation - (224,782) - - - - 224,782 -
Shares buyback - - - - - (13,525) (89) (13,614)
Options exercised 22 335 - - (1,040) 2,420 4,060 5,797
Shares issued for acquisition 34 15,782 - - - - - 15,816
Share-based compensation
charge
- - - - 45,769 - - 45,769
Transactions with owners 56 (208,665) - - 44,729 (11,105) 228,753 53,768
30 June 2022 9,812 16,117 - 55,160 50,389 (11,105) 216,571 336,944
Profit for the year - - - - - - 1,857 1,857
Other comprehensive income/
(loss) for the year
- - - - - - - -
Total comprehensive income
for the year
- - - - - - 1,857 1,857
Shares buyback - - - - - (50,885) (284) (51,169)
Share cancellation (255) - 255 - - 43,665 (43,665) -
Options exercised 222 191 - - (61,888) 3,044 58,055 (376)
Share-based payment charge - - - - 37,041 - - 37,041
Transactions with owners (33) 191 255 - (24,847) (4,176) 14,106 (14,504)
30 June 2023 9,779 16,308 255 55,160 25,542 (15,281) 232,534 324,297
The notes on pages 192 to 197 are an integral part of these financial statements.
192 / FINANCIAL STATEMENTS / Company financial statements
Notes to the company financial statements
2. Basis for preparation
The financial statements of Darktrace plc have been prepared
in accordance with Financial Reporting Standard 101, ‘Reduced
Disclosure Framework’ (FRS 101). The financial statements
have been prepared under the historical cost convention
except for certain financial instruments which are measured
at fair value, and in accordance with the Companies Act 2006.
The preparation of financial statements in conformity with FRS
101 requires the use of certain critical accounting estimates.
It also requires Management to exercise its judgement in the
process of applying the Company’s accounting policies. The
areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the
financial statements, are disclosed in note 3.
The following exemptions from the presentation and disclosure
requirements of IFRS have been applied in the preparation of
these financial statements, in accordance with FRS 101:

Paragraphs 45(b) and 46 to 52 of IFRS 2, ‘Share-based
payment’ (details of the number and weighted average
exercise prices of share options, and how the fair value of
goods or services received was determined).

IFRS 7, ‘Financial instruments: Disclosures’.

Paragraphs 91 to 99 of IFRS 13, ‘Fair value measurement’
(disclosure of valuation techniques and inputs used for fair
value measurement of assets and liabilities).

The following paragraphs of IAS 1, ‘Presentation of
financial statements’:
/ 10(d) (statement of cash flows);
/ 16 (statement of compliance with all IFRS);
/ 38A (requirement for minimum of two primary
statements, including cash flow statements);
/ 38B-D (additional comparative information);
/ 111 (statement of cash flows information); and
/ 134-136 (capital management disclosures).
/ IAS 7, ‘Statement of cash flows’.

Paragraphs 30 and 31 of IAS 8, ‘Accounting policies,
changes in accounting estimates and errors’ (requirement
for the disclosure of information when an entity has
not applied a new IFRS that has been issued but is not
yet effective).

Paragraph 17 of IAS 24, ‘Related party disclosures’ (key
management compensation).

The requirements in IAS 24, ‘Related party disclosures’, to
disclose related party transactions entered into between
two or more members of a group.
All amounts in the financial statements and notes have
been rounded off to the nearest thousand USD, unless
otherwise stated.
Going Concern Assumption
The Company meets its day-to-day working capital
requirements through its cash reserves. The Company’s
forecasts and projections, show that the Company should be
able to operate within the level of its current cash reserves.
After making enquiries, the Directors have a reasonable
expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future.
The Company therefore adopts the going concern basis in
preparing its financial statements.
New standards, amendments, IFRIC /interpretations
and new relevant disclosure requirements adopted
by the Group
There are no amendments to accounting standards, or
IFRIC interpretations that are effective for the period ended
30 June 2023 that have a material impact on Darktrace’s
financial statements.
New standards and interpretations not yet adopted
Certain new accounting standards, amendments to
accounting standards and interpretations have been
published that are not mandatory for 30 June 2023 reporting
periods and have not been early adopted by the Group. These
standards, amendments or interpretations are not expected
to have a material impact on the entity in the current or future
reporting periods and on foreseable future transactions.
Foreign Currency Translation
Transactions and Balances
Foreign currency transactions are translated into the
functional currency of the Company, that is U.S. Dollars (“USD”),
using the exchange rate as at the beginning of the month of
transaction. Foreign exchange gains and losses resulting
from the settlement of such transactions, and from the
1. Company Information
These financial statements are the separate financial statements for Darktrace plc (the Company). The Company was incorporated
on 12 March 2021. The financial statements are presented in US Dollars. Darktrace plc is a public limited company which is listed
on the London Stock Exchange and incorporated and domiciled in the UK. Its registered office and principal place of business is:
Maurice Wilkes Building, St John’s Innovation Park, Cowley Road, Cambridge, CB4 0DS.
FINANCIAL STATEMENTS / Company financial statements / 193
translation of monetary assets and liabilities denominated in
foreign currencies at month end exchange rates, are generally
recognised in the statement of comprehensive income. All
other foreign exchange gains and losses are presented in the
statement of comprehensive income on a net basis within
other gains or losses. Translation differences on assets and
liabilities carried at fair value are reported as part of the fair
value gain or loss.
3. Key Judgements and Estimates
The preparation of financial statements in accordance with
IFRS requires Management to make judgements, estimates
and assumptions that affect the reported amount of assets
and liabilities and disclosure of contingent assets and liabilities
at the period end and the reported amount of revenues and
expenses during the reported period. Actual results may differ
from these estimates.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised
and for any future periods affected.
Critical judgement in the determination of functional
currency
Darktrace plc is the ultimate parent company and pure holding
entity. The Company has no employees of its own and there is
a master service agreement in place for which the Company
charges a service fee to Darktrace Holdings Limited (on a cost
plus basis) for the following:

Strategic management support service

Business planning and development support service
The Company has two Executive Directors (Group CEO and
Group CFO). The Company provides financial support to the
group as and if required through an intercompany agreement
to Darktrace Holdings Limited the main trading entity in the
Group. There is an unsecured US Dollar and Pound Sterling
multi-currency term loan facility of a total principal amount not
exceeding $225.0 million.
Management considers the Company as an extension of
the overall subgroup and therefore considers the functional
currency to be that of Darktrace Holdings Limited and its
subsidiaries, USD.
4. Investments in Subsidiary Undertakings
Investments in subsidiaries are recorded at cost, which is the
fair value of the consideration paid.
The Directors have determined that Darktrace plc controls a
company called Equiniti Trust (Jersey) Limited, even though
Darktrace plc owns 0% of the issued capital of this entity.
Equiniti Trust (Jersey) Limited is the trustee of the Darktrace
plc Employee Benefit Trust. It is a controlled entity of Darktrace
plc, because Darktrace plc is exposed to, and has right to,
variable returns from this entity and is able to use its power over
the entity to affect those returns. The value of the investment
in Equiniti Trust (Jersey) Limited is nil.
Investments are tested for impairment whenever events or
changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for
the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of
an asset’s fair value less costs of disposal and value in use. For
the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable
cash inflows which are largely independent of the cash inflows
from other assets or groups of assets (cash-generating
units). Investments that suffered an impairment are reviewed
for possible reversal of the impairment at the end of each
reporting period.
Share-based payments
The Company operates a number of equity-settled, share-
based compensation plans, under which subsidiaries
receive services from employees as consideration for equity
instruments (options) of the Company. The cost related to the
subsidiaries’ employees service is treated as an investment
value in subsidiaries. The awards represent capital contribution
to the subsidiaries as no payment is expected for the equity-
settled share-based payment awarded to their employees.
The total amount to be accounted for as an increase in
investment value is determined by reference to the fair value
of the options granted:

including any market performance conditions (for
example, an entity’s share price);

excluding the impact of any service and non-market
performance vesting conditions (for example, profitability,
sales growth targets, and remaining an employee of the
entity over a specified time period); and

including the impact of any non-vesting conditions.
194 / FINANCIAL STATEMENTS / Company financial statements
Non-market performance and service conditions are
included in assumptions about the number of options that
are expected to vest. The total investment is recognised over
the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied. At the end of
each reporting period, the Company revises its estimates of
the number of options that are expected to vest based on the
non-market vesting conditions. It recognises the impact of the
revision to original estimates, if any, in the investment value,
with a corresponding adjustment to equity. When the options
are exercised, the options’ original fair value as of the grant
date is accounted for as a deduction from equity.
Amounts owed from subsidiary undertaking includes a loan of
$33.9 million (£30.0 million) to Equiniti Trust (Jersey) Limited
as Trustee of the Darktrace Employee Benefit Trust (‘EBT’), in
order to complete the purchases of 8,308,451 ordinary shares
of £0.01 each in the Company. The loan is receivable within
one year.
The carrying value of the receivables owed from subsidiary
undertakings is considered a reasonable approximation of
fair value due to the short-term nature of the balance. The
total amount outstanding at 30 June 2023 relates to other
debtors and amount owed from Equiniti Trust (Jersey) Limited,
the trustee of the Darktrace plc Employee Benefit Trust. The
balance is current and receivable within one year, hence no
provision for credit losses deemed necessary.
Prepayments include amounts paid in advance for directors
and officers insurance cover.
5. Other receivables
Receivables are recognised initially at the amount of
consideration that is unconditional, unless they contain
significant financing components when they are recognised at
fair value. They are subsequently measured at amortised cost
using the effective interest method, less loss allowance.
30 June 2023 30 June 2022
$'000 $'000
Amounts owed from subsidiary
undertakings
42,825 601
Other receivables 1,430 1,526
Prepayments and accrued income 1,435 1,937
Total 45,690 4,064
Share-based payments
The capital contribution relating to share-based payments
of $28.4 million relates to share-based payments issued to
employees of subsidiary undertakings in the Group.
In the UK, an award of shares or options to an employee
gives rise to a personal tax liability for the employee, related
to the fair value of the award when it vests. In order to meet
this tax liability, two executives surrendered as many shares
as are needed to raise proceeds equal to the tax liability (‘net
settlement’). This tax collection arrangements meant that the
equity–settled awards resulted in a credit for the Company
(treated as a reduction to the investment given it relates to
employees of the subsidary) for the income tax for $9.7 million
and an equal deduction from the equity.
For full details of the Group’s share-based payments, refer to
note 10 to the consolidated financial statements.
30 June
2023
30 June
2022
$'000 $'000
1st July 129,214 68,704
Capital contribution to Darktrace Holdings
Limited for Cybersprint BV acquisition
- 15,782
Capital contribution to EBT 64,676 -
Share-based payments in subsidiaries’
employees
28,385 44,728
30 June 222,275 129,214
Capital contribution to Darktrace Holdings Limited
for Cybersprint BV acquisition
On 22 February 2022 Darktrace Holdings Limited (subsidiary
of Darktrace plc) entered into a definitive agreement to
acquire the entire issued share capital of Cybersprint B.V.
(“Cybersprint”), an attack surface management company
that provides continuous, real-time insights from an outside-
in perspective to eliminate blind spots and detect risks. The
acquisition of Cybersprint was aligned with Darktrace’s vision
of delivering a ‘Continuous Cyber AI Loop’ and complemented
its Self-Learning technology and inside-out view. 2,573,648
shares in Darktrace plc were issued as consideration to the
Sellers (Cybersprint shareholders before acquisition). The fair
value of the acquirer’s equity interests issued is determined as
consideration for the acquired business. Fair value is the quoted
share price, on the acquisition date (£4.59/$6.15), multiplied by
the number of shares issued for publicly traded shares.
Capital contribution to EBT
During the year the Company provided a capital contribution
of $61.0 million (£50.0 million) to Equiniti Trust (Jersey) Limited,
as Trustee of the Darktrace Employee Benefit Trust (‘EBT’), in
order to complete the market purchases of ordinary shares of
£0.01 each in the Company. As the Company renounces to the
exercise price due by the Group employees in favour of EBT
for the repayment of the loan made in December 2023, these
amounts are classified are treated as capital contribution to the
subsidiary. During the year $3.7 million were contributed to EBT
as a result of legacy options exercised by Group employees.
FINANCIAL STATEMENTS / Company financial statements / 195
Amounts owed to subsidiary undertakings relate to amounts
due to Darktrace Holdings Limited in relation to options
exercised during the year. The amount payable is offset by
a receivable balance of $5.7 million from Darktrace Holdings
Limited in relation to income accounted in relation to the
Management Services Agreement entered on 5 May 2021.
Deposits at call are presented as cash equivalents if they have
a maturity of three months or less from the date of acquisition
and are repayable with 24 hours’ notice with no loss of interest.
7. Trade and other payables
These amounts represent liabilities for goods and services
provided to the Company prior to the end of the financial
year or any other period which are unpaid. The amounts are
unsecured and are usually paid within 30 days of recognition.
Trade and other payables are presented as current liabilities
unless payment is not due within 12 months after the end of
the reporting period. They are recognised initially at their fair
value and subsequently measured at amortised cost using the
effective interest method.
6. Cash and cash equivalents
Cash and cash equivalents includes cash on hand, other
short-term, highly liquid investments with original maturities
of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk
of changes in value.
30 June 2023 30 June 2022
$'000 $'000
Amounts owed to subsidiary
undertakings
44,235 19,663
Social security and other taxes 29 32
Other payables and accruals 4,306 707
Total 48,570 20,402
30 June 2023 30 June 2022
$'000 $'000
Cash at bank and in hand 34,508 55,830
Deposits at call 70,394 168,238
Cash and cash equivalents 104,902 224,068
196 / FINANCIAL STATEMENTS / Company financial statements
8. Share capital and share premium
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
Number of
ordinary
shares of
£0.01 each
Number of
preference
shares of
£1 each
Number of
deferred
shares of
£0.01 each
Total
number of
shares
Share
capital
$’000
Share
premium
$’000
Share capital
redemption
reserve
$’000
1 July 2021 697,630,127 50,000 120,063 697,800,190 9,756 224,782 -
Share premium cancellation - - - - - (224,782) -
Shares issued in the period 1,581,578 - - 1,581,578 22 335 -
Business combination 2,573,648 - - 2,573,648 34 15,782 -
30 June 2022 701,785,353 50,000 120,063 701,955,416 9,812 16,117 -
1 July 2022 701,785,353 50,000 120,063 701,955,416 9,812 16,117 -
Shares issued in the year 18,250,239 - - 18,250,239 222 191 -
Preference and deferred shares
cancellation
- (50,000) (120,063) (170,063) (71) - 71
Ordinary shares cancellation (13,280,100) - - (13,280,100) (184) - 184
30 June 2023 706,755,492 - - 706,755,492 9,779 16,308 255
Equity comprises the following:

Share capital: represents the nominal value of equity
shares. Where shares are redeemed or purchased wholly
out of profits available for distribution, a sum equal to the
amount by which the company’s share capital is diminished
on cancellation of the shares (the nominal value of the
shares) is transferred to the capital redemption reserve in
line with section 733 of Companies Act.

Share premium: represents the excess over nominal value
of the consideration received for equity shares, net of any
transaction costs associated with the issue of shares.

Merger reserve: As the Company issued equity shares in
consideration for securing a holding of 100% of the nominal
value of each class of equity in Darktrace Holdings Limited,
the application of merger relief is compulsory. Merger relief
is a statutory relief from recognising any share premium on
shares issued. Instead, a merger reserve is recorded. The
difference between the value of investment in Darktrace
Holdings Limited and the nominal value of share capital
has been recorded in the merger reserve in the equity of
the Company as required by section 612 of the Companies
Act 2006.

Treasury shares includes shares bought back by Darktrace
plc during the year. Shares issued to employees are
recognised on a first in, first out basis.

Stock compensation reserve: this reserve is used to
recognise the grant date fair value of options and awards
issued to subsidiaries’ employees but not exercised.

Retained earnings: represents retained profits and losses.
FINANCIAL STATEMENTS / Company financial statements / 197
9. Other notes
Share-based payments
Certain group employees have been granted options over
the shares in the Company. Refer to the accounting of the
investment for details on the awards granted and the related
accounting (note 10).
Share options outstanding at the end of the year are the same
as per the consolidated financial statements as the Company
does not have employees of its own. Therefore, we refer to the
disclosure in the consolidated financial statements (note 10).
Capital Commitments
The Company had no capital commitments at 30 June 2023
or 30 June 2022.
Information Included in the Notes to
the Consolidated Financial Statements
Some of the information included in the notes to the
consolidated financial statements is directly relevant to the
financial statements of the Company as follows:
Note 5 – Auditors’ remuneration
Note 9 – Share capital
Note 10 – Share-based Payments
Note 26 – Key management personnel
Note 26 – Related parties
Note 28 – Subsidiaries
Note 29 – Post balance sheet events
PART 4
DARKTRACE PLC
INFORMATION
Darktrace plc information / 198 - 199
General Counsel
& Company Secretary
James Sporle
Company number 13264637
Registered office
Maurice Wilkes Building,
St John’s Innovation Park,
Cowley Road, Cambridge,
CB4 0DS, United Kingdom
Website www.darktrace.com
Corporate Advisers
Bankers
HSBC Bank Plc
HSBC Innovation Bank
Solicitors Latham & Watkins LLP
Auditor Grant Thornton UK LLP
Joint brokers
Jefferies International Limited
Joh.Berenberg, Gossler & Co. KG, London Branch
Financial advisor Jefferies International Limited
Registrar Equiniti Limited
Directors
Mr G Hurst (Chair) (appointed 1 April 2021)
Poppy Gustafsson OBE (CEO) (appointed 1 April, 2021)
Catherine Graham (CFO) (appointed 12 March, 2021
Lord Willetts (appointed 1 April, 2021)
Sir Peter Bonfield CBE FREng (appointed 1 April, 2021)
Paul Harrison (appointed 1 April, 2021)
Elaine Bucknor (appointed 1 June 2023)
Stephen Shanley (appointed 1 April, 2021)
Han Sikkens (appointed 1 April, 2021)
Patrick Jacob (appointed 7 December, 2022)
PART 5
FINANCIAL HISTORY
Financial History / 200 - 201
Financial performance
$000 FY 2023 FY 2022 FY 2021
Revenue ($'000) 545,430 415,482 285,101
Gross margin (%) 89.8% 89.2% 90.0%
Net profit ($'000) 58,958 1,457 (145,828)
Adjusted EBIT ($’000) 82,506 49,816 3,818
Adjusted EBITDA ($'000) 139,163 91,412 33,484
Free cash flow ($'000) 93,753 99,517 25,501
Net cash inflow from operating activities ($'000) 134,047 140,244 59,892
Operating performance
$000 FY 2023 FY 2022 FY 2021
Constant currency ARR at 30 June ($'000) 628,444 484,880 340,702
Net ARR Added ($'000) 143,564 144,178 105,909
One-year ARR gross churn at 30 June (%) 6.8% 6.6% 7.4 %
Net ARR retention rate at 30 June (%) 104.7% 105.3% 103.0%
Number of customers at 30 June (#) 8,799 7,437 5,629
Remaining Performance Obligations (RPO) at 30 June ($'000) 1,258,350 1,003,932 763,219
See: KPIs’ section for the meanings of non-IFRS measures and other key performance indicators. ARR Growth, Net ARR added, One year ARR Gross churn, Net ARR Retention rate are
all prepared using the FY 2023 constant currency rates.
/ For FY 2023, constant currency rates were 1.2146 and 1.0450 for the British Pound and Euro, respectively.
/ For FY 2022, constant currency rates were 1.3835 and 1.1878 for the British Pound and Euro, respectively.
/ For FY 2021, constant currency rates were 1.2368 and 1.1235 for the British Pound and Euro, respectively.
All numbers for FY 2022 and FY 2021 have been restated to include Cybersprint B.V. as if it had always been part of the Group for comparability.
PART 6
SHAREHOLDERS
Shareholders / 202 - 203
Fully diluted shareholding of any party with a 3% or greater shareholding in Darktrace as at 30 June 2023
and 23 August 2023:
Shareholder Number of shares
% voting rights
at 30 June 2023
Number of
shares direct
Number of
shares indirect
Summit DT Equity Holdings 3 LP 86,579,924 12.3% 86,579,924 -
KKR Dark Aggregator LP 70,633,213 10.0% 70,633,213 -
Wealth Nominees Limited 63,270,974 9.0% 63,270,974 -
A. Bacares 37,532,653 5.3% 37,532,653 -
Go Etf Solutions 30,441,486 4.3% 30,441,486 -
Brighton Park Capital Management 30,438,766 4.3% 30,438,766 -
Dr. M. Lynch 29,711,750 4.2% 29,711,750 -
BlackRock 27,091,595 3.9% 27,091,595 -
TenEleven Ventures 23,390,655 3.3% 23,390,655 -
Shareholder Number of shares
% voting rights
at 23 August
2023
Number of
shares direct
Number of
shares indirect
KKR Dark Aggregator LP 70,633,213 10.1% 70.633.213 -
Summit DT Equity Holdings 3 LP 65,812,068 9.4% 65,812,068 -
Wealth Nominees Limited 60,839,499 8.7% 60,839,499 -
A. Bacares 34,828,367 5.0% 34,828,367 -
Brighton Park Capital Management 30,438,766 4.3% 30,438,766 -
Dr. M. Lynch 29,711,750 4.2% 29,711,750 -
BlackRock 27,784,311 4.0% 27,784,311 -
Go Etf Solutions 26,382,509 3.8% 26,382,509 -
TenEleven Ventures 23,390,655 3.3% 23,390,655 -
GLOSSARY
AGM
Annual General Meeting
Adjusted EBIT
Adjusted EBIT is the Group’s EBIT
adjusted to remove uncapitalised
share-based payment (SBP)
charges and share option-related
employer tax charges
Adjusted EBITDA
Adjusted EBITDA is the Group’s
EBITDA, but including appliance
depreciation attributed to cost
of sales, adjusted to remove
uncapitalised share-based
payment charges and related
employer tax charges
AI
Artificial Intelligence
AIP
Award Incentive Plan
APAC
Asia-Pacific
APMs
Alternative Performance Measures
ARR
Annualised Recurring Revenue
AWS
Amazon Web Services
Board
The Board of Directors of the
Company
Brexit
The exit of the United Kingdom
from the European Union, officially
on 31 December 2020
CAGR
Compound Annual Growth Rate
CEO
Chief Executive Officer
CFO
Chief Financial Officer
CGU
Cash Generating Unit
Cybersprint
Darktrace Netherlands B.V.
formerly Cybersprint B.V.
Company
Darktrace plc
Darktrace (or Group)
Darktrace plc and each of its
consolidated subsidiaries and
subsidiary undertakings and
thereafter.
DCF
Discounted Cash Flow
Directors
The Executive Directors, the major
shareholders nominated Directors
and the Independent Directors
DTA
Deferred Tax Asset
A C
D
F
E
B
EBT
Darktrace Employee Benefit Trust
EMEA
Europe, Middle East and Africa
ERM
Enterprise Risk Management
ESG
Environmental, Social and
Governance
EU
European Union
Executive Directors
The Executive Directors of the
Company
FCA
The UK Financial Conduct
Authority
FCF
Free Cash Flow
FTE
Full Time Equivalent
FY 2021
Financial year ended 30 June 2021
FY 2022
Financial year ended 30 June 2022
FY 2023
Financial year ended 30 June 2023
FYE
Financial Year End
EBIT
The Group’s operating profit or
loss
EBITDA
The Group’s EBIT plus
depreciation and amortisation
G
N
T
U
V
O
P
R
S
I
K
L
G&A
General and Administrative
GHG
Green House Gas
Group (or Darktrace)
Darktrace plc and each of its
consolidated subsidiaries and
subsidiary undertakings and
thereafter.
IFRS
International Financial Reporting
Standards: UK-adopted
International Accounting Standards
Independent Directors
The independent Directors
appointed to the Board
IoT
Internet of Things
KPI
Key Performance Indicator
LATAM
Latin America
NED
Non-Executive Director
OT
Operating Technology
POV
Proof Of Value
PPA
Purchase Price Allocation
R&D
Research & Development
RPO
Remaining Performance
Obligations
RAID
Risk, Assumptions, Issues and
Dependencies
SaaS
Software as a Service
S&M
Sales and Marketing
SBP
Share-Based Payments
SECR
Streamlined Energy and Carbon
Reporting
TAM
Total Addressable Market
TCFD
Task Force on Climate-Related
Financial Disclosures
TSR
Total Shareholder Return
UK
United Kingdom of Great Britain
and Northern Ireland
USA
United States of America
VIU
Value In Use
North America: +1 (415) 229 9100
Europe: +44 (0) 1223 394 100
Asia-Pacific: +65 6804 5010
Latin America: +55 11 97242 2011
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