The chief executive of Darktrace has launched a staunch defence of the embattled cybersecurity company saying it is run with the “greatest integrity”, after allegations of irregular sales, marketing and accounting practices raised by a US-based hedge fund.
Poppy Gustafsson published a 1,200 word defence of the company she co-founded in 2013, after its share price collapsed to a record low after the publication of a highly critical 70-page report by New York-based Quintessential Capital Management (QCM) on Tuesday.
“We embrace the scrutiny of the public markets,” she said. “However, it is also important to refute any unfounded inferences about the listed business we are today and push back in the strongest terms on any suggestions that this is a business that is not being run with the greatest integrity.”
Gustafsson said the purpose of publishing the lengthy statement was to “explain what we’ve done to establish and enforce robust processes in our business”.
“I stand by my team and the business I represent,” she added. “Our technology is world class, created here in the UK by some of the brightest minds. We will continue to address any legitimate questions that may arise.”
Earlier on Wednesday, Darktrace launched a £75m share buyback of 35m shares in an attempt to bolster investor confidence.
Darktrace’s share price has fallen more than a fifth since it was disclosed on Monday that QCM had taken short positions betting against its future performance.
On Tuesday, the hedge fund published a 70-page report that alleged Darktrace employed questionable sales and accounting practices to drive up the value of the company before its multibillion pound flotation on the London Stock Exchange in 2021.
The report also repeated criticism of the links between the management of Darktrace and Autonomy, both of which were founded by Mike Lynch.
The controversial British billionaire is fighting extradition to the US over fraud charges relating to accounting irregularities before the $11bn (£9bn) sale of Autonomy to Hewlett-Packard in 2011. Lynch denies all charges.
On Wednesday, Darktrace said it had a “resilient business model” and $368m in cash that allowed it to continue to “sufficiently invest in its product pipeline, go-to-market strategy, business foundations and targeted mergers and acquisitions”.
Gordon Hurst, the chair of the company, said the £75m buyback was the “best use of Darktrace’s surplus cash in current market conditions”.
Investors were cheered by the financial vote of confidence pushing the company’s share price back up 7% to 225p, after its record low of 198p on Tuesday.
On Wednesday, QCM followed up its report by circulating a list of 27 questions for Darktrace to answer.
Last year, the short seller Shadowfall launched a similarly scathing attack on Darktrace, while analysts at the UK investment bank Peel Hunt published a report citing anonymous Darktrace clients calling its products “snake oil”.