Cybersecurity firm Darktrace hires EY to review financial processes after damning short seller report

LONDON — Cybersecurity steadfast Darktrace connected Monday said it has appointed auditing steadfast EY to reappraisal its "key fiscal processes and controls," successful a bid to soothe capitalist fears aft a abbreviated seller accused the institution of manipulating its accounts.

"The Board believes afloat successful the robustness of Darktrace's fiscal processes and controls. As a motion of that confidence, we person commissioned this autarkic third-party reappraisal by E&Y," Geoffrey Hurst, seat of the board, said successful a statement. "We look guardant to the result of this review."

EY volition study to the seat of Darktrace's audit and hazard committee, Paul Harrison, Darktrace said. Darktrace said it doesn't expect to beryllium successful a presumption to update markets connected the reappraisal by the clip of its first-half net study connected Mar. 8 and didn't supply a timeline oregon erstwhile it would merchandise the findings.

Darktrace shares roseate much than 2% Monday connected the heels of the announcement. Shares are up 4% year-to-date contempt a crisp plunge successful precocious January.

Darktrace, whose tools let firms to combat cyberthreats with artificial intelligence, was past period targeted successful a study by New York-based plus manager Quintessential Capital Management, which investigated Darktrace's concern exemplary and selling practices.

QCM said it recovered alleged flaws successful Darktrace's accounting, including "round-tripping" and "channel stuffing" practices that question to inflate revenue. The steadfast said it was "deeply skeptical astir the validity of Darktrace's fiscal statements" and believed income and maturation rates whitethorn person been overstated.

Darktrace pushed backmost connected the claims, with its CEO Poppy Gustafsson defending the institution from what she called "unfounded inferences" made by QCM and saying it had "robust processes successful our business." She added: "I basal by my squad and the concern I represent."

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