London — Cyber Security Company dark trace .
“The Board has complete faith in the robustness of Darktrace’s financial processes and controls. As a testament to that trust, we have commissioned this independent third-party review by E&Y,” said Geoffrey, Chairman of the Board. Hurst said in a statement. “We look forward to the results of this review.”
EY will report to Paul Harrison, chair of Darktrace’s Audit and Risk Committee, Darktrace said. Darktrace said it doesn’t expect to update its review of the market before its first-quarter earnings report on March 8, and declined to say when it would release its timeline or findings.
Darktrace shares rose more than 2% on Monday following the announcement. The stock is up 4% year-to-date, despite a sharp sell-off in late January.
Darktrace, which has tools that enable companies to use artificial intelligence to combat cyberthreats, was targeted last month in a report by New York-based asset manager Quintessential Capital Management, highlighting Darktrace’s business model. and sales practices were investigated.
QCM said it found questionable flaws in Darktrace’s accounting, including practices of “round-tripping” and “channel stuffing” that attempt to inflate earnings. The company is “extremely skeptical about the validity of Darktrace’s financial statements” and believes sales and growth rates may be overstated.
Darktrace refuted the allegations, with CEO Poppy Gustafsson defending the company against what she called “baseless reasoning” by QCM, saying “our business has robust processes.” She added: “I stand by my team and the business I represent.”
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