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Darktrace
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=== Near-term customer acquisition will likely remain healthy driven by salesforce hiring and new product launch === JP Morgan models constant currency ARR to grow 39% to $498m in 2022 (fiscal-year ends in Jun), in-line with the midpoint of company guidance. JP Morgan models constant currency ARR (measured as of July-21 exchange rates) growth to slow to 29%/25% in 2023/24, respectively. JP Morgan's estimates are underpinned by the following assumptions. * The roll-out of new ‘Prevent’ product suite around mid-CY22, strong enterprise demand for AI-driven network and email threat detection and response tools and increase in salesforce hiring will likely translate to healthy new customer acquisition in the near term, in JP Morgan's view. Having said this, high competition in the markets Darktrace operates in will make new customer acquisition and retention tougher going forward, in JP Morgan's view. Taking these two factors into account, JP Morgan models a modest increase (up ~2% p.a.) in net new customer adds in 2023/24 from a base of ~7.5k customers exiting Jun-22. * JP Morgan models a slight decline in average contract ARR per net new customer added during 1Q-3Q23 (impacted by early uptake by SMB/mid-market customers following the roll-out of the ‘Prevent’ product suite), followed by a gradual increase during 4Q23-4Q24. * JP Morgan estimates net ARR retention rate to remain constant at 105% throughout JP Morgan's forecast horizon. '''Figure 23: Period-end constant-currency ARR ($, m): 2019-24E'''<ref>Source: Company data, J.P. Morgan estimates. Constant currency rates: 1.3835 and 1.1878 for the British Pound and the Euro, respectively; FY ends in Jun.</ref> [[File:Figure 23.png]] '''Figure 24: Period-end number of customers and net new customers added: 2019-24E'''<ref>Source: Company data, J.P. Morgan estimates; FY ends in Jun.</ref> [[File:Figure 24.png]] Darktrace generates revenue almost exclusively (99%+) from subscription contracts (with an average contract term of ~3 years). Revenue from these subscription contracts is recognized ratably over the contract period. Darktrace has high revenue visibility, with ~80% of annual revenue underpinned by the backlog at the beginning of the period. Based on JP Morgan's ARR assumptions highlighted above, JP Morgan models revenue to grow 48% YoY to $415m in 2022; JP Morgan's revenue growth estimate of 48% stands slightly above Darktrace’s guided range of 44.5%-46.5%. JP Morgan models revenue growth to slow to 32%/28% in 2023/24, mimicking the trend in ARR growth during these periods. '''Figure 25: Revenue ($, m): 1H20-2H24E'''<ref name=":4">Source: Company data, J.P. Morgan estimates; FY ends in Jun.</ref> [[File:Figure 25.png]] '''Figure 26: Revenue ($, m): 2018-24E'''<ref name=":4" /> [[File:Figure 26.png]]
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