Editing Darktrace
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'''Figure 7: Customer split by contract ARR size<ref>Source: Company data; FY ends in Jun.</ref>''' | '''Figure 7: Customer split by contract ARR size<ref>Source: Company data; FY ends in Jun.</ref>''' | ||
[[File:Figure 7.png]] | [[File:Figure 7.png]]'''Figure 8: % of customers using more than one Darktrace product<ref>Source: Company data; FY ends in Jun.</ref>''' | ||
[[File:Figure 8.png]]Darktrace reported 1-year gross ARR churn of 6.4% as of end-1H22 (six-month period ending in Dec-21) vs. 7.6% exiting Jun-21. As expected, Darktrace sees higher churn among customers with contract size less than $100k in ARR. Darktrace’s 1-yr gross ARR churn is higher compared to other cybersecurity vendors (such as Crowdstrike, which reported 1-yr gross ARR churn of ~2% in FY21) given its SMB/mid-market heavy customer base. Darktrace reported net ARR retention rate of 105.1% in 1H22 (increasing from 99.1% in 2020 and 102.9% in 2021) – the increase in net ARR retention rate is a function of higher product upsell/cross-sell and stabilizing churn. Darktrace is investing in its customer success function, which should help stabilize churn and drive higher upsells/cross-sells at the point of renewal. That said, given the SMB/mid-market heavy customer base (which is characterized by higher churn compared to larger enterprise customers) and multiple products purchased at the initial point of sale (which limits the scope of cross-sells), Darktrace does not expect to see a significant improvement in net ARR retention rate going forward (the improvement, if any, is likely to be more gradual). | |||
[[File:Figure 8.png]] | |||
Darktrace reported 1-year gross ARR churn of 6.4% as of end-1H22 (six-month period ending in Dec-21) vs. 7.6% exiting Jun-21. As expected, Darktrace sees higher churn among customers with contract size less than $100k in ARR. Darktrace’s 1-yr gross ARR churn is higher compared to other cybersecurity vendors (such as Crowdstrike, which reported 1-yr gross ARR churn of ~2% in FY21) given its SMB/mid-market heavy customer base. Darktrace reported net ARR retention rate of 105.1% in 1H22 (increasing from 99.1% in 2020 and 102.9% in 2021) – the increase in net ARR retention rate is a function of higher product upsell/cross-sell and stabilizing churn. Darktrace is investing in its customer success function, which should help stabilize churn and drive higher upsells/cross-sells at the point of renewal. That said, given the SMB/mid-market heavy customer base (which is characterized by higher churn compared to larger enterprise customers) and multiple products purchased at the initial point of sale (which limits the scope of cross-sells), Darktrace does not expect to see a significant improvement in net ARR retention rate going forward (the improvement, if any, is likely to be more gradual). | |||
'''Figure 9: Period-end 1-year gross ARR churn (%)<ref>Source: Company data; one-year gross ARR churn rate is defined as the ARR value of customers lost from the existing customer cohort one year prior to the measurement date, divided by the total ARR value of that existing customer cohort (this metric reflects only customer losses and does not reflect expansions or contractions); FY ends in Jun.</ref>''' | '''Figure 9: Period-end 1-year gross ARR churn (%)<ref>Source: Company data; one-year gross ARR churn rate is defined as the ARR value of customers lost from the existing customer cohort one year prior to the measurement date, divided by the total ARR value of that existing customer cohort (this metric reflects only customer losses and does not reflect expansions or contractions); FY ends in Jun.</ref>''' |