This document comprises a registration document (the “

Registration Document

”) relating to Darktrace plc (the

“

Company

”) prepared in accordance with the prospectus regulation rules (the “

Prospectus Rules

”) of the

Financial Conduct Authority (the “

FCA

”) made under section 73A of the Financial Services and Markets Act

2000 (the “

FSMA

”). The Registration Document has been approved by the FCA as competent authority under the

UK Prospectus Regulation. The FCA only approves the Registration Document as meeting the standards of

completeness, comprehensibility and consistency imposed by Regulation (EU) No 2017/1129 as amended by The

Prospectus (Amendment etc.) (EU Exit) Regulations 2019, which is part of UK domestic law by virtue of the

European Union (Withdrawal) Act 2018, as amended from time to time (the “

UK Prospectus Regulation

”) and

such approval should not be considered as an endorsement of the Company or the quality of the Shares that are

the subject of this Registration Document. This Registration Document will only be made available to the public

in accordance with the Prospectus Rules.

The directors of the Company, whose names appear on page 31 of this Registration Document (the “

Directors

”),

and the Company, accept responsibility for the information contained in this Registration Document. To the best

of the knowledge of the Directors and the Company, the information contained in this Registration Document is

in accordance with the facts and makes no omission likely to affect the import of such information.

This Registration Document should be read in its entirety. See Part 1: “

Risk Factors

” for a discussion of

certain risks and other factors that could have a material adverse effect on the Group’s business, financial

condition, results of operation and prospects.

Darktrace plc

(Incorporated under the Companies Act 2006 and registered in England and Wales with registered number 13264637)

The contents of this Registration Document are not to be construed as legal, business or tax advice. Each

prospective investor should consult his or her own lawyer, independent adviser or tax adviser.

This Registration Document may be combined with a securities note and summary to form a prospectus in

accordance with the Prospectus Rules. A prospectus is required before an issuer can offer transferable securities

to the public or request the admission of transferable securities to trading on a regulated market. However, this

Registration Document, where not combined with the securities note and summary to form a prospectus, does not

constitute an offer or invitation to sell or issue, or a solicitation of an offer or invitation to purchase or subscribe

for, any securities in the Company in any jurisdiction, nor shall this Registration Document alone (or any part of

it), or the fact of its distribution, form the basis of, or be relied upon in connection with, or act as any inducement

to enter into, any contract or commitment whatsoever with respect to any offer or otherwise.

No representation or warranty, express or implied, is made and no responsibility or liability is accepted by any

person other than the Company and its Directors, as to the accuracy, completeness, verification or sufficiency of

the information contained herein and nothing contained in this Registration Document is, or shall be relied upon

as, a promise or representation by any of the Company’s advisers or any of their respective affiliates as to the past,

present or future. The delivery of this Registration Document shall not, under any circumstances, create any

implication that there has been no change in the business or affairs of the Company since the date of this

Registration Document or that the information contained herein is correct as of any time subsequent to its date.

No person is or has been authorised to give any information or to make any representation not contained in or not

consistent with this Registration Document and, if given or made, such information or representation must not be

relied upon as having been authorised by the Company or the Directors. Without limitation, the contents of the

website of the Group do not form part of this Registration Document and information contained therein should

not be relied upon by any person.

The date of this Registration Document is 12 April 2021.

Notice to overseas shareholders

The ordinary shares (the “

”) of the Company referred to in this Registration Document have not been, and

will not be, registered under the U.S. Securities Act of 1933, as amended (the “

U.S. Securities Act

”). The Shares

may not be offered or sold in the United States, except to qualified institutional buyers, as defined in, and in

reliance on, the exemption from the registration requirements of the U.S. Securities Act provided in Rule 144A

under the U.S. Securities Act (“

Rule 144A

”) or another exemption from, or in a transaction not subject to, the

registration requirements of the U.S. Securities Act. Any sellers of the Shares may be relying on the exemption

from the provisions of section 5 of the U.S. Securities Act provided by Rule 144A. Outside of the United States,

Shares may only be offered in offshore transactions as defined in Regulation S of the U.S. Securities Act.

No actions have been taken to allow a public offering of the Shares under the applicable securities laws of any

jurisdiction, including Australia, Canada, Dubai, Hong Kong, Japan, Singapore and Switzerland. This

Registration Document does not constitute an offer of, or the solicitation of an offer to subscribe for or purchase

any of the Shares to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in

such jurisdiction.

The Shares have not been and will not be registered or qualified for distribution by this Registration Document

under the applicable securities laws of Australia, Canada, Dubai, Hong Kong, Japan, Singapore and Switzerland.

Subject to certain exceptions, the Shares may not be offered or sold in any jurisdiction, or to or for the account or

benefit of any national, resident or citizen in Australia or Japan or to any person located or resident in Canada.

The Shares have not been recommended by any U.S. federal or state securities commission or regulatory authority.

The foregoing authorities have not confirmed the accuracy or determined the adequacy of this Registration

Document. Any representation to the contrary is a criminal offence in the United States.

The distribution of this Registration Document and the offer and sale of the Shares in certain jurisdictions may be

restricted by law, including, without limitation, the United States, Australia, Canada, Dubai, Hong Kong, Japan,

Singapore and Switzerland. No action has been or will be taken by the Company, its Directors or its shareholders

to permit a public offering of the Shares under the applicable securities laws of any jurisdiction. Other than in the

United Kingdom, no action has been taken or will be taken to permit the possession or distribution of this

Registration Document (or any other offering or publicity materials relating to the Shares) in any jurisdiction

where action for that purpose may be required or where doing so is restricted by law. Accordingly, neither this

Registration Document, nor any advertisement, nor any other offering material may be distributed or published in

any jurisdiction except under circumstances that will result in compliance with any applicable laws and

regulations. Persons into whose possession this Registration Document comes should inform themselves about

and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of the

securities laws of any such jurisdiction. In particular, no actions have been or will be taken to permit a public

offering of the Shares under the applicable securities laws of any jurisdiction, including the United States,

Australia, Canada, Dubai, Hong Kong, Japan, Singapore, South Africa and Switzerland. Accordingly, subject to

certain exceptions, the Shares may not be offered, sold or delivered within the United States, Australia, Canada,

Dubai, Hong Kong, Japan, Singapore, South Africa and Switzerland.

Part 1

RISK FACTORS

The Group is subject to a number of risks. The reader should carefully consider the risk factors associated with

the Group’s business and the industry in which it operates together with all information contained in this

Registration Document including in particular, the risk factors described below.

The risk factors described below are not an exhaustive list or explanation of all risks applicable to the Group. The

risk factors detailed below and additional risks and uncertainties relating to the Group that are not currently

known to the Group, or that the Group currently deems immaterial, may individually or cumulatively also have a

material adverse effect on the Group’s business, financial condition, cash flow and results of operations.

Risks relating to the Group’s business

The Group could be negatively impacted by the failure of its systems or compromise of its data, through cyber

attack, cyber intrusion, insider threats or otherwise.

As a provider of security solutions, the Group has in the past been, and may in the future be, specifically targeted

by bad actors for attacks intended to circumvent the Group’s own security capabilities. A successful attack or other

incident that compromises the Group’s own data or results in an interruption of service (whether or not customer

data is compromised) could have a significant negative effect on its operations, reputation, financial resources,

and the value of its intellectual property. In addition to traditional attacks, the Group, in common with other

organisations during the COVID-19 global pandemic, has also seen an increase in attempted phishing and social

engineering attacks. It cannot be guaranteed that any of the efforts undertaken by the Group to manage this risk

will be effective in protecting it from such attacks. If a successful attack on the Group’s information technology

system occurs, the market perception of the effectiveness of the Cyber AI Platform’s security measures could be

harmed and the Group’s reputation and credibility could be materially damaged.

There is also a risk of internally generated misappropriation, misuse, leakage, falsification or intentional or

accidental release or loss of information maintained in Darktrace’s information systems and networks. For

example, Darktrace could face an insider threat in the event an employee takes its intellectual property and posts

it on the internet or sells it, or if an employee puts a “backdoor” in the code or otherwise compromises the

platform. One of its appliances might be stolen and reverse engineered or parties may attempt to penetrate its

platform to gain access to its data and/or systems. Darktrace may experience threats to its data and systems,

including malicious codes and viruses, phishing and other cyber attacks. The number and complexity of these

threats continue to increase over time. The Group could be required to expend significant amounts of money and

other resources to repair or replace information systems or networks. In addition, it could be subject to regulatory

actions and/or claims made by individuals and groups in private litigation involving privacy issues related to data

collection and use practices and other data privacy laws and regulations, including claims for misuse or

inappropriate disclosure of data, as well as unfair or deceptive practices. While the Directors believe that the

Group has not experienced, from any source, any material system failure to date, if such an event were to occur

and cause interruptions to its operations, it could result in a material disruption of its development programs and

its business operations. To the extent that any cyber attack were to result in a loss of, or damage to, its data

applications, or inappropriate disclosure of financial or confidential information, Darktrace could incur liability.

Although the Group develops and maintains systems and controls designed to prevent these events from occurring

and has a process to identify and mitigate threats, the development and maintenance of these systems, controls

and processes requires ongoing monitoring and updating as cyber attacks become increasingly sophisticated.

Moreover, despite the Group’s efforts, the possibility of these events occurring cannot be eliminated entirely. In

addition, there can be no assurance that its internal information technology system’s efforts to implement adequate

security and control measures will be sufficient to protect against breakdowns, service disruption, data

deterioration or loss in the event of a system malfunction, or prevent data from being stolen or corrupted in the

event of a cyber attack, industrial espionage attacks or insider threat attacks which could result in financial, legal,

business or reputational harm, resulting in a material adverse effect on the Group’s business, financial condition,

results of operations and prospects.

If the Group is unable to develop and enhance its platform to adapt to the increasingly sophisticated nature of

cyber attacks, it could negatively impact the Group’s business, results of operations, financial condition and

prospects.

The Group’s customers operate in markets characterised by rapidly changing technologies and business plans,

which require them to adopt increasingly complex IT infrastructure that incorporates a variety of appliances,

software applications, operating systems and networking protocols. As the Group’s customers’ businesses,

technologies and IT infrastructure grow more complex, the Group expects them to face new and increasingly

sophisticated methods of cyber attack. In the face of this increased risk of cyber attack across a customer’s ever

expanding digital estate, the Group must ensure that its Cyber AI Platform effectively identifies and responds to

these advanced and evolving attacks without disrupting the performance of customers’ IT systems. As a result, the

Group is dependent upon its ability to respond to the rapidly changing needs of customers by developing or

introducing new offerings and by continually monitoring its platform for new methods of cyber attack.

In addition, any failure by the Group to anticipate and effectively respond to changes in the cyber security market,

develop new or enhanced technologies or processes or to extend the Group’s offering to new and evolving

platforms, operating systems or appliances could materially adversely affect the Group’s financial condition,

operating results and prospects. There may be delays in its internally planned release dates of new features and

capabilities, and there can be no assurance that new features or capabilities will be released according to schedule.

Any delays could result in adverse publicity, loss of revenue or market acceptance, or claims by customers brought

against the Group, any of which could harm the Group’s business. Moreover, the design and development of new

products, features and capabilities may require substantial investment, and there can be no assurance that the

results of such investments will be successful. If customers do not widely adopt the Group’s new technology or

the Group fails to anticipate the evolving cyber security threats facing its customers, this could negatively impact

the Group’s business, results of operations, financial condition and prospects.

The Group may be unable to develop and enhance its platform to meet the changing cyber protection demands

of its customers.

The Group derives and expects to continue to derive substantially all of its revenues and cash flows from the

Cyber AI Platform, as well as any future platforms yet to be developed, for the foreseeable future. As such, the

market acceptance of the Cyber AI Platform is, and any future platforms will be, critical to the Group’s continued

success. Demand for the Group’s platform is affected by a number of factors beyond its control, including the

timing of development and release of new products by the Group’s competitors, technological changes, and

growth or contraction in the wider cyber security market. It is possible that the proliferation of machine data may

lead to an increase in the data analysis demands of customers, and the Group’s software may not be able to scale

and perform to meet those demands.

The Group may also not be able to develop new products in sufficiently fast timeframes or be able to sell its

products at desirable prices, nor is there any assurance that enhancements to the platform and technology or new

features or capabilities will be compelling to customers or gain market acceptance. Customers might choose to

unsubscribe from the Group’s technology services and companies generally might shift away from AI to more

traditional security service providers, which rely on rules-based technology instead. As such, revenue and

profitability may be lower than anticipated or it may take longer to generate revenue. Investments in research and

development (“R&D”), irrespective of the amount invested, may not result in significant design improvements,

marketable products or features, or may result in products that are more expensive or attract less customer demand

than anticipated. In addition, many of the Group’s competitors expend considerable funds on their respective R&D

programmes, and those that do not may be acquired by larger companies that would allocate greater resources to

such programmes. Any failure to maintain adequate R&D resources or to compete effectively with competitor’s

product offerings would give an advantage to such competitors and may harm the Group’s business, results of

operations and financial condition.

Actual, possible or perceived defects or vulnerabilities in the Group’s platform, the failure of the Group’s

platform to respond to a cyber attack or the misuse of the Group’s platform could harm the Group’s reputation

and divert resources.

Increasingly, companies are subject to a wide variety of attacks on their systems and networks on an ongoing

basis. Though designed to identify and counter attackers once they are within an organisation’s digital perimeter

and respond to attacks within a timescale that prevents material harm, the Group’s platform may itself be

vulnerable to such attacks, causing it to fail to help secure networks, temporarily interrupt customers’ networking

traffic, and fail to interrupt or prevent viruses or similar threats. If the Group’s platform is subject to an attack, its

cyber analysts as well as R&D employees will be deployed to mitigate the attack’s impact. The shift in internal

focus will divert resources away from customers and R&D initiatives. To the extent that any disruption were to

result in a loss of, or damage to, its data applications, or inappropriate disclosure of financial or confidential

information, the Group could incur liability and the further development and commercialisation of its product

candidates could be delayed.

Attacks may also be of a sort that cannot presently be interrupted, and the Group might be unable to respond to

attacks within a timescale that prevents material harm. In addition, the failure to distribute appropriate updates on

a timely basis or the failure of customers to implement such updates could result in a failure to effectively update

customers’ systems and thereby leave customers vulnerable to the latest security threats. In some instances, the

Group may not be able to develop appropriate updates within an acceptable period of time or at all. Moreover, as

the Group’s platform is adopted by an increasing number of customers, it is possible that attackers will

increasingly focus on finding ways to directly target and evade detection by the Cyber AI Platform. It is also

possible that an attack that is detected is not properly acted on by the customer, an attack is made to a part of a

customer network that Darktrace is not protecting, or an attack is made on a third party that is not a customer of

Darktrace but is affiliated with a customer of Darktrace, all of which is outside of Darktrace’s control. The Group’s

business would be harmed if any of the events described above caused its customers or potential customers to

believe the Group’s platform is unreliable. An actual or perceived failure of the Group’s platform to identify and

respond to an attack could adversely affect the market’s perception of the efficacy of the Group’s platform and

current or potential customers may look to the Group’s competitors for alternatives to the Group’s platform. This

could have a negative impact on the Group’s business, results of operations, financial condition and prospects.

The Group’s artificial intelligence algorithms may not operate properly or as expected which could

detrimentally impact its platform’s effectiveness.

Artificial intelligence algorithms may not operate properly as expected which could negatively impact the Group’s

ability to respond to attacks within a timescale that prevents material harm. AI is the core of the Cyber AI

Platform. As with many developing technologies, AI presents risks and challenges that could affect its algorithms’

further development, adoption and use in the Group’s business. AI is a novel technology, its acceptance is subject

to change and there may be future backlash against AI technology or certain AI use cases. AI algorithms may be

flawed. Datasets may be insufficient, of lesser quality than expected, or contain biased information. If the

recommendations, forecasts, responses or analyses that AI applications produce are deficient or inaccurate, the

Group could be subject to competitive harm, potential legal liability, and brand or reputational harm. Though the

Group’s technologies and business practices are designed to mitigate many of these risks, if Darktrace enables or

offers AI solutions that fail to operate as expected it could have a detrimental impact on business operations.

The Group’s artificial intelligence algorithms may be undermined by other AI technologies deployed by bad actors

or otherwise. Although the Group’s technologies and business practices are designed to mitigate many of the risks

posed by other AI technology, it is possible that offensive AI is developed that can outperform the Group’s

algorithms or is designed to confuse the Group’s AI. The Group’s technology could be subverted by offensive

AI causing it to produce a large number of false reports as a diversion, or the platform could be misused and the

results posted online. If offensive AI is developed and spread at low cost to cyber criminals, the bar to launch

sophisticated offensive AI attacks is significantly lowered. Moreover, advancements in technology and artificial

intelligence generally may also prevent its artificial intelligence technology from working as expected. The Group

cannot anticipate if an “unhackable” device or email will be developed, changes in encryption or data protection

that prevents companies from having access to the data in their own business would prevent Darktrace from

effectively operating or if an open source version of the code will be developed. These advancements could

negatively impact Darktrace’s operations.

The Group may face reputational risk arising out of unlawful, and allegedly unlawful, activities in connection

with the sale of Autonomy Corporation plc (“Autonomy”) and related matters.

Two former non-executive directors of Darktrace Holdings Limited, Sushovan Hussain and Michael Lynch, and

one employee, Stephen Chamberlain, have been charged in the U.S., and in the case of Mr. Hussain, convicted,

for their role in unlawful activities related to the sale of Autonomy to Hewlett Packard (“

”) in 2011, and

subsequent related matters.

In October 2011, HP completed the acquisition of Autonomy. In November 2012, HP announced a number of

allegations, including that Autonomy artificially inflated its reported revenues, revenue growth and gross margins,

and HP wrote-off a significant portion of the value of Autonomy. Criminal proceedings against Messrs. Hussain,

Lynch and Chamberlain, and civil proceedings against Messrs. Hussain and Lynch, ensued.

In November 2016, and subsequent to his resignation as a non-executive director of the Group, the U.S.

government charged Mr. Hussain with numerous counts of wire fraud and conspiracy to commit wire fraud, and

requested forfeiture, and charged him with a further count of securities fraud in 2017. He was convicted at trial in

April 2018, with the conviction upheld on appeal in August 2020. In November 2018, the U.S. government

charged Messrs. Lynch and Chamberlain with various criminal offences and requested forfeiture. An extradition

hearing for Mr. Lynch in the U.K. began in February 2021, with a ruling not expected before May 2021.

Mr. Chamberlain consented to U.S. jurisdiction, with the timing of his case currently linked to the outcome of

Mr. Lynch’s extradition proceedings.

In the U.K., in 2013, the Serious Fraud Office (“

SFO

”) opened a criminal investigation concerning the sale of

Autonomy. That investigation was closed in 2015 on the basis of insufficient evidence on certain aspects of the

investigation and by a ceding of jurisdiction to the U.S. on the remaining aspects (although this does not prevent

the SFO from reconsidering its position with respect to its U.K. investigation in the future). Messrs. Hussain and

Lynch were sued in the High Court of England & Wales by HP. Proceedings (in which certain current Group

directors and employees gave written and/or oral evidence for Messrs. Hussain and Lynch) concluded in January

2020, with judgment expected in 2021.

In 2012, Messrs. Hussain and Lynch, together with other former executives of Autonomy, founded Invoke Capital

Partners (“

Invoke

”), which invests in European technology companies. In 2013, Invoke invested capital into the

Group upon its foundation, and funded the operations of the Group from its inception in 2013 through to 2015 by

way of loans.

In addition to acting as non-executive directors of Darktrace Holdings Limited, Messrs. Hussain and Lynch

(together with other Invoke employees) provided management advice to the Group from time-to-time pursuant to

a Supply of Services Agreement, between Invoke and the Group, which has been terminated, effective at

Admission. Since founding, Mr. Lynch was a member of the Group’s Advisory Council, and in 2021 moved to the

Group’s Science & Technology Council. Mr. Chamberlain became an employee of the Group in April 2016.

Mr. Chamberlain is currently on administrative paid leave. Other members of the Group’s executive management

team, and other Group employees, previously worked at Autonomy. Certain of those individuals were employees

of, and investors in, Invoke.

Negative publicity or other events associating the Group and its employees with Autonomy or Messrs. Hussain,

Lynch or Chamberlain (regardless of their foundation or accuracy), such as coverage of criminal or civil litigation

or related asset enforcement proceedings, or adverse comments in the civil judgment on the evidence of current

Group directors or employees, could adversely affect the Group’s reputation in the cyber security, financial,

investment and other communities, and could also adversely affect the Group’s future share price (including in the

event of share sales following an award of damages or criminal penalties or order of forfeiture). If such events

cause the Group’s customers or potential customers, partners, investors or other stakeholders to negatively

associate the Group with Autonomy and the allegations related to its sale, it could result in significant damage to

the Group’s reputation and result in a material adverse effect on the Group’s business and share price. Such

publicity or other events could also intrude on the Group’s normal business operations, divert the attention of

management and materially disrupt the conduct of the business. If any of the foregoing occurs, it could result in

a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

The Group may face potential liability in relation to possible money laundering offences arising out of its

historic funding by Invoke.

Investment by Messrs. Lynch and Hussain and/or their connected persons in Invoke, the former controlling

shareholder of the Group, creates a risk for the Group as regards the commission of money laundering offences

in the U.K. under Part 7 of the Proceeds of Crime Act 2002, and of similar offences in the U.S.

In 2013, Invoke invested capital into the Group upon its foundation through a capital contribution of £10,000, in

exchange for which Invoke received ordinary shares. Invoke further funded the operations of the Group from its

inception in 2013 through to 2015 by way of non-interest bearing unsecured loans totalling £6.6 million. Between

2016 and 2017 Darktrace Holdings Limited completed a series of primary share issues to institutional investors,

at which time the Group repaid these loans. No direct investment in the Group was made by either Mr. Hussain

or Mr. Lynch. In Summer 2020, the Group raised funds by issuing convertible notes, and cancelled and

extinguished certain of the shares of Darktrace Holdings Limited held by Invoke and paid the proceeds to the

Invoke holding company. The Invoke company holding shares in Darktrace Holdings Limited then distributed its

assets (including its remaining shares) to its shareholders and the cash proceeds were provided to settle certain tax

liabilities of the shareholders arising as a result of the dissolution. Pursuant to this distribution Messrs. Lynch and

Hussain (along with other Invoke shareholders) received shares in the Group from the Invoke company. As at the

date of the Registration Document, they, collectively along with their family members, hold 18.55% of the issued

share capital of the Group.

Messrs. Hussain and Lynch joined the Board of Directors of the Group in 2015 as non-executive directors, with

Mr. Hussain stepping down in 2016 and Mr. Lynch stepping down in 2018. Neither held executive positions in,

or have been employees of, the Group. From founding, Invoke (including Messrs. Hussain and Lynch) provided

management advice to the Group pursuant to a Supply of Services Agreement, which will be terminated by mutual

consent at Admission. Since founding, Mr. Lynch was a member of the Group’s Advisory Council, moving to the

Science & Technology Council in March 2021 to support the Group’s executive team by providing insight on key

industry and global technology trends, meeting on an ad hoc basis several times a year. Mr. Lynch will continue

to be a member of the Science & Technology Council following Admission.

In 2011, Messrs. Hussain and Lynch received funds from HP in exchange for the sale of their shares in Autonomy.

In the event that Messrs. Hussain and Lynch funded Invoke with part of the proceeds of the sale of Autonomy (or

other funds co-mingled with such funds) a risk may arise for the Group as regards the commission of money

laundering offences under Part 7 of the Proceeds of Crime Act 2002 or similar offences in the U.S.

The SFO decided to close its investigation in 2015 into the Autonomy sale due to insufficient evidence (although

this does not prevent the SFO from reconsidering its position with respect to its U.K. investigation in the future)

and the Group has not received subsequent communications about these matters from any other U.K. government

agency. To the Group’s knowledge, it is not the target of an investigation by the Department of Justice (“

DOJ

”),

the Group has complied with subpoenas issued by the DOJ in 2018, and prior to and following the Group’s

interactions with the DOJ during that process, there has not been any communication from the DOJ.

Having analysed and considered the relevant circumstances the Directors believe: (a) there is a low risk to the

Group of successful prosecution for UK money laundering offences or similar offences in the U.S.; and (b) that

the Shares being sold in the Offering are not capable of being criminal property for the purposes of the Proceeds

of Crime Act 2002, nor that persons purchasing Shares in the Offering would, by doing so, commit any offence

under the Proceeds of Crime Act 2002.

However, the consequences of liability under the Proceeds of Crime Act 2002 or similar U.S. laws could be

significant for the Group and could include: financial penalties, forfeiture, management time and expense dealing

with an investigation and defence, a criminal conviction and future debarment from public procurement. If any of

the foregoing occurs, it could result in a material adverse effect on the Group’s business, financial condition,

results of operations and prospects.

The Group may face potential liability arising out of unlawful, and allegedly unlawful, activities in connection

with the sale of Autonomy and related matters.

In November 2018, the U.S. authorities charged Messrs. Lynch and Chamberlain with numerous counts of wire

fraud and conspiracy to commit wire fraud and requested forfeiture. A superseding indictment issued in March

2019 added further charges of securities fraud against Mr. Lynch and wire fraud and conspiracy to evade

accounting controls, tamper with witnesses, obstruct proceedings and commit money laundering against Messrs.

Lynch and Chamberlain.

The U.S. has alleged that, among other things, Mr. Lynch made payments to former Autonomy employees,

including Mr. Hussain, via Invoke and entities affiliated with Invoke; and that Mr. Lynch caused an Invoke

affiliate to hire Mr. Chamberlain in or around May 2016. While the Invoke affiliates are unnamed, they are

believed by the Group to include Darktrace.

Other members of the Group’s executive management team, and other Group employees, previously worked at

Autonomy. Certain of those individuals were also employees of, and investors in, Invoke. No claim has been

brought against any of these individuals in relation to the sale of Autonomy.

In 2018, Darktrace Holdings Limited received and responded to subpoenas issued by the U.S. DOJ, which

included, among other things, requests for information relating to HP, Autonomy (including the hiring of its

former employees by Darktrace Holdings Limited and the issues of shares in Darktrace Holdings Limited to

them), Invoke Capital LLC, ICP London Limited, and ICPD Darktrace Holdings. The Group has not received

further requests for documents or information from the U.S. DOJ since 2018. No claim has been brought against

the Group for any criminal conduct in connection with the sale of Autonomy.

There remains a risk that the Group could be charged with offences, arising from the allegations in the superseding

indictment against Messrs. Lynch and Chamberlain, including money laundering offences. To the Group’s

knowledge, it is not the target of an investigation by the DOJ, the Group has complied with subpoenas issued by

the DOJ in 2018, and prior to and following the Group’s interactions with the DOJ during that process, there has

not been any communication from the DOJ. Having analysed and considered the relevant circumstances, the

Directors believe this risk to be low.

In the event of any action taken by the U.S. DOJ in respect of these risks, the consequences of those actions could

be significant for the Group and could include, in addition to the reputational risks: financial penalties, forfeiture,

management time and expense dealing with an investigation and defence, a criminal conviction and future

debarment from public procurement. If any of the foregoing occurs, it could result in a material adverse effect on

the Group’s business, financial condition, results of operations and prospects could be negatively impacted.

The Group may not be able to sustain its revenue growth rate in the future, which may have an adverse impact

on investor sentiment.

Although the Group achieved year-on-year growth of 72.5% and 45.3% for the years ended 30 June 2019 and

2020 respectively, and 38.9% for the six months ended 31 December 2020, there can be no assurances that

revenue will continue to grow or do so at current rates, and revenues of prior annual periods may not be an

indication of future performance.

The Group’s effective management of its revenue growth rate will depend on, among other things, its ability to:

•

effectively attract, integrate, and retain a large number of new employees, particularly members of the sales

and marketing and R&D teams;

•

further improve the Cyber AI Platform and its own IT infrastructure to support customer needs; and

•

enhance information and communication systems to ensure that employees and offices around the world

are well coordinated and can effectively communicate with each other and with channel partners and

customers.

There can be no assurances that revenue will continue to grow or do so at current rates. The Group’s ability to

forecast its future results of operations is subject to a number of uncertainties, including its ability to effectively

plan for and model future growth. The Group has encountered in the past, and may encounter in the future, risks

and uncertainties frequently experienced by growing companies with global operations in rapidly changing

industries. If the Group is unable to sustain its growth or accurately forecast it’s future growth, or if it is unable

to scale its operations or to do so efficiently, this could negatively impact the Group’s business, results of

operations, financial condition and prospects.

If the Group fails to sustain revenue growth and the revenue growth rate declines or fails to meet analyst

expectations, this could have a negative impact on the Group’s business, results of operations, financial conditions

and prospects or investor sentiment.

The Group has incurred losses each year since inception and may not become profitable in the future.

The Group has incurred losses each year since inception, including net losses of $42.5 million, $34.7 million and

$28.7 million for the financial years ended 30 June 2018, 2019 and 2020, respectively, and net losses of

$48.4 million for the six months ended 31 December 2020 and may never achieve or maintain profitability. The

Group’s limited operating history and the fact that its operating expenses have increased over time, makes it

difficult to evaluate the potential profitability of its business. As the Group continues to expand its business and

the breadth of its operations, hires additional employees, expands into new markets, invests in research and

development and sales and marketing, and incurs costs associated with general administration (including expenses

related to being a listed company), it is possible that the Group’s costs of sales and operating expenses will

increase at a faster rate than its revenue, leading to further net losses. To the extent the Group is successful in

increasing its customer base, it may also incur increased losses because the costs associated with acquiring and

growing the customer base and with research and development are generally incurred upfront, while revenue from

customer contracts is generally recognised over the contract term. The Group may not be able to increase its

revenue at a rate sufficient to offset increases in its costs of sales and operating expenses in the near term or at all,

which would prevent it from achieving or maintaining profitability in the future. Any failure by the Group to

achieve, and then sustain or increase, profitability on a consistent basis could negatively impact the Group’s

business, results of operations, financial condition and prospects.

The Group’s Remaining Performance Obligation (“RPO”) may not be fully realised or may not result in

revenue, which may have a material adverse effect on its business, results of operations, financial condition

and prospects.

As of 31 December 2020, the Group had approximately $613 million of RPO on its customer contracts, valued at

exchange rates as of that date. Management uses RPO as a key performance indicator of the current and future

performance of the business because the Group expects to recognise its current RPO as revenue over time in line

with its accounting policies relating to revenue recognition. Whilst some contracts require further acceptance,

contracted amounts beyond that further acceptance are not included in committed customer contract values or in

the Group’s RPO; nevertheless the Group expects to derive future value from those contracts. However, there can

be no assurances that customers will honour existing contracts. Despite long term agreements and binding terms

that would not allow early termination without cause, customers might still cancel existing contracts. In addition,

liquidity issues could lead its customers to become unable to satisfy their payment obligations or could otherwise

encourage its customers to seek to repudiate, cancel, or renegotiate its contracts for various reasons.

A reduction in RPO due to cancellation by a customer or other reasons could significantly reduce the revenue that

the Group actually receives from affected contracts. Given these factors, the Group’s RPO at any point in time

may not accurately represent the revenue that it expects to realise during any period, and its RPO as of the end of

a financial year may not be indicative of the revenue it expects to earn in the following financial year. Inability to

realise revenue from its RPO could have an adverse effect on its business, results of operations, financial

conditions and prospects.

If the Group fails to retain its customers or does not attract new customers, it may be unable to grow its

revenues and profitability and effectively invest to enhance the capabilities of its platform, if at all.

As the market for cyber security products becomes more saturated, competition for customers will continue to

increase. In order to grow revenues, the Group must retain existing customers to the extent possible and

continuously attract new customers to replace those who terminate their platform subscriptions, and any failure to

do so could impact the Group’s revenues. The Group is dependent on the acquisition of new customers to replace

lost customers, and its ability to attract new customers depends on the perceived value of its platform versus that

of the products offered by competitors. The Group relies on its marketing and direct sales strategies to attract new

customers to its solutions. If sales personnel fail to sell the Group’s products, to upsell new products that the

Group develops or fail to renew contracts with existing customers which have an average duration of three years,

the Group may lose existing customers. If the Group’s current marketing or sales strategy is not successful or

becomes less effective, or if marketing costs were to significantly increase, it may not be able to maintain or

expand its customer base on a cost-effective basis or at all, and its business may be adversely affected.

Numerous factors could adversely impact the growth of revenues and profits even if the Group continues to gain

additional customers. In particular, the Group can provide no assurance that revenues will grow or remain at

current levels even if it continues to gain new customers. For example, if the Group is not able to replace large

accounts and the Group is unable to adjust its cost structure, revenue and profitability could decrease. In addition,

if the Group needs to expend additional resources in order to maintain existing customers, it could have a

significant impact on the Group’s business and financial condition.

If the Group does not effectively expand, train and retain its direct sales force, it may be unable to add new

customers or increase sales to its existing customers, and its business will be adversely affected.

The Group depends, in large part, on its direct sales strategy to obtain new customers and increase sales with

existing customers. Its ability to achieve significant revenue growth will partly depend on its success in recruiting,

training and retaining sufficient numbers of sales personnel. New hires require significant training and may take

significant time before they achieve full productivity. The Group’s recruitment model for direct sales hires is to

hire untrained salespeople who have recently graduated from university and the Group’s training procedures may

prove to be insufficient.

Recent hires and planned hires may not become productive as quickly as expected, and the Group may be unable

to hire or retain sufficient numbers of qualified individuals in the markets in which it does business or plans to do

business. The Group does not have a large Human Resources team and hiring sales personnel in new countries,

or expanding the Group’s existing presence, requires upfront and ongoing expenditures that may not be recovered

if the sales personnel fail to achieve full productivity. In addition, the Group’s sales employees might perceive that

they are paid insufficiently or not adequately trained or mentored which would negatively impact the Group’s

reputation as an employer and make it more difficult to attract qualified sales personnel. The Group cannot predict

whether, or to what extent, its sales will increase as it expands its sales force or how long it will take for sales

personnel to become productive. If the Group is unable to hire and train and retain a sufficient number of effective

sales personnel, or the sales personnel it hires are not successful in obtaining new customers or increasing sales

to its existing customer base, this could negatively impact the Group’s business, results of operations, financial

condition and prospects.

The Group relies on channel partners, including resellers and referral partners, to generate a significant

portion of its revenue. If the Group fails to maintain successful relationships with its channel partners, or if its

channel partners fail to perform, its ability to market, sell and distribute its solution will be limited, and its

business, financial position and results of operations will be harmed.

In addition to the Group’s direct sales force, it relies on its channel partners to sell and support its Cyber AI

Platform, particularly in parts of APAC, LATAM and the Middle East. Approximately 35% of the Group’s

revenues involve channel partners and the Group expects that channel partners will represent a substantial portion

of its revenues for the foreseeable future. The Group’s agreements with channel partners are non-exclusive,

meaning its partners may offer customers IT security products from other companies, including products that

compete with the Group’s platform. If its channel partners do not effectively market and sell its solution, and, if

applicable, fail to present clients with upgraded product versions or choose to use greater efforts to market and

sell their own products or the products of the Group’s competitors, its ability to grow its business will be adversely

affected. The Group’s channel partners may cease or deemphasise the marketing of its solution with limited or no

notice and with little or no penalty. In addition, in certain markets, new channel partners require training and may

take several months or more to achieve productivity. The loss of a substantial number of the Group’s channel

partners, the inability to replace them or the failure to recruit additional channel partners could materially and

adversely affect the Group’s results of operations. Darktrace’s reliance on channel partners could also subject it to

lawsuits or reputational harm if, for example, a channel partner misrepresents the functionality of its solution to

customers or violates laws or its corporate policies. The ability to grow revenues in the future will depend in part

on its success in maintaining successful relationships with its channel partners and training its channel partners to

independently sell and install its solution. If the Group is unable to maintain its relationship with channel partners

or otherwise develop and expand its indirect sales channel, or if the Group’s channel partners fail to perform, the

Group’s business, financial position and results of operations could be adversely affected.

Failure by the Group or, in certain markets, its channel partners, to maintain sufficient levels of customer

support could have a material adverse effect on its business, results of operations, financial condition and

prospects.

The Group’s customers depend in large part on customer support delivered by the Group, or through its channel

partners, to resolve issues relating to the use of its Cyber AI Platform. The Group’s customers are ultimately

responsible for effectively using its Cyber AI Platform and ensuring that their IT staff is properly trained in the

use of the Darktrace platform, however, even with the Group’s support and that of its channel partners, a portion

of the Group’s customers choose not to use the associated operational support. The failure of these customers to

correctly use its solution, or the Group’s failure to effectively assist customers in installing its solution and

providing effective ongoing support, may result in an increase in the vulnerability of its customers’ IT systems

and sensitive business data, and successful attacks may adversely affect the Group’s reputation. If the Group’s

channel partners do not effectively provide support to the satisfaction of its customers, the Group may be required

to provide support to such customers, which would require the Group to invest in additional personnel, which

requires significant time and resources. The Group may not be able to keep up with demand, particularly if the

sales of the platform exceed its internal forecasts. To the extent that the Group or its channel partners are

unsuccessful in hiring, training and retaining adequate support resources, the Group’s ability and the ability of its

channel partners to provide adequate and timely support to its customers will be negatively impacted, its

customers’ satisfaction with its platform will be adversely affected. Accordingly, its failure to provide satisfactory

associated technical support could have a material and adverse effect on its business, results of operations,

financial condition and prospects. See “

—The Group’s ability to sell its Cyber AI Platform is dependent on the

quality of its associated support, and failure to offer high quality associated support could have a material

adverse effect on sales and results of operations.

”

In addition to direct sales, the Group relies on channel partners to sell its platform. Any failure by the Group

to sell its platform effectively through channel partners could negatively impact the Group’s business, results

of operations, financial condition and prospects.

The Group sells and markets its platform to customers indirectly through channel partners, which includes

resellers, in certain jurisdictions, as well as directly by the Group. If resellers are ineffective at marketing or

promoting the Group’s platform, the Group’s sales could decline, or it could damage the Group’s brand. Issues

with specific end customers or broader weakness in specific markets could also negatively affect the cash flow of

resellers, in turn, delay paying their obligations and breaching their agreements. The Group undertakes additional

checks to ensure compliance with the applicable accounting rules, business model and standards, such as ensuring

a back-to-back commercial contract with the ultimate end user. Revenue from resellers is recognised on a

consistent basis with direct sales, with the customer (for revenue purposes) being the reseller. Although sales to

resellers are non-refundable and not dependent on payment from the ultimate end customer, the Group

nevertheless faces a greater risk of non-payment for indirect sales. A change in the credit quality of a reseller can

increase the risk that such counterparty is unable or unwilling to pay amounts owed, which could directly or

indirectly have a material adverse effect on results of operations. Any material decrease in the volume of revenue

generated by the Group’s resellers could negatively impact the Group’s business, results of operations, financial

condition and prospects.

The Group’s current operations are global in scope, creating a variety of operational challenges.

The Group’s offices, employees and customers are dispersed around the world. This creates operational challenges

including:

•

costs associated with developing software and providing support in many languages;

•

varying patterns of use in different countries and different payment cycles;

•

increased complexity of taxes and regulations associated with operating in different countries;

•

costs associated with fluctuation in foreign currency exchange;

•

legal challenges associated with global operations;

•

the effect of tariffs and trade barriers (resulting from, for example, trade wars or the withdrawal or

renegotiation of multilateral trade agreements);

•

a variety of regulatory or contractual limitations on its ability to operate and reduced protection of

intellectual property rights in some countries;

•

potential additional financial costs to the Group, such as potential adverse movements in currency

exchange rates and adverse tax events; and

•

a geographically and culturally diverse workforce and customer base.

Failure to overcome any of these challenges could negatively affect results of operations or increase the Group’s

expenses. The Group may further expand its operations globally. If these efforts are unsuccessful in creating and

expanding the Group’s global customer base, or if its expansion increases the difficulties of running a global

company, it could harm the Group’s results of operations.

The Group also derives a meaningful portion of its revenues from emerging markets, which are subject to greater

risks than more developed markets, including legal, economic, tax and political risks. Emerging markets are

particularly vulnerable to restrictive, inconsistent or frequently changing government policies and have higher

instances of piracy and licence misuse, and therefore may require additional time, precautions and resources to

develop the Group’s business and presence in such markets. If the Group were to decide to enter new markets in

countries such as China or Russia, modifications to the Group’s business plan or operations to comply with

changing regulations or certain actions taken by regulatory authorities may increase the costs of providing the

platform and materially and adversely affect the Group’s business, which could adversely affect the Group’s

financial condition.

The Cyber AI Platform is complex, and any failure of the Cyber AI Platform to satisfy customers or perform

as desired could negatively impact the Group’s business, results of operations, financial condition and

prospects.

The Cyber AI Platform is complex and is deployed in a wide variety of digital estates. Inability to meet the unique

needs of customers may result in customer dissatisfaction and/or damage to the Group’s reputation, which could

materially harm the Group’s business. In addition, the proper use of the Cyber AI Platform may require training

of the customer and the initial or ongoing support of the Group’s technical personnel. If training and/or ongoing

support require more expenditure than originally estimated, margins will be lower than projected.

In addition, if customers do not use the Cyber AI Platform correctly or as intended, inadequate performance or

outcomes may result. It is possible that the Cyber AI Platform may also be intentionally misused or abused by

customers or their employees or third parties who obtain access and use of the Cyber AI Platform. For example,

the Group’s Antigena product operates in two modes, the autonomous mode and the human confirmation mode.

In autonomous mode, the customer does not need to take any action and Antigena automatically defends against

a flagged attack. On human confirmation mode, once an attack is flagged, a customer must manually choose how

to respond to it; and its effectiveness is accordingly dependent on factors outside the Group’s control. For

example, the time lapse between notification and manual input could result in the failure to quickly respond to a

machine speed attack. Inadequate performance, whether or not resulting from the Group’s actions, such as the

incorrect or improper use or configuration of the Cyber AI Platform, failure to properly train customers on how

to efficiently and effectively use the Cyber AI Platform, or failure to properly provide implementation or

analytical support to customers, may result in contract terminations or non-renewals, reduced customer payments,

negative publicity, or legal claims against the Group.

If customer personnel are not well trained in the use of the Cyber AI Platform, customers may defer the

deployment of the platform, deploy it in a more limited manner than originally anticipated, or may not deploy it

all. If there is substantial turnover of customer personnel responsible for procurement and use of the Cyber AI

Platform, the platform may go unused or be adopted less broadly, and the Group’s ability to make additional sales

may be substantially limited, which could negatively impact the Group’s business, results of operations, financial

condition and prospects.

The Group’s ability to sell its Cyber AI Platform is dependent on the quality of its associated support, and

failure to offer high quality associated support could have a material adverse effect on sales and results of

operations.

Once the Cyber AI Platform is deployed and integrated with customers’ existing information technology solutions

and data, customers depend on the Group’s customer success and technology support teams to resolve any issues

relating to the Cyber AI Platform. Increasingly, the platform has been deployed in large-scale, complex technology

environments, and the Directors believe the Group’s future success will depend on its ability to increase sales of

the Cyber AI Platform for use in such deployments. In addition, the Group’s ability to provide effective ongoing

support, or to provide such customer support in a timely, efficient, or scalable manner, may depend in part on

customers’ environments and their upgrading to the latest versions of the Cyber AI Platform.

In addition, the Group’s ability to provide effective support is largely dependent on its ability to attract, train, and

retain qualified personnel with experience in supporting customers on platforms such as the Cyber AI Platform.

The Group’s number of customers has grown significantly, and that growth has and may continue to put additional

pressure on the Group’s support teams if customers choose not to operate on Antigena’s autonomous mode and

instead operate on its human confirmation mode, which increases the risk that breach occurs requiring assistance

from the Group’s support teams. The Group may be unable to respond quickly enough to accommodate short-term

increases in customer demand for support. The Group may be unable to modify the future scope and delivery of

its support to compete with changes in support levels provided by its competitors. Increased customer demand for

support, without corresponding revenue, could increase costs and negatively affect the Group’s business, results

of operations, financial condition and prospects. In addition, as the Group continues to grow its operations and

expand into new markets, it needs to be able to provide efficient associated support that meet its customers’ needs

globally at scale, and its associated support teams may face additional challenges, including those associated with

operating the platforms and delivering support, training, and documentation in languages other than English and

providing support across expanded time-zones. If the Group is unable to provide efficient support globally at

scale, its ability to grow its operations may be harmed, and it may need to hire additional support personnel, which

could negatively impact its business, results of operations, financial condition and prospects. The Group’s

customers typically need training, which is typically self-delivered and accessible through the customer portal, in

the proper use of and the variety of benefits that can be derived from the Cyber AI Platform to maximise its

potential. If the Group does not effectively deploy, update, or upgrade the Cyber AI Platform, succeed in helping

its customers quickly resolve post-deployment issues, and provide effective ongoing support, its ability to sell

additional products to existing customers could be adversely affected, the Group may face negative publicity, and

its reputation with potential customers could be damaged. As a result, failure to maintain high

quality support could negatively impact the Group’s business, results of operations, financial condition and

prospects. See “

—Failure by the Group or its channel partners to maintain sufficient levels of customer support

could have a material adverse effect on its business, results of operations, financial condition and prospects.

”

If the Group’s platform does not interoperate with its customers’ digital estates, installations could be delayed

or cancelled, which could significantly reduce the Group’s revenue.

The Group’s platform is designed to interface with existing digital estates of its customers, each of which have

different specifications and utilise multiple protocol standards. Many of the digital estates of the Group’s

customers contain multiple generations of products that have been added over time as they have grown and

evolved. The Group’s platform must interoperate with the products within digital estates as well as with future

products that might be added to these digital estates in order to meet the requirements of the Group’s customers.

The Group works to advise and assist customers so that its platform will interoperate and scale with customers’

existing software and appliances, however when problems occur in the existing digital estates of customers, it may

be difficult to identify the sources of these problems. Such problems include misconfigurations of a customer’s

existing software, a customer’s mistaken understanding of the operation of its digital estate or errors in the existing

software. Any delays in identifying the sources of problems or in providing necessary modifications to the

Group’s software or appliances could have a negative impact on the Group’s reputation and the Group’s

customers’ satisfaction with its platform, and the Group’s ability to sell its platform could be adversely affected.

If the Group’s platform does not interoperate properly, installations could be delayed or orders for the Group’s

platform could be cancelled, which could negatively impact the Group’s business, results of operations, financial

condition and prospects.

In addition, platform vendors, notably Microsoft with Windows, Cisco, Google with Android and Apple with

MacOS and iOS, could restrict third party cyber security software’s access to customer data hosted or maintained

in third party platforms. This could prevent the Group from accessing data in clouds, networks, collaboration tools

and email. The Group’s platform is designed to interface with the existing computing platforms. As new versions

of platforms are introduced that include cyber security software offered by the platform vendors themselves, there

is a risk that such platform vendors may close their platforms to third party cyber security software such as the

Group’s, or make it more difficult to install and use such third party cyber security software, which would harm

the competitive position of the Group.

As the Group’s platform offerings expand, there is a risk that platform vendors will regard one or other of the

Group’s offerings as a competitive threat and will impose restrictions on the Group’s ability to offer those

offerings. If either Microsoft or Google were to impose restrictions on the Group’s ability to offer additional

offerings to its existing customers, or to obtain vital information that the Directors believe they need to improve

the Group’s products, it may harm the Group’s business.

The Group relies on third-party data centres, such as Amazon Web Services (“AWS”), and its own data servers

to host and operate an increasing number of deployments of or offerings in its Cyber AI Platform, and any

disruption of or interference with its use of these facilities may negatively affect its ability to maintain the

performance and reliability of its Cyber AI Platform which could cause its business to suffer.

The Group’s customers depend on the continuous availability of its Cyber AI Platform. The Group currently hosts

its platform and serves its customers using a mix of third-party data centres, primarily AWS, and its own internal

data servers, hosted in Cambridge and London. Historically, the Group’s platform has been hosted in

customer-controlled data infrastructure, however Darktrace-controlled cloud-hosted products are expected to

grow in materiality and importance. Consequently, the Group may be subject to service disruptions as well as

failures to provide adequate support for reasons from its third-party data centres that are outside of its direct

control. The Group has experienced, and expects that in the future it may experience interruptions, delays and

outages in service and availability from time to time due to a variety of factors, including infrastructure changes,

human or software errors, website hosting, disruptions and capacity constraints.

The adverse effects of any third-party service interruptions may be disproportionately heightened due to the nature

of its business and the fact that its customers have low tolerance for interruptions of any duration. Interruptions

or failures in its service delivery could result in a cyber attack or other security threat to one of its customers

during such periods of interruption or failure. Interruptions or failures in its service could also cause customers to

terminate their subscriptions, adversely affect its renewal rates, and harm its ability to attract new customers.

The Group’s business may also be harmed if the Group’s customers believe that a cloud-based security solution

hosted on third-party data centres is unreliable. While the Group does not consider them to have been material, it

has experienced, and may in the future experience, service interruptions and other performance problems due to

a variety of factors. The occurrence of any of these factors, or if the Group is unable to rapidly and cost-effectively

fix such errors or other problems that may be identified, could damage its reputation, negatively affect its

relationship with its customers or otherwise harm its business, results of operations, financial condition and

prospects.

If the Group is unable to maintain and enhance its brand or if the Group’s reputation and business is harmed

by news or social media coverage it could negatively impact the Group’s business, results of operations,

financial condition and prospects.

The Group’s brand identity is critical to its relationships with its customers and channel partners and to its ability

to attract new customers and channel partners. The successful promotion of the Darktrace brand will depend

largely upon its marketing efforts, ability to continue to offer high-quality products and ability to successfully

differentiate its platform from its competitors’ product offerings. The promotion of the Group’s brand may require

substantial expenditures, which will likely increase as the market becomes more competitive and as the Group

expands into new markets. If the Group is not successful at maintaining and enhancing its brand, it could

adversely affect its ability to attract new customers and it could lose customers, third party channel partners.

Any negative change to the perception of the Group’s brand among its customers could have a material adverse

effect on its business. For example, any negative discussions in customer forums or online review sites, any

negative media attention or any negative comments regarding customer support could have a significant adverse

effect on the Group’s brand. In addition, negative reviews of the Group’s security software solutions or the Group

generally, published by leading research and advisory companies, such as Gartner, could harm the Group’s brand.

The Group depends upon certain third party channel partners and actions by those third parties could have a

negative effect on the Group’s brand. In addition, independent industry analysts often provide reviews of the

Group’s platform, and perception of the Group’s brand in the marketplace may be significantly influenced by

these reviews. If these reviews are negative, or less positive as compared to those of the Group’s competitors, the

Darktrace brand may be adversely affected.

It may also be more difficult to maintain and enhance the Darktrace brand with customers who purchase through

the channel partners, particularly in regions where the Group has less direct contact with end customers. If the

Group cannot successfully maintain and enhance its brand, the business may not grow, and resultantly the Group

may have reduced pricing power relative to competitors with stronger brands and it may lose customers and

channel partners. This could negatively impact the Group’s business, results of operations, financial condition and

prospects.

As the Group’s business grows and interest in the Group and the technology industry overall increases, the Group

may attract significant attention from news and social media outlets, including unfavourable coverage and

coverage that is not directly attributable to statements authorised by the leadership of the Group, that incorrectly

reports on statements made by the leadership of the Group or employees and the nature of the Group’s work or

that is otherwise misleading. If such news or social media coverage presents, or relies on, inaccurate, misleading,

incomplete, or otherwise damaging information regarding the Group, such coverage could damage its reputation

in the industry and with current and potential customers, employees, and investors, and could negatively impact

the Group’s business, results of operations, financial condition and prospects. Due to the sensitive nature of the

Group’s work and its confidentiality obligations, it may be unable to or limited in its ability to respond to such

harmful coverage, which could have a negative impact on the Group’s business. Any of the foregoing could

negatively impact the Group’s business, results of operations, financial condition and prospects.

The inability to obtain any third-party licence required to develop new products or enhancements to the

Group’s platform could require the Group to obtain substitute technology of lower quality or performance

standards or at greater cost, which could negatively impact the Group’s business, results of operations,

financial condition and prospects.

Some of the Group’s products may from time to time include software or other intellectual property licensed from

third parties. It may be necessary in the future to renew licences relating to various aspects of these products or

to seek new licences for existing or new products. There can be no assurance that the necessary licences will be

available on acceptable terms, if at all. The inability to obtain certain licences or other rights or to obtain such

licences or rights on favourable terms could result in delays in product releases until equivalent technology can

be identified, licensed, developed, acquired or integrated, if at all, and may require the Group to use alternative

technology of lower quality or performance standards, any of which may have a material adverse effect on the

Group’s business, operating results and financial condition and prospects. In addition, third parties may allege that

additional licences are required for the Group’s use of their software or intellectual property, and the Group may

be unable to obtain such licences on commercially reasonable terms or at all. Moreover, the inclusion in the

Group’s products of software or other intellectual property licensed from third parties on a non-exclusive basis

could limit the Group’s ability to differentiate the Group’s products from those of the Group’s competitors, which

could negatively impact the Group’s business, results of operations, financial condition and prospects.

The Group relies on the performance of highly skilled personnel including the senior management team.

The Group’s future success depends, in part, on its ability to continue to identify, hire, develop, motivate, and

retain highly skilled personnel for all areas of the organisation, particularly technical professionals. The Group’s

future performance depends on the continued support and continuing contributions of its senior management to

execute on its business plan and to identify and pursue new opportunities and platform innovations. The majority

of the Group’s senior management has been with the Group since its inception which has created a collaborative

company culture. There can be no assurance that the Group would be able to maintain its culture if the

composition of the senior management team were to evolve or individuals were to depart. Competition for

suitably qualified individuals with the relevant technical expertise in the Group’s industry is intense. The loss of

the support of any of the Group’s key personnel, the inability to attract, retain and integrate qualified personnel,

or delays in hiring required personnel could significantly delay or prevent the achievement of the Group’s

development and strategic objectives, and could negatively impact the Group’s business, results of operations,

financial condition and prospects. In addition, to the extent the Group hires personnel from competitors, it may be

subject to allegations that they have been improperly solicited, that they have divulged proprietary or other

confidential information, or that their former employers own their inventions or other work product.

The Group has entered into employment agreements with certain executive officers and key employees that

contain non-compete covenants. However, despite these agreements, the Group may not be able to retain these

officers and employees. In addition, the non-compete covenants may themselves not be enforceable in certain

jurisdictions (for example, in California, where the Group has operations, they are only enforceable in limited

circumstances). This means that the Group may be unable to prevent its competitors from benefiting from the

expertise of such former employees, which could materially and adversely affect the Group’s business and results

of operations.

The Group operates its servers in the UK and may face significant challenges in the event of a disruption of its

servers.

With limited exception, the Group’s platform and associated services are deployed either in customers’ data

centres or third-party cloud providers, however certain support and monitoring functions require the use of the

Group’s server content, which is located in multiple data centres in the UK. The Group has developed back-up

storage for key data which is stored in London; however, there can be no assurance that such back-up storage

arrangements or redundant or distributed server infrastructure will become operational, or, if they do, will be

effective if it becomes necessary to rely on them. Disruption of the server and/or internet bandwidth connectivity

due to technical reasons, natural disaster or other unanticipated catastrophic events, including power interruptions,

storms, fires, floods, earthquakes, terrorist attacks and wars could significantly impair the Group’s ability to

continue its usual business operations and could materially and adversely affect the Group’s business and results

of operations. The Group is continuously working to improve its disaster recovery response and to better

understand how a server going down will interrupt the business.

Although the Directors believe that the Group has the technical knowledge necessary to mitigate risks relating to

such systems and system architecture, the Group may at any time be required to expend significant capital or other

resources (including staff and management time and resources) to protect against network failure and disruption.

This may include the replacement or upgrading of existing business continuity systems, procedures and security

measures. In addition, the Group will require continuing expansion and upgrading of systems to support additional

customers, localities, products and online support. These expansions and upgrades may consume significant

capital and managerial resources.

The Group may be unable to adequately protect its intellectual property proprietary rights and prevent others

from making unauthorised use of its platform and technologies, which could harm the Group’s financial

results.

The success of the Group’s business depends on its ability to protect and enforce its patents, trademarks,

copyrights, trade secrets and other intellectual property rights. The Group seeks to protect its intellectual property

under patent, trademark, copyright and trade secret laws, and through a combination of confidentiality procedures,

contractual provisions and other methods, all of which offer only limited protection. The Group generally enters

into confidentiality, invention assignment or licence agreements with employees, consultants, vendors, partners

and customers, and generally limits access to, and distribution of, its proprietary information. However, there can

be no assurances that the Group has entered into such agreements with all parties who may have or have had

access to confidential information or that the agreements entered into will not be breached. Despite the Group’s

best efforts to protect its intellectual property rights, unauthorised parties may not be deterred from misuse, theft

or misappropriation of information the Group regards as proprietary.

The Group has filed various applications for certain aspects of its intellectual property, including patents and

trademarks. Valid patents may not be issued from pending applications, and the claims eventually allowed on any

patents may not be sufficiently broad to protect the Group’s platform or technologies. Any issued patents may be

challenged, invalidated or circumvented, and any rights granted under these patents may not actually provide

adequate defensive protection or competitive advantages. The Group cannot be certain that it was the first to make

the inventions claimed in its pending patent applications or that it was the first to file for patent protection, which

could prevent patent applications from issuing as patents or invalidate patents following their issue. Similarly,

trademark applications and registrations may be challenged by third parties and registered trademarks may,

following registration, be declared invalid or revoked. The process of obtaining patent, trademark or other

registered intellectual property protection is expensive and time-consuming, and the Group may not be able to

prosecute all necessary or desirable applications, or renew registrations, at a reasonable cost or in a timely manner.

Moreover, policing unauthorised use of the Group’s intellectual property is difficult, expensive and

time-consuming, particularly in foreign countries where the laws may not be as protective of intellectual property

rights as those in the United Kingdom and United States, and where mechanisms for enforcement of intellectual

property rights may be weak. Attempts to enforce the Group’s rights against third parties could also provoke these

third parties to assert their own intellectual property or other rights against the Group, or take unilateral steps to

invalidate the Group’s intellectual property rights, which could result in an action that invalidates or narrows the

scope of its rights, in whole or in part. If the Group is unable to protect its proprietary rights (including aspects of

its software and products protected other than by patent rights), it may be at a competitive disadvantage compared

to others who need not incur the additional expense, time, and effort required to create the innovative products

that have enabled the Group to be successful to date. Any of these events could negatively impact the Group’s

business, results of operations, financial condition and prospects.

The Group’s failure to effectively plan, design, and implement upgrades, enhancements or modifications of its

information technology systems could interfere with the Group’s business and operations and could negatively

impact the Group’s business, results of operations, financial condition and prospects.

The Group’s information systems require an on-going commitment of resources to maintain and enhance existing

systems and develop new systems in order to keep pace with continuing changes in information processing

technology and evolving industry and regulatory standards. The Group may experience difficulties in transitioning

to new or upgraded information technology systems and in applying maintenance patches to existing systems,

including loss of data and decreases in productivity as personnel become familiar with new, upgraded or modified

systems. In addition, the Group may from time to time obtain portions of its information technology services from

independent third parties, which may make its operations vulnerable to such third parties’ failure to perform

adequately. The Group’s failure to effectively plan, design and implement upgrades, enhancements or

modifications of its information technology systems and processes, or the failure of the systems to operate in the

intended manner could negatively impact the Group’s business, results of operations, financial condition and

prospects.

A failure to comply with current laws, rules and regulations or changes to such laws, rules and regulations and

other legal uncertainties could negatively impact the Group’s business, results of operations, financial

condition and prospects.

The Group’s business, results of operations and financial condition could be adversely affected by changes in or

interpretations of existing laws, rules and regulations or the promulgation of new laws, rules and regulations

applicable to the Group, and the use of AI may itself become subject to further specific laws and regulations. The

Group could also be adversely affected by the perception of UK Data Protection Law if the law as it exists is

deemed insufficient or if laws are altered so as to prioritise personal data of its customers’ employees over cyber

security concerns. As a result, regulatory authorities could prevent or temporarily suspend the Group from

carrying on some or all of its activities or otherwise penalise the Group if its practices were found not to comply

with applicable regulatory or licensing requirements or any binding interpretation of such requirements. Any such

changes or interpretations could decrease demand for the Group’s platform, limit marketing methods and

capabilities, affect its margins, increase costs or subject the Group to additional liabilities.

In particular, the Group stores some personally identifiable information of its customers and is subject to data

protection and privacy regulations such as the General Data Protection Regulation (EU) 2016/679 (the “

GDPR

”).

The GDPR, which came into force on 25 May 2018, implemented more stringent operational requirements for the

Group’s use of personal data. These more stringent requirements include expanded disclosures to the Group’s

customers in respect of how the Group may use their personal data and increased rights for customers to access,

control and delete their personal data. In addition, there are mandatory data breach notification requirements and

significantly increased penalties of the greater of €20 million or 4% of global turnover for the preceding financial

year. The Group faces stringent regulations in other jurisdictions as well, including in the UK and under the

California Consumer Privacy Act. The same conduct could expose the Group to penalties for breach of data

protection laws in multiple jurisdictions and, following Brexit, the UK Information Commissioner’s Office may

impose fines that are essentially equivalent to the maximum penalties under the GDPR (in addition to any fines

imposed under the GDPR). The UK's Network and Information Systems Regulations 2018, as amended from time

to time, which came into force on 10 May 2018, apply to the Group and place additional network and information

systems security obligations on the Group, as well as mandatory security incident notification in certain

circumstances with penalties of up to £17 million.

The Group is also subject to various customs and international trade laws and regulations. For example, the Group

may be subject to the

Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong

Special Administrative Region. The Group will also be subject to evolving government export and import

controls. As the strategic application of AI technology and governments’ attitudes towards it develops, it may

become subject to heightened import and export requirements. The cost to comply with applicable laws and

regulations could be significant and would increase the Group’s operating expenses, which could adversely affect

its business, results of operations, financial condition and prospects. The Group’s business is conducted

worldwide and failure to comply with import or export rules and restrictions, or to properly classify items under

tariff regulations and pay the appropriate duties, could expose it to fines and penalties. The Group may be required

to make significant expenditures or modify its business practices to comply with existing or future trade laws and

regulations, which could negatively impact the Group’s business, results of operations, financial condition and

prospects.

There are different laws in the various jurisdictions in which the Group operates that relate to how online sales

may be made, particularly to consumers, including laws regulating the size and prominence of lettering,

regulations surrounding the use of opt-in as compared to opt-out provisions and other specifics as to how sales

may be made. The Group operates globally and must continue to monitor changes to, understand, and comply with

the relevant laws in each jurisdiction. Consumer protection laws are continuously evolving, which can lead to

additional obligations on the Group and expenditures and resources may be required to implement these. The

Group must also rely on its third party partners, over whom it has no control, to also comply with such laws and

regulations. Though the Group’s contracts are ordinarily in either English or Californian law, including contracts

between the Group and its third party partners, in certain jurisdictions contracts between the Group’s third party

partners and its customers are governed by the local jurisdiction. Such contracts can lead to different

interpretations of certain provisions, such as force majeure provisions, where a customer may be able to terminate

a contract with a third party partner, even if such termination would not be permitted by the contract between the

third party partner and the Group. The failure to comply with any consumer laws and regulations in any

jurisdiction could negatively impact the Group’s business, results of operations, financial condition and prospects.

The SEC, the U.S. Department of Justice, the U.S. Treasury Department's Office of Foreign Assets Controls, the

U.S. Department of State, as well as other foreign regulatory authorities, continue to enforce economic and trade

regulations and anti-corruption laws across industries. U.S. trade sanctions relate to transactions with designated

foreign countries and territories, including Cuba, Iran, North Korea, Syria and the Crimea region of Ukraine as

well as specifically targeted individuals and entities that are identified on U.S. and other blacklists, and those

owned by them or those acting on their behalf. Anticorruption laws, including the U.K. Bribery Act (the “

Bribery

Act

”) and the US Foreign Corrupt Practices Act of 1977 (the “

FCPA

”), generally prohibit direct or indirect

corrupt payments to government officials and, under certain laws, private persons to obtain or retain business or

an improper business advantage. Some of the Group’s global operations may be conducted in parts of the world

where it is common to engage in business practices that are prohibited by these laws.

Although the Group has policies and procedures in place designed to promote compliance with laws and

regulations, which the Group reviews and updates as it expands its operations in existing and new jurisdictions in

order to proportionately address risks of non-compliance with applicable laws and regulations, the Group’s

employees or partners could take actions in contravention of its policies and procedures, or violate applicable laws

or regulations. As regulations continue to develop and regulatory oversight continues to focus on these areas, the

Group’s policies and procedures may not comply at all times with all applicable laws or regulations. In the event

the Group’s controls should fail or the Group is found to not be in compliance for other reasons, the Group could

be subject to monetary damages, civil and criminal monetary penalties, withdrawal of business licences or

permits, litigation and damage to its reputation and the value of its brand. As the Group expands its operations in

existing and new jurisdictions globally, the Group will need to increase the scope of its compliance programmes

to address the risks relating to the potential for violations of the Bribery Act and the FCPA and other anti-bribery

and anti-corruption laws. In addition, the promulgation of new laws, rules and regulations, or the new

interpretation of existing laws, rules and regulations, in each case that restrict or otherwise unfavourably impact

the ability or manner in which the Group conduct business, could require the Group to change certain aspects of

its business, operations and commercial relationships to ensure compliance, which could decrease demand for the

Cyber AI Platform, reduce revenue, increase costs or subject the Group to additional liabilities. A failure to comply

with current laws, rules and regulations or changes to such laws, rules and regulations and other legal uncertainties

may negatively impact the Group’s business, results of operations, financial condition and prospects.

The Group may become subject to claims of intellectual property infringement by third parties that, regardless

of merit, could result in litigation and could negatively impact the Group’s business, results of operations,

financial condition and prospects.

The Group’s success largely depends on its ability to use and develop its technology without infringing the

intellectual property rights of third parties, including patents, copyrights, trade secrets and trademarks. The Group

may be subject to litigation involving claims of patent infringement or violation of other intellectual property

rights of third parties. The Group may be the target of so-called “patent trolls”, companies that do not manufacture

or sell products and whose sole activity is to assert patent rights against accused infringers in an attempt to collect

licensing fees. In addition, the Group licences and utilises certain “open source” software as part of its solutions

offering. An author or another third party that distributes such third party or open source software could allege

that the Group had not complied with the conditions of one or more of these licences. Any such claims, regardless

of merit, could result in litigation, which could result in substantial expenses, divert the attention of management,

cause significant delays, materially disrupt the conduct of the business and negatively impact the Group’s

business, results of operations, financial condition and prospects.

As a consequence of such claims, the Group could be required to pay substantial damages (including to its

customers), develop non-infringing technology, enter into royalty-bearing licensing agreements, stop selling some

or all of its products or re-brand certain products. If it appears necessary, the Group may seek to license the

intellectual property which the Group is alleged to have infringed, potentially even if the Directors believe such

claims to be without merit. However, such licencing agreements may not be available on acceptable terms, or at

all. If the Group cannot obtain required licences, or if existing licences are not renewed, litigation could result.

Litigation is inherently uncertain and any adverse decision could result in a loss of proprietary rights, subject the

Group to significant liabilities, require the Group to seek licences from others and otherwise negatively impact

the Group’s business, results of operations, financial condition and prospects.

Some of the Group’s technology incorporates “open source” software, which could negatively affect its ability

to sell the Cyber AI Platform and subject it to possible litigation.

The Group’s platform contains third-party open source software components, and failure to comply with the terms

of the underlying open source software licences could restrict its ability to sell its platform. The use and

distribution of open source software may entail greater risks than the use of third-party commercial software, as

open source licensors generally do not provide warranties or other contractual protections regarding infringement

claims or the quality of the code. Many of the risks associated with use of open source software cannot be

eliminated and could negatively impact the Group’s business, results of operations, financial condition and

prospects.

Some open source licences contain requirements that the Group makes available source code for modifications or

derivative works that it creates based upon the type of open source software used. If the Group combines its

proprietary software with open source software in a certain manner, it could, under certain open source licences,

be required to release the source code of its proprietary software to the public (potentially for no charge), including

authorising further modification and redistribution, or otherwise be limited in the licensing of its services, each of

which could provide an advantage to the Group’s competitors or other entrants to the market, create security

vulnerabilities in its solutions, require the Group to re-engineer all or a portion of the Cyber AI Platform, and

could reduce or eliminate the value of the services provided. This would allow the Group’s competitors to create

a similar platform with lower development effort and time and ultimately could result in a loss of sales for the

Group.

It cannot be assured that the Group’s processes for controlling the use of open source software in its platform will

be effective. From time to time, the Group may face claims from third parties asserting ownership of, or

demanding release of, the open source software or derivative works that it developed using such software (which

could include proprietary source code), or otherwise seeking to enforce the terms of the applicable open source

licence. These claims could result in litigation. Litigation could be costly for the Group to defend, have a negative

effect on results of operations and financial condition or require it to devote additional research and development

resources to change its solutions. Responding to any infringement or non-compliance claim by an open source

vendor, regardless of its validity, discovering certain open source software code in the Cyber AI Platform, or a

finding that the Group has breached the terms of an open source software licence, could by, among other things:

•

result in time-consuming and costly litigation;

•

divert management’s time and attention from developing the business;

•

require the Group to pay monetary damages or enter into royalty and licensing agreements that it would

not normally find acceptable;

•

cause delays in the deployment of the Cyber AI Platform offerings to customers;

•

require the Group to stop offering certain features of the Cyber AI Platform;

•

require the Group to redesign certain components of the Cyber AI Platform using alternative non-infringing

or non-open source technology, which could require significant effort and expense;

•

require the Group to disclose its software source code and the detailed programme commands for its

software; and

•

require the Group to satisfy indemnification obligations to its customers.

Any of these outcomes may result in harm to the Group’s business, results of operations, financial condition and

prospects.

The Group may make acquisitions and investments which could divert management’s attention, result in

operating difficulties and otherwise disrupt the Group’s operations and adversely affect its business, results of

operations, financial condition and prospects, and such acquisitions and investments may result in dilution to

the Group’s shareholders.

From time to time, the Group may pursue strategic acquisition or investment opportunities. Any transactions that

the Group enters into could be material to its financial condition and results of operations. The process of

acquiring and integrating another company or technology could create unforeseen operating difficulties and

expenditures. Shareholders may also not have the opportunity to vote on or approve the acquisitions. Acquisitions

and investments involve a number of risks, such as:

•

diversion of management time and focus from operating the business;

•

use of resources that are needed in other areas of the business;

•

implementation or remediation of controls, procedures and policies of the acquired company;

•

difficulty integrating the accounting systems, IT systems and operations of the acquired company,

including potential risks to the corporate culture of the Group;

•

retention and integration of employees from the acquired company;

•

unforeseen costs or liabilities;

•

adverse effects on the Group’s existing business relationships with customers and merchants;

•

adverse tax consequences;

•

litigation or other claims; and

•

the need to integrate operations across different cultures and languages and to address the particular

economic, currency, political and regulatory risks associated with specific countries.

In addition, a significant portion of the purchase price of acquisitions may be allocated to acquired goodwill and

other intangible assets, which must be assessed for impairment at least annually. The Group may also not be able

to identify acquisition or investment opportunities that meet its strategic objectives, or, to the extent such

opportunities are identified, the Group may not be able to negotiate terms with respect to the acquisition or

investment that are acceptable to it. In the future, if the Group’s acquisitions or investments do not yield expected

returns, it may be required to take charges or impairments to its operating results based on this impairment

assessment process, which could negatively impact the Group’s business, results of operations, financial condition

and prospects.

The global COVID-19 outbreak and the global response to this outbreak could affect the Group’s business and

operations.

The outbreak of the novel coronavirus and the COVID-19 disease that it causes has evolved into a global

pandemic. In light of the uncertain and rapidly evolving situation relating to the spread of COVID-19, the Group

has taken precautionary measures intended to minimise the risk of the virus to its employees, its customers and

the communities in which it operates, including temporarily closing offices worldwide and virtualising,

postponing or cancelling customer, employee or industry events, which may negatively impact its business. The

Group continues to monitor the situation and may adjust its current policies as more information and public health

guidance becomes available, the ongoing effects of the COVID-19 pandemic and/or the precautionary measures

that have been adopted may create operational and other challenges, any of which could harm its business and

results of operations.

Although COVID-19 has had a net positive impact on the business in the short term by reducing operating costs,

the Group cannot be certain what the long-term impact will be. COVID-19 may also disrupt the operations of the

Group’s customers and partners for an indefinite period of time, including as a result of travel restrictions and/or

business shutdowns, uncertainty in the financial markets or other harm to their businesses and financial results,

which could result in a reduction to information technology budgets, delayed purchasing decisions, longer sales

cycles, extended payments terms, the timing of payments, and postponed or cancelled projects, all of which could

negatively impact the Group’s business, results of operations, financial condition and prospects. More generally,

the COVID-19 pandemic has and is expected to continue to adversely affect economies and financial markets

globally, leading to a continued economic downturn, which is expected to decrease technology spending generally

and could adversely affect demand for the Group’s Cyber AI Platform. It is not possible at this time to estimate

the full impact that COVID-19 will have on the Group’s business, as the impact will depend on future

developments, which are highly uncertain and cannot be predicted.

Moreover, to the extent the COVID-19 pandemic adversely affects the Group’s business, results of operations,

financial condition and prospects, it may also have the effect of heightening many of the other risks faced by the

Company, including but not limited to, those related to the ability to increase sales to existing and new customers,

continue to perform on existing contracts, develop and deploy new technologies, expand its marketing capabilities

and sales organisation, generate sufficient cash flow to service its indebtedness, and comply with the covenants

in the agreements that govern indebtedness.

Risks relating to the industry

If organisations choose to adopt cloud-based security solutions, the Group may be adversely affected as the cost

of operations increases.

The Group’s future profitability will depend on a number of factors, including the cost, performance, and

perceived value associated with the Group’s solutions and those of its competitors. Customers currently access the

Group’s platform either through a physical appliance or the cloud. In the past, the majority of customers opted for

an offering in a customer-controlled environment. The number of customers now looking for Darktrace to provide

a hosted service offering is rapidly expanding. The cloud-based offering includes hosting costs that can be variable

and depend on an accurate scope of the customer’s requirements assessed at the outset of the deployment. If this

scoping is incorrect, or if hosting costs increase, there could be a mismatch between the costs the Group incurs

with third-party cloud hosting providers and the price charged to the customer. The shift towards an

Darktrace-hosted service offering and away from a customer-controlled data infrastructure offering could present

upfront challenges with pricing the Cyber AI Platform as the Group might not be able to pass the additional cost

of adopting an Darktrace-hosted service offering to the customer or might get pricing wrong, especially if the costs

increase during the life of the contract. The inability to account for these increased costs could negatively impact

the Group’s business, results of operations, financial condition and prospects.

Competitors’ pricing policies, currency fluctuations and a failure to introduce successful Cyber AI Platform

enhancements may affect the average sales prices for the Group’s platforms , therefore adversely affecting the

Group’s revenue and profitability.

The average revenue per customer for the Group’s platform may decline for a variety of reasons, including

competitive pricing pressures, discounts offered by the Group, a change in the Group’s platform offerings, a

perceived decline in the relevance of the Group’s platform in an evolving cyber security threat landscape and

anticipation of the introduction of new products or promotional programs. Competition is intense in the market

segment in which the Group participates, and it is possible that competition will increase in the future, thereby

leading to increased pricing pressures. In addition, large players that do not have offerings that directly compete

with the Group, such as Amazon and Google, may decide to enter the market and offer a platform that undercuts

the Group on price. This increased competition could result in fewer customer orders, price reductions, reduced

margins, and loss of market share, further negatively affecting the Group’s business, results of operations,

financial condition and prospects.

In addition, although the Group prices in a number of local currencies, currency fluctuations in certain countries

and regions may negatively impact actual prices that distributors, channel partners and customers are willing to

pay in those countries and regions. The Group also anticipates that in the event that platform enhancing features

are not introduced, the average sales prices and gross profits for the Group’s platform could decrease over the

platform life cycle. There can be no assurance that the Group will be successful in developing and introducing

new offerings with enhanced functionality on a timely basis, or that the Group’s platform offerings, if introduced,

will enable the Group to maintain its prices and gross profits at levels that will allow the Group to maintain

profitability. A failure to do so could negatively impact the Group’s business, results of operations, financial

condition and prospects.

If the Group is unable to compete successfully in the highly competitive market for cyber security products, it

could negatively impact the Group’s business, results of operations, financial condition and prospects.

The cyber security market in which the Group operates is characterised by intense competition, constant innovation

and evolving security threats. The Group competes with companies that offer a broad array of cyber security

products. Some of the Group’s competitors are large companies that have greater financial and technical resources

and broader customer bases and channel networks. They may also enjoy potential competitive advantages such as

greater name recognition, established relationships as a trusted vendor with channel and distribution partners and

customers, greater customer support resources and larger intellectual property portfolios. Large technology

companies and cloud providers have the ability to produce cheaper or free additional functionality which might be

attractive to potential clients. Although this perceived benefit from the Group’s competitors does not offer the level

of protection that the Directors believe that Darktrace provides, potential clients might believe that the Group’s

competitors can provide an adequate solution to their organisations’ cyber security needs. Such competitors may

use these advantages to offer more diverse product offerings at a lower price or for free as part of a bundled package

or may develop different products to compete with the Group’s platform and respond more quickly and effectively

than the Group to new or changing threats, regulations, technologies, standards or client requirements. Similarly,

potential customers might take a “self-help” approach where they perceive that they can sufficiently defend against

any potential cyber security breaches without additional assistance.

Many organisations have established deep relationships with certain of the Group’s competitors and may be reluctant

to add new products to their IT systems from other vendors such as the Group. In addition, these larger competitors

often have broader product lines and market focus or greater resources and may therefore not be as susceptible to

economic downturns or other significant reductions in capital spending by customers. If the Group is unable to

sufficiently differentiate its platform from the integrated or bundled products of its competitors, such as by offering

enhanced functionality, performance, or value, the Group may see a decrease in demand for its platform, which could

negatively impact the Group’s business, results of operations, financial condition and prospects.

In addition, new, innovative start-up companies and larger companies that are making significant investments in

research and development may introduce products that have greater performance or functionality, are easier to

implement or use, incorporate technological advances that the Group has not yet developed, or implemented or

may invent similar or superior platforms and technologies that compete with the Group’s platform.

The Group’s current and potential competitors may also establish cooperative relationships among themselves or

with third parties that may further enhance their resources. Current or potential competitors may be acquired by

third parties with greater available resources. As a result of such acquisitions, the Group’s current or potential

competitors might be able to adapt more quickly to new technologies and customer needs, devote greater

resources to the promotion or sale of their products, initiate or withstand substantial price competition, take

advantage of other opportunities more readily or develop and expand their product offerings more quickly than

the Group.

The Group may not compete successfully against its current or potential competitors in the cyber security market.

If it is unable to compete successfully, or if competing successfully requires the Group to take costly actions in

response to the actions of its competitors, its business, results of operations, financial condition and prospects

could be negatively affected.

Adverse global economic events or prolonged economic uncertainties or downturns could materially adversely

affect the Group’s business, operating results and financial condition.

Adverse global economic events or prolonged economic uncertainties or downturns could materially adversely

affect the Group’s business, operating results or financial condition under a number of different scenarios. During

challenging economic times, current or potential customers may delay or forego cyber security investment

decisions. Customers may also have difficulties in obtaining the requisite third-party financing to complete the

purchase of the Group’s platform. An adverse global economic environment could also subject the Group to

increased credit risk should customers delay or be unable to pay the Group for previously purchased platforms.

Accordingly, reserves for doubtful accounts and write-offs of accounts receivable may increase. In addition,

weakness in the market for customers of the Group’s platform could harm the cash flow of its channel partners

who could then delay paying their obligations to the Group or experience other financial difficulties. This would

further increase the Group’s credit risk exposure and, potentially, cause delays in recognition of revenue on sales

to these customers.

The onset or continuation of adverse economic conditions may also make it more difficult to obtain financing for

the Group’s operations, investing activities (including potential acquisitions) or financing activities. Specific

economic trends, such as declines in the demand for cyber security, or softness in corporate information

technology spending, could have an even more direct, and harmful, impact the Group’s business, results of

operations, financial condition and prospects.

The United Kingdom’s withdrawal from the European Union may have a negative effect on global economic

conditions, financial markets and the Group’s business, operating results and financial condition.

The Group is a multinational company headquartered in Cambridge, United Kingdom with worldwide operations,

including significant business operations in Europe. Following a national referendum and enactment of legislation

by the government of the United Kingdom, the United Kingdom formally withdrew from the European Union and

ratified a trade and cooperation agreement governing its future relationship with the European Union. The

agreement, which is being applied provisionally from January 1, 2021 until it is ratified by the European

Parliament and the Council of the European Union, addresses trade, economic arrangements, law enforcement,

judicial cooperation and a governance framework including procedures for dispute resolution, among other things.

Because the agreement merely sets forth a framework in many respects and will require complex additional

bilateral negotiations between the United Kingdom and the European Union as both parties continue to work on

the rules for implementation, significant political and economic uncertainty remains about how the precise terms

of the relationship between the parties will differ from the terms before withdrawal.

These developments, or the perception that any related developments could occur, have had and may continue to

have a material adverse effect on global economic conditions and financial markets, and could significantly reduce

global market liquidity and restrict the ability of key market participants to operate in certain financial markets.

Asset valuations, currency exchange rates and credit ratings have been and may continue to be subject to increased

market volatility. Lack of clarity about future United Kingdom laws and regulations as the United Kingdom

determines which European Union laws to replace or replicate could increase costs could depress economic

activity and restrict the Group’s access to capital. Any of these factors could have a material adverse effect on the

Group’s business, results of operations, financial condition and prospects.

The Group faces exposure to foreign currency exchange rate fluctuations.

The proportion of revenues generated in local currency in international contracts versus the costs denominated in

local currency for the Group’s operations may affect the Group’s results of operations when each converted to

U.S. dollars. Therefore, fluctuations of the value of the U.S. dollar and foreign currencies may affect the Group’s

results of operations. The Group may use derivative instruments, such as foreign currency forward and option

contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates.

Part 2

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

GENERAL

Investors should only rely on the information in any final Prospectus published by the Company. No person

has been authorised to give any information or to make any representations in connection with the Group,

other than those contained in this Registration Document and, if given or made, such information or

representations must not be relied upon as having been authorised by or on behalf of the Company or its

Directors or its shareholders. The delivery of this Registration Document does not create any implication

that there has been no change in the business or affairs of the Group since the date of this Registration

Document or that the information contained herein is correct as of any time subsequent to its date.

In accordance with Prospectus Rule 2.2.2, were the Company in due course to issue a Prospectus, such Prospectus

would contain details of any material change or recent development relating to the Group since the date hereof.

The contents of this Registration Document are not to be construed as legal, business or tax advice. The reader

should consult his or her own lawyer, independent adviser or tax adviser for legal, financial or tax advice. The

reader must rely on their own examination, analysis and enquiry of the Company, including the merits and risks

involved.

This Registration Document is not intended to provide the basis of any credit or other evaluation and should not

be considered as a recommendation by any of the Company or Directors, its shareholders or any of their

representatives that any recipient of this Registration Document should subscribe for or purchase the Shares.

Prior to making any decision as to whether to subscribe for or purchase the Shares, prospective investors should

read any Prospectus published by the Company.

None of the Company, its Directors or shareholders nor any of their representatives is making any representation

regarding the legality of any investment in the Company or its securities.

PRESENTATION OF HISTORICAL FINANCIAL INFORMATION

The historical financial information in this Registration Document has been prepared in accordance with

International Financial Reporting Standards as adopted by the European Union (“

IFRS

”). The significant IFRS

accounting policies applied in the financial information of the Group are applied consistently in the historical

financial information in this Registration Document.

HISTORICAL FINANCIAL INFORMATION

The Company’s financial year runs from 1 July to 30 June. The historical financial information presented in this

Registration Document consists of consolidated financial information for each of the financial years ended

30 June 2020, 2019 and 2018, and the six months ended 31 December 2020. The consolidated historical financial

information for the Group included in section B of Part 9: “

Historical Financial Information

” is covered by an

accountant’s report, included in section A of Part 9: “

Historical Financial Information

”. The accountant’s report

was prepared in accordance with the Standards for Investment Reporting issued by the Financial Reporting

Council in the United Kingdom. The historical interim financial information for the six months ended

31 December 2019 is unaudited. Unless otherwise stated, no other financial information presented in this

Registration Document has been audited.

None of the financial information used in this Registration Document has been audited in accordance with

auditing standards generally accepted in the United States of America (“

U.S. GAAS

”) or auditing standards of the

Public Company Accounting Oversight Board (United States) (“

PCAOB

”). In addition, there could be differences

between the Standards for Investment Reporting issued by the Financial Reporting Council in the United

Kingdom and U.S. GAAS or the auditing standards of the PCAOB. Potential investors should consult their own

professional advisers to gain an understanding of the consolidated historical financial information for the Group

included in Part 9: “

Historical Financial Information

” of this Registration Document and the implications of

differences between the auditing standards noted herein.

NON-IFRS FINANCIAL INFORMATION

This Registration Document contains certain financial measures that are not defined or recognised under IFRS,

including EBIT, Adjusted EBIT, EBITDA and Adjusted EBITDA as defined below.

These non-IFRS financial measures and other metrics are unaudited and are not measures recognised under IFRS

or any other internationally accepted accounting principles, and prospective investors should not consider such

measures as an alternative to the IFRS measures included in the Group’s historical financial information. The

non-IFRS financial measures and other metrics, each as defined herein, may not be comparable to similarly titled

measures presented by other companies as there are no generally accepted principles governing the calculation of

these measures and the criteria upon which these measures are based can vary from company to company. Even

though the non-IFRS financial measures and other metrics are used by management to assess the Group’s financial

results and these types of measures are commonly used by investors, they have important limitations as analytical

tools, and investors should not consider them in isolation or as substitutes for analysis of the Group’s position or

results as reported under IFRS. The Directors believe that each of these measures provides useful information with

respect to the performance of the Group’s business and operations.

Unaudited financial measures and other metrics in relation to the Group have been derived from (i) management

accounts for the relevant accounting periods presented; (ii) internal financial reporting systems supporting the

preparation of the Group’s historical financial information contained in Part 9: “

Historical Financial

Information

”; and (iii) the Group’s other business operating systems and records. Management accounts are

prepared using information derived from accounting records used in the preparation of the Group’s historical

financial information contained in Part 9: “

Historical Financial Information

” but may also include certain other

assumptions and analyses.

EBIT

is a non-IFRS measure defined as the Group’s operating profit or loss.

Adjusted EBIT

is a non-IFRS financial measure defined as the Group’s EBIT plus share-based payment charges,

plus certain share option-related employer tax charges.

EBITDA

is a non-IFRS financial measure defined as the Group’s EBIT plus depreciation and amortisation.

Adjusted EBITDA

is a non-IFRS financial measure defined as the Group’s EBITDA minus appliance

depreciation attributed to cost of sales, plus share-based payment charges and share option-related employer tax

charges.

The Group considers its core operating performance in any period to be that which the Group’s management can

affect in any particular period. The Directors believe that EBIT, Adjusted EBIT, EBITDA and Adjusted EBITDA

are key metrics as they allow the Group to evaluate its underlying operating performance by including or

excluding certain items that the Group does not consider indicative of, or that may impair period-to-period

comparability of, its core operating performance. In addition, the Group uses EBIT, Adjusted EBIT, EBITDA and

Adjusted EBITDA in developing its internal budgets, forecasts and strategic plan, in analysing the effectiveness

of the Group’s business strategies, to evaluate potential acquisitions, in making compensation decisions and in

communications with the Directors concerning the Group’s financial performance.

EBIT, Adjusted EBIT, EBITDA and Adjusted EBITDA have limitations as analytical tools. For example, some of

the limitations with respect to Adjusted EBITDA are:

•

it does not reflect the Group’s cash expenditures or future requirements for capital commitments or

contractual commitments;

•

it does not reflect changes in, or cash requirements for, the Group’s working capital needs;

•

it does not reflect the interest expense or cash requirements necessary to service interest or principal

payments on the Group’s debt;

•

although depreciation and amortisation are non-cash charges, the assets being depreciated and amortised

will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements

for such replacements;

•

it does not reflect any cash income taxes that the Group may be required to pay;

•

it is not adjusted for all non-cash income or expense items that are reflected in the Group’s income

statement;

•

it does not reflect the impact of earnings or charges resulting from certain matters the Group consider not

to be indicative of the Group’s ongoing operations; and

•

other companies in the Group’s industry may calculate this measure differently than the Group, thereby

limiting its usefulness as a comparative measure.

The table below shows the reconciliation of Adjusted EBIT for each of the periods presented.

Six months ended

Financial Year ended

31 December

30 June

–––––––––––––––––––––––

–––––––––––––––––––––––––––––––––––––

(unaudited)

2020

2019

2020

2019

2018

–––––––––

(in $’000)

Operating loss

. . . . . . . . . . . . . . . . . . . . . . .

(4,881)

(21,479)

(24,903)

(36,205)

(40,613)

–––––––

Share-based payment charges . . . . . . . . . . . .

5,810

4,932

10,356

6,758

2,286

Employer related tax charges

. . . . . . . . . . . .

6,522

(67)

539

1,016

–––––––

Adjusted EBIT

. . . . . . . . . . . . . . . . . . . . . . .

7,451

(16,614)

(14,614)

(28,908)

(37,311)

–––––––

The table below shows the reconciliation of EBITDA and Adjusted EBITDA for each of the periods presented.

Six months ended

Financial Year ended

31 December

30 June

–––––––––––––––––––––––

–––––––––––––––––––––––––––––––––––––

(unaudited)

2020

2019

2020

2019

2018

–––––––––

(in $’000)

Operating loss

. . . . . . . . . . . . . . . . . . . . . . .

(4,881)

(21,479)

(24,903)

(36,205)

(40,613)

Depreciation and amortisation

. . . . . . . . . . .

19,149

14,676

32,925

23,976

13,946

–––––––

EBITDA

. . . . . . . . . . . . . . . . . . . . . . . . . . . .

14,268

(6,803)

8,022

(12,229)

(26,667)

Appliance depreciation in cost of sales . . . . .

(5,803)

(4,237)

(9,392)

(6,319)

(3,654)

Share-based payment charges . . . . . . . . . . . .

5,810

4,932

10,356

6,758

2,286

Employer related tax charges

. . . . . . . . . . . .

6,522

(67)

539

1,016

–––––––

Adjusted EBITDA

. . . . . . . . . . . . . . . . . . . .

20,797

(6,175)

8,919

(11,251)

(27,019)

–––––––

In addition, the Group regularly reviews a number of operational metrics to evaluate its business, measure its

performance, identify trends affecting its business, formulate financial projections and make strategic decisions.

The Directors believe the following measures are also useful in evaluating the Group’s operating performance:

•

Annualised recurring revenue

•

Net ARR added

•

One-year gross ARR churn

•

Net ARR retention rate

•

Average contract ARR

•

Number of customers

•

RPO

in each case, as described more fully below.

Annualised Recurring Revenue:

The Group’s Annualised Recurring Revenue (“

ARR

”) is a non-IFRS financial measure that the Group defines as

the sum of all ARR for its customers as of the measurement date. The ARR for each customer is the annual

committed subscription value of each order booked for which it will be entitled to recognise revenue, assuming

the customer continues to renew all contracted subscriptions. For example, a contract for $3.0 million with a

contractual term of three years would have ARR of $1.0 million, as long as the customer remains contractually

committed. In the small number of cases where a customer has an opt-out within six months of entering a contract,

the Group does not recognise ARR on that contract until after that opt-out period has passed.

Net ARR Added:

Net ARR added is a non-IFRS measure defined as new customer ARR added in a period, plus the net impact of

upsell, downsell, and churn activity in the existing customer base in that period.

One-Year Gross ARR Churn Rate:

One-year gross ARR churn rate is a non-IFRS financial measure that the Group defines 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 one year prior to the measurement date. This churn rate reflects only

customer losses and does not reflect customer expansions or contractions.

Net ARR Retention Rate:

Net ARR retention rate is a non-IFRS financial measure defined as the current ARR value for all customers that

were customers one year prior to the measurement date, divided by their ARR one year prior to the measurement

date. This retention rate does reflect customer losses, expansions, and contractions.

Average Contract ARR:

Average contract ARR is a non-IFRS financial measure that is defined as the total ARR at the measurement date

divided by the number of customers at that measurement date.

Number of Customers:

Number of customers is an operating metric defined as the count of the contracting entities that are generating

ARR at the measurement date.

RPO:

RPO is a non-IFRS financial measure that represents committed revenue backlog. RPO is calculated by summing

all committed customer contract ARR values that have not yet been recognised as revenue, valued at the exchange

rates on the last day of the reporting period. Actual revenue recognised may differ, primarily because of the

application of actual exchange rates at the dates of revenue recognition.

CURRENCY PRESENTATION

Unless otherwise indicated, all references to “U.S. dollars”, “USD” or “$” are to the lawful currency of the United

States and the Group prepares its financial statements in U.S. dollars. All references in this Registration Document

to “sterling”, “pounds sterling”, “GBP”, “£”, or “pence” are to the lawful currency of the United Kingdom. All

references in this Registration Document to “Euro” or “€” are to the lawful currency of 19 out of 27 members of

the European Union.

The following table sets out, for the periods set forth below, the high, low, average and period-end Bloomberg

Composite Rate expressed as pound sterling per $1.00. The Bloomberg Composite Rate is a “best market”

calculation, in which, at any point in time, the composite bid rate is equal to the highest bid rate of all currently

active, contributed, bank indications, and the composite ask rate is equal to the lowest ask rate offered by these

same bank indications. The Bloomberg Composite Rate is a mid-value rate between the composite bid rate and

the composite ask rate. The rates may differ from the actual rates used in the preparation of the consolidated

historical financial information and other financial information appearing in this Registration Document.

The average rate for a year, a month, or for any shorter period, means the average of the final daily Bloomberg

Composite Rates during that year, month, or shorter period, as the case may be.

Period (Year/Month)

Period end

Average

High

Low

––––––––––––––––––––––––––––––––––––––––––––––––––––––––

–––––––––––

(GBP per $1.00)

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.7846

0.7500

0.7991

0.6981

2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.7538

0.7838

0.8292

0.7504

2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.7324

0.7797

0.8656

0.7324

January 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.7297

0.7332

0.7394

0.7282

February 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.7172

0.7211

0.7328

0.7091

March 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.7247

0.7216

0.7292

0.7158

April 2021 (to 9 April 2021) . . . . . . . . . . . . . . . . . . . . . .

0.7296

0.7249

0.7296

0.7193

Source: Bloomberg

ROUNDINGS

Certain data in this Registration Document, including financial, statistical, and operating information has been

rounded. As a result of the rounding, the totals of data presented in this Registration Document may vary slightly

from the actual arithmetic totals of such data. Percentages in tables have been rounded and accordingly may not

add up to 100%.

MARKET, ECONOMIC AND INDUSTRY DATA

The Group uses market data and industry forecasts in this Registration Document. Certain market data and certain

industry forecasts used in this Registration Document were obtained from internal surveys, reports and studies,

where appropriate, as well as market research, publicly available information and industry publications. While the

Directors believe the third-party information included therein to be as reliable as forward looking information can

be, the Company has not independently verified such third-party information.

Where third-party information has been used in this Registration Document, the source of such information has

been identified. Where the Group has relied upon internally developed estimates, the information is identified as

Company estimates or beliefs. All other market and industry information in this Registration Document is

extracted from Forrestor (2020), Capgemini (2019), Gartner (2020), McKinsey (2019) and such other sources as

have been duly identified throughout the Registration Document.

The Group does not intend, and does not assume any obligation, to update industry or market data set forth in this

Registration Document. Because market behaviour, preferences and trends are subject to change, prospective

investors should be aware that market and industry information in this Registration Document and estimates based

on any data therein may not be reliable indicators of future market performance or the Group’s future results of

operations.

The Company confirms that all such data sourced from third parties contained in this Registration Document has

been accurately reproduced and, as far as the Company is aware and is able to ascertain from information

published by that third party, no facts have been omitted that would render the reproduced information inaccurate

or misleading.

SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES

The Company has been incorporated under English law. Service of process upon Directors and officers of the

Company may be difficult to obtain within the United States. In addition, since most directly owned assets of the

Group are outside the United States, any judgment obtained in the United States against it may not be collectible

within the United States. There is doubt as to the enforceability of certain civil liabilities under U.S. federal

securities laws in original actions in English courts, and, subject to certain exceptions and time limitations,

English courts will treat a final and conclusive judgment of a U.S. court for a liquidated amount as a debt

enforceable by fresh proceedings in the English courts.

NO INCORPORATION OF WEBSITE INFORMATION

The contents of the Company’s website do not form part of this Registration Document.

10.

DEFINITIONS AND GLOSSARY

Certain terms used in this Registration Document, including all capitalised terms and certain technical and other

items, are defined and explained in Part 11: “

Definitions and Glossary

”.

11.

INFORMATION NOT CONTAINED IN THIS REGISTRATION DOCUMENT

No person has been authorised to give any information or make any representation other than those contained in

this Registration Document and, if given or made, such information or representation must not be relied upon as

having been so authorised. Neither the delivery of this Registration Document nor any subscription or sale made

hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of

the Company since the date of this Registration Document or that the information in this Registration Document

is correct as of any time subsequent to the date hereof.

12.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This Registration Document includes forward-looking statements. These forward-looking statements involve

known and unknown risks and uncertainties, many of which are beyond the Group’s control and all of which are

based on the Directors’ current beliefs and expectations about future events. These forward-looking statements can

be identified by the use of terminology such as, “aims”, “anticipates”, “assumes”, “believes”, “budgets”, “could”,

“contemplates”, “continues”, “estimates”, “expects”, “intends”, “may”, “plans”, “predicts”, “projects”,

“schedules”, “seeks”, “shall”, “should”, “targets”, “would”, “will” or, in each case, their negative or other

variations or comparable terminology. They appear in a number of places throughout this Registration Document

and include statements regarding the intentions, beliefs or current expectations of the Directors or the Group

concerning, among other things, the results of operations, financial condition, prospects, growth, strategies, and

dividend policy of the Group and the industry in which it operates. In particular, the statements under the headings

“

Risk Factors

”, “

Business

” and “

Operating and Financial Review

” regarding the Company’s strategy and other

future events or prospects are forward-looking statements.

These forward-looking statements and other statements contained in this Registration Document regarding

matters that are not historical facts involve predictions. No assurance can be given that such future results will be

achieved; actual events or results may differ materially as a result of risks and uncertainties facing the Group.

Such risks, uncertainties and other important factors include, but are not limited to, those listed under the heading

“

Risk Factors

”, including changes in economic conditions, the Group’s competitive environment, the Group’s

ability to execute its strategies, as well as other factors within and beyond the Group’s control that may affect its

planned strategies and operational initiatives including actions taken by counterparties.

The following include some but not all of the factors that could cause actual results or events to differ materially

from the anticipated results or events:

•

The Group could be negatively impacted by the failure of its systems or compromise of its data, through

cyber attack, cyber intrusion, insider threats or otherwise.

•

If the Group is unable to develop and enhance its platform to adapt to the increasingly sophisticated nature

of cyber attacks, it could negatively impact the Group’s business, results of operations, financial condition

and prospects.

•

The Group may be unable to develop and enhance its platform to meet the changing cyber protection

demands of its customers.

•

Actual, possible or perceived defects or vulnerabilities in the Group’s platform, the failure of the Group’s

platform to respond to a cyber attack or the misuse of the Group’s platform could harm the Group’s

reputation and divert resources.

•

The Group’s artificial intelligence algorithms may not operate properly or as expected which could

detrimentally impact its platform’s effectiveness.

•

The Group may face reputational risk arising out of unlawful, and allegedly unlawful, activities in

connection with the sale of Autonomy Corporation plc and related matters.

•

The Group may face potential liability arising out of its historic funding by Invoke.

•

The Group may face potential liability arising out of unlawful, and allegedly unlawful, activities in

connection with the sale of Autonomy and related matters.

•

The Group has incurred losses each year since inception and may not become profitable in the future.

•

The Group may not be able to sustain its revenue growth rate in the future, which may have an adverse

impact on investor sentiment.

By their nature, forward-looking statements are based upon a number of estimates and assumptions that, whilst

considered reasonable by the Company are inherently subject to significant business, economic and competitive

uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from

those indicated, expressed or implied in such forward-looking statements. Investors are cautioned that

forward-looking statements are not guarantees of future performance.

Part 4

INDUSTRY OVERVIEW

Evolution of the cyber security software industry to date

All organisations with a digital footprint now face significant risks from cyber crime. For private sector

organisations, these include financial risks from theft or extortion; business risks from the theft of IP and

commercially sensitive data and reputational risks from being perceived as poor custodians of customer, citizen

or personal data. For governments, cyber crime also poses significant risk to the health, safety and security of

individuals. Recent attacks have shown the ability for cyber criminals to disrupt critical social infrastructure such

as communications networks, healthcare, energy, or transport networks. For example, whilst the UK’s National

Health Service estimated the financial cost of the 2017 WannaCry attack to be GBP 92.0 million,

the attack also

led to the cancellation of thousands of patient appointments and the temporary closure of a number of accident

and emergency departments.

In this context, all types of organisation are demanding ever more resilient and sophisticated security solutions to

meet evolving threats. Organisations cannot try to turn back the clock on how they digitally interact with their

employees, customers and other stakeholders without harming their effectiveness and competitiveness.

Point solution (“

Point Solution

”) products, which narrowly approach the cyber problem by, for example,

protecting only the organisation’s perimeter against specific and common threats, still dominate the market. Such

threats include, for example: malware (such as viruses, worms, and spyware); phishing and social

engineering techniques (such as emails asking users to access links or disclose confidential data) and web

application attacks. Such Point Solution products often offer defences only based on what has been learned from

previous attacks – both by checking against known malware identifiers, but also offering rules and signature based

checks to counter attacks.

These traditional Point Solution products that defend the perimeter of an organisation are expected to remain an

important part of cyber security for many years to come, and Darktrace’s products work alongside and in harmony

with such products. The Directors believe that the threat landscape has evolved such that traditional solutions will

not prevent determined cyber criminals from identifying new vulnerabilities and therefore new solutions and

approaches are required. Darktrace’s product platform has therefore been developed to address these

vulnerabilities, which are further described below.

Use of historical data and playbooks

The Directors believe that any cyber defences relying on understanding the methodologies of past attacks have

some fundamental shortcomings. First, sophisticated attackers constantly innovate and the past is not an adequate

predictor of the future. Secondly, the scale and complexity of modern digital estates and their use and integrations

with third parties makes it impractical to inspect every piece of code for a match against something previously

used. Thirdly, there is also often a significant time lag between the emergence of a new attack and the

reconfiguration of defences or provision of a patch to address it.

This time lag is because cyber security vendors must first discover the new attack methodology, reverse engineer

its precise characteristics and then deploy the new protection information across their customer base. Certain

vendors have sought to use machine learning for this discovery – investigation – deployment process to reduce

the time during which the customers are unable to prevent the attack. However, the speed at which a novel attack

is able to propagate once it has breached the perimeter, and assuming inadequate internal protections, means that

even a reduced cycle time remains far too long.

An example of this is the NotPetya malware attack, which spread from one location in Ukraine to impact

thousands of sophisticated and ostensibly well protected organisations globally within a matter of minutes on

27 June 2017. Whilst the existence of the attack was identified quickly, the only short term way to protect against

its effect in the immediate aftermath proved to be powering down and disconnecting computers from networks.

UK Department of Health & Social Care (2018), “Securing cyber resilience in health and care”

UK National Audit Office (2018), Investigation: Wannacry cyber attack and the NHS

Siloed or Overlapping Point Solutions

Traditional Point Solution products were typically developed to address a particular specific type of threat, with

Chief Information Security Officers (“

CISOs

”) seeking out the “best in class” from different vendors. However,

the simultaneous operation of multiple Point Solutions has increased the risk of data overload, making it more

difficult for security operations centres (“

SOCs

”) to triage and analyse alerts.

The industry has attempted to address this challenge in recent years by offering systems that aggregate feeds from

multiple vendors into dashboards that manage workflow and ticketing (more recently referred to as security

information and event management systems (“

SIEMs

”)). However, there still remains a risk both of gaps in

coverage between products, and also overlaps between products generating excess alerts. In addition, given that

the same attack may involve multiple events in different parts of the digital estate – each protected by different

Point Solutions – it remains challenging for SOCs to link actions to identify when a serious attack is taking place

and set an appropriate response.

Some larger platform vendors offer bundled point solutions, which are intended to integrate better with one

another. However, this does not allow for a consistent architecture whereby the machine learning can take full

advantage of analysing all of the raw data in real time, which is critical in combatting cyber attacks. The Directors

therefore believe that CISOs will, however, still continue to desire best in class solutions so as to provide optimal

protection.

Lack of adequate protections within the network

Many traditional Point Solutions have focused on perimeter defences. However, these are being breached on a

regular basis, as attackers assume the credentials and appearance of valid users. According to a Forrester survey,

94% of a sample of executives and cyber security specialists had suffered a notable cyber attack or breach within

the prior 12 months and 77% expected attacks to increase over the coming two years.

In addition, 63% of security

experts conceded that it was likely there had been a perimeter compromise they were unaware of in the past year.

Whilst the Directors expect that perimeter defences will remain an important part of an organisation’s defences,

particularly against less sophisticated attacks, such defences do not address the risks arising once the perimeter

has been breached. Once an attack has gained a foothold within the network perimeter then it may spread at

machine speed through the organisation’s entire distributed digital infrastructure globally – datacentre, cloud,

CRM, servers, laptops and beyond. Whilst some attacks may result in obvious data theft or destruction, others

might remain dormant for some time until a future event such as a software update. According to Cybersecurity

Insiders, only 30% of businesses feel they are able to detect irregular behaviour in cloud applications and

infrastructure.

Various products have evolved to help identify possible attacks taking place within the network perimeter,

including network traffic and analysis (“

NTA

”) and user and entity behaviour analytics (“

UEBA

”) products. The

Directors believe that such products currently available in the market, in contrast to those provided by Darktrace,

however, still typically rely on applying previous attack data and patterns, and therefore suffer from the same

shortcomings as described in connection with other such historic-data driven solutions above.

Labour intensity and attacks at machine speed

Human cyber security teams cannot keep pace with the complexity and volume of attacks. According to

Capgemini, 69% of cyber security specialists do not think they will be able to adequately react to attacks without

employing AI-based solutions in future

. Modern attacks may spread across an organisation’s entire digital

ecosystem within seconds. Defences relying on humans to analyse a threat and take decisions are not appropriate

for mitigating this speed of harm. Attackers may time their attacks at weekends, night-times and in holiday periods

so as to benefit from periods subject to less human oversight.

This is why Darktrace has developed its Antigena product, which has the capability to interrupt and neutralise

emerging threats in seconds.

Forrester (2020), “The Rise of the Business-Aligned Security Executive”

Cybersecurity Insiders (2020), “2020 Insider Threat Report”

Capgemini (2019), “Reinventing Cybersecurity in Artificial Intelligence”

Future Trends in the Cyber Security market

The Directors believe that the cyber security market is undergoing a period of rapid evolution given the trends

described below, and that Darktrace’s products are ideally positioned to meet the challenges of this evolving threat

environment.

Well-Resourced and Sophisticated Attackers

Given the potential financial value of stolen data and ransomware attacks, cyber crime offers criminals a

significant financial opportunity. It is therefore increasingly organised and well-resourced, rather than a fringe

activity. In addition, hostile state actors focused on data theft, disruption and misinformation have significant

resources at their disposal. According to Forrester, 88% of companies expect attacks using AI to become

commonplace.

Well-resourced cyber criminals are therefore increasingly using state-of-the-art hacking techniques and tools,

increasingly including automation and AI, to carry out malicious intrusions. For example, on 5 January 2021, US

government agencies issued a joint statement that they believed that a Russian-origin Advanced Persistent Threat

actor was responsible for a high profile cyber attack against SolarWinds (a US network management software

vendor with US government agencies as customers) with the intention of gathering intelligence

. The group

responsible for the attack used a compromised Microsoft Office 365 account to breach SolarWinds’ network and

plant malicious code into a patch for SolarWinds’ Orion software. This patch was then downloaded by some

18,000 businesses and government agencies.

Zero Day Attacks

The ever increasing complexity of operating systems, browsers and applications makes it harder for software

providers to entirely eradicate vulnerabilities. A “zero-day attack” exploits a weakness within a piece of software

or application that is either unknown, or for which a patch has not yet been released. The plethora of different

applications which are now commonplace in the workplace exacerbates the challenge of identifying such attacks,

and in addition the financial cost of making updates to software and appliances may mean that organisations

persist longer than advisable with vulnerabilities.

Cyber security approaches that rely on an understanding of past and known attack methodologies may struggle to

identify and remediate zero-day attacks, as by definition these target previously unknown defects. According to

Ponemon Institute, 80% of organisations which suffered a successful endpoint attack believe they were

compromised by a zero-day attack in 2019.

Changes in data storage and access

The rapid growth in the use of public cloud services, remote and hybrid working patterns; and the increasing

connectedness of OT systems, are further complicating defences against malicious attacks.

As applications and data shift to the cloud, this replaces traditional defence perimeters. In a traditional on-premise

(“

on-prem

”) IT data centre, the company understands where its critical and sensitive data resides and has control

of the legitimate flow of data in and out of its perimeter. In the cloud environment, however, data may move in

and out of an organisation’s perimeter more freely, as users access data stored in offsite locations, perhaps in

different countries and involving more than one cloud provider or storage facility. This trend is expected to

continue, with end-user spending on public cloud services forecast to grow by 18.4% in 2021.

It generally

remains the cloud customers’ responsibility to ensure the security of its data in the cloud environment,

notwithstanding that the cloud service provider maintains the underlying data infrastructure.

The increase in remote and hybrid working patterns, accelerated by the COVID-19 pandemic, is leading to a

significant increase in network access from remote locations via the internet. In order to allow employees to carry

out their jobs effectively, data that previously was only accessible on-prem, has been opened up to remote users.

At remote locations, employees may access their organisations via Wi-Fi and insecure domestic networks to which

Forrester (2020), “The Emergence of Offensive AI”

https://www.cisa.gov/news/2021/01/05/joint-statement-federal-bureau-investigation-fbi-cybersecurity-and-infrastructure

Ponemon Institute (2020), “The Third Annual Study on the State of Endpoint Security Risk”

Gartner

(2020),

“Gartner

Forecasts

Worldwide

Public

Cloud

End-User

Spending

Grow

18%

2021,

https://www.gartner.com/en/newsroom/press-releases/2020-11-17-gartner-forecasts-worldwide-public-cloud-end-user-spending-to-

grow-18-percent-in-2021

many other devices, with varying levels of security, may be connected. Such devices may include smartphones

and tablets, but also those forming IoT, for example; televisions and domestic appliances. The global number of

IoT-connected devices is forecast to approximately triple between 2018 and 2023.

In addition, whilst service industries rely on IT environments, organisations managing industrial processes or

infrastructure also rely on OT. OT is also increasingly embracing IoT, with smart manufacturing allowing internet

access to a very wide range of manufacturing systems and devices, often supplied by third parties, and sometimes

using old communication protocols. Many cyber security tools have been designed for the IT environment, and

therefore may not be best suited to counter risks in the OT environment. In addition, the IT and OT realms are

increasingly linked, raising the risk that a breach in one realm will reach into the other. A 2019 survey found that

77% of people in relevant critical infrastructure roles view the increasing links between IT and OT as a challenge

for managing their OT security.

Each of these factors have led to a significant increase in the number, location, and security of access points that

can be targeted by malicious attackers. According to Forrester, only 53% of security experts feel that their

company has a complete view of its whole attack surface.

Shortage of cyber security professionals

The proliferation of attacks and their increased complexity have led to a material workforce gap, with over 50%

of cyber analysts considering themselves overwhelmed according to Capgemini

. It is estimated that the number

of unfilled cyber security positions will grow to 3.5 million by 2021

. This further increases the vulnerability of

organisations to the growing threat environment. According to a survey conducted by ISC2 in 2019, 51% of cyber

security professionals say their organisation is at moderate or extreme risk due to a cyber security staff shortage

As a result, organisations are seeking more efficient, less labour intensive security products such as AI-driven,

automated software.

Summary and Use of AI in Cyber Security

In light of the above-described trends, the Directors believe that organisations are increasingly recognising the

need to devote resources into new defence solutions which can successfully address the threat of unpredictable

novel attacks, identify and counter attackers once they are within the organisation’s digital perimeter and respond

to attacks within a timescale that prevents material harm.

In light of this, organisations are increasingly acknowledging that the solutions to these challenges will be AI. This

is because an AI application that identifies and analyses all the relevant contextual data in the client’s entire digital

ecosystem, not just data historically associated with information security, will increase the likelihood of

identifying unusual activity that could indicate the presence of a threat. In addition, once such a threat has been

identified, an AI product that is able to link this up with other alerts elsewhere in the ecosystem and offer

automated remedial action at machine speed will greatly reduce the risk of a harmful outcome for the organisation.

The Directors believe that the Darktrace platform provides the ideal solution to address the shortcomings of

traditional cyber security solutions, and address the highly sophisticated threat landscape, using its AI technology.

Capitalise on growth in the overall market

The Group approaches its total addressable market (“

TAM

”) opportunity in several ways. Darktrace’s AI platform

can be applied to companies of almost all sizes, across all sectors and geographies and is complementary to

traditional security solutions likely already used by prospective customers. As a result, the Group approaches its

TAM both by using a bottom-up approach based on addressable global companies and their potential adoption of

Darktrace’s offering, as well as a top-down approach based on the overall cyber security market size.

McKinsey (2019), “Growing opportunities in the Internet of Things” citing Gartner (2017), “Forecast: Internet of Things – Endpoints

and Associated Services, Worldwide”

ARC Advisory Group / Kaspersky (2019), “The State of Industrial Cybersecurity”

Forrester (2020), “The Rise of the Business-Aligned Security Executive”

Capgemini (2019), “Reinventing Cybersecurity in Artificial Intelligence”

The 2019/2020 Official Annual Cybersecurity Jobs Report

(ISC)2 (2019), “Strategies for Building and Growing Strong Cybersecurity Teams, Cybersecurity Workforce Study, 2019”

The Group estimates that its current bottom-up TAM amounts to approximately $40 billion, reflecting a

substantial global greenfield opportunity for Darktrace to capitalise on in order to sustain its strong growth. The

bottom-up TAM is derived by multiplying the Group’s ARR of $236 million in the financial year ended 30 June

2020 by the following factors:

•

37.5x to reflect 150,000 addressable companies, being those that have more than 250 employees globally

compared to Darktrace’s roughly 4,000 customers as of 30 June 2020 (addressable global companies based

on OECD, Eurostat, US Bureau of Labor Statistics, and UK Office for National Statistics, excluding China

and Russia)

•

2x to reflect the cross-sell opportunity within Darktrace’s existing product offering

•

1.5x to reflect the up-sell opportunity to deploy the Group’s products across the entire digital estate of its

customers; and

•

1.5x to reflect the potential adoption of planned future product offerings, including prevention and cyber

compliance as well as self-healing and self-remediating technologies.

The Directors believe that the cyber security industry is in the early days of a significant evolution, as traditional

security approaches can no longer effectively protect organisations from cyber threats on their own. In this

context, the Group also takes into account a top-down TAM approach considering the overall Information Security

and Risk Management market, which Gartner estimates to amount to approximately $125 billion in 2020.

The

Information Security and Risk Management market comprises Cloud Security, Network Security Equipment, Data

Security, Integrated Risk Management, Security Services, Infrastructure Protection, Identity Access Management,

Application Security, and Other Information Security Software. Gartner estimates the total market to grow at a

compound annual growth rate of 8.2% from 2019 to 2024 on a constant currency basis.

The Directors also believe the Group’s growth opportunities are not only constrained to cyber security markets.

By using its self-learning, autonomous AI technology, Darktrace can address use cases beyond cyber security.

Whilst the deployment of AI has been mostly focused on the consumer space until now (e.g. Apple, Google,

Facebook), the Directors believe that the broader Enterprise AI market will provide significant additional growth

opportunities in the future.

Further information on the Company’s products is set out in Part 5: “

Business

”.

Gartner (2020), “Gartner Forecasts Worldwide Security and Risk Management Spending Growth to Slow but Remain Positive in 2020”,

https://www.gartner.com/en/newsroom/press-releases/2020-06-17-gartner-forecasts-worldwide-security-and-risk-managem

Gartner

(2020),

“Forecast:

Information

Security

and

Risk

Management,

Worldwide,

2018-2024,

2Q20

Update”,

https://www.gartner.com/en/documents/3988093/forecast-information-security-and-risk-management-worldw

Part 5

BUSINESS

Investors should read this section of this Registration Document in conjunction with the more detailed information

contained in this Registration Document, including the financial and other information appearing in “Operating

and Financial Review”. Where stated, financial information in this section of this Registration Document has

been extracted from the Group’s financial information as described in “Presentation of Information”.

OVERVIEW

Darktrace is a world leading provider of AI for the enterprise, with the first at scale deployment of AI in cyber

security. Darktrace is a pioneer of self-learning AI and is at the forefront of autonomous response technology.

Created by mathematicians, the Group’s platform uses machine learning and AI algorithms to neutralise cyber

threats across diverse digital estates, including the cloud and networks, IoT and industrial control systems. The

technology learns self and requires minimal set-up, quickly identifying threats that have breached the perimeter,

including threats exploiting previously unknown vulnerabilities, and threats by insiders and cyber attackers. With

deep expertise in mathematics and machine learning, as well as operational experience defending critical

organisational assets, Darktrace seeks to empower organisations to defend their systems against the most silent

and sophisticated cyber threats.

Darktrace’s innovative technology, its current market position and its strong balance sheet leave the Group well

placed to continue to grow in a rapidly expanding market. The Group currently serves over 4,700 customers in

over 100 countries, with more than 1,500 employees globally. Darktrace is headquartered in Cambridge, UK.

The increasing speed and sophistication of cyber attacks has made it more difficult for traditional security

providers to defend against these attacks. Offensive AI and silent attacks have made it more likely that an attacker

will surpass existing security measures. Organisations are increasingly vulnerable to cyber attacks as a result of

increasingly fragmented and complex digital operations that blur the boundary between the inside and outside of

networks; data explosion and proliferation and overwhelmed security teams. Organisations with traditional

security solutions remain vulnerable to attacks. Approximately 74% of Darktrace’s trial deployments in 2020

detected serious vulnerabilities that very often had evaded other defences and quickly demonstrate to prospective

customers the comprehensive nature of the AI driven technology.

Unlike traditional cyber security methods, Darktrace’s Cyber AI Platform learns the normal operations of an

individual customer and continuously adapts to change. Because the technology understands self, it identifies

when an emerging threat develops in any part of the digital estate and autonomously responds to it by enforcing

normal operations. The Cyber AI Platform utilises self-learning technology, not pre-programmed rules and

signatures, enabling the ability to identify zero day attacks, which exploit vulnerabilities before they can be fixed.

Darktrace’s Cyber AI Platform can protect across an entire organisation and provide holistic visibility with

proportionate responses at machine speed. Beyond the speed of detection and response that the Cyber AI

Platform’s advanced technology employs, from the customer’s perspective the output is displayed simply, in an

easy to understand format. The Cyber AI Platform’s average set up time is one hour and the machine learning

gains visibility through software sensors that analyse raw, real-time data.

Darktrace spans the digital business, providing overarching capabilities critical to a complete, continuous security

platform. The Darktrace Cyber AI Platform can provide protection throughout the workforce, infrastructure and

industrial side of a business, offering a fully automated solution with three main areas of focus: (i) self-learning

detection, (ii) automated investigation and (iii) autonomous response.

The Enterprise Immune System and Industrial Immune System use self-learning AI technology to spot the subtle

signals of sophisticated attacks and do not rely on traditional rules and signatures to help detect attacks and defend

against them. The Cyber AI Analyst product augments human cyber security teams, by automatically triaging,

interpreting and reporting on security incidents. The Directors believe Darktrace Antigena is the first solution to

use autonomous response to interrupt detected attacks.

The Group’s next phase of product development will focus on prevention and cyber compliance using automated

penetration testing and cyber hygiene compliance, as well as self-healing and self-remediating technologies. In

collaboration, these products will offer a closed loop AI platform that can operate at machine speed.

The Group’s revenue increased from $79.4 million in the financial year ended 30 June 2018 to $137.0 million in

the financial year ended 30 June 2019 and $199.1 million in the financial year ended 30 June 2020, an increase

of 72.5% and 45.3% respectively. The Group’s revenue increased from $91.1 million in the six months ended

31 December 2019 to $126.5 million in the six months ended 31 December 2020, an increase of 38.9%. The

Group’s operating loss decreased from $40.6 million in the financial year ended 30 June 2018 to $36.2 million in

the financial year ended 30 June 2019 and $24.9 million in the financial year ended 30 June 2020 as the Group

achieved economies of scale, primarily in sales and marketing. The Group’s operating loss decreased from

$21.5 million in the six months ended 31 December 2019 to $4.9 million in the six months ended 31 December

2020. Over the last year the business has grown substantially. In the six months ended 31 December 2020, the

Group recorded total RPO of $612.3 million, which is an increase of $156.6 million, or 34% over the six months

ended 31 December 2019.

COMPETITIVE STRENGTHS

The Directors believe that the Group benefits from the following competitive strengths:

Leading AI platform in enterprise computing with first application in cyber security

The Group is at the forefront of introducing autonomous self-learning technology through its AI immune system

approach. The AI immune system approach is self-learning and continuously evolving, understanding clouds,

networks, endpoints, users and their interactions. The Directors believe that this powerful technology will have

many applications across a variety of sectors. Given the limitations of traditional technology in the cyber security

sphere that is underscored by public security breaches of governments and large corporations, the Group has

focused the first application of this technology in cyber security. The AI immune system approach focuses on

understanding a customer’s business itself, rather than using signature or rule-based approaches based on

historical attack data or predictions, which are often employed by traditional perimeter-focused security solutions

attempting to integrate AI. Through an understanding of a customer’s business, the platform can detect aberrations

to an individual customer’s normal digital operating state thus providing a revolutionary security production,

complementary to traditional perimeter-focused security approaches, and can neutralise threats across digital

businesses that would otherwise go unnoticed. In addition to current and planned cyber security innovations, the

Group’s technology has substantial potential beyond cyber by introducing AI throughout enterprise IT.

At the forefront of the next evolutionary wave in the cyber security industry

Digital businesses are often fragmented and involve complex IT estates. With the rise of Cloud and IoT, and the

proliferation of data, the boundaries of IT networks are increasingly blurred. This increasing scope and complexity

has left traditional perimeter-focused security approaches struggling to keep up and enterprises vulnerable to

attacks, evidenced by the cyber infiltration of 80% of Fortune 500 companies

. Darktrace’s innovative technology

is leading the next evolutionary wave to combat increasingly complex and aggressive threats by upending

traditional limitations through a fundamentally different approach. The Darktrace Enterprise Immune System uses

advanced AI technology to understand the “normal” of an organisation as the basis of security, recognising normal

interactions for the individual business and responding at machine speed to abnormal interactions. Instead of

securing perimeters, this understanding of “normal” cuts across an organisation’s fragmented and complex IT

estates, understanding the normal interactions between each component part and responding when an individual

system’s normal is disturbed. Darktrace’s cloud-native AI technology incorporates unsupervised machine learning

and deep learning capabilities driving Darktrace’s scalable, self-learning and constantly adapting technology.

Darktrace’s technology autonomously detects and responds to anomalies at machine speed, intending to identify

as early as possible.

The leading autonomous cyber security AI products, with ability autonomously to detect, respond and

investigate threats

Darktrace’s AI platform is comprehensive, underlying a broad range of solutions that incorporate self-learning

detection, autonomous response, and automated investigation capabilities. This broad range combines multiple

products on one unified, simple to use platform, providing full visibility, via a customisable dashboard, into an

organisation’s digital estate. In addition, the platform’s breadth creates a defensive capability as it uses broad

access enterprise data to continuously to improve its capabilities. Darktrace’s key product families include:

•

Enterprise Immune System:

Darktrace’s flagship AI technology solution, with individual Enterprise and

Industrial focused products, provides self-learning technology for detecting cyber-threats and vulnerabilities.

Forrester (2020), “The Rise of the Business-Aligned Security Executive”

•

Darktrace

Antigena:

self-learning technology autonomously responding to network and email cyber-threats

and vulnerabilities, at machine-speed with targeted and proportionate responses.

•

Cyber AI Analyst:

automatically triages, interprets and reports on a broad scope of security incidents,

addressing a shortage of cyber professionals by augmenting human cyber security teams.

The Darktrace platform spans the entire digital estate, from the workforce, including email, Software as a Service

(“

SaaS

”) applications and endpoints, to infrastructure, including on-premise, hybrid and cloud networks, to

industrial settings, including OT and IoT. Darktrace’s broad approach stands in contrast to traditional siloed

solutions which create perimeters around specific components, historically often leaving exploitable gaps in

protection.

Differentiated sales model and strong value proposition for customers and partners drive rapid new customer

growth and long-term customer relationships

The Group’s business model, high quality security platform and the user-friendly interface of this platform have

enabled the Group to build a strong brand and loyal customer base for its AI platform. Darktrace’s primary

approach to acquire new customers is through the Proof of Value (“

POV

”) trials of its technology. POVs require

limited scoping and minimal set-up, and thus can demonstrate Darktrace’s substantial value proposition to

potential customers normally within the trial period. POVs form the basis of a highly replicable and scalable sales

approach, revealing to prospective customers’ security issues, driving rapid purchasing processes. In 2020,

approximately 74% of POVs identified serious vulnerabilities in a prospective customer’s digital estate, providing

a clear demonstration of Darktrace’s value proposition.

The majority of the Group’s sales are generated by its direct sales personnel. The Group relies heavily on its direct

sales personnel to promote its platform, and as such, prefers a “home-grown” approach to training its employees,

primarily hiring new graduates. Darktrace’s sales team consists of energetic graduate hires from top universities

with strong academic qualifications. The sales team is trained and developed over time. The Directors believe

customers appreciate the drive and clarity of the sales team. Channel partners, including resellers and system

integrators, supplement the direct sales force, further driving customer base expansion.

The impact of Darktrace’s unique AI platform and sales approach has resulted in a rapidly expanding customer

base and long-term customer relationships. This customer base includes customers across all industries and

organisations of all sizes, and the Group’s customers have increased by a compound annual growth rate of 53%

between the financial years ended 30 June 2018 and 30 June 2020. Among these customers, Darktrace has become

a trusted partner to multiple blue-chip organisation customers, which grant Darktrace access to their central

corporate computing systems. As of 31 December 2020, the Group had over 4,600 customers, with customers in

more than 100 countries.

Broader adoption of technology platform enables substantial growth opportunities

Darktrace was founded with a philosophy focused on understanding the “self” of the customer’s business. This in

turn enables the Group’s vision of a full “closed loop” approach, already including detection and response, with

remediation and prevention under development. A self-learning, self-healing network that can protect, detect,

defend and heal, benefits from a virtuous cycle in which each component feeds the next. This “closed loop”

approach is the basis for a unique, fully automated cyber security solution. Darktrace believes the value of the

platform and closed loop approach are easily understood by customers, as evidenced by upsells and cross-selling

to existing customers. Customers increasingly purchase products across the entire Darktrace platform, with 81%

of customers in the six months ended 31 December 2020 buying two or more products, up from 27% in the

financial year ended 30 June 2018.

Attractive financial model combining rapid growth at scale, revenue visibility, strong underlying profitability,

and cash generation potential

The Group has an established track record of rapid growth, continuing as the business has scaled, increasing by a

CAGR of 58% annually from the end of the financial year 2018 to the end of the financial year 2020. This growth

is combined with a high level of revenue visibility, driven by a subscription-based revenue model, typically paid

up front, enhancing the predictability and visibility of the Group’s future revenue streams. For the financial years

ended 30 June 2020, 2019 and 2018, as well as the six months ended 31 December 2020 and 2019, substantially

all of the revenue was derived from subscription-based contracts. Revenues are primarily derived from prior

period billings recorded as deferred revenue to be recognised in future periods. Revenue from subscription

agreements is recognised on a deferred basis over the life of the agreement, which average three years. As of

31 December 2020, the Group had $612.3 million in RPO, representing revenue contracted but not yet

recognisable.

As an AI-driven technology company, the Group benefits from industry-leading gross margins, in contrast to more

bespoke software companies. In addition, the Group has low overhead costs, with its personnel costs

comparatively low, due to its research and development team being located in Cambridge, UK, a lower-cost

jurisdiction than, for example, Silicon Valley, US. The Group’s highly efficient research and development spend

is also driven by the self-learning nature of its technology, which by design requires less input from engineers to

improve performance. The Group also maintains a cost-efficient distribution model with comparatively lower

sales costs due to the model of hiring and training talented graduates. The relatively low capital needs associated

with the Group’s business model enable strong operating cash flow generation potential.

Experienced management team with strong track record of execution and deep AI expertise

The Group’s management team has significant experience in AI technology, product development, and sales and

marketing. Each member has multiple years of experience in the software and AI industries. The majority of

senior management has been with Darktrace since inception. The experience and energy of the management team

have led the Group through its rapid growth and industry leadership, increasing total customers from

approximately 230 in the financial year ended 30 June 2016 to more than 4,600 in the six months ended

31 December 2020. The Group’s management team has experience working at blue-chip companies such as

Oracle, Quest, 2U, Imperva, and Autonomy, and has been key in attracting and retaining talent from similar

companies. Darktrace has retained its innovation-led, energetic culture since inception, driving high employee

satisfaction.

STRATEGY

The Group has the following key business growth strategies:

Continued focus on innovation to strengthen further existing capabilities, add new capabilities, add new use

cases, and amplify the virtuous cycle of the Group’s “closed loop” strategy

The Group’s next phase of product development is focusing on prevention and cyber compliance using automated

penetration testing and cyber hygiene compliance, as well as self-healing and self-remediating technologies. In

collaboration with Darktrace’s current offerings, these products aim to offer a full, “closed loop” AI platform

operating at machine speed. The individual capabilities of the closed loop expect to amplify each other’s strengths,

leading to an embedded virtuous cycle of self-learning and self-healing technology. In addition, the Group’s

existing products already span a broad spectrum of the digital estate and provide critical security capabilities. The

Group’s products are uniquely positioned to improve over time as a result of the self-learning technology

underpinning the Group’s products. As more data from existing and new customers is fed into the Group’s

AI technology, the products become better at detecting and responding to new threats while adapting to changing

environments. Ever-improving products in turn enable the Group to attract new customers resulting in a virtuous

circle of self-learning technology.

Continue to win new customers, leveraging a highly effective go-to-market strategy, and address a large

greenfield opportunity

The Darktrace AI platform is based on advanced AI technology that detects and responds to attacks other solutions

may not identify. It also offers a simple to set up, simple to use, and easy to understand experience. In addition,

this experience is easy to demonstrate on potential customers’ own systems in a trial period through POVs, which

convert into new customers at a high rate. Based on a combination of energetic sales teams and an impactful POV

sales approach, the Group has a highly effective and differentiated go-to-market strategy with a proven track

record of generating rapid growth in customers. Using this effective go-to-market strategy, Darktrace’s AI

platform can be applied to companies of all sizes, across all sectors and geographies and is complementary to

traditional security solutions likely already present in prospective customers. There is therefore a substantial

global greenfield opportunity in winning new customers.

Drive platform adoption

The Group has a track record of increasing the number of products per customer over time, increasing the

percentage of customers with two or more products from 27% in the financial year ended 30 June 2018 to 81%

in the six months ended 31 December 2020. The Group’s multiple products also enable multiple entry points to

win new customers, and further product expansion to complete the “closed loop” will provide additional entry

points. The Group has a track record of expanding within existing customers, increasing the number of accounts

with ARR above $100,000 and above $250,000 over time. Additional ARR comes from volume-based

subscription pricing, arising from cross-selling and by increasing the coverage of existing customer estates. As the

Group has expanded, it has been able increase focus on maintaining relationships with its existing customers by

establishing an internal customer success team, providing consistent coverage of top accounts and expecting to

drive substantial upside to net dollar retention rates. The Group aims to use its scale, historical expertise and user

data continuously to find new up-sell and cross-sell opportunities.

Continue to expand globally

The Group has customers in more than 100 countries globally. In the six months ended 31 December 2020, the

Group generated 18.1%, 20.5%, 39.4% and 22.0% of its billings from customers in the UK, Europe (excluding

the UK), the US and Canada, and the rest of the world, respectively. The Directors expect the Group’s operations

in the Americas to grow at a higher rate than in Europe and the rest of the world, even whilst operations in Europe

and the rest of the world are expected to continue to grow at rates that exceed those of the market. The Directors

believe that the Group’s strong footprint in Europe and significant presence in the US, as well as dedicated

customer success team function and channel partners, provide considerable opportunity to grow across all of the

Group’s key geographical regions. As a result, the Group intends to grow the sales teams, particularly in the US,

and continue to invest in marketing and industry events to increase brand awareness.

Apply existing core capabilities to expand technology to additional uses across the enterprise

Darktrace’s AI immune system approach is the first at scale use of AI in the enterprise. While many companies

attempt to integrate AI into their solutions, Darktrace’s AI heritage has driven its technological leadership. The

Group’s first mover advantage is amplified by the virtuous cycle of its self-learning technology improving with

additional data. The Group’s platform is underpinned by cloud-native technology, enabling flexible deployment

of all products across all digital businesses. The Directors believe there is substantial potential to apply its

technology to additional uses across the enterprise, resulting from its unique approach of understanding an

organisation’s “normal”.

HISTORY

Darktrace was founded in Cambridge in 2013 out of a collaboration of cyber experts from various government

intelligence backgrounds and mathematicians who were experts in machine learning. Together, they realised that

mathematics could be applied to protect against cyber security threats, leading to the inception of Darktrace. The

Group was driven by its mission to transform fundamentally the ability of organisations to defend their most

critical assets in the face of rising cyber threats. The Group has experienced rapid uninterrupted growth since

inception and has become one of Europe’s fastest growing technology companies.

In 2014, Darktrace launched its Enterprise Immune System, a fundamental AI technology for OT cyber defence

which works to learn a “pattern of life” for every user, device and controller. The success of this initial offering

earned it the title of “Gartner Cool Vendor” and “World Economic Forum Tech Pioneer” in 2015.

In 2016, Darktrace’s AI offering was bolstered by the launch of the first-ever autonomous response technology,

Darktrace Antigena. This innovation allowed the Enterprise Immune System to react to in-progress cyber attacks

in a precise way, taking the pressure off the security teams working to defend against the attacks. In the same year,

Darktrace expanded to over 230 customers and over 200 employees.

The following year, in 2017, the Group continued to grow and scale, launching its new business unit, Darktrace

Industrial. Darktrace Industrial is dedicated to fighting threats in industrial and SCADA networks, building on a

strong base of customers that use Darktrace AI to protect critical national infrastructure and OT. Darktrace also

expanded to over 800 customers and over 400 employees in 24 offices globally. In the same year, Darktrace raised

£38 million from its Series D fundraising, which increased working capital and was used to grow the business.

In 2018, Darktrace announced its Cloud capability. The Group also opened its current headquarters in Cambridge,

UK, increasing its team to more than 700 employees to accommodate the expansion of its global sales footprint

and customer base of over 1,660 customers across 33 offices globally.

The following year, in 2019, after many years of development the Group launched Cyber AI Analyst. Cyber AI

Analyst offers fully automated threat investigation at machine speed, addressing the shortage of cyber security

professionals needed to meet cyber threats. In the same year, Darktrace launched Antigena Email and expanded

to cover over 2,750 customers, with over 900 employees across 40 offices globally. By the end of 2019, Darktrace

ranked 12th in Deloitte UK Technology Fast 50 with a four-year growth rate of 2,446%. In addition to this

ranking, Darktrace has been recognised by the numerous awards it has won. Darktrace is the winner of

“AI Business of the Year” at Lloyd’s Bank National Business Awards in 2019, “Security Innovation of the Year”

at UK IT Industry Awards in 2020, and “Best AI/Machine Learning Provider” at Computing Technology Products

Awards in 2020. Darktrace has also been named in “The Forbes Cloud 100 2020” and “FT 100 Europe’s fastest

Growing Companies 2020.” lists.

For the financial year ended 30 June 2020, Darktrace reported $199.1 million in revenue and its technology was

deployed in more than 100 countries around the world. For the six months ended 31 December 2020, Darktrace

had $612.3 million of RPO and its Cyber AI had investigated over one million security events per week.

The Group’s global footprint continues to grow and now has over 4,700 customers, in over 100 countries and has

over 1,500 employees globally, and has been certified as a Great Place to Work by Great Place to Work UK.

THE CYBER AI PLATFORM

Darktrace’s Cyber AI Platform is the first at scale in the enterprise deployment of AI in cyber security, aiming to

provide complete, continuous and autonomous security. The Cyber AI Platform increases customers’ ability to

protect critical data systems and digital infrastructures enabling them to keep pace with an ever-evolving threat

landscape with limited human resources. Cyber AI is a self-learning technology that is underpinned by data from

varied types of sources and activity that it observes, including cloud systems, networks, devices and industrial

systems data, driven by billions of probability-based calculations. The Darktrace Cyber AI Platform continuously

investigates threats with the speed and scale of AI, reducing triaging time by up to 92% and automatically writing

reports in executive-friendly language. Because the Cyber AI Platform detects threats in real time, it is able to

provide real time responses against these threats.

The Cyber AI Platform comprises the Immune System, Cyber AI Analyst, and Darktrace Antigena. Coverage of

the digital estates spans across clouds, email, endpoints, networks, SaaS applications, IoT, and industrial control

systems.

The Immune System

The Cyber AI Platform offers two variations of the Immune System: the Enterprise Immune System and the

Industrial Immune System. The Enterprise Immune System is a self-learning cyber AI technology that detects

novel attacks and insider threats at an early stage. The system observes users and devices, cloud containers and

workloads to learn what is “normal” for an organisation. The system learns from an organisation’s data, forming

a bespoke and evolving understanding of a business’ digital environment. The system maps and detects threats in

all environments including Windows and Macs, AWS, Microsoft Azure, Google Cloud, Microsoft 365 including

Exchange, Sharepoint, OneDrive and Teams, Salesforce, Box and many other Saas applications, on-prem and

networks. The latest update, Version 5.0, includes Cyber AI Analyst enhancements, C-sensors and endpoint

visibility, extended SaaS capabilities and one-click integration. This extensive list of coverage enhances the

system’s ability to provide a complete view of an organisation’s entire digital estate.

In an OT environment, the Cyber AI Platform uses the Industrial Immune System, which uses its AI technology

for OT-specific cyber defence. It works by passively learning a “pattern of life” for every user, device and

controller across OT, IT and industrial IoT, allowing it to detect even the subtlest signals of emerging cyber threats

in real time. The product works for radically different technologies and deployment types, from decades old

programmable logic controllers) to distributed sensors and industrial IoT. This allows the self-learning AI to

secure the full range of OT-centric environments and organisations. The system is used extensively across all

industries not limited to but including Energy and Utilities, Manufacturing, Oil and Gas and Maritime.

The systems analyse raw and real-time data throughout the cloud, SaaS, networks, clients, industrial/IoT and

email. The system then uses a combination of unsupervised, supervised and deep machine learning to detect

threats in real time. This self-learning approach uses a threat classifier along with user, device, peer group,

network and application/process modelling to detect threats. After this detection phase, Darktrace uses the

Darktrace Antigena and Cyber AI Analyst to respond instantaneously.

Darktrace Antigena

Darktrace Antigena uses Autonomous Response, believed to be the world’s first solution to use AI to target and

interrupt cyber attacks by enforcing normal business operations. The Directors believe Darktrace Antigena is the

only solution that can interrupt attacks at machine speed and with precision, even if the threat is targeted or

entirely unknown. Unlike legacy defences, Antigena can deliver an intelligent autonomous response because its

actions are grounded in Darktrace’s core AI engine where decisions are made in real time, aware of subtle

deviations that reveal novel or targeted attacks and continuously evolving based on dynamic observation of

attacks as they unfold. Its actions are informed by a correlation of patterns across the digital environment. Unlike

traditional methods which utilise single data points, Darktrace Antigena’s actions are based on a deep

understanding of each particular organisation.

Antigena Email uses Darktrace’s core artificial intelligence to stop advanced email threats, intervening to protect

employees from threats targeting an inbox. The product does not analyse emails in isolation and instead

continuously updates its understanding of the inbox for every sender and recipient in the context of the wider

organisation. The unique advantage of the cloud-native AI is that it understands the individual user and treats users

as dynamic individuals and peers, not mere email addresses. It does not rely on rules or historical attack data and

instead analyses inbound, outbound and lateral emails. By treating recipients as dynamic individuals and peers,

Antigena Email is able to stop the full range of targets threatening the inbox from advanced spear phishing and

supply chain attacks to spoofing and solicitation and employee account takeover.

TECHNOLOGY ARCHITECTURE

The Group has numerous key technologies underpinning its Cyber AI Platform, including: self-learning, Cyber AI

algorithm development, Cyber AI Analyst technology and autonomous response technology. The Directors

believe that these fundamental technologies set the Group apart from others in the market and the thousands of

customer digital estates it has learned over years provide the Group with a significant first mover advantage

fuelled by more deployments and more data.

Self-Learning

Self-learning is critical because, unlike supervised approaches, it does not require labelled training data. Instead

it is able to identify key patterns and trends in the data, without the need for human input. The Group uses unique

self-learning algorithms to analyse enterprise data at scale, and make billions of probability-based calculations

based on the evidence that it sees. Instead of relying on knowledge of past threats, it independently classifies data

and detects compelling patterns. From this, it forms an understanding of “normal” behaviours across the

infrastructure, pertaining to devices, users, or cloud containers and sensors, and detects deviations from this

evolving “pattern of life” that may point to a developing threat.

Darktrace complements its core self-learning with other techniques including deep learning, clustering, and

supervised machine learning.

For example, its Enterprise Immune System uses self-learning AI to learn normal

patterns and it also utilises deep learning that uses the cascading interactions of layered mathematical processes –

known as neural nets – to give intelligent systems a higher degree of insight. Multi-layered neural nets can

improve the detection and remediation of certain threats, for example, in the identification of DNS anomalies,

which are less effectively tracked by other machine learning methods. Darktrace clusters devices into peer groups,

based on its own understanding of how those devices behave, and uses some supervised learning to uncover

sequences of breaches, unusual patterns, or to detect aberrant activity at a higher, more holistic level.

Cyber AI Algorithm Development

The technology works by ingesting data from diverse sources across the organisation and feeding it into machine

learning algorithms which are each applied to every user and device in an organisation. The algorithms each have

different strengths / weaknesses with respect to different data features, and operate in competition with each other

to deliver the best model of normal behaviour for each user and device in the organisation. In order to determine

which algorithms to listen to at any given moment, Darktrace uses a unique implementation of Recursive

Bayesian Estimation, which leverages probability theory to act as a smart-thresholding filter that contextually

weights and rescores the outputs from all of the machine learning detectors in light of their previous performance

for a given data feature on a given entity. The classifiers learn how well each detector is working in any given

situation and adjusts every anomaly score up or down accordingly. This acts like a veteran analyst giving feedback

to the Cyber AI Platform so that the various strengths of the machine learning techniques can be harnessed in

different situations

While all of the layers of mathematics in Enterprise Immune System include intellectual property and some

advances in the underlying theory, it is the classifiers that represent one of Darktrace’s key inventions. The

classifiers are based on a building block of ideas from Bayesian belief modelling, allowing Darktrace to embrace

the widest variety of detector approaches, and keep them truly self-learning without needing to revert to a legacy

approach and pre-configure the system with assumptions or business logic regarding people, processes, or

devices. This unique approach establishes a highly accurate and evolving “pattern of life” for every user and

device and all the complex relationships between them and is especially resilient and often uniquely helpful in

visualising and threat hunting within messy/chaotic digital environments.

Cyber AI Analyst Technology

Extensive real-life data and experience over many years have made the algorithms “think” like cyber analysts. The

way Darktrace has done this is to track automatically every cyber analyst action on their computers, in order to

learn what the human did (type of threat, flagged how, how it is responded to etc.), and feed this back into the

algorithm development. This is a fully automated process of data collection, across all cyber analysts on a

permanent basis, to provide 100% data capture and hence a complete picture for the R&D team to understand how

their product is working and where it can be improved. This capability is further enhanced by automating as many

of these processes as possible. This ensures the product is most useful for customers, with minimum manual work,

helping security teams to focus on higher priority cyber projects.

Autonomous Response Technology

The Autonomous Response technology allows organisations to respond to attacks by neutralising them and taking

the pressure off the security teams working to defend against the attacks. It uses Cyber AI to calculate the best

action to take, in the shortest period of time, to respond effectively to a cyber attack. The Directors believe that

this technology is fundamental as today’s threats are so fast-moving and advanced and increase as digital

businesses grow in scale and complexity. Antigena Network uses the autonomous response to neutralise cyber

threats at machine speed and to defend against stealthy, novel and fast-moving network based attacks. Antigena

Email utilises self-learning AI technology to understand the email patterns of an individual user and respond to

deviations that can reveal attacks. Different from traditional security methods that work by analysing emails in

isolation and at a single point in time, Darktrace’s cyber AI continuously learns the normal pattern of behaviour

for every user and can then spot and respond to subtle changes in real time, catching even highly targeted and

advanced email attacks.

SALES, MARKETING AND DISTRIBUTION

The Group’s business model, high efficacy security platform and the user-friendly interface of this platform have

enabled the Group to build a strong brand and loyal customer base for its Cyber AI Platform. As a result, the Group

benefits from significant efficiencies in its marketing activities for its platform. Autonomous response AI is easily

applied and can be used across industries and sectors throughout companies of all sizes from small businesses to

global organisations providing significant commercial opportunities. In addition, as a large portion of the Group’s

revenues are generated from annual subscription agreements with an average three-year commitment, there is

significant revenue visibility. The Group sells its platform both directly to customers and through its channel

partners, which includes resellers and managed security service providers. The Group receives its income from

selling and upselling its products, and as of 31 December 2020, approximately 65% of revenue was from direct

sales whereas approximately 35% of revenue was through a channel partner. This approach has resulted in rapid

growth and increasingly brand awareness.

Direct Sales

The majority of the Group’s sales are generated by its direct sales personnel. The Group utilises its direct sales

personnel to promote its products, and as such, prefers a “home-grown” approach to training its employees,

primarily hiring new graduates. Graduate hires are trained, given experience and allowed to shadow other sales

personnel. An employee incentive program for sales exists that pays employees formal commission on sales

including uncapped commission on new deals, upsells and renewals. Approximately 50% of the commission is

paid on accepted bookings and approximately 50% upon successful account management over the first year. There

is the expectation that talented personnel will be retained and promoted quickly to a junior manager role.

Channel Partners

Although the majority of the Group’s sales are direct to customers, the Group also relies on its channel partners

to sell and market its products. The Group has over 370 active channel partners that operate globally in almost 70

countries. These channel partners increase brand visibility and sales for the Group and assist in penetrating

markets where the Group does not have a significant direct sales team. The Group’s partners include Atos, BT,

Reply, SHI, Bytes, Computacenter, Eurofins, Telstra, Sis, Nth Generation and ConvergeOne. For the six months

ended 31 December 2020, the Group’s largest channel partner accounted for approximately 2% of its total

revenue. Channel partners are assigned a channel relationship manager and are supported by the Group through

training, access to sales resources and technical support. The use of channel partners enables the Group to scale

its end customer base cost effectively, and expand the reach of its own direct sales teams.

Strategy to Acquire Customers

Darktrace’s primary approach to acquire new customers is through the POV trials of its technology. The POV

typically consists generally of a three week trial of Darktrace’s products, allowing each potential new customer

the opportunity to evaluate the capabilities of the platform’s self-learning technology on the potential customer’s

own systems free of charge. Upon commencing the POV, Darktrace’s products are deployed across a potential

customer’s digital business either in the cloud or by an on-premise appliance. The technology is activated quickly

with minimal set up time or expense. As the Cyber AI Platform does not require customisation and can be

deployed with minimal set up expense, the POV is both fast and replicable. The Cyber AI Platform’s seamless

integration of new capabilities also allows its customers rapidly to see the benefit of utilising a combination of

Darktrace’s products, and a high percentage of customers acquire a second product within the first year. The

Group rarely loses potential customers to its competitors in head to head comparisons.

Strategy to Retain Customers

Darktrace is focused on maintaining relationships with its existing customers. In 2018, to help maintain its

customer relationships, Darktrace established a customer success team. As of 31 December 2020, Darktrace had

90 customer success team managers globally. The Group takes a two-tiered approach to retention in which large

organisations each have a dedicated manager and mid-level to small customers are assigned a manager from a

pool of managers. Each customer has access to the support team, which provides English and local language

support globally. In addition, these personal relationships with customers facilitate the cross-selling of additional

products as they are developed. As of 31 December 2020, 81% of customers were using two or more products

compared to 27% as of 30 June 2018.

Customer Base

The Group’s customer base is both deep and broad, including customers across all industries and all sizes. The

Group has over 4,700 customers globally, with products deployed in more than 100 countries. Furthermore, in the

six months ended 31 December 2020, the Group generated 18.1%, 20.5%, 39.4%, and 22.0% of its billings from

customers in the UK, Europe (excluding the UK), the US and Canada, and the rest of the world, respectively.

Marketing

The Group’s marketing approach focuses on creating brand awareness and informing potential customers about

new cyber attack trends and the platform’s latest products. This allows the Group to build and maintain, through

relevant digital content and online communication, a substantial customer base and community. The Group’s

marketing approach works to build brand awareness and is able to attract customers to its website

(www.darktrace.com). Twice-weekly, the Group’s Darktrace Blog publishes up-to-date information on recent

notable cyber attacks and highlights the utility of the Cyber AI Platform. Viewership has increased four times

since March 2020. In addition to demonstrating the success of the Cyber AI Platform, the blog regularly publishes

cyber security news and updates pertaining to Email Security, Cloud & SaaS Security, OT Security, autonomous

response and Crypto-Mining. In addition to the website, the Group engages with current and potential customers

through its social media channels including its Twitter, Linkedin profiles, Facebook and Xing (Germany). The

Group also has a group of recognised experts who regularly appear on national and global news programmes, in

publications and at industry conferences to provide pragmatic advice on the changing cyber security landscape.

The Group’s

premium media partners include but are not limited to, The New York Times, The Washington Post,

Bloomberg Businessweek, The Wall Street Journal, Nikkei Business Publications Inc., the Financial Times, Les

Echos and The Economist. The Group utilises digital advertising, including large custom and units, newsletter and

global print advertisements and primarily focuses on the US market.

The Group attends industry trade shows and conferences, regularly communicating with industry analysts and

hosts webinars on current issues to create awareness of the Group’s Cyber AI Platform. Despite having to cancel

a majority of face-to-face events during the COVID-19 pandemic, the Group has continued to host virtual events

including webinars and including webinars and virtual seminars. Per month, the Group participates in an average

of 79 events, and generates between 6,000 and 12,000 leads. Darktrace also relies on its digital marketing and key

thought leadership campaigns to endorse its platform including partnerships with MIT Tech Review and McLaren

Racing.

Distribution

Darktrace’s cyber security products use sensors placed in customer systems. These sensors can be delivered

virtually (in software) or physically (using an appliance) and are commonly used in combination. In many cases,

the sensors deployed during the POV remain in place given that the machine learning has already learned the

organisation’s “self”. In the case of large customer deployments, additional products and sensors may be licensed

and deployed. When physical appliances are part of the contract, distribution is required.

The Group has two primary distribution centres of its physical appliance unit, one based at its headquarters in

Cambridge, UK, which focuses on shipments outside of Europe and the other in Dublin, Ireland, which focuses

primarily on shipments throughout Europe. The physical appliances are standard components that are built into

server units by Darktrace suppliers at either of its two distribution sites. Each physical appliance is encoded such

that it can only be used in conjunction with the Darktrace products. Darktrace receives the pre-built server units

and will then load software onto the appliance including pre-configurations individualised for the customer. The

pre-configuration process is specific to each customer, however, there are a number of build scripts that allow this

to run at scale. The Darktrace team at the distribution site can prepare hundreds of appliances a day through the

use of scripts, ready for shipment to customers.

In some regions, channel partners facilitate onward transport and installation of the appliance and they may

provide a range of additional services. In other regions, the Darktrace appliance is delivered directly to the

customer and installation and a range of services are provided virtually. In addition to the possibility of remote

installation, Darktrace generally has its own technical teams including cyber technicians and engineers, in most

parts of the world who will make site visits, when possible, and perform installation.

RESEARCH AND DEVELOPMENT

The Group had research and development costs of $12.0 million in the financial year ended 30 June 2020,

representing 6.0% of the Group’s total revenues. The Group’s research and development costs were $9.7 million

for the financial year ended 30 June 2019 and $7.5 million for the financial year ended 30 June 2018, or 7.1% and

9.5% of revenues, respectively. The Group’s research and development costs were $10.7 million for the six

months ended 31 December 2020 and $5.6 million for the six months ended 31 December 2019, or 8.4% and 6.1%

of revenue, respectively.

The team designated to expand the Cyber AI Platform has two primary goals, meeting the long term and short

term vision for the Cyber AI Platform. The short term development strategy is commercially driven and aims to

identify updates, features and new products based on customers’ needs and expectations. The Group works with

its customers to address any improvement requests specific to that customer’s business needs, as the nature of a

customer’s threat landscape is constantly changing. To respond to such requests, the Group has implemented a

system internally that focuses on review and responding to such requests within a week. These customer requests

help the Group target development efforts, and a feature or change originating with a customer request is typically

implemented within six weeks. For example, in response to the COVID-19 pandemic and the shift in working

patterns created by employees working from home, Darktrace developed its C-sensor technology. Darktrace’s

customers needed a supplemental feature that would provide visibility when employees are not within their

corporate network. To provide for these changes in the users, Darktrace released sensors to install into customers’

employee laptops to provide the same AI driven protection and detection that would have been received in their

office space. This C-sensor technology was developed on short notice and ensured that given the change in

working pattern, the Group’s customers would still have full visibility of compromises and threats to their digital

estates.

The long term development strategy for the research and development team is focused on providing a “closed

loop” solution to customers within the Cyber AI Platform, including a fully automated cyber defence solution at

machine speed. The next phase of Darktrace’s research and development focuses on prevention and cyber

compliance which will be implemented through the use of automated penetration testing and cyber hygiene

compliance of a customer’s digital estate. The research and development team is working to provide a more

proactive view of the risks posed to a customer’s business. Once the team develops a product that sufficiently

meets this goal it will turn its attention to the healing and remediation process in the aftermath of an attack.

In addition to working towards the Group’s short and long term visions, the research and development team’s

development operations group focuses on quality assurance and an additional group focuses on customer support

on an as-needed basis. The Group’s customer support connects a customer with an appropriate expert based on

the specific issue and the specialty required to fix the relevant issue. Throughout the research and development

process, the development strategy for the Cyber AI Platform also focuses on adjacent areas to cyber security and

potential industries outside of cyber security that the Group might consider expanding within by using the same

AI technology used within its Cyber AI Platform.

A separate group focuses on improving the Cyber AI Platform’s features, functionality and scalability. This team

dedicated to enhancing the existing Cyber AI Platform also works closely with the Group’s cloud operations team

to ensure that the Cyber AI Platform is available, reliable and stable.

Despite its already substantial and continuously developing technological achievements, the Group is able to

support its research and development initiatives at a relatively low cost. This is due in large part to the automated

AI-based infrastructure, the use of unsupervised machine-learning and the Group’s method of recruiting research

and development personnel. The Group primarily recruits accomplished new graduates with science-and

mathematics-focused degrees from notable universities rather than experienced hires, and provides in-house

training to familiarise its new hires with the technology quickly and effectively, whilst at the same time fostering

a collaborative, close-knit culture within the team. This in-house training allows Darktrace’s new graduates to

grow and focus in different specialities, including web developers, mathematicians and multi-language coders.

As of 31 December 2020, the Group had more than 200 employees focused on research and development,

representing 14% of its total headcount and all of these employees are located in Cambridge, UK. The research

and development team is divided into sub-teams ranging from two to eight people based on specialty.

PATENTS, TRADEMARKS AND OTHER INTELLECTUAL PROPERTY RIGHTS

The Group’s intellectual property rights are important to its business. The Group relies on a combination of patent,

trademark, copyright and trade secret laws, as well as licensing agreements and third party nondisclosure and

assignment agreements to protect its intellectual property and know-how. Customarily, customers are subject to

the standard terms of the Group’s shrink-wrap licence agreement at the onset of the trial period. The licence

agreement provides mutual non-disclosure terms, but in rare instances, where required by the prospective

customer, the Group will sign a mutual non-disclosure agreement. In addition, it is required, when their

relationship with the Group begins, that employees and independent contractors execute agreements, which

include standard confidentiality and transfer of intellectual property terms. Employees are required to agree to

keep the Group’s proprietary information confidential. The Group’s policy requires that employment contracts

include clauses requiring employees to assign all of the inventions and intellectual property rights they develop in

the course of their employment, or the economic benefits thereof, to the Group and to agree not to disclose or

misuse any confidential information.

As of 31 December 2020, the Group had 10 issued patents, with the majority granted in the United States. As of

31 December 2020, the Group had also applied for a further 52

patents, which are pending. The majority of filings

are primarily machine learning and AI focused. Of the Group’s patent portfolio, many of the patents are related to

multiple focuses, and are related to cyber security tools and AI augmented workflows, mathematics and

autonomous response, email security, cloud and SaaS, industrial and endpoint security. The cyber security tools

and AI augment workflows consist of innovations generated from the desire to improve the workflow of a human

cyber analyst using the Darktrace system. These tools are not limited to use in Darktrace, but were originally

developed to augment its use. The mathematics and autonomous response patents include fundamental filings on

the mathematical structures behind the Group’s “pattern of life” detection, how devices are clustered and the

framework for autonomous response. Email security patents include components, machine learning classifiers and

workflows specific to bringing in email environment under the Cyber AI Platform’s detection and response. The

cloud and SaaS patents include components and workflows specific to bringing in Cloud environment and SaaS

services under the Cyber AI Platform’s detection and response. The industrial patents include components and

workflows specific to bringing in industrial control systems under the Cyber AI Platform’s detection and response.

Lastly, the endpoint patent applications include components and workflows specific to bringing detection and

response onto a new device host.

The Group has applied for or obtained over 40 trademark registrations that it considers material to the marketing

of its products. These trademarks are registered in the United Kingdom, the United States, Australia, Japan,

Singapore, South Africa, Canada, South Korea, the EU and with the World Intellectual Property Organisation.

10.

EMPLOYEES

As at 31 December 2020, the Group had a global workforce consisting of over 1,400 employees, including 120 AI

experts and 27 people with PhDs.

Employees by function

The following table details the breakdown of the Group’s employees by function as at 31 December 2020 and

30 June 2020, 2019 and 2018:

As at

31 December

As at 30 June

–––––––––––––––––––––

––

–––––––––

2020

2019

2018

–––––––––

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

994

825

726

439

Administration and Operations . . . . . . . . . . . . . . . . . . . .

242

162

Research and Development . . . . . . . . . . . . . . . . . . . . . . .

205

163

131

115

–––––––––

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,441

1,150

947

618

–––––––––

Note: The above table includes both full time employees and contractors.

Employees by geography

The following table details the breakdown of the Group’s employees by geography as at 31 December 2020 and

30 June 2020, 2019 and 2018:

As at

31 December

As at 30 June

–––––––––––––––––––––

––

–––––––––

2020

2019

2018

–––––––––

EMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

691

528

438

287

Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

168

149

APAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

582

473

360

236

–––––––––

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,441

1,150

947

618

–––––––––

Note: The above table includes both full time employees and contractors.

Labour laws in these regions generally provide minimum standards regarding annual paid and unpaid leave, sick

leave, maternity leave and other provisions regarding leave from work, severance pay, pension contributions and

other terms of employment. The Group contributes to a pension scheme for its employees in the United Kingdom.

None of the Group’s employees are represented by a labour organisation or union or covered by collective

bargaining agreements. As of 31 December 2020, the Group had not experienced a labour-related work stoppage.

The Directors consider the Group’s relations with its employees to be good.

The Directors believe that one of the key reasons for the Group’s success is its people. The Group trains its human

resources team to comply with the latest employment and selection best practices. The Group recognises the

importance of human capital and values it highly. The Group’s human resources vision is to create a committed

workforce through people, enabling processes and knowledge sharing practices based upon the Group’s value

system.

The Group’s future success will depend, in part, on its ability to continue to attract, retain and motivate highly

qualified creative, technical and managerial personnel for whom competition is intense.

11.

PROPERTIES

The Group has more than 30 offices globally. The Group’s offices are all located in leased premises. Individual

office leases vary as to their terms, rental provisions and expiration dates. The Group’s principal office is located

at Maurice Wilkes Building St John's Innovation Park, Cowley Road, Cambridge, United Kingdom, CB4 0DS.

The following table details the breakdown of certain of the principal leases for the Group’s offices as of

31 December 2020:

Lease

Expiration

Facility Location

Date

––––––––––––––––––––––

––––––––––

London (United Kingdom) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13 February 2027

Cambridge

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11 July 2033

New York

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30 April 2028

San Francisco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30 June 2031

Certain of the Group’s leases have a term as short as one year while others are over ten years in length. Rent on

the majority of the Group’s offices is paid monthly in advance.

12.

ENVIRONMENT

Due to the nature of the Group’s technology, the Group does not have significant customer data storage

obligations, and therefore does not require extensive IT infrastructure. To date, there have been no environmental

issues associated with the Group’s IT infrastructure. The Directors believe that due to the nature of its business

the Group does not have any material environmental compliance costs or environmental liabilities.

13.

INSURANCE

The Group maintains a commercial combined insurance coverage covering the core business including employee

liability, stock, property damage or loss (contents insurance), business interruption and business travel insurance.

The Group also maintains directors’ and officers’ insurance, public and product liability, professional indemnity

and cyber liability. The Group has also procured additional policies covering certain areas where the general

coverage has exceptions or limitations. Typically, these exceptions or limitations are identified when a new

subsidiary is created in a new country and after a risk assessment has explored the potential risks attached to

operating the subsidiary company, the company procures supplemental insurance coverage. The Directors believe

that the Group’s current insurance coverage is appropriate for its business, in respect of its level and applicable

excesses and deductibles. The Group does not have any material outstanding insurance claims.

14.

DIVIDEND POLICY

The Group expects to adopt a dividend policy that will ensure that the Group retains the flexibility to continue to

deploy capital towards profitable growth. The Group intends to retain any earnings to expand the growth and

development of its business and, therefore, does not anticipate paying dividends in the foreseeable future. There

can be no guarantees that the Company will pay future dividends. The determination of the level of future

dividends, if any, will depend upon the Group’s results of operations, financial condition, capital requirements,

contractual restrictions, business prospects and any other factors the Board may deem relevant.

15.

LEGAL PROCEEDINGS

See Section 13 of Part 10: “

Additional Information

”.

16.

REGULATORY MATTERS

The Group’s business is subject to a wide array of regulations in the various jurisdictions in which it operates,

with employees and customers in many countries. As a result, the Group is regulated by various authorities,

including in the United Kingdom and the United States, which oversee, among other areas, consumer protection,

licensing and corporate governance. The Group is also subject to the laws, regulations and possible sanctions of

a number of countries affecting international transactions, including consumer protection, labour laws, laws

related to internet commerce, and information technology. The Group also has employees and customers in many

countries, resulting in the Group handling sensitive personal data in those countries. Therefore, the Group must

comply with local data protection and privacy rules. In addition, due to the Group’s global operations, it is in

receipt of payments in/from a number of jurisdictions. As a result, the Group must monitor compliance with

money laundering regulations in a number of countries. The regulatory environment related to information

security, data collection and privacy is becoming increasingly demanding, with new and changing requirements

applicable to the Group’s business, including restrictions on transfer of personal data of customers or employees

outside of the European Union or the United States, as applicable, and with significant operational requirements

that must be followed and significant penalties for non-compliance.

In particular, the Group stores some personally identifiable information of its customers and is subject to data

protection and privacy regulations such as the General Data Protection Regulation (EU) 2016/679 (the “

GDPR

”).

The GDPR, which came into force on 25 May 2018, implemented more stringent operational requirements for the

Group’s use of personal data. These more stringent requirements include expanded disclosures to the Group’s

customers in respect of how the Group may use their personal data and increased rights for customers to access,

control and delete their personal data. In addition, there are mandatory data breach notification requirements and

significantly increased penalties of the greater of €20 million or 4% of global turnover for the preceding financial

year. The Group faces stringent regulations in other jurisdictions as well, including in the UK and under the

California Consumer Privacy Act. The same conduct could expose the Group to penalties for breach of data

protection laws in multiple jurisdictions and, following Brexit, the UK Information Commissioner’s Office may

impose fines that are essentially equivalent to the maximum penalties under the GDPR (in addition to any fines

imposed under the GDPR). The UK's Network and Information Systems Regulations 2018, as amended from time

to time, which came into force on 10 May 2018, apply to the Group and place additional network and information

systems security obligations on the Group, as well as mandatory security incident notification in certain

circumstances with penalties of up to £17 million.

The Group is also subject to various customs and international trade laws and regulations. For example, the Group

may be subject to the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong

Special Administrative Region. The Group will also be subject to evolving government export and import

controls. There are also different laws in the various jurisdictions in which the Group operates that relate to how

online sales may be made, particularly to consumers, including laws regulating the size and prominence of

lettering, regulations surrounding the use of opt-in as compared to opt-out provisions and other specifics as to how

sales may be made.

In addition, the Group is also subject to anti-bribery regulations and anti-corruption legislation in other countries

where the Group conducts business. The SEC, the U.S. Department of Justice, the U.S. Treasury Department's

Office of Foreign Assets Controls, the U.S. Department of State, as well as other foreign regulatory authorities,

continue to enforce economic and trade regulations and anti-corruption laws across industries. U.S. trade

sanctions relate to transactions with designated foreign countries and territories, including Cuba, Iran, North

Korea, Syria and the Crimea region of Ukraine as well as specifically targeted individuals and entities that are

identified on U.S. and other blacklists, and those owned by them or those acting on their behalf. Anticorruption

laws, including the Bribery Act and the U.S. Foreign Corrupt Practices Act of 1977, generally prohibit direct or

indirect corrupt payments to government officials and, under certain laws, private persons to obtain or retain

business or an improper business advantage.

In addition, the Group is subject to the United Kingdom’s, United States’ and European Union’s competition law

and any relevant antitrust or competition law in any other jurisdiction in which it operates which prohibits the

abuse of a dominant position in the market.

Part 6

DIRECTORS, SENIOR MANAGERS AND CORPORATE GOVERNANCE

DIRECTORS

The following table lists the names, positions and ages of the Directors as at the date of this Registration

Document:

Name

Age

Position

–––––––––––––––––––––––––––––––––––––––––––––––––––––––

–––––

––––––––––––––––––––––––––––––––––––––––––

Gordon Hurst . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Independent Chair

Poppy Gustafsson OBE . . . . . . . . . . . . . . . . . . . . . . . .

Chief Executive Officer

Catherine Graham

. . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chief Financial Officer

Vanessa Colomar . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-Executive Director

Stephen Shanley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-Executive Director

Johannes Sikkens . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-Executive Director

Lord Willetts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Independent Non-Executive Director

Paul Harrison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Independent Non-Executive Director

Sir Peter Bonfield . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Independent Non-Executive Director

The business address of each of the Directors is Maurice Wilkes Building St John's Innovation Park, Cowley

Road, Cambridge, United Kingdom, CB4 0DS.

The management experience and expertise of each of the Directors is set out below. Catherine Graham was

appointed to the Board at incorporation of the Company. All other Directors were appointed to the Board on

1 April 2021.

Gordon Hurst

Mr. Hurst joined the Group on 28 July 2019 as a Director of Darktrace Holdings Limited, and was appointed to

the Board of the Company on 1 April 2021. Mr. Hurst has 27 years’ experience with Capita plc (LON: CPI), a

leading consulting, digital services and software business company, from 1988 until February 2015, including

having served as the Group Finance Director on its board since 1996. During this period, Mr. Hurst was

instrumental in managing acquisitions, large outsourcing deals, and building a team of commercially-focused

finance directors to enable continued development of the business. Since then, Mr. Hurst has also served as

non-executive chair of the board of Featurespace since November 2014. Currently, Mr. Hurst serves as the

non-executive chair of the PE funded services business, Marston Holdings, and Azets Ltd.

Poppy Gustafsson OBE

Ms. Gustafsson joined the Group as an employee with effect from November 2014, was appointed as a Director

of Darktrace Holdings Limited on 11 May 2020, and was appointed to the Board of the Company on 1 April 2021

and has served as the CEO of the Group since 2016. Under her leadership, the Group has grown to 1,500

employees with over 40 offices around the world. Ms. Gustafsson has led the Group to achieve a variety of

accolades, such as being named the 9th ‘Fastest Growing European Company’ by The Financial Times, as well as

‘Fastest Growing Super Scale-up’ by Tech Tour. Ms. Gustafsson is a qualified chartered accountant and previously

served as the company’s CFO. She was the winner of the ‘Veuve Clicquot Business Woman Awards 2019,’ and

recognised in Management Today’s ‘35 Women Under 35’ list in 2018. Ms. Gustafsson was awarded an OBE

(Officer of the Order of the British Empire) in 2019 in recognition of her services to cyber security.

Catherine Graham

Ms. Graham joined the Group as an employee in February 2020, was appointed to the Board of the Company at

incorporation of the Company and is the Company’s Chief Financial Officer. Ms. Graham has more than two

decades of professional experience in financial disciplines and has served at the helm of several businesses

throughout periods of rapid growth and capital structure evolution. Previously at 2U, a global leader in education

technology, Ms. Graham has extensive experience in developing and maturing hyper-growth technology

companies. In 2015, she was named as Northern Virginia Technology Council’s ‘Public Company CFO of the

Year’ and has most recently been included in the Washington Business Journal’s 2018 list of ‘Women Who Mean

Business.’ Ms. Graham holds an MBA from Loyola University Maryland and a BA in Economics from the

University of Maryland.

Vanessa Colomar

Ms. Colomar joined the Group on 14 July 2015 as a Director of Darktrace Holdings Limited, and was appointed

to the Board of the Company on 1 April 2021. Ms. Colomar has 24 years’ experience in public relations and

communications, having held senior positions at agency Edelman and Burston Marsteller in Madrid and New

York. Previously, she has also served as SVP of Communications at Autonomy where she joined immediately

prior to the HP acquisition in August 2011 and worked through May 2012. Ms. Colomar is a Partner and

Co-Founder of Invoke Capital. At Invoke, Ms. Colomar is responsible for Communications and Investor Relations

and oversees these functions for portfolio companies including Luminance. Ms. Colomar is also a member of the

Board of Directors for Luminance, a leading AI platform for the legal industry and an Invoke portfolio company.

Ms. Colomar holds a First-Class BA in Modern European Languages from Durham University, and an MA in

Journalism from Universidad Autónoma de Madrid.

Stephen Shanley

Mr. Shanley joined the Group on 15 July 2016 as a Director of Darktrace Holdings Limited, and was appointed

to the Board of the Company on 1 April 2021. Mr. Shanley has worked at KKR since 2014 and currently serves

as a Managing Director at KKR and as head of KKR’s Technology Growth Equity business in Europe. Mr.

Shanley serves or has served on the board of directors of several technology companies, including Feedzai –

Consultadoria e Inovação Tecnológica, S.A., ReliaQuest, LLC, Zwift Inc., KnowBe4, Inc., OutSystems Holdings

S.A., iValua S.A.S., GetYourGuide AG and Clicktale (UK) Limited. Prior to joining KKR, Mr. Shanley was an

investor with Technology Crossover Ventures, a technology focused growth equity firm. Prior to that, Mr. Shanley

was with the TMT investment banking group of Needham & Company, LLC. He started his career in the

transaction services group of KPMG US LLP. Mr. Shanley holds a B.S. and a B.Sc. from Santa Clara University.

Johannes Sikkens

Mr. Sikkens joined the Group on 14 July 2015 as a Director of Darktrace Holdings Limited, and was appointed

to the Board of the Company on 1 April 2021. Mr. Sikkens serves as Managing Director and Head of Europe at

Summit Partners, a global alternative investment firm with more than $23 billion in assets under management. Mr.

Sikkens joined Summit Partners in 2004 and today manages the firm’s London office. Mr. Sikkens focuses

primarily on investments in the technology sector in Europe. In addition to the Company, Mr. Sikkens currently

serves as a director at MUBI, Red Points and Syncron, and he is actively involved in Summit’s investments in

Akeneo, Ivalua, LearnUpon, Odoo and Solactive. His previous board and investment experience includes 360T

Group, Acturis Limited, Avast (LON: AVST), Flow Traders (Euronext: FLOW), Multifonds, RELEX Solutions,

SafeBoot, Siteimprove and Welltec International. Prior to Summit, Mr. Sikkens worked for Scotia Capital and

IBM Corporation. Mr. Sikkens holds a BS in business administration from the University of Groningen, an MSc

in international business from the University of Groningen, and an MSc in international finance from the CERAM

Graduate School of Management & Technology.

Lord Willetts

Lord Willetts was appointed to the Board of the Company on 1 April 2021. Lord Willetts began his career in

Parliament as the MP for Havant in 1992 and was appointed Minister for Universities and Science in May 2010.

Lord Willetts has previously served as Paymaster General and then in the Shadow Cabinet in a range of roles,

including Shadow Secretary of State for Trade and Industry, Shadow Secretary for Education and Skills, and

Shadow Secretary for Innovation, Universities and Skills. Lord Willetts has also worked at HM Treasury and in

the Number 10 Policy Unit. In addition, Lord Willetts was a visiting fellow at Nuffield College, Oxford, is a

governor of the Ditchley Foundation and a member of the Council of the Institute for Fiscal Studies. He has

written widely on economic and social policy. In 2011 he published a book, ‘The Pinch: How the baby boomers

took their children’s future – and why they should give it back’. Lord Willetts was educated at King Edward’s

School, Birmingham and Christ Church, Oxford, where he studied philosophy, politics and economics.

Paul Harrison

Mr. Harrison was appointed to the Board of the Company on 1 April 2021. Mr. Harrison is a chartered accountant

with over 35 years business experience. Previously, Mr Harrison has served as the CFO of Just Eat PLC, a FTSE

100 on-line food marketplace business and as interim CEO from April to September 2017. Prior to Just Eat,

Mr. Harrison served as CFO of WANdisco plc in California and as Group CFO of one of the largest UK (& FTSE

100) software businesses, The Sage Group plc for 13 years. In addition, Mr. Harrison served from 2007 to 2017

as a Non-Executive Director and, in the last 5 years of his appointment, Senior Independent Director of FTSE 250

recruiter, Hays plc. During this time, Mr. Harrison initially chaired the Audit Committee switching mid way

through his appointment to chairing the Remuneration Committee. In February 2016, Mr. Harrison also joined the

Board of the newly listed Ascential plc, a FTSE 250 business where he served as chair of the Audit Committee

until January 2021. At that time, he assumed the role of Executive Director and Chief Operating Officer of

Ascential plc. Mr. Harrison has formerly also served as Governor of Royal Grammar School, Newcastle a large,

independent school based in Newcastle upon Tyne.

Sir Peter Bonfield CBE

Sir Peter was appointed to the Board of the Company on 1 April 2021. Sir Peter has previously served as the CEO

and Chairman of the Executive Committee of British Telecommunications from 1996, when he was appointed,

until early 2002. Sir Peter is currently serving as Chairman of NXP Semiconductors in the Netherlands. Sir Peter

has previously served as Chairman and Managing Director of ICL after its merger with STC, a large

telecommunications equipment manufacturer, Deputy Chief Executive of STC plc as well as Chairman and CEO

of ICL. Sir Peter’s career has also included Chair of Council and Senior Pro Chancellor for Loughborough

University, Chairman of GlobalLogic, Vice-Presidency of the British Quality Foundation, Senior Independent

Directorship of AstraZeneca, Non-Executive Director Dubai International Capital LLC, Actis Capital LLP,

Member of the Citigroup International Advisory Board, Advisor to Apax Partners LLP, Senior Advisor to

Rothschild, Senior Advisor to G3 Good Governance Group, Senior Advisor The Hampton Group, Chairman of

the Board/East West Institute UK, member of Silent Circle’s Advisory Board and Directorships on the Boards of

Sony Corporation in Japan, Mentor Graphics Corporation in the USA, Ericsson in Sweden, the Department for

Constitutional Affairs and the Ministry of Justice. In total, Sir Peter has been a Board Member of 12 quoted

companies around the world. Sir Peter has an Honours Degree in Engineering from Loughborough University, is

a Liveryman of the Worshipful Company of Information Technologists, a Freeman of The City of London, an

Honorary Citizen of Dallas and a Fellow of the Royal Academy of Engineering.

SENIOR MANAGERS

In addition to the Directors listed above, the following members of the Company’s current senior management

team (each a “

Senior Manager

”) are considered relevant to establishing that the Company has the appropriate

experience and expertise for the management of its business:

Name

Age

Position

–––––––––––––––––––––––––––––––––––––––––––––––––––––––

–––––

––––––––––––––––––––––––––––––––––––––––––

David Palmer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chief Product Officer

Nicole Eagan

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chief Strategy Officer

Jack Stockdale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chief Technology Officer

The business address of each Senior Manager is Maurice Wilkes Building St John's Innovation Park, Cowley

Road, Cambridge, United Kingdom, CB4 0DS.

The management experience and expertise of each Senior Manager is set out below.

David Palmer

Mr. Palmer joined the Group at founding, and is the Chief Product Officer of the Company, overseeing the

mathematics and engineering teams and project strategies. With over 13 years’ experience at the forefront of

government intelligence operations, Mr. Palmer has worked across UK intelligence agencies GCHQ and MI5,

where he was responsible for delivering mission-critical infrastructure services, including replacing and securing

entire global networks, the development of operational internet capabilities and the management of critical

disaster recovery incidents. Mr. Palmer acts as an advisor to cyber security start-ups and growth-stage companies

from the UK Government’s Cyber Security Accelerator and CyLon. Mr. Palmer’s insights on AI and the future of

cyber security are also regularly featured in the UK media. Mr. Palmer holds a first-class degree in Computer

Science and Software Engineering from the University of Birmingham.

Nicole Eagan

Ms. Eagan joined the Group in 2014, and is Chief Strategy Officer and AI Officer of the Company. Ms. Eagan’s

extensive career in technology spans 30 years working for Oracle and early to late-stage growth companies. Ms.

Eagan identifies and shapes the Group’s strategic plan, leads the Company’s AI vision together with the Group’s

Chief Technology Officer, and provides product strategy and direction. A core part of the executive team, during

Ms. Eagan’s tenure, the Group has won more than 100 awards, and has been named one of WSJ’s ‘Tech

Companies to Watch’, Fast Company’s ‘Most Innovative Companies’, and a CNBC ‘Disruptor 50’. Ms. Eagan

was named ‘AI Leader of the Year’ and was awarded the top position on The Software Report’s ‘Top 25 Women

Leaders in Cybersecurity’ in 2020.

Jack Stockdale

Mr. Stockdale joined the Group at founding, and is the Chief Technology Officer of the Company. With over

20 years’ experience of software engineering, Mr. Stockdale is responsible for overseeing the development of

Bayesian mathematical models and artificial intelligence algorithms that underpin the Company’s award-winning

technology. Mr. Stockdale and his development team in Cambridge, UK were recognised for their outstanding

contribution to engineering by the Royal Academy of Engineering MacRobert Innovation Award Committee in

2017 and again in 2019. Mr. Stockdale has a degree in Computer Science from Lancaster University. Mr.

Stockdale was awarded an OBE (Officer of the Order of the British Empire) in 2019 in recognition of his services

to cyber security.

CORPORATE GOVERNANCE

The Board currently adheres to a corporate governance regime that is appropriate for an English company. The

Board is committed to implementing the highest standards of corporate governance appropriate for a company of

its size and status.

In anticipation of Admission, the Company has adopted corporate governance principles and practices that address

various matters under the UK Corporate Governance Code as further described below. The Directors believe the

Board and the committees will act in the best interests of the Company and all its Shareholders, and will provide

appropriate corporate governance and experience. The Board believes that the non-independent Directors will

ensure stability and continuity, as well as relevant experience and expertise, and that the independent

non-executive directors of the Company (the “

Non-Executive Directors

”) will bring strong judgment and

considerable knowledge to the Board’s deliberations.

The Board

Board Composition

The UK Corporate Governance Code recommends that at least half of the board of directors of a UK-listed

company, excluding the chair, should comprise non-executive directors determined by the board to be independent

in character and judgment and free from relationships or circumstances, which may affect, or could appear to

affect, the director’s judgment.

The Board comprises nine members: Gordon Hurst, the Chair, two executive Directors, Poppy Gustafsson OBE

and Catherine Graham, and six Non-Executive Directors, Vanessa Colomar, Stephen Shanley, Johannes Sikkens,

Lord Willetts, Paul Harrison and Sir Peter Bonfield. In addition to Gordon Hurst, the Company regards each of

Lord Willetts, Paul Harrison and Sir Peter Bonfield to be independent for the purposes of the UK Corporate

Governance Code. Therefore, the Company will not comply with the recommendation of the UK Corporate

Governance Code that at least half of the board of directors of a UK-listed company, excluding the chair, should

comprise independent non-executive directors. Notwithstanding this, the Board believes that the current Directors

bring to the Company a desirable range of skills and experience in light of its challenges and opportunities

following Admission. The Company has recently appointed three Independent Non-Executive Directors with

current and/or previous experience on listed company boards in addition to the independent Chair. The Board

intends to achieve full compliance with the UK Corporate Governance Code in due course.

Senior Independent Director

The UK Corporate Governance Code also recommends that the board appoints one of the independent non-

executive directors to be the senior independent director. The Company has appointed Lord Willetts as the Senior

Independent Director of the Company and the Company therefore will comply with this recommendation.

Board Committees

The Board has established an audit and risk committee, a nomination committee and a remuneration committee

as described below. If the need should arise, the Board may set up additional committees as appropriate.

Audit and risk committee

The audit and risk committee’s role is to assist the Board with the discharge of its responsibilities in relation to

financial reporting, including reviewing the Group’s annual and half year financial statements and accounting

policies, narrative reporting, internal controls and risk management, whistleblowing, fraud and compliance,

reviewing and monitoring the scope of the annual audit and the extent of the non-audit work undertaken by

external auditors, advising on the appointment of external auditors and reviewing the effectiveness of the internal

audit, internal controls in place within the Group. The audit and risk committee will meet at least three times a

year.

Composition and membership

The UK Corporate Governance Code recommends that the audit and risk committee be comprised of at least three

directors, all of whom are independent non-executive directors. It also recommends that at least one member

should have recent and relevant financial experience. It further recommends that the chair should not be a member

of the audit and risk committee.

The audit and risk committee is chaired by Paul Harrison and its other members are Lord Willetts and Sir Peter

Bonfield.

Nomination committee

The nomination committee assists the Board in reviewing the structure, size, performance and composition of the

Board. It is also responsible for reviewing succession plans for the Directors, including the chair and CEO and

other senior executives. The nomination committee will meet at least twice a year.

Composition and membership

The UK Corporate Governance Code recommends that a majority of the nomination committee be independent

non-executive directors.

The nomination committee is chaired by Lord Willetts and its other members are Gordon Hurst and Poppy

Gustafsson.

Remuneration committee

The remuneration committee approves and recommends to the Board the Group’s compensation policy for

officers and Directors (including periodic examination and updates to the compensation policy), determines or

recommends to the Board for approval the remuneration of officer and directors, reviews and recommends to the

Board for approval grants of awards under the Group’s incentive plans and prepares an annual remuneration report

for approval by the Shareholders at annual general meetings. The remuneration committee will meet at least twice

a year.

Composition and membership

The UK Corporate Governance Code recommends that the remuneration committee be comprised of at least three

directors, all of whom are independent non-executive directors. It also recommends that one of the members of

the remuneration committee may be the chair (but that person may not chair the remuneration committee) if he or

she was considered independent on appointment as chair.

The remuneration committee is chaired by Sir Peter Bonfield and its other members are Lord Willetts, Paul

Harrison and Gordon Hurst.

The Board considers that the Company complies with the recommendations of the UK Corporate Governance

Code with regard to the composition and role of such committees.

Share dealing code

The Company has adopted, with effect from Admission, a code of securities dealings in relation to the Shares

which is based on the requirements of the Market Abuse Regulation. The code adopted will apply to the Directors

and other relevant employees of the Group.

CONFLICTS OF INTEREST

There are no potential conflicts of interest between any duties owed by the Directors or Senior Managers to the

Company and their private interests or other duties.

CORPORATE HISTORY

The Company and its major shareholders intend to adopt detailed arrangements to govern their relationships

following Admission, modelled on the requirements of the Listing Rules, to ensure the Company is able to carry

on an independent business as its main activity, as detailed below.

For further information on the history and risks related to the Group’s association with activities in connection

with the sale of Autonomy and the funding of the Group, please see risk factors entitled “

The Group may face

reputational risk arising out of unlawful, and allegedly unlawful, activities in connection with the sale of

Autonomy Corporation plc (“Autonomy”) and related matters”, “The Group may face potential liability arising

out of its historic funding by Invoke”

and

“The Group may face potential liability arising out of unlawful, and

allegedly unlawful, activities in connection with the sale of Autonomy and related matters

” in Part 1. Having

analysed and considered the relevant circumstances the Directors believe: (a) there is a low risk to the Group of

successful prosecution for UK money laundering offences or similar offences in the U.S.; and (b) that the Shares

being sold in the Offering are not capable of being criminal property for the purposes of the Proceeds of Crime

Act 2002, nor that persons purchasing Shares in the Offering would, by doing so, commit any offence under the

Proceeds of Crime Act 2002.

Funding history

Invoke, a specialist firm that invests in, and advises, fast-growing European technology companies, provided the

initial funding of the Group in June 2013 via its operating entity, ICP London Limited (“

ICP

”). This funding was

via a share subscription of £10,000 in Darktrace Holdings Limited (“

Holdings

”) and by way of non-interest

bearing unsecured loans totalling £6.6 million provided to Holdings from 2013 through to 2015. In August 2013,

certain employees (including David Palmer) and former employees of the Group also subscribed for shares in

Holdings. The non-interest bearing loans from ICP to Holdings were repaid in full with the proceeds received from

a series of primary share issues by Holdings to institutional investors between 2016 and 2017. These primary share

issues, and subsequent funding rounds, by Holdings were as follows:

•

February 2015 – Series A funding with investors including Talis Capital and Hoxton Ventures, raising

approximately $10 million;

•

July 2015 – Series B funding led by Summit Partners, raising approximately $39 million;

•

July 2016 – Series C funding led by KKR DA, raising approximately $34 million;

•

July 2017 – Series D funding led by Insight Venture Partners, raising approximately $50 million;

•

September 2018 – Series E funding, led by Vitruvian Partners, raising approximately $50 million; and

•

July 2020 – issue of convertible loan notes to certain existing investors, including KKR DA, Summit

Partners, Talis Capital, TenEleven Ventures, Hoxton Ventures and Balderton Capital, raising approximately

$163 million.

In July 2020, the shareholders of Holdings passed a resolution to reduce the share capital account and share

premium account of the Company equal to approximately $127 million and applied such amount to cancel and

extinguish certain ordinary shares in Holdings held by ICP Darktrace Holdings Limited (the holding company of

Invoke’s interests in Holdings, “

ICPDH

”) and paid the proceeds directly to ICPDH.

ICPDH subsequently entered

into voluntary liquidation, with the remaining shares that ICPDH held in Holdings distributed to its shareholders

to be held directly by them, and the proceeds of the capital reduction to be applied to settle certain tax liabilities

of the ICPDH shareholders arising as a result of the dissolution. The dissolution of ICPDH (and distribution of

Holdings’ shares held by it) was completed in November 2020.

Board history

The initial director of Holdings was Elizabeth Harris, an Invoke employee. Robert Webb QC was appointed as

chair in August 2014, and Nicole Eagan was appointed to the board as the CEO in September 2014.

In connection with Holdings’ Series A funding, in February 2015, Vasile Foca (nominated by Talis Capital), and

Sushovan Hussain and Michael Lynch (each nominated by Invoke) joined the board of directors. Following the

Series A funding, Elizabeth Harris resigned as a director.

In connection with Holdings’ Series B funding, in July 2015 Johannes Sikkens (nominated by Summit Partners)

and Vanessa Colomar (nominated by Invoke) joined the board of directors.

In connection with Holdings’ Series C funding, in July 2016 Stephen Shanley (nominated by KKR DA) joined the

board of directors. Following the funding, Vasile Foca resigned as a director.

In October 2016, Poppy Gustafsson was appointed as a Co-CEO of Holdings. In November 2016 Sushovan

Hussain voluntarily resigned as a director, and Andrew Kanter (nominated by Invoke) joined the board. In

November 2018 Michael Lynch voluntarily resigned as a director, and Philip Pearson (nominated by Invoke)

joined the board as a director.

Gordon Hurst joined the board as an independent director in July 2019. Poppy Gustafsson joined the board as an

executive director (CEO) in May 2020, and Nicole Eagan resigned as a director and CEO (although remains as

Chief Strategy Officer of the Group). In connection with Holdings’ convertible loan note funding, in July 2020

Mark Hatfield (nominated by the convertible loan note holders) joined the board.

In April 2021, it is expected that Messrs. Hatfield, Kanter and Pearson each will cease to be directors of Holdings.

As at, and conditional upon Admission, pursuant to the pre-IPO reorganisation, Holdings will cease to be the

holding company of the Group and will become a wholly-owned subsidiary of the Company. From Admission, all

of the directors of Holdings will be employees of Darktrace.

Advisory Council and Science & Technology Group

Advisory Council

The Group’s Advisory Council was established in September 2013 as an advisory group of leading experts in their

respective fields who support the Group’s executive team by providing their insights on key industry and global

trends. The Advisory Council does not meet formally as a committee of the board of the Company and has no

executive, management or governance role or authority. The Advisory Council’s members are available to the

Company’s management in order to consult with in areas of their respective expertise. Michael Lynch was a

member of the Advisory Council from its establishment until March 2021. The current members of the Advisory

Council, together with their brief biography, are stated below:

Lord Evans of Weardale KCB

Lord Evans was Director General of MI5 from 2007 to 2013. Lord Evans spent 33 years with MI5, defending the

UK against internal and domestic terrorism and cyber-threats. He was appointed to the Security Service’s

Management Board as Director of International Counter Terrorism in 2001, ten days before the 9/11 attacks on

the World Trade Center. Lord Evans was appointed to the House of Lords in 2014 at the personal recommendation

of the Prime Minister and sits as a cross-bench peer. Lord Evans is also a non-executive Director of HSBC

Holdings and of Ark Datacentres Ltd.

Professor Nick Jennings CB FREng

Professor Nick Jennings is the Vice-Provost for Research and Enterprise at Imperial College London, responsible

for promoting, supporting and facilitating their research performance and for leading on the delivery of the

Research and Enterprise Strategy. Professor Jennings also holds a chair in Artificial Intelligence in the

Departments of Computing and Electrical and Electronic Engineering. Before joining Imperial College London,

Professor Jennings was Regius Professor of Computer Science at the University of Southampton and the UK

Government’s Chief Scientific Advisor for National Security. Professor Jennings is an internationally-recognised

authority in the areas of artificial intelligence, autonomous systems, cybersecurity and agent-based computing.

Professor Jennings is a member of the Government’s AI Council.

Alan Wade

Alan Wade had a thirty-five-year career in the Central Intelligence Agency, where he latterly served as the Chief

Information Officer, before his retirement in 2005. Prior to this role, Mr. Wade held a series of senior positions at

the CIA, including the Director of Communications and Director of Security. Mr. Wade is a recipient of the

National Intelligence Distinguished Service Medal, the Director’s Medal, and the Distinguished Intelligence

Medal. Mr. Wade also serves on the boards of the Aerospace Corporation in El Segundo, CA, Professional Project

Services in Oak Ridge, TN and Assyst Inc in Herndon, VA.

Rt Hon Amber Rudd

After a career in banking, venture capital and head hunting, Amber Rudd became the MP for Hastings and Rye

from 2010 to 2019. Ms. Rudd held three cabinet roles over four years and under three Prime Ministers, first in

Energy and Climate Change, then the Home Office as Home Secretary and until September 2019 in Work and

Pensions. Ms. Rudd also twice served as Minister for Women and Equalities. As Energy Secretary, Ms. Rudd

steered the UK’s participation in the crucial and successful Paris Climate Change Agreement in 2015. As Home

Secretary, Ms. Rudd oversaw the UK’s response to the terrorist attacks in 2017. Under her leadership, the UK led

on setting up an international industry-led response to removing radicalising material on the internet which

endures as the Global Internet Forum to Counter Terrorism (GIFCT). Ms. Rudd is now a Senior Advisor to Teneo,

Management Consultants. Ms. Rudd is also an Advisor to Pool Re, insurers for terrorism risk. Ms. Rudd recently

became a Trustee for The Climate Group, working with the private sector to reach a net zero outcome.

Robert Webb

Robert Webb is the former Chairman of Holdings, and also serves as Chairman of Luminance. Previously, Mr.

Webb has also served as a Director of Holdingham Group Ltd (formerly Hakluyt) as well as a Senior Advisor at

Brunswick LLP. Mr. Webb is a Door Tenant of Brick Court Chambers. Until 1998, Mr. Webb was a practicing

Barrister, a Recorder and Head of Chambers at 5 Bell Yard, London. His field of practice was commercial law,

aviation law and mass disaster litigation. From 1998 to 2009, Mr. Webb was General Counsel of British Airways.

Mr. Webb is also a past Chairman of BBC Worldwide and of Autonomy plc, a former Senior Independent Director

of the London Stock Exchange and a former Director of Argent Ltd and of Air Mauritius. Mr. Webb was General

Counsel of Rolls-Royce Plc (2012-16). Mr. Webb is a Bencher of the Inner Temple, a former Trustee of Comic

Relief and a former Fellow of UNICEF.

Science & Technology Group

In March 2021, the Group established the Science & Technology Group, a panel of leading experts to assist the

Company’s management in its consideration of science and technology matters. The members of the Science &

Technology Group are experts in their respective fields and comprise Dr. Michael Lynch and Professor Nick

Jennings. The Science & Technology Group does not meet formally as a committee of the board of the Company

and has no executive, management or governance role or authority. The Science & Technology Group’s role is

purely consultative and advisory and it has no right to receive any information from, or otherwise influence the

decisions of, the Group. The Company’s management team consult with members of the Science & Technology

Group on an ad hoc basis on key industry and global trends and such other similar matters.

Services provided by Invoke

Since inception, ICP has provided Darktrace with managerial support contributing to the Group’s growth.

Invoke has historically provided certain management services to the Group pursuant to a supply of services

agreement (the “

Services Agreement

”). The key services provided under the Services Agreement included

strategic, marketing, communication, technological and commercial advice, subject matter expertise, advice in

relation to the Group’s go-to market strategy, market positioning, vision and public relations, and operational

advice and support. Such services included, by way of example, meetings with the technical teams to discuss

product development, providing strategic advice on marketing and communications and consulting on other

general business matters as they arose from time to time. As the scale of the Group’s operations have grown since

inception the services provided under the Services Agreement have reduced, in particular as the Group has

acquired and developed appropriate capabilities and expertise in-house. As a result, the Services Agreement has

been terminated with effect from Admission. The Company will pay to ICP a fee of £1,200,000 (plus VAT) in

respect of the six months’ notice required under the Services Agreement.

Certain executives of the Group, including Poppy Gustafsson (Chief Executive Officer), Jack Stockdale (Chief

Technology Officer), Nicole Eagan (Chief Strategy Officer, AI Officer) and Emily Orton (Chief Marketing

Officer) were historically employed by Invoke (and were formerly also employed by Autonomy) and became

employees of the Group with effect from November 2014. As at the date of the Registration Document, these key

executives hold Shares in the Company as follows:

Percentage

of issued

Number of

ordinary

Shareholders

share capital

––––––––––––––––––––––

––––––––––

Poppy Gustafsson

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15,914

0.62

Jack Stockdale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16,989

0.71

Nicole Eagan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56,590

2.36

Emily Orton

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,417

0.23

Note: The interests in Shares have been stated on a fully diluted basis (including options and growth shares).

As part of the preparation for Admission, the Company is implementing a transition plan for its full separation

from Invoke, with the plan expected to be materially complete on 6 April 2021. The plan involves separation of

shared office premises, the transfer of certain personal and other operational matters.

Historically, certain employees of the Group shared office premises with Invoke in London and Cambridge.

Following Admission, Darktrace will sublicence office space in its Cambridge and London offices to certain of

Invoke’s portfolio companies. Each of the sublicences has been negotiated on an arm’s length basis and on normal

commercial terms, and the areas occupied by each of Darktrace and Invoke are segregated, with separate and

secure entrances.

Until March 2021, two employees of Invoke supported the finance function of the Group in Cambridge. This

support was no longer needed following the hiring and onboarding of additional finance team members, whose

hiring was completed in January 2021. As at the date of the Registration Document, no employee of Invoke works

at, or provides consultation services to, any member of the Group.

In addition, the Group has historically supplied cyber security products to Invoke and its portfolio companies. The

Group expects to continue to supply cyber security products to Invoke and its portfolio companies on normal

commercial terms and on an arm’s length basis.

Shareholder agreements

Conditional upon Admission, each of the Invoke Shareholders (as detailed below), Summit Partners and KKR DA

intends to enter into separate shareholder agreements (each a “

Shareholders’ Agreement

”) with the Company.

Pursuant to the agreements, each of the Invoke Shareholders, Summit Partners and KKR DA will have the right

to nominate one non-executive director to the Board (each a “

Nominee Director

”) for so long as they and their

associates are entitled to exercise, or to control, directly or indirectly, 10% or more of the voting rights attaching

to the issued share capital of the Company.

The Invoke Shareholders, Summit Partners and KKR DA shall consult in advance with and require the approval

of the Nomination Committee regarding the identity of any director proposed to be nominated by each of them.

The Invoke Shareholders will collectively nominate the Invoke Nominee Director by voting in proportion to their

respective shareholding in the Company.

Vanessa Colomar (an Invoke employee) will be the first Invoke Nominee Director, Johannes Sikkens (a Summit

employee) will be the first Summit Nominee Director and Stephen Shanley (a KKR employee) will be the first

KKR DA Nominee Director by KKR DA.

The Invoke Shareholders comprise employees (and their respective spouses) of Invoke and its associated

companies, as follows:

Percentage

of issued

Number of

ordinary

Invoke Shareholders

share capital

(1)

––––––––––––––––––––––

––––––––––

Angela Bacares

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

321,577

13.42

Michael Lynch

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

123,047

5.13

Sushovan Hussain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

67,358

2.81

Peter Menell

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43,979

1.83

Vanessa Colomar

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28,620

1.19

Andrew Kanter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23,712

0.99

Philip Pearson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11,423

0.48

James Loxam

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,377

0.27

Charlotte Golunski

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,325

0.26

Elizabeth Harris

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,230

0.05

Others

(2)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,762

0.12

––––––––––

TOTAL

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

636,410

26.55

––––––––––

Notes:

(1)

The interests in Shares have been stated on a fully diluted basis (including options and growth shares).

(2)

The other shareholders include Maha Kadirkamanathan, Ruth Angus, Ella Mamelok, Adam Guthrie and Graham Sills.

Under the terms of their respective Shareholders’ Agreements, each of the Invoke Shareholders, Summit Partners

and KKR DA will undertake, for themselves and, so far as they are able to procure, on behalf of each of their

associates (as applicable): (a) that they shall take all steps as may be reasonably requested by the Company to

enable it to carry on an independent business as its main activity and otherwise to operate in full compliance at

all times with the provisions of the Listing Rules; and (b) not to unduly influence or seek to unduly influence the

day-to-day operation of the Group.

In the case of any Nominee Director, such undertaking shall be subject to such

director complying at all times with his or her legal and fiduciary duties.

Unless prohibited by law or regulation, each of the Nominee Directors for the Invoke Shareholders, Summit

Partners and KKR DA shall be entitled to disclose to the Invoke Shareholders, Summit Partners and KKR DA

respectively, any information provided to such Nominee Director by any member of the Group or which otherwise

comes into his or her possession through his or her role as Director (subject to the Nominee Director complying

with his or her duties as a director), provided that each of Invoke Shareholders, Summit Partners and KKR DA

and their respective associates (as applicable) keep all such information received as confidential information.

For so long as each Shareholders’ Agreement is in force, the election of any independent director to the Board

shall be approved by separate resolutions of the independent shareholders of the Company as well as by the

shareholders of the Company as a whole.

Further, each of the Invoke Shareholders, Summit Partners and KKR DA intend to agree that they shall not, and

shall procure, so far as they are able to, that their respective associates (as applicable) shall not:

take any action that would have the effect of preventing the Company and any other member of the Group

from carrying on its business independently of each of them and their respective associates and/or making

decisions for the benefit of the Company’s shareholders as a whole;

take any action that would have the effect of preventing the Company or any other member of the Group

from complying with its obligations under the Listing Rules, the Market Abuse Regulation, the Disclosure

Guidance and Transparency Rules or other applicable laws and regulations;

take any action that would have the effect of preventing the Company and the Board from managing their

affairs in accordance with the principles of good governance set out in the UK Corporate Governance Code

(save as disclosed in the Prospectus or any annual report);

propose or procure the proposal of a shareholder resolution which is intended or appears to be intended to

circumvent the proper application of the Listing Rules;

exercise any of their voting rights or other rights and powers in a way that would be inconsistent with, or

breach any of the provisions of, their respective shareholder agreement;

take any action that would have the effect of preventing the Company or any other member of the Group

from complying with applicable laws and regulations, including its obligations under the Disclosure

Guidance and Transparency Rules, the Market Abuse Regulation or other applicable laws and regulations;

conduct any transactions and arrangements with the Company or any other member of the Group, other

than at arm’s length and on normal commercial terms and in accordance with the related party rules set out

in Chapter 11 of the Listing Rules; and

take any action which they know (or should reasonably know) would prejudice either the Company’s status

as a listed company or its suitability for listing

Each of the Invoke Shareholders, Summit Partners and KKR DA will undertake to the Company that: (a) in the

event it wishes to purchase additional Shares in the Company, it will not discuss its intentions with any other

Shareholder in advance of such purchase; (b) it will not come together with any other Shareholder to act in

concert; and (c) it will not make an offer for the Company, without the consent of the Company. Nothing in this

provision shall prevent a Shareholder from: (a) accepting an offer for the Company’s Shares at any stage; or (b)

agreeing to accept any offer for the Shares either before or after such offer’s announcement.

Further, the Invoke Shareholders will confirm that no Invoke Shareholder will unduly influence any other Invoke

Shareholder to exercise their voting rights at any general meeting of the Company in any way. Nothing in this

confirmation shall prohibit an Invoke Shareholder from appointing a common proxy to exercise their voting

rights, provided that no Invoke Shareholder exercises their vote under any undue influence from another Invoke

Shareholder. The Invoke Shareholders will confirm that they will not unduly influence any other Invoke

Shareholder in respect of the decision of the Invoke Shareholders to nominate a Nominee Director for

appointment. The Invoke Shareholders will also confirm that, other than their Shareholder Agreement and the

Invoke Nominee Director appointment, there is no other agreement, whether formal or informal, between any or

all of the Invoke Shareholders in relation to the Company and the Invoke Shareholders undertake to not enter into

any such agreement (including an agreement to exercise their voting rights in a collective manner (ie ceding

voting rights to a majority of a group) with other Invoke Shareholder. However, nothing in the confirmation shall

prevent any Invoke Shareholder from discussing a shareholder resolution provided that no Invoke Shareholder

unduly influences any other Invoke Shareholder to exercise their voting rights on such shareholder resolution in

any way.

For so long as their respective Shareholders’ Agreements are in force, the Invoke Shareholders, Summit Partners

and KKR DA shall each, promptly following the request of the Company, confirm to the Company, in writing,

every six months from the date of the respective Shareholders’ Agreement, that it and its associates have complied

with their respective undertakings pursuant to their Shareholders’ Agreement. In the event of non-compliance, the

respective Shareholders shall provide a brief description of the background to and reasons for failing to comply

with the relevant undertaking or procurement obligation to enable the Company and other shareholders of the

Company to evaluate the impact of non-compliance on the Company. Further, the Company shall include in its

annual financial report a statement by the Directors whether the Shareholders and their associates have confirmed

their compliance with the Shareholders’ Agreements and, in the event of a non-compliance, a brief description of

the background to and reasons for failing to comply with the relevant undertaking or procurement obligation that

enables other shareholders of the Company to evaluate the impact of non-compliance on the Company.

The provisions of each Shareholders’ Agreement will remain in full force and effect in respect of the Invoke

Shareholders, Summit Partners or KKR DA for so long as the Invoke Shareholders, Summit Partners and KKR

DA (as applicable), together with their respective associates, continue to exercise, or to control, directly or

indirectly, 10% or more of the voting rights attaching to the issued share capital of the Company (save that the

each Shareholders’ Agreement will be terminated if the Company ceases to be admitted to the premium listing

segment of the Official List).

The Directors believe that the Group is able to carry on its business independently and to ensure that all

transactions and relationships between the Company and/or the members of the Group, on the one hand, and each

of the Invoke Shareholders, Summit Partners and KKR DA, respectively and/or their associates, on the other hand,

are, and will be, conducted at arm’s length and on normal commercial terms.

Part 7

SELECTED FINANCIAL INFORMATION

The selected financial information set out below has been extracted without material amendment from Sections B

and C of Part 8: “Historical Financial Information” of this Registration Document, where it is shown with

important notes describing some of the line items.

Consolidated statement of comprehensive income

For the 6 months ended

For the year ended

––––––––––––––––––––––––––

––––––––––––––––––––––––––––––––––––––––

31 Dec 2020

31 Dec 2019

30 June 2020

30 June 2019

30 June 2018

(unaudited)

––––––––––––

$’000

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .

126,514

91,076

199,076

137,017

79,415

Cost of sales . . . . . . . . . . . . . . . . . . . . . . .

(12,399)

(7,010)

(17,477)

(12,252)

(8,225)

––––––––––––

Gross profit

. . . . . . . . . . . . . . . . . . . . . . .

114,115

84,066

181,599

124,765

71,190

Sales and marketing costs . . . . . . . . . . . . .

(86,738)

(86,338)

(163,052)

(130,532)

(91,117)

Administrative expenses

Research and development costs

. . . . .

(10,657)

(5,574)

(12,030)

(9,715)

(7,512)

Other administrative expenses

. . . . . . .

(21,500)

(13,954)

(26,887)

(20,247)

(12,587)

Credit loss charge

. . . . . . . . . . . . . . . . .

(423)

(103)

(5,344)

(1,326)

(587)

Other operating income

. . . . . . . . . . . .

322

424

811

850

–

––––––––––––

Operating loss

. . . . . . . . . . . . . . . . . . . . .

(4,881)

(21,479)

(24,903)

(36,205)

(40,613)

Finance costs . . . . . . . . . . . . . . . . . . . . . . .

(43,044)

(1,164)

(2,405)

(2,224)

(1,262)

Finance income . . . . . . . . . . . . . . . . . . . . .

453

382

937

250

––––––––––––

Loss before taxation

. . . . . . . . . . . . . . . .

(47,866)

(22,190)

(26,926)

(37,492)

(41,625)

Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . .

(545)

(580)

(1,746)

2,800

(869)

––––––––––––

Net loss

. . . . . . . . . . . . . . . . . . . . . . . . . . .

(48,411)

(22,770)

(28,672)

(34,692)

(42,494)

––––––––––––

Other comprehensive (loss)/income

Items that are or may be reclassified

subsequently to profit or loss:

Foreign exchange difference arising on

presentational currency change . . . . . . .

–

(1,708)

1,315

––––––––––––

Total comprehensive loss

. . . . . . . . . . . .

(48,411)

(22,770)

(28,672)

(36,400)

(42,179)

––––––––––––

Earnings per share

. . . . . . . . . . . . . . . . .

Basic (loss)/earnings per share

. . . . . . .

$(24.69)

$(11.10)

$(13.49)

$(16.89)

$(19.32)

Diluted (loss)/earnings per share

. . . . . .

$(24.69)

$(11.10)

$(13.49)

$(16.89)

$(19.32)

All of the results for the periods presented are attributable to equity holders of Darktrace Holdings Limited.

Consolidated statement of financial position

31 Dec 2020

31 Dec 2019

30 June 2020

30 June 2019

30 June 2018

(unaudited)

––––––––––––

$’000

Non-current assets

Intangible assets . . . . . . . . . . . . . . . . . . . .

8,563

5,734

6,049

4,690

3,139

Property, plant and equipment

. . . . . . . . .

48,322

48,180

49,462

42,882

30,066

Right of use (“RoU”) assets . . . . . . . . . . .

32,530

25,150

31,411

27,353

15,205

Capitalised commission

. . . . . . . . . . . . . .

16,256

11,738

14,659

9,438

5,225

Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,154

5,286

4,895

5,040

3,726

––––––––––––

110,825

96,088

106,476

89,403

57,361

––––––––––––

Current assets

Trade and other receivables

. . . . . . . . . . .

69,005

52,261

60,363

39,867

38,097

Capitalised commission

. . . . . . . . . . . . . .

12,302

9,237

10,890

7,915

4,497

Tax receivable . . . . . . . . . . . . . . . . . . . . . .

1,292

1,221

1,267

4,845

–

Cash and cash equivalents

. . . . . . . . . . . .

103,912

46,568

53,944

64,443

29,178

––––––––––––

186,511

109,287

126,464

117,070

71,772

––––––––––––

Total assets

. . . . . . . . . . . . . . . . . . . . . . . .

297,336

205,375

232,940

206,473

129,133

––––––––––––

Current liabilities

Deferred revenue . . . . . . . . . . . . . . . . . . . .

(108,736)

(81,615)

(96,769)

(72,552)

(42,881)

Lease liabilities . . . . . . . . . . . . . . . . . . . . .

(5,233)

(5,347)

(4,903)

(4,438)

(2,197)

Tax payable . . . . . . . . . . . . . . . . . . . . . . . .

–

(508)

(257)

(378)

Trade and other payables

. . . . . . . . . . . . .

(59,797)

(45,030)

(50,482)

(37,635)

(25,516)

––––––––––––

Non-current liabilities

. . . . . . . . . . . . . . .

(173,766)

(131,992)

(152,662)

(114,882)

(70,972)

––––––––––––

Deferred revenue . . . . . . . . . . . . . . . . . . . .

(30,216)

(24,629)

(25,779)

(22,702)

(21,582)

Lease liabilities . . . . . . . . . . . . . . . . . . . . .

(33,478)

(24,457)

(30,643)

(26,857)

(14,995)

Convertible loan, host contract . . . . . . . . .

(98,577)

–

Convertible loan, embedded derivative

. .

(106,895)

–

––––––––––––

(269,166)

(49,086)

(56,422)

(49,559)

(36,577)

––––––––––––

Total liabilities

. . . . . . . . . . . . . . . . . . . . .

(442,932)

(181,078)

(209,084)

(164,441)

(107,549)

––––––––––––

Net (liabilities)/assets

. . . . . . . . . . . . . . .

(145,596)

24,297

23,856

42,032

21,584

––––––––––––

Equity

Share capital . . . . . . . . . . . . . . . . . . . . . . .

Share premium . . . . . . . . . . . . . . . . . . . . .

43,553

170,367

170,402

181,621

131,533

Capital contribution

. . . . . . . . . . . . . . . . .

–

Stock compensation reserve . . . . . . . . . . .

26,678

15,444

20,868

10,828

4,070

Foreign currency translation reserve

. . . .

(4,398)

(2,690)

Retained earnings . . . . . . . . . . . . . . . . . . .

(211,456)

(157,143)

(163,045)

(146,052)

(111,360)

––––––––––––

Total equity

. . . . . . . . . . . . . . . . . . . . . . .

(145,596)

24,297

23,856

42,032

21,584

––––––––––––

Consolidated statement of changes in equity

Foreign

currency

Share-based

translation

Capital

payments

Retained

capital

premium

reserve contribution

Reserve

earnings

Total equity

–––––––––

$’000

Balance at 30 June 2019

. . . . . . . . . . . . . . . . . . . . . . .

181,621

(4,398)

–

10,828

(146,052)

42,032

Effect of change in functional currency . . . . . . . . . . . .

(6)

(11,357)

–

(316)

11,679

–

–––––––––

Balance at 1 July 2019

. . . . . . . . . . . . . . . . . . . . . . . .

170,264

(4,398)

–

10,512

(134,373)

42,032

–––––––––

Net loss

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–

(22,770)

Other comprehensive (loss)/income . . . . . . . . . . . . . .

–

–––––––––

Total comprehensive loss

. . . . . . . . . . . . . . . . . . . . . .

–

(22,770)

Shares issued. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–

103

–

103

Credit to equity for share based compensation charge.

–

4,932

–

4,932

–––––––––

Transactions with shareholders

. . . . . . . . . . . . . . . .

–

103

–

4,932

–

5,035

–––––––––

Balance at 31 December 2019, unaudited

. . . . . . . .

170,367

(4,398)

–

15,444

(157,143)

24,297

–––––––––

Balance at 1 July 2020

. . . . . . . . . . . . . . . . . . . . . . . .

170,402

(4,398)

–

20,868

(163,045)

23,856

–––––––––

Total comprehensive loss:

. . . . . . . . . . . . . . . . . . . . .

–

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–

(48,411)

Other comprehensive (loss)/income . . . . . . . . . . . . . .

–

–––––––––

Total comprehensive loss

. . . . . . . . . . . . . . . . . . . . . .

–

(48,411)

Shares issued. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–

212

–

212

Share repurchase and cancellation . . . . . . . . . . . . . . . .

(2)

(127,061)

–

(127,063)

Credit to equity for share based compensation charge.

–

5,810

–

5,810

–––––––––

Transactions with shareholders

. . . . . . . . . . . . . . . . .

(2)

(126,849)

–

5,810

–

(121,041)

–––––––––

Balance at 31 December 2020

. . . . . . . . . . . . . . . . . .

43,553

(4,398)

–

26,678

(211,456)

(145,596)

–––––––––

Balance at 1 July 2017

. . . . . . . . . . . . . . . . . . . . . . . .

81,783

(4,005)

2,954

1,784

(71,820)

10,726

–––––––––

Total comprehensive loss:

Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–

(42,494)

Other comprehensive loss:

Foreign exchange difference arising on translation

to presentation currency . . . . . . . . . . . . . . . . . . . . . .

–

1,315

–

1,315

–––––––––

Total comprehensive loss

. . . . . . . . . . . . . . . . . . . . . .

–

1,315

–

(42,494)

(41,179)

Reserve’s transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–

(2,954)

–

2,954

–

Shares issued. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

49,750

–

49,751

Credit to equity for share based compensation charge.

–

2,286

–

2,286

–––––––––

Transactions with shareholders

. . . . . . . . . . . . . . . .

49,750

–

(2,954)

2,286

2,954

52,037

–––––––––

Balance at 30 June 2018

. . . . . . . . . . . . . . . . . . . . . . .

131,533

(2,690)

–

4,070

(111,360)

21,584

–––––––––

Total comprehensive loss:

Net Loss

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–

(34,692)

Other comprehensive loss:

Foreign exchange difference arising on translation

to presentation currency . . . . . . . . . . . . . . . . . . . . . .

–

(1,708)

–

(1,708)

–––––––––

Total comprehensive loss

. . . . . . . . . . . . . . . . . . . . . .

–

(1,708)

–

(34,692)

(36,400)

Shares issued. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

50,088

–

50,090

Credit to equity for share based compensation charge.

–

6,758

–

6,758

–––––––––

Transactions with shareholders

. . . . . . . . . . . . . . . .

50,088

–

6,758

–

56,848

–––––––––

Balance at 30 June 2019

. . . . . . . . . . . . . . . . . . . . . . .

181,621

(4,398)

–

10,828

(146,052)

42,032

–––––––––

Effect of change in functional currency . . . . . . . . . . . .

(6)

(11,357)

–

(316)

11,679

–

–––––––––

Balance at 1 July 2019

. . . . . . . . . . . . . . . . . . . . . . . .

170,264

(4,398)

–

10,512

(134,373)

42,032

–––––––––

Total comprehensive loss:

Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–

(28,672)

Other comprehensive loss . . . . . . . . . . . . . . . . . . . . . .

–

–––––––––

Total comprehensive loss

. . . . . . . . . . . . . . . . . . . . . .

–

(28,672)

Shares issued. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

138

–

140

Credit to equity for share based compensation charge.

–

10,356

–

10,356

–––––––––

Transactions with shareholders

. . . . . . . . . . . . . . . .

138

–

10,356

–

10,496

–––––––––

Balance at 30 June 2020

. . . . . . . . . . . . . . . . . . . . . . .

170,402

(4,398)

–

20,868

(163,045)

23,856

–––––––––

Consolidated statement of cash flows

For 6 months ended

For the year ended

––––––––––––––––––––––––––

––––––––––––––––––––––––––––––––––––––––

31 Dec 2020

31 Dec 2019

30 June 2020

30 June 2019

30 June 2018

(unaudited)

––––––––––––

$’000

Cash generated from operations

Loss for the period . . . . . . . . . . . . . . . . . .

(48,411)

(22,770)

(28,672)

(34,692)

(42,494)

Adjustments for:

Depreciation of property, plant and

equipment (“PPE”) and RoU asset . . . .

11,795

9,599

21,055

15,993

9,367

Amortisation of intangible assets . . . . . . .

949

276

1,429

890

875

Amortisation of capitalised commission . .

6,405

4,801

10,441

7,092

3,703

Impairment loss on PPE . . . . . . . . . . . . . .

–

Loss/(Profit) on disposal of PPE

. . . . . . .

244

376

681

Foreign exchange differences . . . . . . . . . .

(1,176)

152

(148)

(2,665)

572

Credit loss charge . . . . . . . . . . . . . . . . . . .

423

103

5,344

1,326

587

Share based compensation charge

. . . . . .

5,810

4,932

10,356

6,758

2,286

Finance costs . . . . . . . . . . . . . . . . . . . . . . .

1,382

1,164

2,405

2,224

1,262

Charge for convertible loan (host contract)

14,302

–

Charge for convertible loan

(embedded derivative) . . . . . . . . . . . . . .

27,360

–

Finance income . . . . . . . . . . . . . . . . . . . . .

(59)

(453)

(382)

(937)

(250)

Other operating income

. . . . . . . . . . . . . .

(322)

(424)

(811)

(850)

–

Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . .

545

580

1,746

(2,800)

869

––––––––––––

Operating cash flows before movements

in working capital

. . . . . . . . . . . . . . . .

19,337

(1,969)

23,139

(6,980)

(23,130)

––––––––––––

Increase in trade and other receivables . . .

(7,248)

(12,245)

(25,641)

(5,678)

(27,304)

Increase in capitalised commission

. . . . .

(9,414)

(8,850)

(19,064)

(14,915)

(9,224)

Increase in trade and other payables . . . . .

6,960

5,526

10,758

13,302

11,289

Increase in deferred revenue . . . . . . . . . . .

16,404

10,990

27,294

34,455

32,331

––––––––––––

Net cash flows from operating activities

before tax

. . . . . . . . . . . . . . . . . . . . . . .

26,039

(6,548)

16,486

20,184

(16,038)

––––––––––––

Tax received/(paid) . . . . . . . . . . . . . . . . . .

(756)

3,211

2,894

(1,429)

(647)

––––––––––––

Net cash flow from operating activities

25,283

(3,337)

19,380

18,755

(16,685)

––––––––––––

Cash flows from investing activities

Development costs capitalised . . . . . . . . .

(2,473)

(1,320)

(2,788)

(2,621)

(1,945)

Purchase of property, plant and equipment

(6,137)

(10,523)

(20,389)

(25,106)

(16,476)

Finance income . . . . . . . . . . . . . . . . . . . . .

453

382

937

250

––––––––––––

Net cash flow from investing activities

(8,551)

(11,390)

(22,795)

(26,790)

(18,171

)

––––––––––––

Financing activities

Proceeds from share issues . . . . . . . . . . . .

212

103

140

50,090

49,750

Repurchase of shares

. . . . . . . . . . . . . . . .

(127,063)

–

Proceeds from convertible loan/borrowings

162,821

–

Repayment to shareholder (net) . . . . . . . .

–

(1,411)

(3,788)

Repayment of lease liabilities . . . . . . . . . .

(2,642)

(2,085)

(4,519)

(2,947)

(1,288)

Payment of interest on lease liabilities . . .

(1,382)

(1,164)

(2,405)

(2,224)

(1,262)

––––––––––––

Net cash flow from financing activities

31,946

(3,146)

(6,784)

43,508

43,412

––––––––––––

Net increase/(decrease) in cash and cash

equivalents

. . . . . . . . . . . . . . . . . . . . . .

48,678

(17,873)

(10,199)

35,473

8,556

Cash and cash equivalents at the beginning

of period . . . . . . . . . . . . . . . . . . . . . . . .

53,944

64,443

29,178

19,623

Exchange difference on cash held (net) . .

1,290

(2)

(300)

(208)

999

––––––––––––

Cash and cash equivalents at the end of

period

. . . . . . . . . . . . . . . . . . . . . . . . . .

103,912

46,568

53,944

64,443

29,178

––––––––––––

Part 8

OPERATING AND FINANCIAL REVIEW

This Part 8: “Operating and Financial Review” should be read in conjunction with Part 2: “Presentation of

Financial and Other Information”, Part 4: “Industry Overview”; Part 5: “Business” and Part 9: “Historical

Financial Information”. Prospective investors should read the entire document and not just rely on the summary

set out below. The financial information considered in this Part 8: “Operating and Financial Review” is extracted

from the financial information set out in Part 9: “Historical Financial Information”. Figures at, or for the period

ended, 31 December 2019 are unaudited comparatives.

The following discussion of the Group’s results of operations and financial conditions contains forward-looking

statements. The Group’s actual results could differ materially from those that it discusses in these forward-looking

statements. Factors that could cause or contribute to such differences include those discussed below and

elsewhere in this Registration Document, particularly under Part 1: “Risk Factors” and Part 2: “Presentation of

Financial and Other Information”. In addition, certain industry issues also affect the Group’s results of

operations and are described in Part 4: “Industry Overview”.

COMPANY OVERVIEW