Darktrace’s Strategic Pivot: From Undervalued UK Tech to Global Cybersecurity Powerhouse

The recent developments at Darktrace, under the stewardship of CEO Jill Popelka, mark more than just a corporate turnaround — they serve as a cautionary tale about the UK’s capital market environment and a strategic case study in unlocking operational value post-privatisation.

Operational Transformation under Popelka

Following its £4.3bn acquisition by US private equity giant Thoma Bravo in 2024, Darktrace has undergone a meaningful transition. Popelka’s move from COO to CEO was catalysed by the departure of Poppy Gustafsson to the public sector — but her mandate was already clear: instil operational rigour and transition Darktrace from a founder-led innovation machine to a scalable, partner-led cybersecurity platform.

She is pursuing this through several levers:

• Optimising partner sales: Shifting toward an 80–90% channel sales model aligns with industry best practices (e.g. Palo Alto Networks, CrowdStrike).

• Churn reduction: A focus on renewals and customer success reflects a maturing SaaS-like approach.

• Leadership overhaul: Commercial and systems-focused hires reflect a PE-backed scaling mindset.

Solid Financial Performance Pre-Takeover

Darktrace’s fundamentals had been improving before going private:

• FY2024 revenue hit $690mn, a 26.4% YoY increase.

• ARR reached $782.2mn, up 22.7% YoY.

• Pre-tax profit of ~$70mn signals healthy margins in a notoriously cash-burning sector.

Yet, public investors remained sceptical — held back by legacy concerns (notably ties to Mike Lynch and Autonomy) and a perceived lack of governance maturity, despite an independent review clearing past allegations.

Strategic Expansion through M&A

The 2025 announced acquisition of Cado Security, a UK-based cloud forensics firm, signals Darktrace’s move up the value chain. This acquisition strengthens its ActiveAI platform, enhancing its incident response in multi-cloud environments — a smart move as hybrid cloud threats dominate the CISOs’ agenda.

Thoma Bravo’s playbook here is clear: consolidate adjacent tech capabilities, improve operational scalability, and relist at a premium — likely in the US, where cybersecurity multiples are richer and investor appetite more aggressive.

MY OUTLOOK: UK Valuation Discount is Real — and Dangerous

Darktrace’s delisting highlights a persistent issue: UK public markets undervalue high-growth tech companies relative to the US. Whether due to a culture averse to risk, a less tech-savvy institutional base, or structural issues like index concentration in financials and energy, the net result is clear: IP-rich, scalable UK tech firms are exiting the LSE in favour of private capital or overseas listings.

The FCA’s recent reforms to listing rules may help, but until the UK fosters a deeper growth-equity ecosystem and embraces a more long-term view of tech valuation, it risks a continued exodus of companies like Darktrace, ARM, and others.

I expect Darktrace to pursue further M&A, targeting cloud-native or threat intelligence players in North America. Operationally, expect margin expansion as its partner model matures and cost discipline sets in.

With improving sentiment around cybersecurity spend amid global geopolitical instability, Darktrace is well-positioned. If the strategy executes to plan, a 2026–2027 US IPO at a tech-friendly multiple (20–25x EBITDA) could easily yield a >2x return on Thoma Bravo’s investment.

In Summary: Popelka is proving that operational discipline and narrative control can transform market perception. Yet, for UK markets, the lesson is sobering: unless systemic issues are tackled, they will continue to haemorrhage the very companies needed to fuel long-term growth and global relevance.