CyberArk Software Is Maintained at Outperform by RBC Capital

CyberArk Software CYBR reported third-quarter 2024 non-GAAP earnings of 94 cents per share, which surpassed the Zacks Consensus Estimate of 45 cents. The bottom-line figure also showed a robust year-over-year improvement of 123.8%.

The solid year-over-year bottom-line performance was primarily driven by higher revenues, better cost management and increased financial income, partially offset by a higher number of outstanding shares.

CyberArk’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 97.7%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

CyberArk’s third-quarter 2024 revenues of $240.1 million exceeded the consensus mark by 2.7%. The top line jumped 26% year over year, primarily driven by the company’s robust dominance in identity security and world-class execution levels at every step while delivering an integrated platform with all sorts of solutions across the workforce from IT to developers and machines.

Buoyed by strong quarterly performance, CyberArk raised guidance for 2024 and issued impressive guidance for the fourth quarter. Strong third-quarter results, along with an impressive outlook, are expected to pull up its shares. On a year-to-date basis, shares of CyberArk soared 33.1% compared with the Zacks Computers - IT Services industry’s return of 16.3%.

CyberArk’s Q3 Details

CyberArk’s strong top-line performance can be attributed to the immense year-over-year rise in its Subscription revenues, partially offset by Maintenance and Perpetual Licenses.

Segment-wise, Subscription revenues (73.1% of the total revenues) were $175.6 million, up 42.9% from the year-ago quarter. Our estimate for Subscription revenues was pegged at $166.2 million.

CyberArk Software Ltd. Price, Consensus and EPS Surprise

CyberArk Software Ltd. price-consensus-eps-surprise-chart | CyberArk Software Ltd. Quote

Maintenance and professional services revenues (25.7% of the total revenues) were $61.6 million, lower than the year-ago quarter’s $64.3 million. Our estimate for Maintenance and professional services revenues was pegged at $63.4 million.

Perpetual license revenues (1.2% of the total revenues) plunged to $2.9 million from $4.1 million in the year-ago quarter. The decline reflects the company’s continued efforts toward shifting the business model to subscription-based from a perpetual license. Our estimate for Perpetual license revenues was pegged at $3.7 million.

CyberArk’s non-GAAP gross profit increased 26.7% year over year to $200.3 million. Moreover, the non-GAAP gross margin expanded 70 basis points (bps) to 83.4%, primarily driven by robust revenue growth.

The non-GAAP operating income increased 109.5% year over year to $35.4 million, while the operating margin expanded 590 bps to 14.7%.

CyberArk’s Key Business Metrics

In the third quarter, Annual Recurring Revenues (ARR) were $926 million, up 31% year over year. The Subscription portion of ARR was $735 million, or 79% of total ARR as of Sept. 30, 2024, up 46% year over year.

The Maintenance portion of ARR was $191 million as of Sept. 30, 2024, compared with $200 million as of Sept. 30, 2023. Recurring revenues in the third quarter were $224.2 million, up 29% from the third quarter of 2023.

CYBR’s Balance Sheet & Cash Flow

CyberArk had cash and cash equivalents, marketable securities and short-term deposits of $1.5 billion as of Sept. 30, 2024, compared with $1.4 billion as of June 30, 2024.

Long-term debt was $646.3 million as of Sept. 30, slightly higher than $646.1 million as of June 30.

Cash flow from operations was $54.2 million, up from $44.3 million as of June 30, 2024. Free cash flow was $51.6 million compared with the previous quarter’s $41.7 million.

During the first nine months of 2024, CyberArk generated $167.2 million of cash from operational activities.

CyberArk Raises FY24 Guidance

CyberArk raised guidance for 2024. The company now expects 2024 revenues in the range of $983-$989 million, up from the previous guidance of $932-$948 million. The Zacks Consensus Estimate for revenues is pegged at $939.1 million, suggesting a year-over-year rise of 24.9%.

It now expects non-GAAP operating income between $135 million and $140 million, up from the earlier projection of $107.5-$116.5 million. The company now estimates its non-GAAP earnings in the range of $2.85-$2.96 per share, up from the previous forecast of $2.17-$2.36 per share. The Zacks Consensus Estimate for earnings is pegged at $2.30 per share, indicating a year-over-year rise of 105.4%.

ARR, as of Dec. 31, 2024, is expected to be in the range of $1.153-$1.163 billion, indicating an increase of 49-50% year over year. The company expects free cash flow between $203 million and $213 million.

CyberArk also initiated guidance for the fourth quarter. For the fourth quarter, it expects revenues to be in the band of $297-$303 million, suggesting year-over-year growth of 33-36%. The Zacks Consensus Estimate for revenues is pegged at $258.5 million, suggesting a year-over-year rise of 15.8%.

Non-GAAP operating income is expected to be in the range of $43.5-48.5 million. Non-GAAP earnings per share are anticipated between 65 cents and 75 cents. The Zacks Consensus Estimate for earnings is pegged at 54 cents per share, indicating a year-over-year decline of 33.3%.

Zacks Rank & Other Stocks to Consider

Currently, CYBR sports a Zacks Rank #1 (Strong Buy) at present.

Blackberry BB, Amphenol APH and Advantest ATEYY are some other top-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector.

BB, APH and ATEYY sport a Zacks Rank #1 each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

BB shares have plunged 31.1% year to date. It is set to report third-quarter fiscal 2025 results on Dec. 19, 2024.

APH shares have jumped 45.9% year to date. It is slated to release fourth-quarter 2024 results on Jan. 22, 2025.

ATEYY shares have surged 79.8% year to date. It is slated to report its third-quarter 2024 results on Jan. 29, 2025.

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