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CyberArk (CYBR) Q4 Earnings Beat Estimates, Revenues Miss
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CyberArk Software Ltd. (CYBR - Free Report) delivered better-than-expected earnings results for the fourth quarter of 2022. The company reported non-GAAP earnings of 16 cents per share for the fourth quarter, surpassing the Zacks Consensus Estimate of 13 cents.
However, the bottom line plunged 42.9% year over year. The decline was mainly due to increased costs and heightened expenses in sales & marketing as well as research & development, which more than offsets the benefits of higher revenues.
Top-Line Performance
For the fourth quarter of 2022, the leading Identity Security solution provider reported revenues, which increased 12% year over year to $169.2 million but fell short of the consensus mark of $174.1 million. Markedly, 84% of quarterly revenues were recurring in nature, which surged 39% year over year to $142.6 million.
CyberArk Software Ltd. Price, Consensus and EPS Surprise
Annual Recurring Revenues (“ARR”) increased 45% to $570 million. The subscription portion, which accounted for 64% of the total ARR, soared 99% year over year to $364 million. This upside was primarily driven by a record number of software-as-a-service solutions bookings and strong demand for on-premises subscription offerings. However, the maintenance portion, representing 36% of the total ARR, decreased to $206 million from $210 million on Dec 31, 2021.
CyberArk’s subscription transition has been witnessing strong momentum, with a rapidly growing base of recurring revenues. Subscription bookings made up 90% of the license bookings in the quarter, higher than 71% in the year-ago quarter.
Quarter Details
Segment-wise, Subscription revenues (52% of the total revenues) were $88.5 million, up 86% from the year-ago quarter.
Maintenance and professional services revenues (39% of the total revenues) marginally increased to $66.1 million from $65.1 million in the year-ago quarter.
Perpetual license revenues (9% of the total revenues) plunged 62.3% to $14 million. The decline reflects the company’s continued efforts toward shifting the business model to subscription-based from a perpetual license.
The signing of new logos across all industries highlighted a steady increase in new businesses. The new business pipeline is encouraging. In the fourth quarter, CyberArk added around 380 new customers.
Operating Details
CyberArk’s non-GAAP gross profit increased 7.7% year over year to $140.2 million. However, the non-GAAP gross margin contracted 300 basis points (bps) to 83% due to the significant increase in subscription revenues, with a continuous decline in perpetual license sales due to a shift in the business model.
Non-GAAP operating expenses escalated 19.6% year over year to $136.1 million. Higher operating expenses reflect the company’s aggressive sales and marketing initiatives and sustained investments in research and development to boost product offerings and capabilities.
The company’s non-GAAP operating income declined to $4.1 million from $16.3 million in the year-ago quarter. The non-GAAP operating margin contracted 840 bps to 2.4% due to a lower gross margin and increased expenses.
Balance Sheet
CyberArk ended the October-December 2022 quarter with cash and cash equivalents, marketable securities and short-term deposits of $1.2 billion. As of Dec 31, 2022, total deferred revenues were $408.4 million, up 29% year over year.
In the fourth quarter, CyberArk used operating cash flow worth $20.5 million and free cash flow worth $16.8 million. In 2022, the company generated $49.7 million in operating cash flow and $37.2 million in free cash flow.
Guidance
For the first quarter of 2023, CyberArk expects revenues between $160 million and $164 million. The non-GAAP operating loss is estimated between $12.5 million and $15.5 million. It projects to post a non-GAAP loss in the range of 23-30 cents per share.
For the full-year 2023, CyberArk expects revenues in the range of $724-$736 million. The company projects non-GAAP earnings in the band of 7-28 cents per share. The non-GAAP operating income/(loss) for the full-year 2023 is estimated between a loss of $5 million and an income of $5 million.
Zacks Rank & Stocks to Consider
Currently, CyberArk carries a Zacks Rank #3 (Hold). Shares of CYBR have declined 6.2% over the past year.
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CyberArk (CYBR) Q4 Earnings Beat Estimates, Revenues Miss
CyberArk Software Ltd. (CYBR - Free Report) delivered better-than-expected earnings results for the fourth quarter of 2022. The company reported non-GAAP earnings of 16 cents per share for the fourth quarter, surpassing the Zacks Consensus Estimate of 13 cents.
However, the bottom line plunged 42.9% year over year. The decline was mainly due to increased costs and heightened expenses in sales & marketing as well as research & development, which more than offsets the benefits of higher revenues.
Top-Line Performance
For the fourth quarter of 2022, the leading Identity Security solution provider reported revenues, which increased 12% year over year to $169.2 million but fell short of the consensus mark of $174.1 million. Markedly, 84% of quarterly revenues were recurring in nature, which surged 39% year over year to $142.6 million.
CyberArk Software Ltd. Price, Consensus and EPS Surprise
CyberArk Software Ltd. price-consensus-eps-surprise-chart | CyberArk Software Ltd. Quote
Annual Recurring Revenues (“ARR”) increased 45% to $570 million. The subscription portion, which accounted for 64% of the total ARR, soared 99% year over year to $364 million. This upside was primarily driven by a record number of software-as-a-service solutions bookings and strong demand for on-premises subscription offerings. However, the maintenance portion, representing 36% of the total ARR, decreased to $206 million from $210 million on Dec 31, 2021.
CyberArk’s subscription transition has been witnessing strong momentum, with a rapidly growing base of recurring revenues. Subscription bookings made up 90% of the license bookings in the quarter, higher than 71% in the year-ago quarter.
Quarter Details
Segment-wise, Subscription revenues (52% of the total revenues) were $88.5 million, up 86% from the year-ago quarter.
Maintenance and professional services revenues (39% of the total revenues) marginally increased to $66.1 million from $65.1 million in the year-ago quarter.
Perpetual license revenues (9% of the total revenues) plunged 62.3% to $14 million. The decline reflects the company’s continued efforts toward shifting the business model to subscription-based from a perpetual license.
The signing of new logos across all industries highlighted a steady increase in new businesses. The new business pipeline is encouraging. In the fourth quarter, CyberArk added around 380 new customers.
Operating Details
CyberArk’s non-GAAP gross profit increased 7.7% year over year to $140.2 million. However, the non-GAAP gross margin contracted 300 basis points (bps) to 83% due to the significant increase in subscription revenues, with a continuous decline in perpetual license sales due to a shift in the business model.
Non-GAAP operating expenses escalated 19.6% year over year to $136.1 million. Higher operating expenses reflect the company’s aggressive sales and marketing initiatives and sustained investments in research and development to boost product offerings and capabilities.
The company’s non-GAAP operating income declined to $4.1 million from $16.3 million in the year-ago quarter. The non-GAAP operating margin contracted 840 bps to 2.4% due to a lower gross margin and increased expenses.
Balance Sheet
CyberArk ended the October-December 2022 quarter with cash and cash equivalents, marketable securities and short-term deposits of $1.2 billion. As of Dec 31, 2022, total deferred revenues were $408.4 million, up 29% year over year.
In the fourth quarter, CyberArk used operating cash flow worth $20.5 million and free cash flow worth $16.8 million. In 2022, the company generated $49.7 million in operating cash flow and $37.2 million in free cash flow.
Guidance
For the first quarter of 2023, CyberArk expects revenues between $160 million and $164 million. The non-GAAP operating loss is estimated between $12.5 million and $15.5 million. It projects to post a non-GAAP loss in the range of 23-30 cents per share.
For the full-year 2023, CyberArk expects revenues in the range of $724-$736 million. The company projects non-GAAP earnings in the band of 7-28 cents per share. The non-GAAP operating income/(loss) for the full-year 2023 is estimated between a loss of $5 million and an income of $5 million.
Zacks Rank & Stocks to Consider
Currently, CyberArk carries a Zacks Rank #3 (Hold). Shares of CYBR have declined 6.2% over the past year.
Some better-ranked stocks from the broader technology sector are Clarivate Plc (CLVT - Free Report) , CDW Corporation (CDW - Free Report) and ServiceNow (NOW - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Clarivate’s first-quarter 2023 earnings has been revised upward by a penny to 17 cents per share over the past 60 days. For 2023, earnings estimates have been revised a penny northward to 81 cents per share in the past 60 days.
Clarivate's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 9.4%. Shares of CLVT have fallen 31.9% in the trailing 12 months.
The Zacks Consensus Estimate for CDW's first-quarter 2023 earnings has been revised upward to $2.35 per share from $2.31 60 days ago. For 2023, earnings estimates have remained unchanged at $10.39 per share in the past 60 days.
CDW’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 4.7%. Shares of the company have increased 13.8% over the past year.
The Zacks Consensus Estimate for ServiceNow's first-quarter 2023 earnings has been revised southward by 4 cents to $2.01 per share over the past 30 days. For 2023, earnings estimates have moved upward by 18 cents to $9.17 per share in the past 30 days.
ServiceNow's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6.9%. Shares of NOW have plunged 20.6% in the trailing 12 months.