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Why Is CyberArk Software (CYBR) Up 5.3% Since Its Last Earnings Report?

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A month has gone by since the last earnings report for CyberArk Software Ltd. (CYBR - Free Report) . Shares have added about 5.3% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is CYBR due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

CyberArk Q4 Earnings and Revenues Beat

CyberArk reported splendid results for fourth-quarter 2017, wherein it exceeded its guidance at every point and surpassed the respective Zacks Consensus Estimate as well.

Revenues

CyberArk’s revenues were up 24.9% year over year to $80.4 million and came ahead of management’s guided range of $75-$76 million (mid-point $75.5 million), as well as the Zacks Consensus Estimate of $75.6 million. The company’s top line mainly benefited from better sales execution, new customer acquisitions and add-on business from existing clients.

During the reported quarter, the company closed a number of deals, including a significant number of seven-figure new clients. Also, CyberArk witnessed a remarkable number of federal deals in the fourth quarter. The company added more than 200 customers and ended the quarter with more than 3,650 clients.

Furthermore, the company reported data for the number of deals of different sizes it won in 2017. The number of deals worth more than $100,000 increased 27% to 659 from 519 in 2016. It also won 92 contracts worth more than $500,000, which also include a record number of million dollar deals.

Segment wise, License revenues which accounted for 60% of total revenues, increased 19% year over year to $48.6 million. Maintenance and Professional Services revenues, contributing 40% to total revenues, surged 35% year over year to $31.8 million.

Geographically, the company witnessed revenue growth across every region. On a year-over-year basis, revenues from the Americas increased 18% and contributed 54% of total revenues. Revenues in the Asia Pacific and Japan were up 2% year over year, representing 5% of total revenues. EMEA recorded a 41% jump and accounted for 41% of total revenues.

Operating Results

CyberArk’s non-GAAP gross profit came in at $70.6 million, representing year-over-year growth of 25.1%. Gross margin remained flat year over year 88% in the fourth quarter.

The company reported non-GAAP operating income of $19.7 million, up marginally from $19.4 million reported in the year-ago quarter. Operating income also came way higher than the company’s guidance range of $16.8-$17.6 million.

Non-GAAP operating margin dipped to 24.5% from 30.2%, primarily due to elevated operating expenses as a percentage of revenues. Escalated operating expenses mainly stemmed from increased investment toward enhancing product offerings and expanding sales capabilities.

The company reported non-GAAP net income of approximately $15 million, slightly up from $14.7 million reported in the year-ago quarter. However, net income margin came in at 18.7% compared with 22.8% reported in fourth-quarter 2016.

On per-share basis, the company reported non-GAAP earnings of 41 cents, flat with the year-ago quarter. Benefits from higher revenues were completely offset by increased operating expenses.

However, quarterly earnings came ahead of management’s guidance range of 35-36 cents and surpassed the Zacks Consensus Estimate of 36 cents as well.

Balance Sheet & Cash Flow

CyberArk exited the fourth quarter with cash, cash equivalents, short-term deposits and marketable securities of approximately $284 million, down from $297 million at the end of third-quarter 2017. Receivables were $33.3 million at the end of the reported quarter.

CyberArk’s balance sheet does not have any long-term debt. The company generated cash flow from operations of approximately $80.7 million in 2017.

Guidance

Buoyed by splendid fourth-quarter results, the company issued encouraging outlook for the first quarter and full-year 2018.

For the current year, CyberArk anticipates revenues in the band of $312-$316 million (mid-point $314 million), representing 19-21% year-over-year growth.

Non-GAAP operating income is projected to lie between $54.5 million and $57.5 million. Non-GAAP earnings for 2018 are expected to be between $1.18 and $1.24 per share.

For the first quarter, CyberArk estimates revenues in the range of $68.25-$69.75 million (mid-point $69 million), representing 16-18% year-over-year growth. Non-GAAP operating income is predicted to lie in the band of $9.2-$10.4 million. The company projects non-GAAP earnings for the first quarter in the 19-22 cents range.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months. In the past month, the consensus estimate has shifted by 65.9% due to these changes.

CyberArk Software Ltd. Price and Consensus

VGM Scores

At this time, CYBR has a great Growth Score of A, though it is lagging a lot on the momentum front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth based on our styles scores.

Outlook

CYBR has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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