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CyberArk (CYBR) Q2 Earnings Miss, Revenues Beat Estimates

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CyberArk (CYBR - Free Report) reported mixed second-quarter 2021 results, wherein the top line surpassed the Zacks Consensus Estimate but the bottom line lagged the same. The leading Identity Security solution provider reported non-GAAP earnings of a penny, missing the Zacks Consensus Estimate of 3 cents per share. The figure declined 97.6% from the year-ago quarter’s earnings of 42 cents per share.

For the second quarter of 2021, the company reported revenues of $117.2 million, beating the consensus mark of $116.3 million. The top line witnessed year-over-year surge of 10%. Markedly, 68.8% of quarterly revenues were recurring in nature, which jumped 32.6% year over year to $80.6 million.

Annual Recurring Revenues (ARR) increased 35% to $315 million. The maintenance portion, representing 65% of total ARR, increased 10.9% year over year to $205.7 million. Subscription portion, which accounted for 35% of the total ARR, soared 128% year over year to $109.5 million. This upside was mainly driven by a record number of SaaS solutions bookings and strong demand for on-premises subscription offerings.

CyberArk’s subscription transition is witnessing strong momentum, with a rapidly growing base of recurring revenues.

SaaS and subscription bookings created additional headwinds of about $13 million for the second quarter. However, strong demand for the company’s solutions more than offset this and drove top-line growth.

CyberArk Software Ltd. Price, Consensus and EPS Surprise CyberArk Software Ltd. Price, Consensus and EPS Surprise

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

Quarterly Details

Segment-wise, subscription revenues (23.1% of total revenues) were $27.1 million, up by 101% percent from the year-ago quarter.

Maintenance and professional services revenues (53.6% of total revenues) climbed 10% at $62.9 million from the year-ago quarter.

Perpetual license revenues (23.3% of total revenues) slumped 23.5% to $27.3 million at the close of this quarter.

Solid demand across PAM including on-premise and cloud, Endpoint Privilege Manager and Application Access Manager was a major growth driver.

Growth in existing customers to an all-time high was also a tailwind. A steady increase in new business was reflected in the signing of new logos across all industries. The new business pipeline is encouraging. During the second quarter, CyberArk added 185 new customers.

Operating Details

The Identity Security pioneer saw an 8% year-over-year increase in its quarterly non-GAAP gross profit, which totaled $97.9 million. Non-GAAP gross margin contracted 170 basis points (bps) to 83.5%.

Operating expenses hiked 29% year over year to $117.4 million. This was primarily due to a 47% year-over-year growth in R&D expenses together with year-over-year increases of 25.7% and 13.9% in S&M and G&A expenses, respectively, from year-earlier reported figures. S&A expenses comprised almost 56% of the total quarterly operating expenses.

The company’s non-GAAP operating income was $2.0 million for the end of second-quarter 2021, reflecting a significant decline of 88.2% year over year. As a result, the non-GAAP operating margin shrunk 142 bps to 1.7%. The decline was primarily due to a $30 million headwind, and high expenses related to foreign exchange rates and a full quarter of expenses from Idaptive.

Balance Sheet & Other Details

CyberArk ended the Apr-Jun quarter with cash and cash equivalents, marketable securities, and short-term deposits of $1.2 billion. As of Jun 30, 2021, total deferred revenues were $275 million, up 22% year over year.
During the first half of 2021, the company generated operating and free cash flows of $49.5 million and $45.2 million, respectively.

Guidance

For the third quarter of 2021, CyberArk expects revenues between $116.0 million and $124.0 million.

It projects to post a non-GAAP loss per share in the range of 2 cents to 19 cents.

Non-GAAP operating income is estimated in the range of a loss of $6.0 million to an income of $1.0 million.

For full-year 2021, CyberArk expects revenues to be $484-$496 million, while non-GAAP earnings are projected between a penny and 26 cents per share.

It estimates non-GAAP operating income for full-year 2021 in the $7.0-$17.0 million band.

Zacks Rank and Key Picks

CyberArk currently carries Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include the following.

On Semiconductors Corporation (ON - Free Report) has a Zacks Rank #1 (Strong Buy) and a long-term earnings growth rate of 52.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Paycom Software, Inc. (PAYC - Free Report) has Zacks Rank #1 and a long-term earnings growth rate of 25%.

Advanced Micro Devices, Inc. (AMD - Free Report) has Zacks Rank #2 (Buy) and a long-term earnings growth rate of 44.6%.

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