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CyberArk (CYBR) Q3 Loss Narrower Than Estimated, Revenues Beat

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CyberArk Software (CYBR - Free Report) reported better-than-anticipated third-quarter 2021 results. The leading Identity Security solution provider reported a non-GAAP loss of 6 cents, which was narrower than the Zacks Consensus Estimate of a loss of 8 cents per share. However, the figure compared unfavorably with the year-ago quarter’s non-GAAP earnings of 31 cents per share.

For the third quarter of 2021, the company reported revenues of $121.6 million, beating the consensus mark of $120.4 million. The top line witnessed a year-over-year surge of 14%. Markedly, 73.1% of quarterly revenues were recurring in nature, which jumped 41% year over year to $88.9 million.

Annual Recurring Revenues (ARR) increased 38% to $344 million. The maintenance portion, representing 60% of total ARR, increased 9% year over year to $206 million. Subscription portion, which accounted for 40% of the total ARR, soared 131% year over year to $139 million. This upside was primarily 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. Notably, subscription bookings made up 72% of the license bookings in the quarter, which was significantly higher than 45% in the year-ago quarter.

Additionally, in the third-quarter 2021, the company was named a Leader in “The Forrester Wave: Identity-as-a-Service (IDaaS) For Enterprise” report.

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 (29% of total revenues) were $35.3 million, up by 143% from the year-ago quarter.

Maintenance and professional services revenues (52% of total revenues) climbed 7% at $63.3 million from the year-ago quarter.

Perpetual license revenues (19% of total revenues) slumped 30.4% to $23 million at the close of this quarter.

The signing of new logos across all industries highlighted a steady increase in new business. The new business pipeline is encouraging. During the third quarter, CyberArk added over 230 new customers.

Operating Details

CyberArk’s non-GAAP gross profit increased 14.6% year over year to $102.5 million. Non-GAAP gross margin expanded 40 basis points (bps) to 84.3%.

Operating expenses escalated 33% year over year to $125.9 million. This was primarily due to 54.5%, 25.6% and 25% year-over-year increase in R&D, S&M and G&A expenses, respectively, from the year-earlier reported figures. S&M expenses comprised almost 55.3% of the total quarterly operating expenses.

The company’s non-GAAP operating income was $0.1 million at the end of the third-quarter 2021, reflecting a significant decline of 99% year over year. As a result, the non-GAAP operating margin contracted 1,220 bps to 0.1%.

Balance Sheet & Other Details

CyberArk ended the Jul-Sep quarter with cash and cash equivalents, marketable securities, and short-term deposits of $1.2 billion.

As of Sep 30, 2021, total deferred revenues were $280.9 million, up 23% year over year.

During the first nine months of 2021, the company generated operating and free cash flows of $54.3 million and $47.1 million, respectively.

Guidance

For the fourth quarter of 2021, CyberArk expects revenues between $140 million and $148 million.

It projects to post non-GAAP earnings per share in the range of 6 cents to 21 cents.

Non-GAAP operating income is estimated between $5.5 million and $11.5 million.

For full-year 2021, CyberArk raised revenue outlook to $491.6-$499.6 from $484-$496 million anticipated earlier. It narrowed non-GAAP earnings projection to 11-25 cents per share from the previous guidance range of 1-26 cents.

It now estimates non-GAAP operating income for full-year 2021 in the $13.1-$19.1 million band, up from the previous forecast of $7-$17 million.

Zacks Rank & Key Picks

CyberArk currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader computer and technology sector are Salesforce (CRM - Free Report) , which sports a Zacks Rank #1 (Strong Buy), while both Advanced Micro Devices (AMD - Free Report) and Adobe (ADBE - Free Report) carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rates for Salesforce, Advanced Micro Devices and Adobe are currently pegged at 16.8%, 46.2% and 19.1%, respectively.

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