Shares of CyberArk Software Ltd (CYBR - Free Report) went up more than 6% yesterday, after the company reported better-than-expected third-quarter 2016 results.
The company reported adjusted earnings per share (excluding amortization of intangible assets and other one-time items buts including stock-based compensation) on a proportionate tax basis of 22 cents per share, which came ahead of the Zacks Consensus Estimate of 18 cents per share. Adjusted earnings however were flat year over year.
CyberArk’s revenues grew 37.2% year over year to $54.9 million and surpassed the Zacks Consensus Estimate of $52 million. The company’s revenues increased on a year-over-year basis, primarily due to better-than-expected demand for its privileged account security platform.
Revenues were also boosted by a 34% increase in License revenues, which came in at $33.3 million and accounted for 60% of total revenue. Also, a 42% year-over-year increase in Maintenance and Professional Services revenues (40% of total revenues) positively impacted the quarterly results.
Geographically, on a year-over-year basis, revenues from the Americas increased 39% and contributed 66% of total revenue. EMEA also increased 38% and accounted for 27% of total revenue. Asia-Pacific increased 22% year over year, representing 7% of total revenue.
CyberArk’s adjusted gross margin (excluding amortization of intangible assets and other one-time items buts including stock-based compensation) contracted 20 basis points (bps) on a year-over-year basis to 86%, primarily due to higher cost of sales.
The company’s adjusted operating margin (excluding amortization of intangible assets and other one-time items but including stock-based compensation) decreased 570 bps from the year-ago quarter to 16.8%, primarily due to higher adjusted operating expenses as a percentage of revenues. Adjusted operating expenses, as a percentage of revenues, increased 550 bps on a year-over-year basis.
The company’s adjusted net income (excluding amortization of intangible assets and other one-time items buts including stock-based compensation) came in at $7.7 million, which improved from $7.4 million reported in the year-ago quarter. On a GAAP basis, net income came in at $7.1 million compared with $6.8 million reported in the year-ago period.
CyberArk exited the quarter with cash, cash equivalents, short-term deposits and marketable securities of approximately $238.2 million compared with $236.7 million reported in the year-ago quarter. Receivables were $20.4 million at the end of the quarter.
CyberArk’s balance sheet does not have any long-term debt. The company reported cash flow from operations of $40.3 million during the nine months ended Sep 30, 2016.
For the fourth quarter of fiscal 2016, CyberArk expects revenues in the range of $62 million to $63 million, representing 20% to 22% year-over-year growth. The Zacks Consensus Estimate is pegged at $63 million. Non-GAAP operating income is expected to be in the range of $14.7 million to $15.5 million. The company expects non-GAAP earnings for the fourth quarter of fiscal 2016 in the range of 31 cents to 33 cents. The Zacks Consensus Estimate is pegged at 23 cents.
CyberArk raised its full-year 2016 guidance. The company now expects revenues in the range of $214.3 million to $215.3 million (previous guidance $210.5 million to $212.5 million), representing 33% to 34% year-over-year growth. The Zacks Consensus Estimate is pegged at $212 million. Non-GAAP operating income is expected to be in the range of $53.3 million to $54.1 million (previously $48.4 million to $50 million). The company now expects non-GAAP earnings for fiscal 2016 in the range of $1.16 per share to $1.18 per share (previous guidance $1.03 per share to $1.07 per share). The Zacks Consensus Estimate is pegged at 78 cents.
CYBER-ARK SFTWR Price, Consensus and EPS Surprise
CyberArk is an Israeli company that specializes in protecting accounts from cyber-attacks. The company offers several products that protect passwords, close loopholes in the security system, and secure cloud-based assets.
The company reported better-than-expected third-quarter 2016 results. Also, revenues increased from the year-ago quarter, primarily due to higher license growth. Moreover the company provided an encouraging fourth quarter guidance and raised its fiscal 2016 guidance.
According to research firm, Markets and Markets, the cyber security market is expected to touch $170.21 billion by 2020 from $106.32 billion in 2015, growing at an annual rate of 9.8%. We believe that CyberArk Software is in a favorable position to tap the opportunities.
Furthermore, investments in product suite and go-to-market are the other positives for the company.
It is worth mentioning that demand for cyber security is on the rise. With the advancement in technology, more organizations are adopting a bring-your-own-device policy, which has enhanced employee productivity with anytime, anywhere access. This indicates continued positive growth for CyberArk, going forward.
However, competition from International Business Machines Corporation (IBM - Free Report) , Microsoft Corporation (MSFT - Free Report) and Oracle Corporation (ORCL - Free Report) remains a concern.
Currently, CyberArk has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
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