A month has gone by since the last earnings report for CyberArk (CYBR Quick QuoteCYBR - Free Report) . Shares have added about 6.7% in that time frame, outperforming the S&P 500.

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

CyberArk Crushes Q3 Earnings & Revenue Estimates

CyberArk reported better-than-expected third-quarter 2024 results. The leading identity security solution provider’s quarterly results also exceeded management’s expectations across all guided metrics and marked significant year-over-year improvement as well.

CyberArk reported non-GAAP earnings of 94 cents per share and outpaced the Zacks Consensus Estimate of 45 cents. CyberArk’s third-quarter non-GAAP earnings also came well ahead of its previously provided guidance range of 38-49 cents per share.

Moreover, the bottom line also marked a robust improvement from the year-ago quarter’s earnings of 42 cents per share. The solid year-over-year earnings performance was primarily driven by higher revenues, better cost management and increased financial income, partially offset by a higher number of outstanding shares.

Top-Line Performance

In the third quarter of 2024, the Identity Security solution provider’s reported revenues increased 26% year over year to $240.1 million and surpassed the consensus mark of $234 million. Markedly, more than 92% of quarterly revenues were recurring in nature, which surged approximately 29% year over year to $224.2 million.

Annual Recurring Revenues (“ARR”) increased 31% to $926 million. The subscription portion, which accounted for 79% of the total ARR, soared 46% year over year to $735 million. This upside was primarily driven by a record number of software-as-a-service solution bookings and the strong demand for on-premise subscription offerings. The Maintenance portion of ARR was $191 million as of Sept. 30, 2024, compared with $200 million as of Sept. 30, 2023.

Quarterly Details

Segment-wise, Subscription revenues (73.1% of the total revenues) were $175.6 million, up 42.9% from the year-ago quarter. Our estimate for Subscription revenues was pegged at $166.2 million.

Maintenance and professional services revenues (25.7% of the total revenues) were $61.6 million, lower than the year-ago quarter’s $64.3 million. Our estimate for Maintenance and professional services revenues was pegged at $63.4 million.

Perpetual license revenues (1.2% of the total revenues) plunged to $2.9 million from $4.1 million in the year-ago quarter. The decline reflects the company’s continued efforts toward shifting the business model to subscription-based from a perpetual license. Our estimate for Perpetual license revenues was pegged at $3.7 million.

Operating Details

CyberArk’s non-GAAP gross profit increased 26.7% year over year to $200.3 million. Moreover, the non-GAAP gross margin expanded 70 basis points (bps) to 83.4%, primarily driven by robust revenue growth.

The non-GAAP operating income increased 109.5% year over year to $35.4 million, while the operating margin expanded 590 bps to 14.7%. The robust increase in operating income was primarily driven by revenue growth outperformance, improved gross margin and the benefits of inherent operating leverage of the company’s business model.

Balance Sheet

CyberArk had cash and cash equivalents, marketable securities and short-term deposits of $1.5 billion as of Sept. 30, 2024, compared with $1.4 billion as of June 30, 2024. Long-term debt was $646.3 million as of Sept. 30, slightly higher than $646.1 million as of June 30.

During the third quarter, cash flow from operations was $54.2 million, up from $44.3 million as of June 30, 2024. Free cash flow was $51.6 million compared with the previous quarter’s $41.7 million. During the first nine months of 2024, CyberArk generated $167.2 million of cash from operational activities.

CYBR Raises FY24 Guidance

Buoyed by the stronger-than-expected third-quarter performance, CyberArk raises guidance for full-year 2024. The company now expects 2024 revenues in the range of $983-$989 million, up from the previous guidance range of $932-$948 million.

It now projects to post non-GAAP operating income between $135 and $140 million instead of the earlier assumption of $107.5-$116.5 million. The company now estimates its non-GAAP earnings in the range of $2.85-$2.96 per share, up from the previous forecast of $2.17-$2.36 per share

Additionally, CyberArk initiated guidance for the fourth quarter. For the fourth quarter, it expects revenues to be in the band of $297-$303 million, suggesting year-over-year growth of 33-36%. Non-GAAP operating income is expected to be in the range of $43.5-48.5 million. Non-GAAP earnings per share are anticipated between 65 cents and 75 cents.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

The consensus estimate has shifted 40.98% due to these changes.

VGM Scores

Currently, CyberArk has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, CyberArk has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

CyberArk is part of the Zacks Computers - IT Services industry. Over the past month, Dynatrace (DT Quick QuoteDT - Free Report) , a stock from the same industry, has gained 4.7%. The company reported its results for the quarter ended September 2024 more than a month ago.

Dynatrace reported revenues of $418.13 million in the last reported quarter, representing a year-over-year change of +18.9%. EPS of $0.37 for the same period compares with $0.31 a year ago.

Dynatrace is expected to post earnings of $0.33 per share for the current quarter, representing a year-over-year change of +3.1%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

Dynatrace has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.