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CyberArk (CYBR) Q2 Earnings and Revenues Surpass Estimates

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CyberArk Software Ltd. (CYBR - Free Report) reported second-quarter 2018 non-GAAP earnings of 36 cents, which rose 71.4% from the year-ago quarter and surpassed the Zacks Consensus Estimate of 24 cents as well.

CyberArk’s revenues were up 35.2% year over year to $77.7 million and came ahead of the Zacks Consensus Estimate of $73 million. The top line mainly benefited from better sales execution, customer acquisitions and add-on business from existing clients.

Quarter Details

Segment wise, License revenues, which accounted for 53% of total revenues, increased 35.6% year over year to $41.1 million. High level of customer satisfaction and growing adoption of its solutions are helping it win deals in new as well as add-on business. Notably, add-on business accounted for 55% of license revenues in the quarter.

The company is gaining momentum among advisory firms like Deloitte, PWC, KPMG and Accenture. Management mentions that new and add-on business impacted by advisory firms grew more than 50% from the year-ago quarter.

Maintenance and Professional Services revenues, contributing 47% to total revenues, jumped 34.7% year over year to $36.6 million. Professional services revenues were $6.8 million, contributing 9% of total revenues, driven by better efficiency from services group and improvement in services from EMEA.

Geographically, the company witnessed revenue growth across every region. On a year-over-year basis, revenues from the Americas increased 24% and contributed 62% of total revenues. Revenues in the Asia Pacific and Japan were up 54% year over year, representing 9% of total revenues. EMEA recorded a 62% jump and accounted for 29% of total revenues.

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 quarter. Global government vertical, which represents 15% of the company’s business, more than doubled from the year-ago quarter.

Management mentioned that banking, education, energy, insurance, IT services and software and telecommunications sectors grew by at least 50% this quarter.

CyberArk Software Ltd. Price, Consensus and EPS Surprise

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

Operating Results

CyberArk’s non-GAAP gross profit came in at $68.2 million, representing year-over-year growth of 39.3%. Gross margin expanded 260 basis points (bps) year over year to 87.8% driven by higher utilization of professional services team and fall in third-party subcontractor’s use.  

The company reported non-GAAP operating income of $17 million, compared with $8.8 million reported in the year-ago quarter. Non-GAAP operating margin expanded to 21.9% from 15.3%.

Balance Sheet & Cash Flow

CyberArk exited the quarter with cash, cash equivalents, short-term deposits and marketable securities of approximately $377.5 million, up from $325.4 million at the end of previous quarter.

CyberArk’s balance sheet does not have any long-term debt. The company generated cash flow from operations of approximately $33.1 million in the first quarter.

Guidance

Buoyed by splendid second-quarter results, the company issued an encouraging outlook for the third quarter and raised the full-year guidance.

For the current year, CyberArk now anticipates revenues in the band of $320–$324 million, representing 22-24% year-over-year growth, up from $315-$319 million predicted earlier.

Non-GAAP operating income is now projected to lie between $64 million and $67 million, up from the previous projection of $57.5–$60.5 million. Non-GAAP earnings per share for 2018 are now expected to lie in the $1.43–$1.50 band, against the previous estimate of $1.31–$1.37.

For the third quarter, CyberArk estimates revenues in the range of $77.75-$79.25 million, representing 20-22% year-over-year growth. Non-GAAP operating income is predicted to lie in the band of $11.4-$12.6 million. The company projects non-GAAP earnings for the third quarter in the 25-28 cents range.

The company expects operating expenses to increase in the quarter due to seasonal employee expenses, marketing programs, and the company’s new defense customer series.

Zacks Rank & Key Picks

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

A few better-ranked stocks in the broader technology sector are Zillow Group (ZG - Free Report) , Science Applications (SAIC - Free Report) and Verint Systems (VRNT - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Zillow, Science Applications and Verint is projected to be 5%, 5% and 10%, respectively.

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