CyberArk Software Ltd. (CYBR - Free Report) reported third-quarter 2018 non-GAAP earnings of 48 cents, which surpassed the Zacks Consensus Estimate of 27 cents and were way higher than the year-ago quarter’s figure of 7 cents.
CyberArk’s revenues were up 31% year over year to $85 million and came ahead of the Zacks Consensus Estimate of $79 million. The top line mainly benefited from better sales execution, customer acquisitions and add-on business from existing clients.
Increasing demand for privileged access security on the back of digital transformation and cloud migration strategies is a key growth driver. Management noted that the enhanced functionality of Version 10 of the company’s core privileged access security solutions coupled with its new simplified pricing model is helping it drive customer acquisition.
Buoyed by splendid third-quarter results, the company issued an encouraging view for the fourth quarter and raised the full-year guidance.
Segment wise, License revenues increased 29% year over year to $46.1 million. The company benefited from strong growth across geographies, channel contribution and mix for both add-on businesses and new customers.
Maintenance and Professional Services revenues jumped 33% year over year to $38.5 million. Professional services revenues were $6.7 million.
Geographically, the company witnessed revenue growth across every region. On a year-over-year basis, revenues from the Americas of $52.1 million increased 23% and contributed 62% of total revenues. Revenues in the Asia Pacific and Japan of $6.3 million were up 52% year over year, representing 7% of total revenues. EMEA revenues of $26.3 million recorded a 42% jump and accounted for 31% of total revenues.
CyberArk ended the quarter with 4,200 customers, adding around 200 new logos this quarter. On the year-to-date basis, management mentioned that new customer additions have grown by 37% from the first nine months of 2017. This compares to about 10% year-over-year growth the company witnessed in the first nine months of 2017 and 28% in the first nine months of 2016.
During the reported quarter, the company closed a number of deals, including a significant number of seven-figure new clients. Management mentioned that manufacturing, retail, insurance, telecommunications and professional services were the five verticals, which grew at least 50% this quarter.
Also, CyberArk won more than 40 U.S. federal deals from both new and existing customers in the quarter. The company is also gaining traction among government agencies in EMEA and APJ.
The company’s expertise in securing multiple public clouds, which include Google Cloud Platform and AWS is a tailwind.
During the quarter, the company signed more than 20 new retail customers and the vertical grew by more than 75% from the prior-year quarter.
Moreover, the company is gaining momentum among advisory firms like Deloitte, PWC, KPMG, among others. Notably, 20% of the company’s business in the quarter was driven by these firms.
CyberArk’s non-GAAP gross profit came in at $74.9 million, representing year-over-year growth of 34.4%. Gross margin expanded 200 basis points (bps) year over year to 88% driven by higher utilization of professional services team.
The company reported non-GAAP operating income of $21 million, compared with $10.7 million reported in the year-ago quarter. Non-GAAP operating margin expanded to 24.8% from 16.5% on the back of higher revenues, strong business model and disciplined investments.
Balance Sheet & Cash Flow
CyberArk exited the quarter with cash, cash equivalents, short-term deposits and marketable securities of approximately $410 million, up from $377.5 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 $44.6 million, compared with $33.1 million in the previous quarter.
For the current year, CyberArk now anticipates revenues in the band of $328.9–$330.4 million, representing 26% year-over-year growth, up from $320-$324 million predicted earlier.
Non-GAAP operating income is now projected to be between $78 million and $79.2 million, up from the previous projection of $64–$67 million. Non-GAAP earnings per share for 2018 are now expected to be in the $1.75–$1.77 band compared with the previous estimate of $1.43–$1.50.
For the fourth quarter, CyberArk estimates revenues in the range of $94.75-$96.25 million, representing 18-20% year-over-year growth. Non-GAAP operating income is predicted to be in the band of $27.3-$28.5 million. The company projects non-GAAP earnings in the 58-60 cents range.
Zacks Rank and Other Stocks to Consider
CyberArk currently sports a Zacks Rank #1 (Strong Buy).
A few other top-ranked stocks in the broader technology sector are Intel Corp. (INTC - Free Report) , Twitter, Inc. (TWTR - Free Report) and CACI International (CACI - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for Intel, Twitter and CACI International is projected to be 8.4%, 22.1% and 10%, respectively.
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