CyberArk Software Ltd. (CYBR - Free Report) reported healthy first-quarter 2019 results wherein both the top and bottom lines beat estimates.
Non-GAAP earnings per share of 56 cents surpassed the Zacks Consensus Estimate of 41 cents. The bottom line came in way higher than the year-ago quarter figure of 32 cents.
CyberArk’s revenues jumped 34% year over year to $95.9 million, and beat the consensus estimate of $92 million. Strong revenue growth across the Americas, EMEA and APJ drove the top line.
Increasing demand for privileged access security on the back of digital transformation and cloud migration strategies was a key growth driver.
Segment wise, License revenues (53.5% of total revenues) increased 33.2% year over year to $51.28 million.
Maintenance and Professional Services (46.5% of total revenues) revenues jumped 34% to $44.65 million. Revenues from the professional services part of this mix were $8.2 million.
Region wise, the company witnessed revenue growth across every region. On a year-over-year basis, revenues from the Americas of $62.1 million increased 41%, representing 65% of total revenues. Revenues in the Asia Pacific and Japan of $8.5 million were up 45%, representing 9% of total revenues.
EMEA revenues of $25.3 million recorded a 16% jump and accounted for 26% of total revenues. The year-end budget flush was a headwind for this region. However, the pipeline continues to be very strong.
Strong demand across banking, insurance, IT services and software, healthcare, and media — all of which grew more than 50% — drove revenues.
Existing customers of the Privilege Access Security programs represented more than 60% of revenues as they expanded deployments with CyberArk in the first quarter.
CyberArk ended the quarter with 4,600 customers, adding around 150 new logos this quarter.
During the first quarter, CyberArk closed several seven figure add-on deals. The company was the only privileged access security program vendor for a Fortune 100 financial services firm.
The company’s expertise in securing multiple public clouds, which include Alphabet’s (GOOGL - Free Report) Google Cloud Platform and Amazon’s (AMZN - Free Report) AWS is a tailwind.
During the quarter, CyberArk introduced Application Access Manager, which unifies Conjur and Application Identity Manager into a single solution for both dynamic and static application environments. This solution witnessed a strong traction and secured a large license deal in the quarter.
Additionally, the Endpoint Privilege Manager continued to gain traction among customers across various industries.
The company’s advisory, value-added reseller, and technology partner ecosystem contributed to more than 65% of revenues from indirect channel. The C3 Alliance program continued to gain momentum.
CyberArk’s non-GAAP gross profit came in at $84.8 million, representing year-over-year growth of 36%. Gross margin expanded 100 basis points to 88%.
The company reported non-GAAP operating income of $25.5 million compared with $12.6 million in the year-ago quarter. Non-GAAP operating margin expanded to 27% from 18% 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 $509.7 million, up from $451.2 million at the end of previous quarter.
The company’s balance sheet does not have any long-term debt. The company generated cash flow from operations of approximately $45.9 million compared with $130.1 million in the previous quarter.
For full-year 2019, CyberArk raised its guidance. It now anticipates revenues in the band of $415-$419 million, up from $411-$415 million, representing 21-22% year-over-year growth.
Non-GAAP operating income is now projected to be between $100.5 million and $103.5 million compared with $92.5-$95.5 million projected earlier. Non-GAAP earnings per share for 2019 are expected to be in the $2.10-$2.16 band, up from $1.94-$2.
For the second quarter of 2019, CyberArk estimates revenues in the range of $96-$98 million, representing 24-26% year-over-year growth. Non-GAAP operating income is predicted to be in the band of $18.5-$20 million. The company projects non-GAAP earnings in the 39-42 cents range.
The company intends to continue investing in business in the second quarter, which will keep expenses high and margins under pressure.
CyberArk typically experiences a sequential decline in revenues in the first quarter, and moderate sequential growth in the second quarter. The third and fourth quarters are usually the best quarters in terms of revenue generation.
However, an increase in expenses due to seasonal employee expenses and the marquee Americas customer event is expected to be an overhang in the third quarter of 2019.
Zacks Rank and A Key Pick
CyberArk currently has a Zacks Rank #3 (Hold).
A better-ranked stock in the broader Computer and Technology sector is Verint Systems Inc. (VRNT - Free Report) , 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 rate for Verint is projected to be 11%, respectively.
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