CyberArk Software Ltd. (CYBR - Free Report) reported healthy second-quarter 2019 results wherein both the top line and bottom line beat estimates. Non-GAAP earnings per share of 56 cents surpassed the Zacks Consensus Estimate of 47 cents. The bottom line was way higher than the year-ago quarter figure of 36 cents.
CyberArk’s revenues jumped 29% year over year to $100.2 million, and beat the consensus estimate of $97.21 million. Strong revenue growth across all its geographical regions 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 (52% of total revenues) increased 27% year over year to $52.2 million. On the product side, Application Access Manager represented nearly 9% of license revenues and Endpoint Privilege Manager accounted for 7% of the same. Continued growth in the EPM bookings derived from SaaS deals was a positive.
Maintenance and Professional Services (48% of total revenues) revenues jumped 31% to $48 million. Revenues from the professional services part of this mix were $8.2 million. Within the segment, professional services revenues came at $9.2 million, representing 9% of total revenues.
The company witnessed revenue growth in every region. On a year-over-year basis, revenues from the Americas of $61.8 million increased 28%, representing 62% of total revenues, backed by strong EPM SaaS bookings. Revenues from the Asia Pacific and Japan of $9.7 million were up 41%, representing 10% of total revenues. EMEA revenues of $28.7 million jumped 20% and accounted for 28% of total revenues.
Strong demand across insurance, manufacturing, media, pharmaceuticals, retail and transportation (all of which grew more than 40%) drove revenues. Existing customers of the Privilege Access Security programs represented more than 65% of revenues as these expanded deployments with CyberArk in the second quarter.
CyberArk ended the quarter with more than 4,800 customers, adding around 200 new logos this quarter. During the second quarter, it closed several seven figure add-on deals.
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.
Moreover, Amdocs expanded its relationship with Microsoft (MSFT - Free Report) by joining the Microsoft Intelligent Security Association, to deliver greater flexibility and efficiency for securing privileged access.
Application Access Manager continued to witness a strong traction and secured a large license deal in the quarter. Additionally, the Endpoint Privilege Manager gained 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.
CyberArk’s non-GAAP gross profit came in at $87.7 million, representing year-over-year growth of 28.6%. Gross margin was flat at 88%.
The company reported non-GAAP operating income of $26.5 million compared with $17 million in the year-ago quarter. Non-GAAP operating margin expanded 400 basis points to 26% 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 $537.9 million, up from $509.7 million at the end of previous quarter. The company’s balance sheet does not have any long-term debt.
The company’s cash flow generated from operations was approximately $45.9 million as of Jun 30, 2019.
For full-year 2019, CyberArk raised its guidance. It now anticipates revenues in the band of $419-$423 million, up from $415-$419 million, representing 22-23% year-over-year growth.
Non-GAAP operating income is now projected to be between $106 million and $109 million compared with $100.5-$103.5 million projected earlier.
Non-GAAP earnings per share for 2019 are expected to be in the $2.24-$2.30 band, up from $2.10-$2.16.
For the third quarter of 2019, CyberArk estimates revenues in the range of $102-$104 million, representing 20-23% year-over-year growth.
Non-GAAP operating income is predicted to be in the band of $21.75-$23.25 million. The company projects non-GAAP earnings in the 45-48 cents range.
The company intends to continue investing in business in the third quarter, which will keep expenses high and margins under pressure.
Notably, 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.
CyberArk currently carries 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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