A month has gone by since the last earnings report for CyberArk (CYBR - Free Report) . Shares have lost about 2.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CyberArk due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
CyberArk Q1 Earnings Beat Estimates, Revenues Match
CyberArk reported first-quarter 2020 results, wherein the top line matched estimates and the bottom line surpassed the same. Non-GAAP earnings per share of 50 cents exceeded the Zacks Consensus Estimate by 35.1%. The bottom line, however, was lower than the year-ago quarter’s 56 cents.
CyberArk’s revenues grew 11% year over year to $107 million. Strong revenue growth across all geographical regions augmented the top line. Moreover, an expanding customer base was a tailwind.
Increasing demand for privileged access security on the back of digital transformation and cloud migration strategies was a key growth driver. Moreover, growing pipelines across verticals such as banking, insurance, healthcare, global government, pharmaceuticals and utilities, which are less affected due to the coronavirus outbreak, boosted revenues.
Additionally, CyberArk announced the acquisition of identity-as-a-service provider, Idaptive, to boost its strategy to develop an identity security platform.
Segment-wise, License revenues (48.3% of total revenues) increased 2% year over year to $51.7 million. Add-on business jumped to 79% of license revenues in the first quarter, up from 63% for the entire 2019, reflecting strong a deal volumes rate.
The company’s products, Application Access Manager and Endpoint Privilege Manager, represented nearly 7% of license revenues, each.
However, the mix toward SaaS and subscription-based revenues reduced revenues by about $5 million.
Maintenance and Professional Services (51.7%) revenues rose 24% to $55.2 million. Within the segment, professional services revenues came in at $9.1 million, representing 8% of total revenues.
The company witnessed top-line growth in every region. On a year-over-year basis, revenues of $69.9 million from the Americas increased 13%. Revenues of $9.5 million from the APJ jumped 11%. EMEA revenues of $27.4 million rose 8%.
CyberArk’s new SaaS solutions — CyberArk Privilege Cloud and Alero — are also witnessing significant growth.
The company ended the quarter with more than 5,500 customers, adding around 116 new logos.
CyberArk’s non-GAAP gross profit was $92.5 million, representing year-over-year growth of 9%. Gross margin contracted 100 basis points (bps) to 87% due to lower license revenues.
The company reported non-GAAP operating income of $21.5 million compared with $25.5 million in the year-ago quarter. Non-GAAP operating margin contracted 650 bps to 20.1% due to higher operating expenses.
Balance Sheet & Cash Flow
CyberArk exited the quarter with cash, cash equivalents, short-term deposits and marketable securities of approximately $1.2 billion, up from $1.1 billion at the end of the previous quarter. The company’s balance sheet does not show any long-term debt.
The company’s cash flow generated from operations was approximately $33.8 million as of Mar 31, 2020, down from $141.7 million in the previous quarter.
For the second quarter of 2020, CyberArk estimates revenues of $95-$105 million.
Non-GAAP operating income is expected in a band of $7-$16 million. The company projects non-GAAP earnings in the 17-35 cents range.
Cash balances are expected to be negatively impacted by approximately $70 million due to the acquisition of Idaptive.
CyberArk typically experiences a sequential revenue decline in the first quarter, moderate sequential growth in the second and third quarters and highest revenues in the fourth quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -122.66% due to these changes.
At this time, CyberArk has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, CyberArk has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.