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CyberArk (CYBR) Soars 8% as Q2 Earnings & Revenues Beat Estimates

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CyberArk Software Ltd. (CYBR - Free Report) shares gained more than 8% on Thursday after the company reported better-than-expected second-quarter 2024 results. The leading identity security solution provider’s quarterly results also exceeded management’s expectations across all guided metrics and marked significant year-over-year improvement as well.

CyberArk reported non-GAAP earnings of 54 cents per share and outpaced the Zacks Consensus Estimate of 41 cents. CyberArk’s second-quarter non-GAAP earnings also came well ahead of its previously provided guidance range of 34-44 cents per share.

Moreover, the bottom line also marked a robust improvement from the year-ago quarter’s earnings of 3 cents per share. The solid year-over-year earnings performance was primarily driven by higher revenues, better cost management and increased financial income, partially offset by a higher number of outstanding shares.

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

CyberArk Software Ltd. price-consensus-eps-surprise-chart | CyberArk Software Ltd. Quote

Top-Line Performance

In the second quarter of 2024, the Identity Security solution provider’s reported revenues increased 24% year over year to $224.7 million and surpassed the consensus mark of $219.3 million. Markedly, more than 92% of quarterly revenues were recurring in nature, which surged approximately 32% year over year to $208 million.

Annual Recurring Revenues (“ARR”) increased 33% to $868 million. The subscription portion, which accounted for 78% of the total ARR, soared 50% year over year to $677 million. This upside was primarily driven by a record number of software-as-a-service solution bookings and the strong demand for on-premise subscription offerings. However, the maintenance portion, representing 23% of the total ARR, decreased to $191 million from $201 million on Jun 30, 2023.

Quarterly Details

Segment-wise, Subscription revenues (70% of the total revenues) were $158.4 million, up 50% from the year-ago quarter. Our estimate for Subscription revenues was pegged at $151.5 million.

Maintenance and professional services revenues (28% of the total revenues) were $62.7 million, lower than the year-ago quarter’s $64.6 million. Our estimate for Maintenance and professional services revenues was pegged at $63.3 million.

Perpetual license revenues (2% of the total revenues) plunged to $3.6 million from $5.1 million in the year-ago quarter. The decline reflects the company’s continued efforts toward shifting the business model to subscription-based from a perpetual license. Our estimate for Perpetual license revenues was pegged at $4.4 million.

Operating Details

CyberArk’s non-GAAP gross profit increased 30.4% year over year to $186.9 million. Moreover, the non-GAAP gross margin expanded 170 basis points (bps) to 83.2%, primarily driven by robust revenue growth.

Non-GAAP operating expenses increased 9.6% year over year to $163.1 million. However, operating expenses as a percentage of revenues declined to 72.6% from 84.6% in the year-ago quarter.

The company reported a non-GAAP operating income of $23.7 million in the second quarter, which reflects a strong improvement from the year-ago quarter’s non-GAAP operating loss of $5.6 million. Its second-quarter non-GAAP operating margin was 10.6%. The robust increase in operating income was primarily driven by revenue growth outperformance, improved gross margin and the benefits of inherent operating leverage of the company’s business model.

Balance Sheet

CyberArk ended the April-June 2024 quarter with cash and cash equivalents, marketable securities and short-term deposits of $1.4 billion. As of Jun 30, 2024, total deferred revenues were $442.2 million.

During the second quarter, the company generated operating cash flow and free cash flow of $44.3 million and $41.7 million, respectively. In the first half of 2024, it generated $113 million of cash from operational activities and $108.5 million in free cash flow.

CYBR Raises FY24 Guidance

Buoyed by the stronger-than-expected second-quarter performance, CyberArk raises guidance for full-year 2024. The company now expects 2024 revenues in the range of $932-$942 million, up from the previous guidance range of $928-$938 million. The Zacks Consensus Estimate for 2024 revenues is currently pegged at $935.2 million, which indicates 24.4% year-over-year growth.

It now projects to post non-GAAP operating income between $107.5 million and $116.5 million instead of the earlier assumption of $90.5-$99.5 million. The company now estimates its non-GAAP earnings in the range of $2.17-$2.36 per share, up from the previous forecast of $1.88-$2.07 per share. The consensus mark for 2024 earnings is currently pegged at $2.04 per share, which implies 82.1% year-over-year growth.

Additionally, CyberArk initiated guidance for the third quarter. The company expects revenues between $230 million and $236 million for the third quarter. The non-GAAP operating income is estimated between $20.5 million and $25.5 million. It projects to post non-GAAP earnings in the range of 38-49 cents per share. The Zacks Consensus Estimate for third-quarter revenues and earnings is currently pegged at $231.8 million and 37 cents per share, respectively.

Zacks Rank & Stocks to Consider

Currently, CyberArk carries a Zacks Rank #3 (Hold). Shares of CYBR have risen 20.4% year to date (YTD).

Some better-ranked stocks in the broader technology sector are Arista Networks (ANET - Free Report) , Twilio (TWLO - Free Report) and Datadog (DDOG - Free Report) While Arista Networks sports a Zacks Rank #1 (Strong Buy), Twilio and Datadog each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Arista Networks’ 2024 earnings has been revised upward by 4% to $8.24 per share in the past 30 days, which suggests year-over-year growth of 18.7%. The long-term estimated earnings growth rate for the stock is 17.2%. The stock has rallied 42% YTD.

The consensus mark for Twilio’s 2024 earnings has been revised upward by 10 cents to $3.22 per share over the past seven days, which indicates a 31.4% increase from 2023. It has a long-term earnings growth expectation of 32.7%. The stock has plunged 20.1% YTD.

The Zacks Consensus Estimate for Datadog’s 2024 earnings has remained unchanged at $1.54 in the past 60 days, which calls for an increase of 16.7% on a year-over-year basis. The long-term estimated earnings growth rate for the stock is 9.6%. Shares of DDOG have declined 6% YTD.

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