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CyberArk (CYBR) Q1 Earnings & Revenues Beat Estimates, Up Y/Y

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CyberArk Software CYBR reported first-quarter 2021 non-GAAP earnings of 9 cents per share that exceeded the Zacks Consensus Estimate of 3 cents. The bottom line, however, tanked 82% year over year.

CyberArk’s revenues grew 5.6% year over year to $112.8 million and topped the consensus mark of $109.6 million as well. Markedly, 68% of quarterly revenues were recurring in nature, which jumped 41% year over year to $76 million.

Annual Recurring Revenues climbed 41% year over year to $288 million, as of Mar 31, 2021.

Notably, CyberArk’s subscription transition is in force with strong momentum, with a rapidly growing base of recurring revenues.

SaaS and subscription bookings created additional headwinds of about $11 million for the first quarter. However, strong demand for the company’s solutions more than offset this and drove top-line growth.

CyberArk Software Ltd. Price, Consensus and EPS Surprise

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

Quarter Details

Segment wise, Subscription revenues surged 180% to $25 million and represented 22% of the total revenues. Sales from Perpetual License (24% of total revenues) plunged 39% to $27 million mainly due to the company’s strategic move of shifting sales motion toward a recurring subscription business model. The company’s Maintenance and Professional Services (54% of total revenues) revenues increased 13% to $61 million.

Solid demand across PAM including on-premise and cloud, Endpoint Privilege Manager and Application Access Manager was a major growth driver.

Growth in existing customers to an all-time high was also a tailwind. Moreover, a steady increase in new business was reflected in the signing of new logos across all industries. The new business pipeline is also encouraging.

CyberArk’s non-GAAP gross profit came in at $95.6 million, marking a year-over-year increase of 3.3%. Yet, gross margin contracted 200 basis points (bps) to 85% on unfavorable subscription bookings mix and increased cloud infrastructure costs related to the SaaS business.

Operating expenses flared up 27% year over year to $90.1 million. This inflation resulted from the 39% year-on-year rise in R&D expenses, 20% in S&M, 37% in G&A expenses, along with $2.1 million additional expenses related to the integration of Idaptive operations.

The company reported non-GAAP operating income of $5.5 million, significantly down 74.7% year over year. As a result, non-GAAP operating margin shrunk to 4.8% from the year-ago quarter’s 20.2%.

Balance Sheet

As of Mar 31, 2021, CyberArk had $978 million in cash, cash equivalents, marketable securities and short-term deposits compared with the $953 million reported in the previous quarter.

Total deferred revenues were $176 million, up 23% year over year.

Guidance

For the second quarter of 2021, CyberArk estimates revenues of $111-$119 million.

Non-GAAP operating income is predicted between a loss of $3.5 million and an income of $2.5 million. The company projects the bottom line between a non-GAAP loss of 11 cents and a non-GAAP earnings of 6 cents per share.

Approximately 55% of new license bookings are expected to come from subscription, resulting in a revenue headwind of about $9 million for the second quarter.

For 2021, CyberArk projects revenues between $484 million and $496 million. Revenues from SaaS and subscription are expected to constitute 57% of license bookings, leading to a revenue headwind of $45 million.

The company lowered its non-GAAP earnings per share guided range to 39-64 cents from the earlier projection of 45-64 cents.

Zacks Rank and Stocks to Consider

CyberArk currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Lam Research Corporation LRCX, ASML Holding N.V. ASML and NVIDIA NVDA. While Lam Research and ASML Holding sport a Zacks Rank #1, NVIDIA carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Lam Research, ASML Holding, and NVIDIA is currently pegged at 32.8%, 29.8% and 15.1%, respectively.

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