CyberArk (CYBR) Surpasses Q2 Earnings and Revenue Estimates
CyberArk Software Ltd. CYBR delivered better-than-expected results for the second quarter of 2023. The company reported non-GAAP earnings of 3 cents per share in the second quarter. The Zacks Consensus Estimate for earnings was pegged at a loss of 13 cents. Moreover, the bottom line improved from the year-ago quarter’s loss of 27 cents per share.
Top-Line Performance
In the second quarter of 2023, the Identity Security solution provider’s reported revenues increased 24% year over year to $175.8 million and surpassed the consensus mark of $173.2 million. Markedly, approximately 90% of quarterly revenues were recurring in nature, which surged 31% year over year to $158 million.
Annual Recurring Revenues (“ARR”) increased 40% to $653 million. The subscription portion, which accounted for 69% of the total ARR, soared 77% year over year to $451 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 31% of the total ARR, decreased to $201 million from $210 million on Jun 30, 2022.
CyberArk’s subscription transition has been witnessing strong momentum with a rapidly growing base of recurring revenues. Subscription bookings made up 95% of license bookings in the quarter, higher than 88% in the year-ago quarter.
CyberArk Software Ltd. Price, Consensus and EPS Surprise
CyberArk Software Ltd. price-consensus-eps-surprise-chart | CyberArk Software Ltd. Quote
Quarterly Details
Segment-wise, Subscription revenues (60% of the total revenues) were $106.2 million, up 61% from the year-ago quarter. Our estimate for Subscription revenue was pegged at $102.1 million.
Maintenance and professional services revenues (37% of the total revenues) were $64.6 million, slightly lower than the year-ago quarter’s $65.3 million. Our estimate for Maintenance and professional services revenue was pegged at $66.5 million.
Perpetual license revenues (3% of the total revenues) plunged to $5.1 million from $11 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 revenue was pegged at $3.9 million.
Operating Details
CyberArk’s non-GAAP gross profit increased 22.6% year over year to $143.3 million. However, the non-GAAP gross margin contracted 60 basis points (bps) to 81.5%.
Non-GAAP operating expenses escalated 16.7% year over year to $148.8 million. Higher operating expenses reflect the company’s aggressive sales and marketing initiatives and sustained investments in research and development to boost product offerings and capabilities. However, operating expenses as a percentage of revenues declined to 84.6% from 89.6% in the year-ago quarter.
The company reported a non-GAAP operating loss of $5.6 million in the second quarter, narrower than the loss of $10.7 million in the year-ago quarter.
Balance Sheet
CyberArk ended the April-June 2023 quarter with cash and cash equivalents, marketable securities and short-term deposits of $1.2 billion. As of Jun 30, 2022, total deferred revenues were $418.7 million, up 19% year over year.
In the first half of 2023, CyberArk used $5 million worth of cash for operational activities and has a negative free cash flow of $8.6 million.
Guidance
CyberArk updated guidance for 2023. The company now expects revenues in the range of $726-$736 million compared with the previous guidance in the band of $724-$736 million. It now projects to post non-GAAP operating income in the breakeven to $9 million range instead of its earlier guidance between a loss of $5 million and an income of $5 million.
The company raised its non-GAAP earnings guidance range to 44-63 cents per share from the band of 16-38 cents per share anticipated previously.
For the third quarter of 2023, CyberArk expects revenues between $181.5 million and $186.5 million. The non-GAAP operating income is estimated between $4 million and $8 million. It projects to post non-GAAP earnings in the range of 19-27 cents per share.
Zacks Rank & Other Stocks to Consider
Currently, CyberArk carries a Zacks Rank #2 (Buy). Shares of CYBR have increased 10.5% year to date (YTD).
Some other top-ranked stocks from the broader technology sector are NVIDIA NVDA, CrowdStrike CRWD and Salesforce CRM. NVIDIA sports a Zacks Rank #1 (Strong Buy), while CrowdStrike and Salesforce each carry a Zacks Rank #2 at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVIDIA's second-quarter fiscal 2024 earnings has been revised upward by a couple of cents to $2.06 per share in the past 30 days. For fiscal 2024, earnings estimates have increased by 13 cents to $7.79 per share in the past 30 days.
NVIDIA’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 0.3%. Shares of NVDA have surged 190.2% YTD.
The Zacks Consensus Estimate for CrowdStrike’s second-quarter fiscal 2024 earnings has been revised a penny northward to 56 cents per share in the past 60 days. For fiscal 2024, earnings estimates have moved a penny upward to $2.39 per share in the past 60 days.
CrowdStrike’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 19.2%. Shares of CRWD have rallied 38.2% YTD.
The Zacks Consensus Estimate for Salesforce's second-quarter fiscal 2024 earnings has been revised upward by a penny to $1.90 per share in the past 60 days. For fiscal 2024, earnings estimates have moved upward by a couple of cents to $7.44 per share in the past 60 days.
Salesforce's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 15.5%. Shares of CRM have surged 55.3% YTD.
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