CyberArk (CYBR) Surpasses Q3 Earnings and Revenue Estimates
CyberArk Software Ltd. CYBR delivered better-than-expected results in the third quarter of 2023. The company reported non-GAAP earnings of 42 cents per share in the third quarter and outpaced the Zacks Consensus Estimate of 24 cents. Moreover, the bottom line improved from the year-ago quarter’s loss of 6 cents per share.
Top-Line Performance
In the third quarter of 2023, the Identity Security solution provider’s reported revenues increased 25% year over year to $191.2 million and surpassed the consensus mark of $184.5 million. Markedly, more than 91% of quarterly revenues were recurring in nature, which surged 36% year over year to $174.4 million.
Annual Recurring Revenues (“ARR”) increased 38% to $705 million. The subscription portion, which accounted for 72% of the total ARR, soared 68% year over year to $504 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 28% of the total ARR, decreased to $200 million from $211 million on Sep 30, 2022.
CyberArk’s subscription transition has been witnessing strong momentum with a rapidly growing base of recurring revenues. Subscription bookings made up 97% of license bookings in the quarter, higher than 87% 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 (64% of the total revenues) were $123 million, up 65% from the year-ago quarter. Our estimate for Subscription revenues was pegged at $113.6 million.
Maintenance and professional services revenues (34% of the total revenues) were $64.3 million, slightly lower than the year-ago quarter’s $64.6 million. Our estimate for Maintenance and professional services revenues was pegged at $66.4 million.
Perpetual license revenues (2% of the total revenues) plunged to $4.1 million from $13.8 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 $4.2 million.
Operating Details
CyberArk’s non-GAAP gross profit increased 25.6% year over year to $158.2 million. However, the non-GAAP gross margin expanded 20 basis points (bps) to 82.7%.
Non-GAAP operating expenses escalated 8.7% year over year to $141.3 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 73.9% from 85.1% in the year-ago quarter.
The company reported a non-GAAP operating income of $16.9 million in the third quarter, which reflects a strong improvement from the year-ago quarter’s non-GAAP operating loss of $4 million. Its third-quarter non-GAAP operating margin was 8.8%.
Balance Sheet
CyberArk ended the July-September 2023 quarter with cash and cash equivalents, marketable securities and short-term deposits of $1.2 billion. As of Sep 30, 2022, total deferred revenues were $423.1 million, up 12% year over year.
During the third quarter, the company generated operating cash flow and free cash flow of $14.4 million and $13.6 million, respectively. In the first nine months of 2023, CyberArk generated operating cash flow of $9.3 million and free cash flow of $5.1 million.
Guidance
CyberArk updated guidance for 2023. The company now expects revenues in the range of $735.3-$740.3 million compared with the previous guidance in the band of $726-$736 million. It now projects to post non-GAAP operating income between $17.7 million and $21.7 million instead of its earlier guidance of breakeven to a $9 million range.
The company raised its non-GAAP earnings guidance range to 72-80 cents per share from the band of 44-63 cents per share anticipated previously.
For the fourth quarter of 2023, CyberArk expects revenues between $206.5 million and $211.5 million. The non-GAAP operating income is estimated between $19 million and $23 million. It projects to post non-GAAP earnings in the range of 41-50 cents per share.
Zacks Rank & Stocks to Consider
Currently, CyberArk carries a Zacks Rank #3 (Hold). Shares of CYBR have increased 33.8% year to date (YTD).
Some better-ranked stocks from the broader technology sector are Palo Alto Networks PANW, NVIDIA Corporation NVDA and Splunk SPLK. Palo Alto and NVIDIA each sport a Zacks Rank #1 (Strong Buy), while Splunk carries 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 Palo Alto Networks' first-quarter fiscal 2024 earnings has remained unchanged at $1.16 per share in the past 60 days. For fiscal 2024, earnings estimates have remained unchanged at $5.34 per share in the past 60 days.
Palo Alto Networks’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 22.2%. Shares of PANW have surged 72.2% YTD.
The Zacks Consensus Estimate for NVIDIA’s third-quarter fiscal 2024 earnings has been revised 10 cents northward to $2.10 per share in the past 60 days. For fiscal 2024, earnings estimates have moved 28 cents upward to $10.74 per share in the past 60 days.
NVIDIA’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing on one occasion, the average surprise being 9.8%. Shares of NVDA have surged 197.5% YTD.
The Zacks Consensus Estimate for Splunk's third-quarter fiscal 2024 earnings has been revised upward by a penny to $1.12 per share in the past 60 days. For fiscal 2024, earnings estimates have moved upward by 2 cents to $3.78 per share in the past 60 days.
Splunk’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 154.9%. Shares of SPLK have risen 70.65 YTD.
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