Compliance and Regulatory Risks - The company faces significant risks related to compliance with privacy, data protection, and AI laws, which could impact its operations and market performance[31]. - Compliance with privacy and data protection laws, such as GDPR and CCPA, imposes significant capital and resource expenditures, potentially affecting revenue and operational efficiency[74]. - The EU AI Act, effective August 1, 2024, will impose a comprehensive governance framework for AI, with fines for breaches of up to 7% of worldwide annual turnover[84]. - The dynamic regulatory environment around privacy and AI may require modifications to offerings, increasing operational expenses and limiting customer attraction[73]. - The company may face regulatory scrutiny and potential fines for non-compliance with privacy and data protection laws, which could adversely affect its reputation and financial results[85]. - Compliance with multiple privacy laws may necessitate changes in services and business practices, potentially leading to increased costs and reduced efficiency[76]. - The company is subject to various regulatory and geopolitical risks that could materially affect its business and profitability[108]. - The evolving legal and regulatory framework surrounding AI technologies may expose the company to claims of copyright infringement or intellectual property misappropriation[93]. Financial Performance and Profitability - The company has a history of incurring net losses and must generate sufficient revenue to achieve and sustain profitability, with a focus on cash flow from operating activities[31]. - The company incurred net losses of $66.5 million and $93.5 million for the years ended December 31, 2023 and 2024, respectively[107]. - Operating expenses are expected to increase due to hiring additional personnel and enhancing solutions, which may hinder profitability[107]. - Economic uncertainties, including rising interest rates and inflation, could lead to decreased corporate spending on cybersecurity software[105]. - The company may raise additional capital through equity or debt financing, which could dilute existing shareholders and potentially reduce the market price of its ordinary shares[130]. - Changes in tax laws could adversely affect the company's tax position, with potential increases in the effective tax rate due to corporate tax reforms[135]. - The recent Inflation Reduction Act introduced a 15% corporate minimum tax, which may impact the company's financial results[136]. Customer Retention and Sales Growth - Customer renewals are critical for the company's performance targets, and any failure to retain existing customers could negatively impact financial results[40]. - The company is dependent on acquiring new customers and expanding sales to existing customers to achieve revenue growth and meet investor expectations[41]. - The company may face challenges in expanding its customer base due to competition and unfavorable macroeconomic conditions, which could prolong sales cycles[37]. - Transitioning existing customers to SaaS solutions may result in customer churn if not managed effectively[39]. - Significant turnover in sales and marketing organizations may adversely affect customer retention and revenue generation goals[72]. - The number of sales personnel increased from 272 as of December 31, 2023, to 345 as of December 31, 2024, indicating a growth of approximately 26.8%[71]. - It takes an average of approximately six to nine months for a new sales force member to reach target performance levels, which may impact business operations[72]. Cybersecurity Threats and Challenges - Any security vulnerabilities or breaches could significantly harm the company's reputation and financial condition, leading to potential legal and regulatory consequences[49]. - The company acknowledges the persistent threat landscape and the ongoing risk of cyberattacks, including phishing attempts targeting employees[51]. - Cyberattacks are expected to increase in frequency and impact due to the expansion of cloud-based solutions and the use of AI, which enables more sophisticated attack methods[52]. - The company faces risks from third-party software and supply chain vulnerabilities, which could lead to significant operational disruptions[54]. - The company has acquired firms with cybersecurity vulnerabilities, increasing exposure to potential cyberattacks[55]. - The company is vulnerable to IT system failures and service outages caused by various factors, including natural disasters and cyberattacks, which could significantly damage market position and lead to costly remediation[56]. - Increased cybersecurity insurance premiums may require the company to assume higher liabilities regarding security and data breaches[57]. - The skills gap in cybersecurity is a significant challenge, prompting organizations to consolidate vendors and increase automation to enhance security initiatives[183]. Market Competition and Innovation - The information security market is characterized by intense competition, constant innovation, and evolving customer requirements, which may challenge the company's growth[58]. - Competitors may leverage greater resources and advanced technologies, potentially commoditizing the company's offerings and reducing demand[62]. - The introduction of new technologies, such as AI, may expand the company's addressable market, but failure to capitalize on these opportunities could hinder innovation[35]. - The company plans to continue strategic acquisitions, such as Venafi Holdings, Inc. and Zilla Security Inc., but faces risks related to integration and realization of expected benefits[66]. - Partnerships and strategic alliances involve significant investments and risks, including potential misalignment of goals and increased long-term expenditures[67]. Technology and Product Development - The company must continually invest in and enhance its solutions to adapt to the evolving cyber threat landscape and meet customer demands[34]. - The company plans to continue integrating AI technology into its operations, which presents various risks and challenges that could negatively impact business[90]. - The integration of generative AI into IT infrastructure presents both opportunities and security challenges, necessitating robust identity security measures[172]. - CyberArk's Identity Security Platform aims to secure all identities, including human and machine, with appropriate privilege controls[161]. - The company’s Privileged Access Management solutions secure, manage, and monitor privileged access across hybrid and multi-cloud environments[196]. - The company’s Secure Cloud Access service offers secure, native access to cloud consoles and services with zero standing privileges, reducing the risk of compromised access[203]. Customer Base and Revenue Distribution - As of December 31, 2024, the company had over 9,700 customers across various industries, including financial services, healthcare, and technology[216]. - In 2024, the company generated 50.3% of its revenues from the United States, 31.1% from the EMEA region, and 18.6% from the rest of the world[217]. - The majority of annualized software bookings in 2024 were subscriptions or recurring revenue, with only a declining single-digit percentage from perpetual licenses[99]. - A significant portion of quarterly bookings is generated through large transactions, with potential adverse impacts on financial performance from delays or slippage in deals[100]. Strategic Initiatives and Future Plans - The company aims to strengthen its Identity Security leadership by enhancing solutions and developing new offerings, including AI utilization[170]. - The company plans to make its Managed Service Provider SaaS Solution generally available in 2025 to enhance operations and security for managed service provider tenants[223]. - The company executed a hybrid sales model, generating approximately 19% of revenues from direct sales in 2024, with a global network of over 1,500 channel partners[221]. - The company hosted its 18th annual CyberArk IMPACT Conference in May 2024, attracting over 8,000 attendees, making it the largest Identity Security conference worldwide[220].

Company Performance - CyberArk's stock closed at $335.45, reflecting a -0.66% change from the previous day's closing price, underperforming the S&P 500 which gained 0.55% [1] - The stock has decreased by 11.79% over the past month, compared to the Computer and Technology sector's loss of 8.51% and the S&P 500's loss of 5.56% [1] Upcoming Earnings - CyberArk is expected to report an EPS of $0.80, representing a 6.67% increase from the same quarter last year [2] - The Zacks Consensus Estimate for revenue is projected at $305.71 million, which is a 37.99% increase from the year-ago period [2] Fiscal Year Estimates - For the entire fiscal year, earnings are estimated at $3.64 per share, indicating a +20.13% change from the previous year [3] - Revenue is projected to be $1.32 billion, reflecting a +31.46% increase from the prior year [3] Analyst Projections - Recent shifts in analyst projections for CyberArk are important to monitor, as upward revisions indicate positive sentiment regarding the company's business operations [4] - The Zacks Rank system, which assesses these estimate changes, currently ranks CyberArk at 3 (Hold) [6] Valuation Metrics - CyberArk has a Forward P/E ratio of 92.75, which is higher than the industry's average Forward P/E of 61.65 [7] - The company also has a PEG ratio of 4.64, compared to the Security industry's average PEG ratio of 3.11 [7] Industry Context - The Security industry, part of the Computer and Technology sector, holds a Zacks Industry Rank of 60, placing it in the top 24% of over 250 industries [8] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [8]

CyberArk Software Ltd. (CYBR) shares have soared 8.5% since the company reported fourth-quarter 2024 results on Feb. 13.Shares of CYBR have rallied 58.7% in the past year. This robust performance has significantly outperformed the broader Zacks Computer and Technology sector, the S&P 500 and the Zacks Security industry’s growth of 26.1%, 23.2% and 22.1%, respectively, reinforcing its position as a standout performer in the cybersecurity space.Strong Q4 Results Push CYBR Stock HigherCyberArk’s most recent ra ...

Core Viewpoint - CyberArk Software Ltd. (CYBR) reported better-than-expected fourth-quarter 2024 results, with shares closing 8.8% higher following the announcement of non-GAAP earnings of 80 cents per share, surpassing the Zacks Consensus Estimate of 71 cents [1][3]. Financial Performance - Fourth-quarter revenues reached $314.4 million, exceeding the consensus mark by 4.4% and reflecting a 41% year-over-year increase, driven by strong identity security performance and the contribution of $47 million from the Venafi acquisition [3][4]. - Non-GAAP gross profit increased by 40.8% year over year to $267.1 million, with a stable gross margin of 85% [7]. - Non-GAAP operating income rose 66.2% year over year to $58.7 million, with an operating margin expansion of 310 basis points to 18.7% [7]. Revenue Breakdown - Subscription revenues accounted for 77.3% of total revenues, amounting to $243 million, a 62% increase from the previous year [4]. - Maintenance and professional services revenues were $66.4 million, slightly up from $64.8 million year over year [5]. - Perpetual license revenues fell to $5 million from $8 million in the year-ago quarter, reflecting a shift towards a subscription-based model [6]. Annual Recurring Revenue (ARR) - As of December 31, 2024, ARR was $1.17 billion, a 51% increase year over year, with subscription ARR at $977 million, representing 84% of total ARR and a 68% year-over-year growth [8]. - Recurring revenues for the fourth quarter were $292.2 million, up 45% from the same quarter in 2023, while full-year recurring revenues reached $930.3 million, a 37% increase year over year [9]. Guidance for 2025 - For Q1 2025, CyberArk expects revenues between $301 million and $307 million, indicating a year-over-year growth of 36-39% [13]. - Full-year 2025 revenue guidance is set between $1.308 billion and $1.318 billion, representing a year-over-year growth of 31-32% [14]. - Non-GAAP earnings per share for 2025 are anticipated to be between $3.55 and $3.70, with a year-over-year increase of 18.2% [15]. Balance Sheet and Cash Flow - As of December 30, 2024, CyberArk had cash and cash equivalents of $841.1 million, down from $1.5 billion due to the Venafi acquisition [11]. - Long-term debt decreased to $76 million, significantly lower than $646.3 million as of September 30, reflecting the settlement of senior convertible notes [12]. - Operating cash flow for 2024 was $231.9 million, with free cash flow at $220.8 million [12].

Core Insights - CyberArk Software Ltd reported fiscal fourth-quarter results that exceeded expectations, with a revenue growth of 41% year-on-year to $314.40 million, surpassing the analyst consensus estimate of $301.31 million [1] - The adjusted EPS was 80 cents, beating the analyst consensus estimate of 72 cents [1] Financial Performance - Total ARR reached $1.169 billion, driven by organic ARR crossing $1 billion and strong performance from Venafi [2] - CyberArk returned to Rule of 40 on a full-year basis, exceeding long-term guidance by a year [2] - The company expects fiscal first-quarter revenue of $301.0 million to $307.0 million, with an adjusted EPS of $0.74 to $0.81 [2] Future Projections - For fiscal 2025, CyberArk projects revenue of $1.308 billion to $1.318 billion, with an adjusted EPS outlook of $3.55 to $3.70 [3] - ARR is expected to reach $1.410 billion to $1.420 billion by December 31, 2025, representing a 21% increase [3] Market Reaction - CyberArk shares increased by 8.8% to close at $414.31 following the earnings announcement [3] - Analysts have adjusted their price targets for CyberArk, with Barclays raising it from $375 to $450, Rosenblatt from $415 to $445, and Morgan Stanley from $316 to $390 [4]

Financial Performance - Total ARR reached $1.169 billion, with organic ARR surpassing $1 billion[1] - Subscription revenue for the full year 2024 was $733.3 million, a 55% increase from $472.0 million in 2023[7] - Total revenue for the full year 2024 was $1.001 billion, growing 33% year-over-year from $751.9 million in 2023[7] - Non-GAAP operating income for the full year 2024 was $150.9 million, representing a 15% margin compared to 4% in 2023[7] - Free cash flow for the full year 2024 was $221 million, or a 22% FCF margin[1] - Recurring revenue in Q4 2024 was $292.2 million, a 45% increase from $201.5 million in Q4 2023[7] - Total revenues for the three months ended December 31, 2023, were $223.1 million, a decrease from $314.4 million for the same period in 2024, representing a decline of approximately 29%[30] - Subscription revenues for the twelve months ended December 31, 2023, were $472.0 million, compared to $733.3 million in 2024, indicating a decrease of about 36%[30] - The net loss for the three months ended December 31, 2023, was $97.1 million, compared to a net income of $8.9 million for the same period in 2024[30] - Net loss for the twelve months ended December 31, 2023, was $66,504 thousand, compared to a loss of $93,461 thousand for the same period in 2024[34] - Free cash flow for the twelve months ended December 31, 2024, was $220,828 thousand, compared to $51,256 thousand in 2023[36] - Gross profit for the twelve months ended December 31, 2024, reached $792,365 thousand, an increase from $595,757 thousand in 2023[37] - Non-GAAP net income for the twelve months ended December 31, 2024, was $147,549 thousand, compared to $52,004 thousand in 2023[41] Cash and Assets - Cash and cash equivalents increased from $355.9 million in December 2023 to $526.5 million in December 2024, showing a growth of about 48%[32] - Total assets rose significantly from $2.0 billion in December 2023 to $3.3 billion in December 2024, an increase of approximately 65%[32] - The company reported a basic loss per ordinary share of $2.02 for the three months ended December 31, 2024, compared to a profit of $0.21 for the same period in 2023[30] - Deferred revenues increased from $409.2 million in December 2023 to $596.9 million in December 2024, representing a growth of about 46%[32] - Cash and cash equivalents at the end of the period increased to $526,467 thousand in 2024, compared to $355,933 thousand in 2023[34] - The company reported an increase in short-term and long-term deferred revenues to $150,780 thousand in 2024, up from $72,190 thousand in 2023[34] Operating Expenses and Efficiency - Operating expenses for the twelve months ended December 31, 2023, totaled $712.2 million, up from $865.2 million in 2024, reflecting a decrease of approximately 18%[30] - Operating expenses for the twelve months ended December 31, 2024, were $865,169 thousand, compared to $712,229 thousand in 2023[38] - The company experienced a significant increase in cash flows from financing activities, totaling $288,806 thousand in 2024, compared to $38,084 thousand in 2023[34] Future Guidance - Total revenue guidance for full year 2025 is expected to be between $1.308 billion and $1.318 billion, representing growth of 31% to 32% compared to 2024[13] - ARR as of December 31, 2025 is expected to be between $1.410 billion and $1.420 billion, indicating a 21% growth from December 31, 2024[13] - Adjusted free cash flow for the full year 2025 is expected to be between $300 million and $310 million, normalizing for a one-time tax payment of $70 million[13] Strategic Initiatives - CyberArk announced the acquisition of Zilla Security for an enterprise value of $165 million in cash[8] - The company is focused on integrating the operations of Venafi Holdings, Inc. and Zilla Security Inc. to realize anticipated benefits and improve operational efficiency[27] - CyberArk is adapting its solutions to meet the changing demands of the information security market, including advancements in artificial intelligence (AI)[27]

Financial Data and Key Metrics Changes - CyberArk achieved over $1 billion in Annual Recurring Revenue (ARR) for the first time, reaching $1.169 billion, including approximately $166 million from Venafi [46][47] - Total revenue for Q4 reached $314.4 million, significantly exceeding guidance, with a contribution of approximately $47 million from Venafi [49] - The company reported a free cash flow of $221 million for the year, representing a margin of about 22% [61][62] Business Line Data and Key Metrics Changes - Subscription ARR grew to $977 million, representing 84% of total ARR, with organic subscription ARR reaching $816 million [47][59] - Recurring revenue for Q4 was $292.2 million, growing 24% year-over-year, while subscription revenue reached $243 million, growing 34% year-over-year [50][52] - Secrets Management was the fastest-growing solution for the full year, with significant growth in average deal sizes compared to the previous year [35][36] Market Data and Key Metrics Changes - The Americas revenue reached $189.5 million, EMEA revenue was about $94.5 million, and APJ revenue was $30.4 million, with growth across all regions [53][54] - Organic growth rates were 17% in the Americas, 26% in EMEA, and 19% in APJ year-over-year [54] Company Strategy and Development Direction - CyberArk is focused on expanding its leadership in Identity Security through acquisitions like Venafi and Zilla Security, enhancing its platform capabilities [19][64] - The company aims to address the evolving needs of identity security in a dynamic environment, emphasizing the integration of various identity management solutions [80][100] - The acquisition of Zilla Security is expected to enhance CyberArk's identity governance capabilities, addressing modern challenges in identity management [19][64] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position amidst a challenging threat landscape, highlighting the importance of comprehensive identity security solutions [12][42] - The company anticipates continued growth in ARR and revenue, projecting total revenue for 2025 to be between $1.308 billion and $1.318 billion, representing 31% year-over-year growth at the midpoint [68][70] - Management noted that the integration of Venafi is already accretive to operating and cash flow margins, reinforcing the strategic value of the acquisition [73] Other Important Information - CyberArk ended the year with approximately 3,800 employees, including about 400 from Venafi, and maintained a strong balance sheet with approximately $841 million in cash and marketable securities [60][62] - The company expects adjusted free cash flow for 2025 to be in the range of $300 million to $310 million, representing a 23% adjusted free cash flow margin at the midpoint [71] Q&A Session Summary Question: Thoughts on identity as a platform versus a series of swim lanes - Management indicated that customers are increasingly seeking integrated security solutions that cover multiple identity management areas rather than isolated tools [80][82] Question: Positioning for securing AI agents - Management highlighted CyberArk's long-standing expertise in managing dynamic access and privilege controls, positioning the company well to secure AI agents [88][90] Question: Broader product landing with new logos - Management noted that the top three deals in Q4 were full-scope, integrating multiple solutions across the platform, reflecting a trend towards comprehensive identity security [95][96] Question: Differentiation of Zilla's solution - Management explained that Zilla's modern IGA capabilities address the dynamic nature of identity management in today's SaaS and cloud environments, enhancing CyberArk's platform [100][105] Question: Impact of federal government spending uncertainty - Management acknowledged some uncertainty but emphasized a broad base of support within federal agencies, mitigating risks associated with changes in government spending [110][112] Question: Maintenance ARR and conversion opportunities - Management expressed optimism about the conversion opportunities within maintenance ARR, indicating a healthy pace of conversion activity expected to pick up in 2025 [123] Question: Governance layer for machine identities - Management confirmed the complexity of machine identity management and the role of Zilla in enhancing governance capabilities within CyberArk's broader identity security strategy [128][132] Question: Channel strategy and MSSP opportunities - Management emphasized the importance of channel partnerships, particularly with Managed Security Service Providers (MSSPs), in driving new business and expanding market reach [138]

Core Insights - CyberArk reported revenue of $314.38 million for the quarter ended December 2024, reflecting a year-over-year increase of 40.9% and surpassing the Zacks Consensus Estimate by 4.43% [1] - The company's EPS for the quarter was $0.80, slightly down from $0.81 in the same quarter last year, but exceeded the consensus estimate of $0.71 by 12.68% [1] Financial Performance Metrics - Total Annual Recurring Revenue (ARR) reached $1.17 billion, slightly above the average estimate of $1.16 billion from eight analysts [4] - Maintenance ARR was reported at $192 million, exceeding the average estimate of $182.59 million from five analysts [4] - Subscription ARR was $977 million, marginally below the average estimate of $978.51 million from five analysts [4] - Revenues from maintenance and professional services amounted to $66.37 million, surpassing the average estimate of $63.43 million from eleven analysts, representing a year-over-year increase of 2.4% [4] - Perpetual license revenues were $4.97 million, above the average estimate of $4.70 million from eleven analysts, but showed a significant year-over-year decline of 38% [4] - Subscription revenues reached $243.05 million, exceeding the average estimate of $232.74 million from eleven analysts, with a year-over-year growth of 61.8% [4] Stock Performance - CyberArk's shares have returned +9.6% over the past month, outperforming the Zacks S&P 500 composite's +3.9% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Investor Relations Presentation February 2025 © 2025 CyberArk Software Ltd. All rights reserved. Cautionary Language Concerning Forward-Looking Statements This presentation contains forward-looking statements, which express the current beliefs and expectations of CyberArk's (the "Company") management. In some cases, forward-looking statements may be identified by terminology such as "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "predict," "potential" or the ne ...

Identity security company CyberArk has acquired identity governance and administration (IGA) platform Zilla Security in a deal worth up to $175 million. Founded in 1999, Boston-based CyberArk specializes in access management, including privileged access security which helps organizations protect sensitive data and critical infrastructure from external (and internal) threats. Zilla, for its part, is another Boston-based security company operating in the identity and access management realm. Founded in 2019 ...