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CyberArk (CYBR) Earnings & Conference Call - Assessment & Takeaway

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CyberArk (CYBR) Earnings & Conference Call - Assessment & Takeaway

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Highlights

4th Qtr Ended December 31, 2023

  • Revenue of $223.1M (+31.9% Y/Y) beats by $13.36M.
  • CyberArk press release (NASDAQ:CYBR): Q4 Non-GAAP EPS of $0.81 beats by $0.34.
  • Subscription revenue was $150.3 million in the fourth quarter of 2023, an increase of 70 percent from $88.5 million in the fourth quarter of 2022.
  • Maintenance and professional services revenue were $64.8 million in the fourth quarter of 2023, compared to $66.1 million in the fourth quarter of 2022.
  • Perpetual license revenue was $8.0 million in the fourth quarter of 2023, compared to $14.6 million in the fourth quarter of 2022.
  • Subscription Portion of Annual Recurring Revenue (ARR) of $582 million; Growth of 60% Year-over-Year
  • Total ARR of $774 million; Growth of 36% Year-over-Year

Looking forward

First Quarter 2024:

  • Total revenue is expected to be in the range of $209.0 million and $215.0 million vs $207.25M consensus, representing growth of 29 percent to 33 percent compared to the first quarter of 2023.
  • Non-GAAP operating income is expected to be in the range of $7.5 million to $12.5 million.
  • Non-GAAP net income per share is expected to be in the range of $0.21 to $0.31 per diluted share vs $0.24 consensus.
  • Assumes 47.8 million weighted average diluted shares.

Full Year 2024:

  • Total revenue is expected to be in the range of $920.0 million to $930.0 million vs $915.82M. Growth of 22 percent to 24 percent compared to the full year 2023.
  • Non-GAAP operating income is expected to be in the range of $75.5 million to $84.5 million.
  • Non-GAAP net income per share is expected to be in the range of $1.63 to $1.81 per diluted share, vs $1.72 consensus estimate.
  • Assumes 48.0 million weighted average diluted shares.
  • ARR as of December 31, 2024 is expected to be in the range of $968.0 million to $983.0 million, representing growth of 25 percent to 27 percent from December 31, 2023.
  • Non-GAAP free cash flow is expected to be in the range of $85.0 million to $95.0 million for the full year 2024.

Management Comments

Matt Cohen  / CEO

“In the fourth quarter our top line growth accelerated, operating income and cash flow increased, and we again beat expectations across all guided metrics.”

“Record demand for our SaaS solutions drove our subscription bookings mix to 95 percent in 2023 and recurring revenue reached 90 percent of our total revenue – we are now a fully recurring revenue company.”

“The momentum in our business and our platform selling motion is demonstrated by: Our ARR reaching $774 million and growing 36 percent as well as our Subscription ARR reaching $582 million, growing 60 percent.”

“We set a record for net new Subscription ARR of $78 million in the fourth quarter.”

“Our identity security platform is applying the right level of controls across all identities, human or machine, regardless of environment. In today’s threat landscape, our platform and security first approach are a business imperative, resulting in customers consolidating on our identity platform.

With our execution in 2023, we enter 2024 in a position of strength, poised to continue to deliver durable growth, profitability, and cash flow.”

Financial Summary

- for the 4th Qtr Ended December 31, 2023

  • Subscription revenue was $150.3 million in the fourth quarter of 2023, an increase of 70 percent from $88.5 million in the fourth quarter of 2022.
  • Maintenance and professional services revenue was $64.8 million in the fourth quarter of 2023, compared to $66.1 million in the fourth quarter of 2022.
  • Perpetual license revenue was $8.0 million in the fourth quarter of 2023, compared to $14.6 million in the fourth quarter of 2022.
  • Total revenue was $223.1 million in the fourth quarter of 2023, up 32 percent from $169.2 million in the fourth quarter of 2022, outperforming guidance.
  • GAAP operating loss was $(4.7) million, and non-GAAP operating income was $34.7 million in the fourth quarter of 2023, outperforming guidance.
  • GAAP net income was $8.9 million, or $0.20 per diluted share, in the fourth quarter of 2023. Non-GAAP net income was $38.1 million, or $0.81 per diluted share, in the fourth quarter of 2023, outperforming guidance.

- for the Full Year Ended December 31, 2023

  • Subscription revenue was $472.0 million in the full year 2023, an increase of 68 percent from $280.6 million in the full year 2022.
  • Maintenance and professional services revenue was $258.8 million in the full year 2023, compared to $261.1 million in the full year 2022.
  • Perpetual license revenue was $21.0 million in the full year 2023, compared to $50.0 million in the full year 2022.
  • Total revenue was $751.9 million in the full year 2023, accelerating to 27 percent year over year growth from $591.7 million.
  • GAAP operating loss was $(116.5) million, and non-GAAP operating income was $33.5 million in the full year 2023.
  • GAAP net loss was $(66.5) million, or $(1.60) per basic and diluted share, in the full year 2023. Non-GAAP net income was $52.0 million, or $1.12 per diluted share, in the full year 2023.

Balance Sheet and Net Cash Provided by Operating Activities

  • As of December 31, 2023, CyberArk had $1.3 billion in cash, cash equivalents, marketable securities, and short-term deposits.
  • During the full year, 2023, the Company’s net cash provided by operating activities was $56.2 million.
  • As of December 31, 2023, total deferred revenue was $480.6 million, an 18 percent increase from $408.4 million at December 31, 2022.

Key Business Highlights

  • Annual Recurring Revenue (ARR) was $774 million, an increase of 36 percent from $570 million at December 31, 2022.
  • The Subscription portion of ARR was $582 million, or 75 percent of total ARR at December 31, 2023. This represents an increase of 60 percent from $364 million, or 64 percent of total ARR, at December 31, 2022.
  • The Maintenance portion of ARR was $192 million at December 31, 2023, compared to $206 million at December 31, 2022.
  • Recurring revenue in the fourth quarter was $201.5 million, an increase of 41 percent from $142.6 million for the fourth quarter of 2022. For the full year 2023, recurring revenue was $679.6 million, an increase of 36 percent from $498.3 million for the full year 2022.

Recent Developments

Guidance

As of February 8, 2024, CyberArk is issuing guidance for the first quarter and full year 2024 as indicated below.

First Quarter 2024:

  • Total revenue is expected to be in the range of $209.0 million and $215.0 million, representing growth of 29 percent to 33 percent compared to the first quarter of 2023.
  • Non-GAAP operating income is expected to be in the range of $7.5 million to $12.5 million.
  • Non-GAAP net income per share is expected to be in the range of $0.21 to $0.31 per diluted share.
  • Assumes 47.8 million weighted average diluted shares.

Full Year 2024:

  • Total revenue is expected to be in the range of $920.0 million to $930.0 million, representing growth of 22 percent to 24 percent compared to the full year 2023.
  • Non-GAAP operating income is expected to be in the range of $75.5 million to $84.5 million.
  • Non-GAAP net income per share is expected to be in the range of $1.63 to $1.81 per diluted share.
  • Assumes 48.0 million weighted average diluted shares.
  • ARR as of December 31, 2024 is expected to be in the range of $968.0 million to $983.0 million, representing growth of 25 percent to 27 percent from December 31, 2023.
  • Non-GAAP free cash flow is expected to be in the range of $85.0 million to $95.0 million for the full year 2024.

Beachside Commentary

white and blue ocean waves
Photo by Matt Paul Catalano on Unsplash
  • Top and bottom-line beats that are huge and led by a strong Annual Recurring Revenue, or ARR.
  • Demand held up well in this difficult environment while providing success managing its transition to subscription.
  • CYBR provided healthy guidance for 2024 as well being above the Street’s expectations.
  • There is a wide range of product offerings maintaining strong demand while significantly growing profitability across the board.
  • There is a relatively thin float on this stock with less than 48 million shares outstanding to be traded. So when demand spikes given the earnings print and news items that are relevant, the price can easily spike right along with it.

As Cestrian has said so well, over and over, it is about the supply and demand of the underlying equity, that drives price. Both on the upside and downside, it is a larger component than most commentary ever takes into consideration.

Do your due diligence and research or you could wind up on the wrong end.

  • Total revenue grew 32% year-over-year to $223.1M in the fourth quarter ending Dec. 31, 2023.
  • Non-GAAP increased 406% year-over-year to $0.81.
  • Subscription revenue rose 70% year-over-year to $150.3M in the fourth quarter.
  • “….recurring revenue reached 90 percent of our total revenue – “we are now a fully recurring revenue company," said CyberArk's CEO Matt Cohen.
  • Annual Recurring Revenue, increased 36% year-over-year to $774M.
  • FY24 ARR guidance to $968m to $983M (up 25% to 27% year-over-year) ahead of the Street's estimate of $964.4M.
  • CYBR continues to see strength in its identity security solutions with 7-figure deals across many industries as its land and expand strategy is seeing significant momentum of upsell, cross-sell, and new logos.

Recommend you listen or read the Conference Call minutes. Worth your time if you are in this or looking to get in.

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Cestrian Capital Research, Inc - 15 February 2024.

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