Three Israeli cybersecurity companies traded on Wall Street published their financial results last week - CyberArk (Nasdaq: CYBR), Varonis Systems (Nasdaq: VRNS), and Tufin (NYSE: TUFN), showing rising revenue, reflecting growing awareness of the need for cybersecurity following more and more headlines about cyberattacks. Nevertheless, all three companies, which deal with different aspects of cybersecurity, have share prices trading far below last year's peak.
CyberArk's investors like the change
CyberArk beat the analysts in its fourth quarter and full year 2021 financial report published on Thursday and provided annual 2022 guidance for higher revenue than the analysts' expectations but also a bigger net loss. CyberArk is in the midst of changing its business model and reported a faster than expected pivot to the subscription model and as a result the company's share price rose 8% after it published its results, while on Friday the share price slipped 0.42% to $154.93, giving a market cap of $6.16 billion.
CyberArk, which was founded by CEO Udi Mokady, provides cybersecurity solutions that focus on preferential accounts and enterprise identity management. CyberArk's fourth quarter revenue was $151 million, up 4.7% from the corresponding quarter of 2020, with revenue from subscription growing 142% from the corresponding quarter to $47.6 million. In 2020 revenue was $503 million, up 8.3% from 2020, while revenue from subscriptions in 2021 was $135 million, up from $56.4 million in 2020.
The shift from the licensing model to the subscription model has hit profitability in the short term. CyberArk made a GAAP net loss of $16.9 million in the fourth quarter of 2021 compared with a GAAP net profit of $12.1 million in the corresponding quarter of 2020. In 2021, CyberArk made a GAAP net loss of $83.9 million, compared with a GAAP net loss of $5.8 million in 2020. Non-GAAP net profit in the fourth quarter of 2021 was $11.8 million ($0.28 per share), down from the corresponding quarter of 2020 much higher than the analysts' expectations. Non-GAAP net profit in 2021 was $13.4 million down from $81.1 million in 2020.
However, CyberArk sees a higher than expected non-GAAP net loss of $10.1 million in the first quarter of 2022 and a net loss of $26-40 million in all of 2022.
Mokady said, "2021 was a historic year for CyberArk characterized by transformation, outperformance and acceleration. As we moved through 2021, momentum continued to build culminating in a record fourth quarter."
Varonis also growing through subscription sales
Varonis, which published its financial results last week, has also seen its subscription sales grow. The company, headed by cofounder and CEO Yaki Faitelson, focuses on security solutions for analyzing data in enterprises. Varonis reported $390 million revenue in 2021, up 33% from 2020, including $127 million in the fourth quarter of 2021, up 35% from the corresponding quarter of 2020. Varonis, which began the switch to the subscription model before CyberArk saw subscription revenue grow 66.8% in 2021 to $269 million.
GAAP net loss was $24.9 million in the fourth quarter and $117 million in 2021. Non-GAAP net profit grew 50.3% to $18.5 million in the fourth quarter and non-GAAP net profit in 2021 was $15.6 million, swinging to profit from a loss in 2020.
Faitelson said, "Our technology has never been a better fit than for today's market, as the acceleration of secular trends impacting companies further drives the global need for the Varonis Data Security Platform. Looking ahead, our leadership in the market, coupled with our ongoing innovation and execution, firmly positions us to better protect our customers, offer more value to our partners, and deliver durable long-term growth to our stockholders."
In the days following publication of the financial report, Varonis' share price rose 7% and it is currently at $40.76, giving a market cap of $4.38 billion.
Tufin reported higher growth in 2021
Like CyberArk and Varonis, Tufin is also in the process of changing its business model. Tufin focuses on firewall management and network security policy software. The company managed by cofounder Ruvi Kitov reported 2021 revenue of $111 million, up 10% from 2020 including revenue of $35.8 million in the fourth quarter. GAAP net loss in the fourth quarter was $4 million, narrowing from $4.4 million, in the corresponding quarter of 2020. GAAP net loss in 2021 was $36.9 million, 4.3% higher than in 2020. Non-GAAP net loss in the fourth quarter was $1.6 million ($0.04 per share), beating the analysts' expectations. GAAP net loss in 2021 was $25.8 million compared with $20.6 million in 2020.
Tufin sees revenue of $23-27 million in the first quarter of 2022 with an operating loss of $8.1-11.5 million. Annual revenue is expected to be $123-129 million. Kitov said there is growing awareness in the field of cybersecurity and organizations are allocating more resources to applying automation based on data security policy.
Tufin's market cap is $354 million, after the company's share price fell 38% over the past year and has fallen 33% since its IPO in 2019.
Published by Globes, Israel business news - en.globes.co.il - on February 13, 2022.
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