Israeli cybersecurity company CyberArk Software (Nasdaq: CYBR) saw its market cap increase by $1.6 billion in two days last week to an all-time high of $11.8 billion. Since the company held its Wall Street IPO almost a decade ago in September 2014 at a company valuation of $473 million, the stock has yielded a return of 1,658%.
As of today, CyberArk is the fifth most valuable Israeli company on Wall Street, having recently overtaken Amdocs and Elbit Systems. In the cybersecurity sector it is the second most valuable Israeli company after Check Point Software Technologies Ltd. (Nasdaq: CHKP), which is also trading at peak levels with a market cap of $19.2 billion. CyberArk and Check Point rose by 89.4% and 28.1% respectively over the past year. Another cybersecurity company, Palo Alto Networks (Nasdaq: PANW), which is not incorporated in Israel but was founded by Israeli Nir Zuk, is far larger than both of them with a market cap of $118 billion.
CyberArk was founded in 1999 by Udi Mokady and Alon Cohen. Mokady serves as the company's CEO from 2005 until last year before becoming executive chairman and being succeeded by Matt Cohen.
Over the years, CyberArk has had a specific specialization in the cybersecurity market - security and management solutions of privileged access accounts in enterprise software systems, for example accounts of IT professionals with broad access permission. However, in 2020, the company entered a new market for the first time, identity management, after acquiring a US company in the field, and today CyberArk describes itself as an identity security company. In recent years, CyberArk has also completed a process to change its business model for selling licenses to subscription, which bring in recurring revenue.
"32% growth and record demand for our solutions"
Last Thursday, CyberArk surprised the market with stronger than expected results for the fourth quarter of 2023 while providing positive guidance for 2024. Fourth quarter revenue was $223 million, up 31.9% from the corresponding quarter of 2023, and higher than the analysts' expectations of $210 million. Full-year 2023 revenue was $752 million, up 68% from $472 million in 2022.
CEO Matt Cohen said that the company is seeing record demand for its SaaS solutions and added, "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."
CyberArk's GAAP net profit was $8.9 million in the fourth quarter, although there was still a net loss of $66.5 million in full-year 2023, narrowing 49% from 2022. Non-GAAP net profit in the fourth quarter of 2023 was $38.1 million or $0.81 per share, when the analysts had predicted $0.47 per share. Non-GAAP net profit in full year 2023 was $52 million after a net loss in 2022. The gap between the GAAP and non-GAAP results was mainly due to capital remuneration for employees, which amounted to $121 million in 2023, down from $140 million in 2022.
"Increasing effectiveness but also the AI risk"
In the first quarter of 2024, CyberArk expects revenue of $209-215 million, reflecting 29%-33% growth from the corresponding quarter of 2023, and above the analysts' expectations. The company expects non-GAAP earnings per share of $0.21-0.31 with the analysts predicting $0.24. In full year 2024, CyberArk expects revenue of $920-930 million, up 23% from 2023 and earnings per share of $1.61-1.81, in line with the analysts' expectations.
CyberArk chairman Udi Mokady says that during 2023, the company continued to identify a growing level of risk with the rise in frequency and severity of cybersecurity breaches. He also referred to AI and said, "It creates the ultimate paradox - it makes us more effective and at the same time increases the internal and external risks exponentially."
CyberArk currently has 3,000 employees worldwide including 950 in Israel and is hiring 100 new employees for its centers in Petah Tikva and Beersheva.
Published by Globes, Israel business news - en.globes.co.il - on February 12, 2024.
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