CyberArk sets terms for $75m Nasdaq IPO


CyberArk plans to issue 5.36 million shares at $13-15 a share later this month.

Israeli information security company CyberArk is taking the final steps towards its Nasdaq IPO. The company yesterday revised its draft prospectus for the offering, which now contains its particulars. CyberArk plans to issue 5.36 million shares at $13-15 a share, thereby raising $69.7-80.4 million (an average of $75 million), at a company value of $384-444 million (an average of $414 million) after money. No offer of sale will be included in the IPO. The IPO is expected during the week of September 22.

Deutsche Bank, JP Morgan, and Barclays Capital will be the chief underwriters, and William Blair, Nomura and Oppenheimer will be the secondary underwriters. Following the IPO, CyberArk's shares will be traded under the CYBR ticker symbol. The underwriters will receive an option to purchase an additional 804,000 shares, which would increase the company's cash by $10.5-$12.1 million (an average of $11.3 million).

CyberArk monitors and counters the threat of privileged accounts in organizational computer systems. These accounts, which enable parties not entitled to access to sensitive information to obtain authorized access to such files and processes, are part of the default option in the operation system, and were used in quite a number of break-ins in recent years.

Udi Mokady (45), CyberArk's CEO since 2005, founded the company 15 years ago, making it an old man by high-tech standards. The company chairman is Gadi Tirosh, who represents Jerusalem Venture Partners (JVP), the company's biggest investor (46.6% before the IPO, 36.8% after it), on the CyberArk board of directors. Goldman Sachs owns 24.1% of the company (18.8% after the offering), and Vertex Venture Capital owns 11.6% (9.1% after the offering). Mokady himself owns 4% of the company's pre-IPO capital (3.4% post-IPO).

The company recently revised its second quarter results. Its second quarter revenue totaled $21.3 million, reflecting 29.4% annual growth and 22.7% quarterly growth. CyberArk derives its revenue from the sale of licenses to use its software, and from the sale of maintenance services. License sales accounted for 52.2% of revenue in the second quarter, down from 58.9% in the corresponding quarter last year.

CyberArk has been making a profit for at least two and a half years, a respectable record, given the tendency of companies like it to invest a great deal in sales and marketing at the expense of their profit. CyberArk's operating profit in the second quarter was $3.1 million, compared with $2.9 million in the second quarter of 2013 and a negligible $190,000 in the first quarter of 2014, making its second quarter operating profit margin 14.4%, compared with 17.5% in the second quarter of 2013.

The company posted a $2.1 million net profit in the second quarter, compared with $2.6 million in the corresponding quarter last year and a $1.2 million loss in the first quarter. The erosion of its operating profit is reflected in its net profit margin, which declined from 15.8% in the second quarter of 2013 to 5.8% in the second quarter of 2014.

Published by Globes [online], Israel business news - - on September 11, 2014

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