CyberArk Software Ltd.

CYBR Details

CyberArk Software Ltd. (NASDAQ: CYBR) is an Israel-based supplier of Information Technology (IT) security solutions that defend businesses from cyber threats. Privileged Access Manager, Endpoint Privilege Manager, Cloud Entitlements Manager, Privileged Session Manager, Privileged Threat Analytics, and CyberArk Privilege Cloud are some of the company's products and services. The company generates revenues through subscription contracts, perpetual licenses, and maintenance and provision of professional services of its products. The United States is CYBR's primary source of revenue, although it also has operations in the United Kingdom, Europe, the Middle East, and Africa, among other countries.

Expansion of Security Offerings: On June 9, 2021, CYBR released its software on Amazon Web Services (AWS) Marketplace, including Cloud Entitlements Manager, Endpoint Privilege Manager, and CyberArk Workforce Identity. Additionally, AWS clients may use CyberArk's Identity Security solutions to eliminate unwarranted rights and permissions on endpoint devices, servers, and throughout their cloud environments.

H1FY21 Results: The company reported a 7.25% decline in total revenues to USD 213.32 million during H1FY21 (ended June 30, 2021) compared to USD 230.00 million during H1FY20, primarily due to a decline in subscription and perpetual license revenues. However, the company reported a decline in net losses to USD 1.93 million during H1FY21 vs. USD 37.95 million reported in H1FY20. As of June 30, 2021, its cash and cash equivalents (including short-term bank deposits and marketable securities) were USD 976.11 million, with a total debt of USD 511.12 million.

Key Risks: Third-party cloud infrastructure service providers, primarily Amazon Web Services (AWS), manage CYBR's SaaS solutions.  Cloud service providers' operations and facilities are not under the authority of the firm. As a result, CYBR may be unable to fulfil its pledged uptime if cloud service providers' services fail or become unavailable due to lengthy outages, cyber-attacks, disruptions, or non-renewal of its contracts, resulting in a reduction in revenues and cash flows of the company.

Outlook: As of August 12, 2021, CYBR expects its Q3FY21 revenues to range between USD 116.0 to USD 124.0 million, with non-GAAP operating income to be around USD (6.0) to USD 1.0 million. Non-GAAP net loss per share is expected to be in the range of USD 0.19 to USD 0.02, assuming 40.2 million weighted average basic and diluted shares.

For FY21, CYBR expects its total income to range between USD 484.0 to USD 496.0 million, with non-GAAP operating income to be around USD 7.0 to USD 17.0 million. Non-GAAP net income per share is anticipated to be in the range of USD 0.01 to USD 0.26, assuming 40.8 weighted average diluted shares.

Valuation Methodology: EV / Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

CYBR Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: CYBR's stock price surged 48.64% in the past nine months and is currently in the higher-band of the 52-week range of USD 95.12 to USD 169.70. The stock is currently trading far above its 50 and 200 DMA levels, and its RSI Index is 74.02. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 142.24. Considering the significant rise in the stock price, we believe the current trading levels adequately reflect the decent business fundamentals and hence, we recommend a "Sell" rating on the stock at the current price of USD 165.87, down 0.57% as of August 26, 2021, at 2:35 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

*All forecasted figures and industry information have been taken from REFINITIV.