What’s in Store for CyberArk (CYBR) This Earnings Season?

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CyberArk Software CYBR is set to report fourth-quarter 2017 results on Feb 15. The company delivered a positive earnings surprise of 38.9% in the previous quarter. Let’s have a look at the factors that may influence fourth-quarter results.

Partner Program & Sales Strategies to Drive Revenues

We remain optimistic about the company’s top-line performance. The Zacks Consensus Estimate is pegged at $75.6 million, indicating year-over-year increase of 17.5%. The increase is likely to be backed by steady client addition via enhanced product offerings and expanding sales capabilities.

It should be noted that in the third quarter, the company showed signs of revival wherein its revenue growth rate once again accelerated to almost 18% from the slowest-ever revenue growth rate of 14% in the second quarter.

We believe that the revival was a result of the company’s initiatives, which included enhancing relationship with channel partners and go-to-market sales strategy. The company, on the third-quarter conference call, noted that channel partners were a significant driver of its go-to-market sales strategy and generated roughly 60% of the business.

We believe that the aforementioned strategy will continue to benefit the company and help in bringing new customers, thereby boosting revenues.

Additionally, CyberArk’s expansion strategy through acquisitions is also encouraging. During the third quarter, the company revealed that its newly acquired Conjur business had received strong customer response. Conjur specializes in offering DevOps security software. Therefore, the acquisition is anticipated to boost CyberArk’s capabilities in empowering companies to accelerate software deployment with more security and thereby attract customers.

Apart from this, the company’s C3 technology alliance program is also attracting deals, in turn, bolstering its revenues. CyberArk has nearly 70 partners, under this program, which includes companies like Proofpoint PFPT , Qualys QLYS and ServiceNow NOW .

Escalating Expenses to Weigh on Profitability

We are apprehensive about the increasing operating expenses pertaining to initiatives related to enriching the solutions suite as well as enhancing its sales competency. Though these investments will have benefits over the long term, we anticipate these to be a drag on the company’s profitability and the hence the bottom line in the near term.

Notably, the Zacks Consensus Estimate for fourth-quarter 2017 earnings stands at 36 cents per share, reflecting year-over-year decline of 12.2%.

CyberArk Software Ltd. Price and EPS Surprise

CyberArk Software Ltd. Price and EPS Surprise | CyberArk Software Ltd. Quote

CyberArk has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



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