CyberArk Software Ltd. CYBR has delivered an impressive performance in 2024, surging 57.5% in the past year. This robust performance has significantly outperformed the broader Zacks Computer and Technology sector, the S&P 500 and the Zacks Computers - IT Services industry’s growth of 34.7%, 25.6% and 15.4%, respectively, reinforcing its position as a standout performer in the cybersecurity space.
CyberArk’s strong rally over the past year highlights the confidence that the investors have in CYBR’s identity security solutions and its strategic initiatives. Other factors, including CYBR’s robust quarterly results, rapid annual recurring revenue (ARR) growth and success in transitioning to a subscription-based model, have driven its outperformance.
With this momentum, investors are left pondering whether CyberArk will continue its upward momentum in 2025.
CyberArk Leads the Identity Security Space
CyberArk is dominating the identity security market with its sophisticated products. As cyber threats grow more sophisticated, organizations are intensifying their focus on privileged access management and Zero Trust capabilities. CYBR’s offerings, such as its Zero Standing Privilege approach, are well-aligned with these industry trends, ensuring its significance in the ever-changing threat landscape.
CyberArk Price Performance Chart
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CYBR’s $1.54 billion acquisition of Venafi, a leader in machine identity management, strengthens its position in the security space. This move broadens CyberArk’s capabilities in machine-to-machine security, complementing its core human identity offerings. While integration challenges exist, the long-term potential to expand its addressable market and enhance ARR growth makes this acquisition a promising growth driver.
CYBR is also a crucial security ally for more than 5,400 global businesses, which comprises over 50% of the Fortune 500 and 35% of the Global 2000 companies. One of the key drivers for customer growth is CyberArk’s strategic partnerships with tech giants like Microsoft MSFT, Amazon’s AMZN Amazon Web Services (“AWS”) and Alphabet’s GOOGL Google Cloud.
By integrating its solutions with Microsoft’s Azure Active Directory, AWS’ cloud infrastructure and Alphabet’s Google Cloud, CyberArk deepened its ability to secure cloud environments, offering robust identity management solutions across various IT ecosystems. With all these enhancements in place, CyberArk provides its customers with comprehensive and integrated security solutions, making CYBR an indispensable player in today’s cybersecurity landscape.
Resilient Financial Performance of CyberArk
CyberArk’s strong financials underscore its operational resilience. In the third quarter of 2024, the company posted a 26% year-over-year revenue increase to $240.1 million, alongside a non-GAAP operating margin of 14.7%, a 590 basis point expansion. These results exceeded expectations, demonstrating CyberArk’s ability to balance profitability with growth.
The company raised its full-year 2024 revenue guidance to the $983-$989 million band, indicating robust 31% growth at the midpoint. A key highlight was the 31% year-over-year surge in ARR to $926 million, driven by a 46% increase in subscription ARR. This growth reflects the strong adoption of CyberArk’s identity solutions and provides stable revenue visibility moving forward.
Analysts remain optimistic about the company’s future. The Zacks Consensus Estimate for 2025 suggests robust growth in revenues and earnings. Moreover, CyberArk’s long-term earnings growth rate is projected at 20%, surpassing the industry average of 16.6%.
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Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Valuation Concerns Persist for CyberArk
Despite its strengths, CyberArk’s valuation remains a point of concern. The stock trades at 96.59X forward 12-month earnings, significantly higher than the sector average of 37.77X. Its forward 12-month sales multiple of 11.58X also exceeds the sector average of 11.2X. These elevated valuations suggest that much of its future growth is already priced in, leaving the stock vulnerable to market corrections or earnings disappointments.
CyberArk P/S (F12M) Chart
Zacks Investment Research
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Conclusion: Hold CyberArk Stock for Now
CyberArk’s impressive rally in 2024 underscores its position as a leader in the cybersecurity sector. Its focus on identity security, strategic acquisitions and growing ARR base offer strong long-term growth prospects. However, its lofty valuation warrants caution.
For existing shareholders, holding the stock remains a prudent strategy to capitalize on its long-term potential while navigating current market dynamics. However, new investors may benefit from waiting for a more attractive entry point. CyberArk currently carries a Zacks Rank #3 (Hold), reflecting a balanced outlook amid its robust fundamentals and valuation challenges. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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