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CyberArk Software ( CYBR ) stock crashed late Thursday despite the firm’s Q4 beat after its earnings outlook lagged, while fellow security vendor FireEye ( FEYE ) came up just short on Q4 sales and missed with its Q1 bottom-line guidance. After hours, CyberArk stock reversed an uptrend at the closing bell and was down 7.5% on the disappointing guidance. FireEye stock was down 2.5% in after-hours trading. Both stocks had taken a hit last week after weak guidance from data analytics firm Tableau Software ( DATA ) raised fears of slower IT spending this year — including security spending — as global stock markets have sunk this year on macroeconomic worries. For Q4, CyberArk reported a record-smashing $51.5 million in sales and 39 cents earnings per share ex items, up 42% and 86%, respectively, vs. the year-earlier quarter. Both measures topped the consensus of 15 analysts polled by Thomson Reuters for $43.9 million and 20 cents, and the company’s earlier guidance for $43 million to $44 million and 18-20 cents. CyberArk wrapped up the year with a record $160.8 million in sales and $1 EPS minus items vs. consensus expectations for $153.3 million and 81 cents. Sales grew 56% and EPS rose 89% vs. 2014. Three months ago, CyberArk guided to $152.3 million to $153.3 million and 80-82 cents. EPS Outlook Trails Consensus Wall Street concerns of slowing cybersecurity growth don’t apply to CyberArk, which is “providing a very proactive type of security” and is not dependent on emergency response, CyberArk CEO Udi Mokady told analysts during the company’s earnings conference call late Thursday. But both 2016 and current-quarter EPS guidance trailed analyst expectations, drawing shares down sharply after hours. For Q1, CyberArk guided to 15-16 cents EPS minus items, lagging Wall Street expectations for 17 cents. The company’s guidance is flat to down 6% year over year. Sales views for $42.5 million to $43.5 million topped the consensus model for $41.6 million, up 30% at the midpoint. CyberArk expects to pull in $205 million to $207 million in 2016 sales, up 26%-28%, topping analyst projections for $202.3 million. But the EPS outlook for 83-86 cents fell short of the consensus model for 91 cents and would be down 15.5% at the midpoint of guidance. Privileged Account Security ‘Gaining Traction’ Mokady credited competitive displacements and an increasing number of seven-figure deals for the Q4 and 2015 gains. Existing customers are “taking larger chunks” when they return year over year to sign new deals, he said. Average deal size is about $100,000-plus, he said. CyberArk’s bread-and-butter — privileged account security — is gaining traction. Hackers orchestrating high-profile breaches, such as that of the federal Office of Personnel Management, couldn’t navigate a system without privileged credentials, he said. He likened the ever-growing awareness to the “significant trajectory” firewall security software enjoyed in past decades. That awareness helped CyberArk undercut a larger French competitor for a major deal with a U.S. airline that “turned to CyberArk because the incumbent’s software was process-heavy and could not enhance security” in the way CyberArk can, Mokady said. Last quarter, CyberArk also closed a seven-figure sale with a pharmaceuticals company, deployed six products for a large health care insurance provider, and sent out another half-dozen products for the software division of a large U.S. company, he said. And CyberArk’s Viewfinity is already seeing “strong sales traction,” Mokady said. Through Viewfinity, CyberArk added nearly 300 net new customers in Q4. CyberArk now counts about 2,500 customers, including 450 organically in Q4. Last year, CyberArk spent $30.5 million to acquire Viewfinity, a maker of software designed to secure a network at its endpoints Meanwhile, the federal government on Tuesday unveiled a spending plan that includes $19 billion in cybersecurity initiatives. For CyberArk, that means building on record federal sales, Mokady said. Last year’s 30-day Cybersecurity Sprint, where the federal Office of Management and Budget gave agencies a month to improve their security included several privileged account-centric goals. “The 30-day sprint looks more like the first mile of a marathon,” Mokady said. “It’s not just a sprint and stop, but a lot of pipeline being built.” FireEye Q4 Losses Shrink FireEye, meanwhile, reported Q4 sales of $184.8 million, up 29% from the year-earlier quarter but just shy of the $185.3 million analyst forecast. On Jan. 20, however, FireEye had preannounced Q4 results, saying it expected sales of $184 million to $185 million. It posted a Q4 per-share loss minus items of 36 cents, better than the 38-cent loss in Q4 2014 and beating the 37-cent loss analysts had forecast. For Q1, though, the company said it expected to lose 49 cents to 53 cents per share, ex items, where analysts had forecast just a 40-cent loss. Image provided by Shutterstock . Scalper1 News
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