CyberArk’s 4Q Outlook Disappoints; Shares Drop 9%

Shares of CyberArk Software dropped 9.4% on Tuesday after the company reported weaker-than-expected 3Q sales results and provided a 4Q outlook that fell short of the analysts’ estimates. The information technology security provider’s revenues decreased 1.4% year-on-year to $106.6 million and were below analysts’ expectations of $112 million.

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CyberArk’s (CYBR) 3Q adjusted EPS plunged 52.3% to $0.31 year-on-year but surpassed Street estimates of $0.29. The company’s CFO Josh Siegel said, “The acceleration of our SaaS (Software-as-a-Service) and subscription offerings is beginning to impact our reported revenue and profitability, making the P&L in the near term more a lagging indicator of our success.”

For the 4Q, CyberArk provided a revenue and earnings outlook that missed Street expectations at the mid-point. The mid-point of revenues guidance range of $125-$135 million compared to analysts’ estimates of $134.7 million. Similarly, the company projects adjusted EPS between $0.52 and $0.67, which at the mid-point is below the consensus of $0.64. (See CYBR stock analysis on TipRanks).

Following the earnings release, Oppenheimer analyst Shaul Eyal maintained a Buy rating on the stock with a price target of $120 (25.5% upside potential). In a note to investors, Eyal said, “We acknowledge that a SaaS/Subscription transition poses near-term headwinds; however, we do believe the potential end game (following ~8-10 quarters of transition period) should accelerate the subscription flywheel to grow both revenue and operating income in excess of 20%.”

Currently, the Street has a bullish outlook on the stock with a Strong Buy analyst consensus. With shares down nearly 18% year-to-date, the average price target of $124.33 implies upside potential of about 30% to current levels.