CyberArk Software Ltd. (CYBR) has showcased remarkable growth in 2024, with its stock climbing 57.5% over the past year. This impressive performance outstrips the broader Zacks Computer and Technology sector, the S&P 500, and the Zacks Computers – IT Services industry, which saw gains of 34.7%, 25.6%, and 15.4%, respectively. Such figures reinforce CyberArk’s status as a leader in the cybersecurity sector.
The significant increase in CyberArk’s stock price signifies strong investor confidence in the company’s identity security solutions and its strategic initiatives. Factors driving this success include solid quarterly financial results, a rapid rise in annual recurring revenue (ARR), and effective shifts to a subscription-based business model.
Given this momentum, many investors are curious about whether CyberArk can sustain its growth into 2025.
CyberArk at the Forefront of Identity Security
CyberArk is leading the identity security market with its advanced offerings. As cyber threats become increasingly complex, businesses are prioritizing privileged access management and Zero Trust strategies. CyberArk’s innovative approaches, like its Zero Standing Privilege strategy, align well with these industry shifts, cementing its role in the constantly evolving threat environment.
CyberArk Price Performance Chart
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The company’s acquisition of Venafi for $1.54 billion, a specialist in machine identity management, further enhances CyberArk’s expertise in the security field. This strategic move not only expands CyberArk’s capabilities with machine-to-machine security but also strengthens its core focus on human identity management. Although there are challenges in integrating the two companies, the acquisition holds promise for boosting the addressable market and enhancing ARR growth.
Currently, CyberArk serves as a key security partner for over 5,400 global firms, including more than half of the Fortune 500 and 35% of the Global 2000. Partnerships with major technology players like Microsoft (MSFT), Amazon (AMZN) Web Services, and Alphabet (GOOGL) Google Cloud are vital to its growth, enhancing its market presence.
By integrating its technologies with Microsoft’s Azure Active Directory, AWS’s infrastructure, and Google Cloud, CyberArk has improved its capacity to secure cloud environments. This provides clients with comprehensive identity management solutions, reinforcing CyberArk’s essential role in today’s cybersecurity landscape.
Strong Financial Outcomes for CyberArk
CyberArk’s financial results reflect its resilience. In the third quarter of 2024, the firm recorded a revenue increase of 26% year-over-year, reaching $240.1 million, along with a non-GAAP operating margin of 14.7%, showing a 590 basis point improvement. These results surpassed expectations, indicating CyberArk’s ability to manage profitability while fostering growth.
The firm raised its guidance for full-year 2024 revenue to between $983 million and $989 million, predicting a robust 31% growth at the midpoint. Notably, ARR surged 31% year-over-year to $926 million, driven by a 46% rise in subscription ARR. This growth reflects strong market acceptance of CyberArk’s identity solutions and offers stable revenue outlooks going forward.
Market analysts express optimism about CyberArk’s future. The Zacks Consensus Estimate for 2025 indicates strong revenue and earnings growth, with CyberArk’s long-term earnings growth rate projected at 20%, outpacing the industry average of 16.6%.
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Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Valuation Challenges for CyberArk
Despite its numerous strengths, CyberArk faces valuation concerns. The stock currently 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 surpasses the sector average of 11.2X. These inflated valuations may imply that much of its growth potential is already reflected in the stock price, making it susceptible to market corrections or earnings misses.
CyberArk P/S (F12M) Chart
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Conclusion: A Cautious Hold on CyberArk Stock
CyberArk’s remarkable performance in 2024 solidifies its position as a leader in cybersecurity. The company’s emphasis on identity security, strategic acquisitions, and an expanding ARR base offer promising long-term growth potential. However, the elevated valuation encourages investors to proceed with caution.
For current shareholders, continuing to hold the stock is a sensible approach to harness its long-term potential while navigating current market dynamics. New investors may want to wait for a more favorable entry point. CyberArk holds a Zacks Rank #3 (Hold), indicating a balanced outlook amid its robust fundamentals and valuation uncertainties. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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