Shares of cybersecurity company CyberArk Software (CYBR -2.77%) slumped on Friday following the release of preliminary second-quarter results. Both revenue and earnings are now expected to come in below previous guidance, with the shortfall driven by the company's failure to close certain deals on time. CyberArk stock was down 17% at 12:15 p.m. EDT.
CyberArk now expects to report second-quarter revenue between $57.0 million and $57.5 million, below the company's previous guidance of $61.0 million to $62.0 million. GAAP (generally accepted accounting principles) operating income is expected to be between $0.7 million and $1.1 million, while non-GAAP operating income is expected between $8.5 million and $8.9 million. That's a major shortfall compared to previous non-GAAP operating income guidance, which called for a range of $10.9 million to $11.7 million.
CyberArk chairman and CEO Udi Mokady blamed delays in closing deals in the Europe, Middle East, and Africa (EMEA) markets for the disappointing results. The company is in the process of rectifying the situation, according to Mokady: "We are actively working to determine and implement the appropriate steps to improve execution, drive stronger results and enhance visibility into our EMEA performance."
Mokady pointed to some silver linings, saying that there "were a number of positive trends in the quarter." Revenue from both the Americas and Asia Pacific region grew, the company's pipeline of deals expanded, and market fundamentals for privileged-account security remained robust in all regions. Mokady sees the second quarter as a minor issue in the long run: "We believe that our significant greenfield opportunity, leadership position in the market, and strategy will deliver long term value to our shareholders."
CyberArk will report its full second-quarter results after the market closes on Aug. 8. The new revenue guidance range represents 14.5% year-over-year growth at the midpoint, a fairly dramatic slowdown compared to recent quarters. Revenue expanded by 25.8% during the first quarter and by 25.1% during the fourth quarter of last year.
With CyberArk stock trading for more than six times last year's sales and more than 50 times last year's earnings, sluggish growth won't cut it. The big question: Are there deeper problems beyond contract-signing delays? Investors should get some answers on Aug. 8.