Nearly 90% of security professionals believe that an enterprise's IT infrastructure is not fully protected unless its privileged accounts are secured, according to a survey by CyberArk Software Ltd. (NASDAQ:CYBR). This global demand for cybersecurity solutions that safeguard an organization's most sensitive data is helping to fuel CyberArk's growth, as evidenced by its strong first-quarter results.

CyberArk Software results: The raw numbers

Metric

Q1 2018

Q1 2017

Year-Over-Year Change

Revenue

$71.783 million

$59.035 million

22%

Adjusted net income

$11.811 million

$10.247 million

15%

Adjusted EPS

$0.32

$0.28

14%

Data source: CyberArk Software Q1 2018 earnings press release.

What happened with CyberArk Software this quarter?

License revenue rose 17% to $38.5 million, while maintenance and professional services revenue leapt 28% to $33.3 million. In all, total revenue increased 22% to $71.8 million, which bested CyberArk's forecast for sales of $68.25 million to $69.75 million.

"We were pleased to start 2018 with a very strong quarter, exceeding our guidance across revenue, operating income, and EPS," CEO Udi Mokady said in a press release. "We continue to see robust demand for our solution across geographies and vertical markets."

CyberArk ended the quarter with more than 3,800 customers, up from about 3,000 in the first quarter of 2017. These new customers combined with strong add-on business are helping to drive the company's sales sharply higher.

"Existing customers continue to take a strategic approach to privileged-access security, rolling out multiphase CyberArk programs," Mokady said during a conference call with analysts. "We are on pace for a third of our customers to expand their CyberArk deployments again this year."

A person sitting in front of multiple computer screens

CyberArk aims to safeguard companies' most crucial data. Image source: Getty Images.

Still, non-GAAP operating income -- which excludes share-based compensation and acquisition-related items -- was essentially flat year over year at $12.6 million. CyberArk's operating expenses increased 30% to $49.8 million, mostly due to employee headcount growth, which led operating margin to decline to 18%, from 22%  in the year-ago period.

All told, non-GAAP net income, which benefited from a lower effective tax rate, rose 15% to $11.8 million, or $0.32 per share.

Looking forward

For the second quarter, CyberArk is guiding for revenue of $72 million to $73.5 million, representing year-over-year growth of 25% to 28%. The company also expects non-GAAP operating income of $10.2 million to $11.4 million and earnings per share of $0.23 to $0.25.

Additionally, CyberArk boosted its full-year guidance, which now includes:

  • Total revenue of $315 million to $319 million, signifying year-over-year growth of 20% to 22%, and up from a previous forecast  of $312 million to $316 million.
  • Non-GAAP operating income of $57.5 million to $60.5 million, up from $54.5 million to $57.5 million.
  • Non-GAAP EPS of $1.31 to $1.37, up from $1.18 to $1.24.

"Our results reflect the momentum in the market, our investments in innovation, and the healthy demand for privileged access security across all geographies," Mokady  said. "Our execution in the first quarter, robust pipeline, and industry leadership positioned us well to execute our strategy for the remainder of the year."

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends CyberArk Software. The Motley Fool has a disclosure policy.