Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of CyberArk Software (NASDAQ:CYBR) rose on Friday after the company reported first-quarter earnings and revenue that beat analyst expectations. At 12:30 Friday afternoon, the stock was up about 9% after being up as much as 10% earlier in the day.
So what: CyberArk reported first-quarter revenue of $32.9 million, up 89% year-over-year and about $6 million higher than what analyst were expecting. Sales of CyberArk's cyber security software surged, with license revenue up 119% year-over-year, growing to $20 million. Maintenance and professional services revenue made up the balance of the company's sales, growing 56% year-over-year to $12.9 million.
The company reported non-GAAP net income of $0.16 per share, a big improvement over the $0.14-per-share loss reported in the first quarter of 2014 and eleven cents better than what analysts were expecting. On a GAAP basis, net income came in at $0.12 per share, compared to a loss of $0.35 per share during the first quarter of 2014.
CyberArk's guidance for both the second quarter and the full year exceeded analyst expectations. The company expects revenue in the second quarter to be in the range of $31.5 million to $32.5 million, representing 50% year-over-year growth at the midpoint of that range. For the full year, revenue between $136 million and $138 million is expected, a 33% growth rate.
Now what: CyberArk operates in the very hot cybersecurity industry, and its valuation shows it. CyberArk trades in excess of 20 times 2014 sales based on the latest share count, a valuation that doesn't make much sense given that revenue is only expected to grow by 33% this year.
CyberArk is certainly seeing strong demand for its security software, and the company had a great quarter, but this has to be viewed in the context of the valuation before considering investing in the stock.