Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CyberArk Software Ltd (CYBR, Financial) reported strong third quarter results, outperforming guidance across all metrics.
- Subscription Annual Recurring Revenue (ARR) grew 46% year-over-year to $735 million, demonstrating strong demand for subscription-based services.
- The company achieved a record total revenue of $240.1 million, marking a 26% year-over-year increase.
- CyberArk's platform selling approach is gaining traction, with nearly 230 new logos signed in the third quarter.
- The acquisition of Venafi is expected to enhance CyberArk's machine identity security offerings and contribute to future growth.
Negative Points
- The integration of Venafi into CyberArk's operations may present challenges and uncertainties.
- Despite strong growth, the company operates in a tough macroeconomic environment, which could impact future performance.
- There is a significant sequential decrease expected in maintenance ARR in the fourth quarter due to a large cohort of customer renewals.
- Venafi's ARR growth was only around 10% prior to the acquisition, indicating potential challenges in accelerating growth.
- The transition to a subscription model continues to impact maintenance revenue, which decreased year-over-year.
Q & A Highlights
Q: Matt, can you talk about the trend of customers consolidating their identity solutions with CyberArk and how you're driving this within your sales team?
A: Customers are facing an identity crisis due to the threat landscape and are looking for a trusted partner to secure all types of identities. Our conversations with CISOs and CIOs focus on providing security across the spectrum of identities, both human and machine. We use a solution selling approach to offer quick on-ramps and time to value, and a platform selling approach to future-proof customers. Customers are recognizing the need to go faster and deeper with CyberArk, driven by security-minded buyers and trust in our relationship. - Matthew Cohen, CEO
Q: How do you view the growth profile for Venafi relative to CyberArk's organic growth in terms of ARR?
A: We see Venafi contributing well and growing at a higher rate than CyberArk's organic growth. We expect a significant shift towards SaaS in Venafi's bookings, moving from a traditionally on-premise model to a majority SaaS model next year. This aligns with our strategy and the broader market trend towards SaaS. - Joshua Siegel, CFO
Q: Can you elaborate on the opportunity to expand awareness of the machine identity problem across your customer base?
A: We are scaling awareness through sales-driven processes, marketing events, and partner enablement. Events like the Machine Identity Security Summit and our Impact on the Road World Tour have amplified the message. Customers are increasingly aware of the need to manage machine identities due to regulatory changes and the complexity of manual processes. Our marketing team is actively pushing this awareness, and customers are recognizing the urgency to address machine identity security. - Matthew Cohen, CEO
Q: What drove the strong margin outperformance this quarter?
A: The margin outperformance was driven by revenue exceeding expectations, some expenses shifting to Q4, and overall operational efficiency. We continue to focus on strong execution and efficiency in our operations. - Joshua Siegel, CFO
Q: How integrated is the human side of CyberArk's portfolio today, and what are the plans for integrating Venafi?
A: Our immediate priority is integrating Venafi into a Machine Identity Security Solution. We aim to provide shared experiences across human and machine identities, with shared dashboards and discovery. Over time, we will leverage shared services like unified audit and identity management. The integration will evolve, with 2025 focused on machine identity and 2026 on broader platform integration. Customers are already seeing the value in managing human and machine identities under one platform. - Matthew Cohen, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
