For a quick recap on the company, CYBR specializes in privileged account security offerings. As opposed to an end user account which may be a secretary or a receptionist's access to a business network, a privileged account would be the IT Database Manager or some other high ranking IT personnel account. Privileged accounts have access to things that an end user would not have access to. Examples include servers, routers, databases, IT infrastructure. As such, sophisticated hackers can do a lot more damage/theft with a privileged account access as opposed to an end user access code.
Its products include Enterprise Password Vault, which prevents user passwords and SSH keys from being hacked, Privileged Session Manager, which protects window-based systems, databases, virtual machines, websites, and network devices, and Privileged Threat Analytics.
For the quarter, CYBR generated EPS of $0.48, easily out-pacing the $0.27 consensus, and nearly doubling on a year/year basis. In addition to the healthy revenue growth, as discussed below, gross margin expanded to 88% compared to 86% in the year ago quarter. During the earnings call last night, management stated that higher utilization of its professional services team resulted in the improved gross margin for the quarter.
Non-GAAP operating income also nearly doubled year/year to $21.0 million, hitting a new quarterly record for the company, while net cash flow from operations of $89.2 million over the first nine months of 2018 have already exceeded last year's total.
On the topline, revenue jumped by 31% to $84.7 million, beating analysts' $78.8 million expectation, while also setting a new company record. Driving the upside performance was the addition of 200 new logo adds, putting CYBR at over 4,200 customers overall. CYBR is not only rapidly expanding its client base, but, it is also having success landing corporate bellwethers, as it now servers over 50% of the Fortune 500.
What's especially encouraging about its growth is that it is broad-based and diversified. For example, it saw solid growth in every geography, with the Americas delivering another record quarter, up more than 20%. EMEA was even more impressive, with revenue surging by 40% in Q3. Beyond geographic diversification, CYBR also experienced broad-based demand across verticals, with five verticals growing by 50% or faster. These include manufacturing, insurance, retail, telecom and professional services.
There are several main catalysts that are driving CYBR's impressive performance. From a general perspective, awareness and demand for privileged access security as a whole is rising, and, "stronger than ever", according to the company. And, the rising demand is worldwide. Also, privileged access is seen as integral to the execution of digital transformation and cloud migration strategies.
Company specific-wise, over the past 18 months, CYBR has introduced a new, simpler pricing model, and it has also launched the latest version of its software (Version10). These actions, along with some new key partnerships (Ansible, Chef, Puppet), have helped drive demand higher.
4Q18 Outlook & Conclusuion
Looking out to Q4, CYBR is forecasting EPS of $0.58-$0.60, ahead of the $0.51 consensus, on revenue of $94.75-$96.25 million, inline with the $94.9 million expectation. Non-GAAP operating income is expected to be in the range of $27.3-$28.5 million, or an operating margin of 29% to 30%.
To conclude, there has clearly been no let-up in business for CYBR, and no let down for investors as the company continues to outperform expectations. CYBR is benefiting from a very healthy cyber-security market right now, but, it is also doing its part, executing well and keeping a lid on costs. For example, Sales & Marketing was up a very manageable 15% for the quarter. In short, CYBR's exceptional performance and growth make it a premier name in the highly competitive cyber security space.