CyberArk Software (CYBR) is under heavy pressure this morning (-15%) after lowering Q2 revenue and non-GAAP operating income guidance last night. In case you're not familiar, CyberArk, which made its IPO debut in September 2014, is an Israel-based provider of IT security software.
CYBR's software is specifically designed to protect what are called "privileged accounts." As opposed to an end user account (secretary or receptionist), a privileged account would be a high ranking IT personnel account. Privileged accounts have access to things that an end user would not have access to such as servers, routers, databases etc. As such, sophisticated hackers can do a lot more damage/theft with a privileged account access.
CyberArk's platform proactively protects privileged accounts, monitors privileged activity and detects malicious privileged behavior. Customers use its platform to introduce this new security layer to protect against, detect and respond to cyber attacks before they strike vital systems and compromise sensitive data. Customers include companies in a diverse set of industries, including energy and utilities, financial services, healthcare, manufacturing, retail, technology and telecom, as well as government agencies.
Turning to the guidance, CyberArk now expects Q2 revenue to come in around $57.0-57.5 mln vs prior guidance of $61-62 mln. License revenue is expected to be $30.0-30.5 mln. Non-GAAP operating income guidance was lowered to $8.5-8.9 mln from $10.9-11.7 mln.
The company says it is disappointed that it had to lower Q2 guidance from what was provided in May. The primary reason for the revenue shortfall was CYBR's performance in its EMEA (Europe, the Middle East and Africa) region, where certain deals that management expected would close did not close by the end of the quarter. On the other hand, CYBR says there were a number of positive trends in the quarter. The Americas and APJ (Asia Pacific) continued to grow, its pipeline expanded and market fundamentals for privileged account security across all geographies continued to be robust.
In sum, while the revenue shortfall was not that large, the big decline in the stock price indicates investors are a bit spooked by the new guidance. Also, while the revenue miss was fairly modest, the non-GAAP operating income guidance was reduced by a greater amount on a percentage basis. Perhaps investors also have some concerns about margins. The stock has mostly been trading sideways over the past year, mostly in the $46-56 area but today the stock is making a new 52-week low. Hopefully those deals that did not close by the end of Q2 close soon and the stock gets back on the upswing.