CyberArk Software (CYBR) Nearly Doubles in First Two Days After IPO

Joel Anderson |

CyberArk Software IPO, cyber security, online security, icloud, hack, data hacking, scandalsecurity breach first hit. Remember that? That seems like so long ago. That was back before a handful of other major breaches, including Home Depot (HD) just a week ago and, of course, the big one, the Fappening.

Certainly, nothing appears to be standing in the way of the stampede towards a digitized, online consumer culture. No matter how many times something happens that would seem to make it clear that our new cloud culture is woefully insecure, the march in that very same direction has appeared to remain utterly and completely inevitable.

What does that mean? It means that there’s a pretty large unmet need in the market for cybersecurity firms. That’s probably some major part of why CyberArk Software, at the end of its second day as a public company, has already doubled in value.

Cybersecurity Entering Boom Times?

Granted, what CyberArk actually does has little or nothing to do with the data thefts in the news. CyberArk is focused on enterprise solutions for cybersecurity, allowing businesses to protect their most valuable information assets while maintaining a robust IT infrastructure.

Arguably, the company’s not necessarily going to be able to help Target protect credit cards used in their stores or prevent hackers from hacking individual iCloud accounts. However, it’s hard not to think that the massive, public breaches have corporations everywhere thinking hard about what they’re doing to ensure that their intellectual property is safe.

What’s more, for those of us who are pretty sure that the markets aren’t REALLY all that rational, the preponderance of data-hacking scandals this year is likely helping to push shares higher whether the subject’s consistent with CyberArk’s core business or not.

Relevant or Not – A Good Business?

Of course, regardless of whether the market’s exuberance for the company is rational or not, what’s going to matter in the long run is the company’s business. As is the case with any and all IPOs, the first-week shenanigans will probably be completely erased after about a year as actual earnings reports come in.

So does CyberArk have the oomph to keep going? Is this a big splash for a shiny new toy or is it a wise investment in a company poised to dominate a rapidly growing industry?

Equities.com’s Francis Gaskins offered a positive expectation for the debut on Tuesday, pointing to the company’s robust balance sheet. That’s because the company is profitable. That’s right, a tech IPO for a profitable company, what will we think of next?

Revenue grew a hair under 30% in 2012 and a hair over 40% in 2013 with similar growth in its gross income over those same periods. And, while net income declined 15% in 2013, it was still there and had grown by over a third the year prior. The company’s revenue is split almost down the middle between licensing fees and maintenance and professional services, and the renewal rate for the company’s services is in excess of 90%.

CyberArk is also quick to point out its high level of adoption among the biggest companies in the world. It’s currently serving over 35 Fortune 100 companies and 17 of the world’s 20 biggest banks, clients who are likely taking their cybersecurity extremely seriously.

A Chance to be a Leader in a Growing Industry

CyberArk may or may not be on top of the cybersecurity heap a year or five years from now, but this is clearly a growth industry. And that’s likely the very reason that the stock is soaring today. There’s already a lot of need out there and it’s just ramping up as companies everywhere are eager to take advantage of the increased efficiency of an online world without sacrificing security.

CyberArk may or may not be the company that’s going to ride that tidal wave all the way into the future, but the chance that it will be among the leaders certainly appears to have the stock popping for the near future.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
TGT Target Corporation 76.98 -0.96 -1.23 7,173,255
HD Home Depot Inc. (The) 129.68 -0.19 -0.15 4,065,425
CYBR CyberArk Software Ltd. 49.78 1.26 2.60 301,519

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