On this warm, Saturday afternoon (yea, I got up late), I was scouring once again the news headlines of what I could write about today. It’s all the usual stuff, Putin and the midterm elections, North Korea sending more operatives to other countries to launch Cyber attacks, and Iran saber rattling with new threats of Cyber attacks, blah, blah, blah, etc.
So today, I thought I would bring you some cheery news on a Cyber security company in which you might be interested to buy their stock in. The company is called Cyber Ark Security, and is based out of Israel. Although it is a smaller company than most American Cyber security companies, the chart below shows it is on a stellar growth path:
So, why should you invest in this little company? Here are the following reasons:
*It totally decimated Wall Street’s expectations for 2Q earnings.
*Given that the Cyber security landscape is a brutally threatening one; at least from the perspective of customer acquisition, Cyber Ark is amping up its sales and marketing efforts by at least 20%. Because of this, it brought on 200 brand new customers to add its already 4,000 strong customer base.
*It has added over 1,000 new customers in the space of just one year, these include four Fortune 500 organizations and 15% of its business comes from government contracts.
*CyberArk signed 31 new deals with U.S. Federal Agencies just last quarter.
*A European government agency struck a seven-figure deal with the company in order to beef up its line of defenses, after they became a victim a major Cyber attack, where large amounts of confidential information and data were stolen.
*One of Cyber Ark’s lines of expertise is actually in the protection of privileged accounts using Two Factor Authentication (2FA).
*The company’s revenue shot up 35% from the prior-year period, which is also indicative that customers are buying more than just one kind of solution.
*CyberArk claims that over 55% of its licensing revenue came from add-on businesses last quarter from existing customers. CyberArk also gets nearly 52% of its revenue from the licensing business, which means that repeat business from existing customers is a huge revenue driver for them. This means that the company’s products and services are literally selling themselves.
*The company’s gross margin rose significantly from 82% to almost 85% YoY (Year over Year).
* It’s deferred revenue, jumped 56% annually to $129.6 million just in the last quarter. In case you don’t know what deferred revenue is, here is a definition:
“Deferred and unearned revenue are accounting terms that both refer to revenue received by a company for goods or services that haven’t been provided yet.” (SOURCE: https://www.fool.com/knowledge-center/the-difference-between-deferred-revenue-and-unearn.aspx).
So in other words, if Cyber Ark cannot deliver on some products and services to customers, part of that $129.6 Million must be returned.
*Cyber Ark’s earnings are expected to increase at a compound annual growth rate of more than 26% for the next five years.
*On the downside, CyberArk trades at 168 times trailing earnings and 52 times forward earnings, which is considered to be very expensive, given that the industry Price to Earnings Ratio is at 56.
So, given all this information, would you buy CBYR (this is the company’s ticker symbol, and it is traded on the NASDAQ), would you buy any shares of this? If I had some extra spending money, sure I would buy some. Although the stock might be risky in terms of expense, there are more that enough positive indications that one could be very well paid for their investment in the way of a nice dividend.
But keep in mind, the Cyber security landscape will be a goldmine to invest into the future. For example, the U.S. government’s Cyber security spending is expected to increase from $13.15 billion in 2017 to nearly $15 billion next year. Also, the area of securing privileged accounts will be a hot growth area as well, so look out for those kinds of Cyber security companies that have that kind of product line.
So, Happy Investing!!!