Why Shares of CyberArk Software Dropped Today

By Timothy Green Markets Fool.com

What happened

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Shares ofCyberArk Software (NASDAQ: CYBR) slumped on Friday after the cybersecurity companyreported its first-quarter results. While revenue and earnings came in above analyst expectations, CyberArk's second-quarter guidance proved disappointing. The stock was down about 11% at 11:45 a.m. EDT.

So what

CyberArk reported first-quarter revenue of $59 million, up 26% year over year and about $1 million higher than the average analyst estimate. License revenue jumped 20% to $33 million, while maintenance and professional services revenue rose 34% to $26 million.

Image source: CyberArk Software.

Non-GAAP earnings per share came in at $0.28, up from $0.23 in the prior-year period and $0.05 better than analysts were expecting. GAAP operating income dipped slightly, but a tax benefit provided a boost to net income.

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For the second quarter, CyberArk expects to produce revenue between $61 million and $62 million, below analyst expectations of $62.4 million. Non-GAAP EPS is expected between $0.23 and $0.25, also below analyst expectations of $0.27.

Now what

Shares of CyberArk are far from cheap, trading for nearly nine times sales prior to Friday's slump. Combine a lofty valuation and disappointing guidance and the result is often a significant decline in the stock price.

CyberArk is now down about 33% from its all-time high in mid-2015. The company will need to start impressing investors again for the stock to recover.

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Timothy Green has no position in any stocks mentioned. The Motley Fool recommends CyberArk Software. The Motley Fool has a disclosure policy.