CAU201 Free PDF - CyberArk Defender Updated: 2024

An Ark Full of Security

CyberArk Software Ltd. (NASDAQ:CYBR) of Israel has been on our acquisition list for 7 years. Like Noah's ark secured the human race, CyberArk wants to make us all safer. Our Seeking Alpha article about the identity security company appeared on S A on November 28, 2018; the share price was on the move up topping $68.35 each at the time of publication. The share price closed the second week of December ’23 near its 52-week high at $204.53 then slipped to $201.25 to close the second week of December '23.

In our opinion, current measures substantiate the stock’s Buy-rating status we, S A, and Wall Street analysts assign it at this time.

CyberArk stands out from its peers in several ways meaningful to investors. My associate, Dan Goldmeier, now VP of Sales & Marketing at start-up Hospice Tools in Chicago, worked with CyberArk in a former position at an Israeli software company. He rates CyberArk "a great company with some of the best tech for cybersecurity for governments and banks and enterprise companies. And the service to customers with boots on the ground is stellar."

In a survey by Gartner Peer Insights, CyberArk reviews rate it higher than Microsoft (MSFT) and 22 other well-known players in the field of Identity Security. CyberArk is "better at service and support, easier to integrate and deploy, and better evaluation and contracting."

A second reason for our gleam comes from the company's strategy of generating growing recurring revenue; that translates to good earnings and high margins. The quarterly gross profit margin over the last 3 quarters averages ~80% and 81.59% over all the years. That number is better than 85% of GPM of companies in the industry. CyberArk's operating and net margins rank lower than those of industry competitors but CyberArk is producing enough cash flow for the company liquidity ranking to place it mid-level among its peers.

Profile

According to Stockanalysis.com, CyberArk is the seventh largest, Israel-based, publicly traded, business on a U. S. exchange by market cap (~$8.39B) with annual revenue touching $700M.

A primary reason for the resiliency of Israel's stocks is that most of the above companies have R&D and marketing offices overseas and customers are worldwide. Overseas locations operationally support CyberArk's Israel and West Bank locations. Its operations, productivity, and output are minimally affected by the war.

CyberArk Software develops, markets, and sells software security programs and services. It is building subscription revenue, too.

Brand names include

• Privileged Access protects against attacks involving privileged access;
• Vendor Privileged Access combines PAM and Remote Access for third-party vendors;
• Endpoint Privilege Manager is a SaaS solution that secures privileges on the endpoint;
• Cloud Security is a SaaS solution that cuts risks arising from excessive privileges in cloud environments.
• Identity and Workforce Access covers workforce identity security by offering adaptive multi-factor authentication (MFA), single sign-on, secure Web sessions, workforce password management, application gateway, identity lifecycle management, directory services customer identity services, and more.
• Secrets Management manages the credentials used by third-party solutions and Secrets Manager Conjur secures cloud-native applications to develop AWS secrets.

Customers include financial services, manufacturing, insurance, healthcare, energy and utilities, transportation, retail, technology, and telecommunications industries. Private customers and government agencies are reached through CyberArk’s direct sales force, channel sales, security service providers, and advisory partners.

The company was founded in 1999 when Israel’s burgeoning tech industry engendered its tag name, the Start-Up Nation. Late this year, CyberArk was named an Overall Leader in the KuppingerCole Analysts AG 2023 “Leadership Compass: Access Management” report. “The company’s overall leadership position is based on the strength of its CyberArk Identity offering across the report’s product, innovation and market categories.”

CyberArk’s growth is partly attributable to its acquisition of 7 companies in software and IT at a cost of nearly $145M over the years. S A reports investment firm Wedbush Securities recently cited CyberArk among the global leaders likely to benefit from increased Washington spending next year on security and risk management; it projects total spending of $215B in ’24 or +14% Y/Y. Israel’s cybersecurity firms and government are projected to report revenue to grow in 2024 at an annual CAGR average of 11.66% hitting a market volume of $1.5B by FY ’28. This might be an underestimation considering how significantly cybersecurity firms are aiding in Israel’s anti-terror war effort.

More Good News

Q3 ’23 reported in November was one of the company’s best quarters. Demand for Identity Security is a global priority according to the CEO: “Total bookings growth accelerated and…significantly outpaced our guidance framework.” The engagement of customers on a subscription model resulted in “a break-out in terms of product ARR (annual recurring revenue) subscription growth, rising to a quarterly level," according to S A analyst Bert Hochfeld.

The shareholders were also told

"Subscription ARR reached $504 million growing 68% year-over-year. Total ARR reached $705 million growing 38%. We added a robust $52 million in net new ARR and we exceeded our guidance range across revenue, operating income and EPS with total revenue accelerating to 25% growth, reaching $191 million. Non-GAAP operating income came in at approximately $17 million, and we generated non-GAAP earnings per share of $0.42. Throughout the year, our team has personified excellence in execution, and we have navigated the macroeconomic landscape exceptionally well. While uncertainty persisted in the third quarter, we experienced a firming of the macro environment compared to the last few quarters. Our execution was even stronger in Q3, as seen in our meaningful top and bottom line outperformance… The velocity of our business is picking up as customers achieve faster time to value with our SaaS solutions."

We foresee significant revenue growth, and better and more consistent EPS upside over the next 2 years and into the future. Identity cybersecurity is an important part of risk management in public space security, as we discussed in a exact article about Evolv Technologies Holdings, Inc. (EVLV). We think the increase in demand for CyberArk’s products and services on a subscription basis is going to positively affect the consensus FY ‘24 EPS forecast loss to between -$1.73-to -$2.38 from the 2023 consensus between -$2.31-to -$2.40 per share. Wells Fargo (WFC) recently upgraded its average target price from $201 to $231.

We see an opportunity for an average target share price of +$250 over the next 3 to 6 months with no impediments to ending this rally anytime soon.

Finally, media coverage and sentiment about CyberArk was bullish most of the year and seems to remain so.

Risks

In our 2018 article, we wrote, “CyberArk is a solid investment for small investors interested in the cybersecurity industry. There is plenty of room for growth and opportunities for climbing to the target prices set by institutional investors.” Little has changed except, to note, that S A downgraded its Quant Rating assessment this year to Hold, as the share price soared $100 from the end of 2022 lowering its valuation. We consider this new status a risk flag and investors need to watch valuation.

Another concern is the conflict in Gaza; when Israel was invaded by Hamas in October, the average share price of Israel-based firms dived around 14% to 16%. Shares of CyberArk sold for $171 each in Sep ’23, slipped to ~$156 in late October, but are back-up, as we predicted the share prices would be once initial economic-impact revisions were evaluated.

Third, corporate insiders do not own many shares and that is never reassuring to retail value investors. Hedge funds consistently bought the stock in the first quarter of 2023 and in greater quantities beginning in May ’23. Since the rally, funds have tended to sell, decreasing their holdings by 102K shares last quarter. At its peak number in Q1 ’23, 33 hedge funds owned shares, 27 in Q2, and 30 at the end of Q3 ’23.

We do not see any downward trend evolving yet despite the greatest risk which is the high valuation. The company holds $571.6M in debt but last reported $906.2M in cash and equivalents; plus, its market cap tops $8B. CyberArk’s net cash flow from operations is slightly up but so are liabilities. It is liquid enough to cover outstanding financial obligations. Short interest moved up to +5% on the share price rise with days to cover 3-to-4 down from +7 last August.

CyberArk is in a labor-intensive business competing for trained innovative-thinking employees. In February ’23, the company hired another 150 employees to keep R&D apace. Officials also announced the CEO of 18 years is stepping down, but we expect any new moves to be delayed until after the war on terrorists is settled.

Valuation

Regarding S A’s valuation F grade, a peek at the metrics reveals the share price rally puts them out-of-sync with sector mean numbers. For example, P/E non-GAAP forward is 261.6 versus the sector mean of 23.8; PEG non-GAAP is 11.89 versus 2.03; and EV to Sales TTM and FWD is around 11 to the sector’s mean of 2.88 and 2.81, respectively. EV/EBITDA gets an F standing at 1.88 to 15.3. CyberArk’s price to various metrics all rate a D- or F. Concomitantly, its Enterprise Value has steadily risen:

In our opinion, considering EV growth, past and potential revenue and earnings growth, liquidity, potential for generating recurring income, and other metrics, we conclude the shares selling at around $210 each is a reasonable fair value but other valuation gauges suggest there is potential for the share price to move up higher.

Granted, the current share price is on the expensive side of fair value; we think fair value will rise when its price-to-sales ratio becomes more balanced as the company grows, cuts debt, enjoys the results of lower loan interest rates, and Identity Security software grows in sophistication and effectiveness pushing massive industry growth.

More value lies in the potential for this Israeli tech company garnering M&A attention from a suitor. These deals are at a 9 year low because of the war but identity tech companies have learned a lot from the war making CyberArk potentially more valuable.

Takeaway

We see from the valuation metrics a rising risk from sell-offs to take profits as we near the end of the year and start a new one. But predictions are, for the most part, 2024 will be a big up year for the stock market. The demand for identity security is only going to increase. We do not see any other significant downward pressures over the next 6 months on the stock. CyberArk is facing few risks, is carrying through on its subscription strategy, and has the potential for tremendous growth worldwide. It is why the company gets a better Factor Grade for Momentum from 6 and 3 months earlier and we see the stock as a Buy opportunity even at +$200 per share.

It’s likely that you regularly come across or work with PDF files—they’re ubiquitous in our modern cross-platform world. Most of the time, when viewing a PDF, you can enjoy free software that allows you to read or comment on these files. But what if you need to edit them as well? That’s where a PDF editor comes in.

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Here at PCWorld we’ve tested many of these top PDF editors and curated a list of the very best. With different use cases in mind, we’ve included picks for the best overall, best budget option, and even a recommendation for the best free PDF editor—because sometimes you just don’t want to pay for the basics. Check out our recommendations below to find the best PDF editor for you.

Update 12/18/2023: To include Foxit PDF Editor 13 as our new choice for best overall PDF editor runner-up. Read more about this excellent alternative to Acrobat in our summary below.

A word about online PDF editors

Why spend a chunk of change on a desktop editor when free online PDF editors abound? The simple answer is because you get what you pay for. Generally, free online editors will let you add text and comments, merge and split documents, and convert files to and from PDF. With rare exception, however, they won’t let you edit existing text and many have file-size and page-volume restrictions. And a lot of them will watermark your edited document. For these reasons, web PDF editors are best reserved for simple, fast editing jobs. Call in these big dogs for anything more demanding.

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PDF editors come in a variety of flavors, offering varying feature sets—from basic functionality to power-user tools. It’s important to know what features best match your workflow before you commit to a PDF editor.

Create, convert, and export PDFs

The most fundamental function of a PDF editor is to make PDFs, either from scratch, scanned hard copies, or by converting digital documents. A good PDF editor should be able to transform a variety of file types—from Microsoft Office formats to images to HTML—and do so seamlessly, preserving the original formatting. It should also include OCR technology to make the PDF text searchable and editable. Likewise, a good PDF editor must be able to export PDFs into other editable formats such as Microsoft Word and PowerPoint, HTML, or plain text, maintaining the original files hyperlinks, images, and other elements.

Content editing

Another bit of magic that PDF editors unlock is the ability to modify text; insert, resize, and move images; and reorganize pages in the PDF. A good one will perform these tasks as easily as in a text document or slide deck, allowing in-line editing, dragging-and dropping graphics, and adding or removing hyperlinks.

Review and annotate

A good PDF editor should also let you or anyone else using it add comments and other annotations to PDF files during review. It should have tools to mark up both text documents and graphic-heavy files like webpages. Common options include sticky notes, callout boxes, highlighting, freehand drawing tools, and stamps with messages like “approved,” “revised,” and “confidential.”

Security

All businesses deal with documents containing sensitive data. Look for a PDF editor that includes security features that allow access for authorized eyes only. Good options will usually offer several levels of security, including password protection, permissions setting, and content redaction, which “blacks out” selected text and images. Most PDF editors will also offer one or more ways to electronically sign documents.

Mobile support

While deep PDF editing is best done on a desktop, it’s nice to be able to review and annotate files when you’re out and about. While PDFs can typically be reviewed in any PDF reader or editor, regardless of which one they were created in, consider looking for an editor that has a dedicated mobile app, is optimized for mobile devices, or allows cloud access to features through a mobile browser.

One of the great things about a PDF is that it can be read and edited in any PDF program regardless of which one it was created in. So beyond the features outlined here, let your personal preferences guide you in making your decision.

The best free PDF editors let you create, edit, and work together on files without any subscriptions or fees. 

We all know how important PDF files are. They literally keep millions of businesses on the same page. The best PDF editors we've tried - yes, even free versions - let you create and design seriously professional documents. There are limitations, and few free PDF editing software is as feature-packed as the likes of Adobe Acrobat. But add in e-signatures, forms, and enhanced security tools, and you do have some of the best Adobe Acrobat alternatives without any subscriptions or lifetime licenses.