While their earnings reports would suggest that they are a strong competitor in the market, the public market has been less than kind to CyberArk
It has been a stellar year for cyber security and Israeli cyber super stars CyberArk have good reason to be celebrating. Their report covering both Q4 and the whole of 2015 highlighted their record Q4 revenue of $51 million. This 42% year-over-year increase for the quarter shines even brighter for the company’s growth in contrast to the annual revenue that they clock at $161 million, making it a very strong way to end the year.
The past year has shown the company grow with new acquisitions that included Viewfinity for $30.5 million in October, making their Privileged Account Security Solution more effective with the ability to isolate malware at endpoints and providing protection to the remainder of the network.
Since the acquisition, CyberArk has teamed up with Check Point’s Threat Cloud solution to produce a powerful malware analytics product. Their cooperation allows for communication of suspicious activity detected through CyberArk’s software to the Threat Cloud, which in turn is able to send out the alert to the network and endpoints, creating awareness and mitigating potential harm.
CyberArk, based in Boston and Israel, is one of the first cyber security companies ever. Originally created to protect access to sensitive information against users already within the network (also known as privileged account management), with early customers such as banks and insurance companies, CyberArk eventually expanded its offerings to shield a wider range of companies from outside attacks. Today, they provide automated detection of threats in real-time and ensure that once a hacker has entered a system, their damage will not spread nor will they be able to gain control.
The company cites their flagship Privileged Account Security Solution as the driver of their success over the past year.
CyberArk has correctly identified users with high levels of credentials who have wide access to all parts of a company’s infrastructure as providing an ideal avenue for attackers looking to break into a network. If hackers can steal or compromise an account belonging to an administrator or other top level user, then they are able to roam free without many of the built-in restrictions hindering them as they would encounter with a lower level employee’s access.
CyberArk is one of the leaders in an industry that has shifted away from the idea that a strong perimeter will be enough to keep a network safe from attackers. Like many others, they focus on detection and mitigation of damages.
The team at CyberArk is not the only ones to have turned their gaze inward, looking for wolves in sheep’s clothing. Another Israeli firm called Fortscale raised $16 million in a pre-Series B back in November for their insider threat solutions.
Even though startups like Minerva Labs and their prevention solutions are trying to upset this trend of detection centricity in the industry, it will likely continue to dominate the conversation for the coming year.
While their earnings reports would suggest that they are a strong competitor in the market, the public market has been less than kind to CyberArk. Their shares have been steadily dropping in value, now trading at $32.78, down from the $40.10 that was cited after their Q3 earnings report was released. Before that, they had been trading at over $50, so this is an even bigger blow to one of Israel’s cyber firms that chose the public route.
The good news for the company is that this drop is not likely a direct reflection on CyberArk, which was by many accounts overvalued to start with. After experiencing a rapid rise, the markets have punished otherwise hot sectors of the tech industry like adtech. Taboola is another company that has produced impressive profits, but had their valuations drop in November when Fidelity decided to cool their heels on some of the more popular players in tech.
So while this may not be happy news for investors, it should be taken as a signal that the market is coming back to an equilibrium that with any luck will allow for a more sustainable industry to develop.