CyberArk Stock: Should Investors Hold or Fold?
CyberArk Software Ltd. (CYBR) has witnessed a substantial 17% surge in its stock price over the past six months. This performance significantly surpasses the gains seen in both the broader Zacks Computer and Technology sector and the S&P 500. Given this recent success, investors are contemplating whether to secure profits or maintain their current holdings. Despite the gains, a ‘Hold’ strategy appears to be the optimal approach, considering CyberArk’s leading position in identity security, impressive financial performance, and accelerating annual recurring revenue (ARR) growth.
Market Dominance in Identity Security
CyberArk asserts its leadership in the identity security market by delivering privileged access management (PAM) and Zero Trust solutions. As cyber threats evolve in complexity, organizations are increasing their investments in identity and access security. This trend directly benefits CyberArk’s core business offerings, bolstering its presence in the cybersecurity landscape.
Acquisitions and Expanded Capabilities
The company’s strategic acquisitions have further strengthened its capabilities. The $1.54 billion acquisition of Venafi in October 2024, a leader in machine identity management, notably enhanced CyberArk’s ability to protect machine-to-machine communications. This move complements CyberArk’s existing human identity protection services, creating a comprehensive suite of security solutions. Furthermore, the addition of Zilla Security in February 2025, specializing in cloud-based identity governance, has expanded its product portfolio within the cloud security domain. These acquisitions are anticipated to drive ARR growth, expand the total addressable market (TAM), and solidify its standing in cloud security. In the rapidly evolving landscape of cybersecurity, these acquisitions position CyberArk for sustained growth and innovation.
Expanding Customer Base and Strategic Partnerships
CyberArk currently secures more than 5,400 global businesses, with a substantial presence among Fortune 500 and Global 2000 companies. This broad customer base underlines the company’s critical role in enterprise security. The company’s strategic collaborations with leading tech companies like Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL) are key drivers of customer acquisition. By integrating its solutions with Microsoft’s Azure Active Directory, Amazon Web Services, and Google Cloud, CyberArk offers enhanced security capabilities across multi-cloud environments. Through joint go-to-market initiatives, CyberArk heightens exposure and reliability, attracting large-scale customers and expanding its reach in the cybersecurity landscape.
Robust Financial Performance and Revenue Growth
CyberArk’s financial results demonstrate its ability to achieve consistent growth and profitability. In the fourth quarter of 2024, the company reported $314 million in revenues, representing a 41% year-over-year increase. The non-GAAP operating margin expanded by 310 basis points to 18.7%, showcasing its ability to combine growth with operational efficiency. A remarkable metric from the quarter was the 51% year-over-year surge in ARR to $1.17 billion, driven by a 68% jump in subscription ARR. For 2025, the company forecasts revenues between $1.308 billion and $1.318 billion, projecting robust growth of 31-32%. Moreover, CyberArk has consistently exceeded expectations, surpassing the Zacks Consensus Estimate in each of the last four quarters, with an average surprise of 82.8%, demonstrating its operational consistency.
Valuation Considerations
Despite the compelling fundamentals, its valuation is stretched. The stock trades at a forward P/E ratio of 87.53, significantly above the Zacks Computer and Technology sector average of 24.25. CyberArk’s forward 12-month sales multiple of 12.26 also exceeds the sector average of 5.72, suggesting that much of the company’s future growth is already factored into the stock price. This makes the stock vulnerable to corrections if performance falters or market sentiment shifts.
Conclusion: Hold the Stock
CyberArk’s strategic advantages—its dominant position in identity security, rapid ARR growth, and strong partnerships with cloud providers—position it as a strong investment for the long term. The company’s financial resilience, with increasing market share and a growing customer base, supports its prospects for continued success. While its elevated valuation warrants caution, existing shareholders should hold the stock. New investors could potentially benefit from waiting for a more favorable entry point. CyberArk currently holds a Zacks Rank #3 (Hold).
