CyberArk eyes mid-market customers, expansion in Asia

Enterprise customers continue to be cybersecurity company’s main focus for the time being, Udi Mokady says

Shoshanna Solomon was The Times of Israel's Startups and Business reporter

CyberArk's President and CEO Udi Mokady (Courtesy)
CyberArk's President and CEO Udi Mokady (Courtesy)

Petah Tikva-based CyberArk, Israel’s second-largest public cybersecurity company, plans to target the Asian and Latin American markets and mid-sized customers in the longer term to boost growth, Udi Mokady, president and chief executive officer of CyberArk, said in an interview.

Speaking with reporters last week at the sidelines of a cybersecurity conference in Tel Aviv, Mokady said enterprise customers are still the main focus of the company and CyberArk is still just “scratching the surface” of the potential of these companies.But in the longer term the firm is also “looking at ways to address also the mid-market as part of our strategy.”

CyberArk is a cybersecurity company that specializes in protecting “privileged accounts” on corporate servers. Privileged accounts are computer system user accounts that have extra privileges so that owners of those accounts can control important aspects of a server or network. Large computer systems, especially those that have been around for years, usually contain many such accounts that are no longer in use – either because they were set up specifically for certain no-longer relevant missions or because they belonged to former employees. These accounts are especially vulnerable to hacker accounts, as they aren’t watched too closely.

CyberArk chokes off the possibility that privileged accounts will be abused by identifying and cutting off access to the accounts. The system sets up a policy on user accounts that forces users to change passwords on a regular basis, including dormant privileged accounts. In addition, the system sets up a “safe zone” for data to be managed when accessed from an account.

“We found that even though we were targeting enterprise, we got pull from mid-market — universities, credit unions, law firms, things we weren’t necessarily targeting, and so it shows us there is an opportunity and we are looking for ways to address that in 2017 and beyond,” Mokady said in the interview. “Right now it is very much enterprise-focused.”

The company, which held an initial public offering of shares on the Nasdaq in 2014, saw its shares surge as corporations flocked to buy security software amid higher levels of data breaches worldwide.

Today CyberArk, the largest Israeli public information security company in both revenue and in market capitalization, has more than 2,600 customers globally, of which more than 40% are Fortune 100 customers, according to data from a May 2016 presentation.

Revenues grew over 50 percent in 2014 and 2015, and in the first quarter of the year revenue jumped 43% to around $47 million compared to the same quarter a year earlier. Net income for the first quarter of 2016 rose to $4.3 million from $4.2 million in the same quarter in 2015. CyberArk in May forecast total revenue to rise by around 30% in 2016 to a range of $209 million to $211 million.

The company is also looking to increase its presence in the Asia Pacific, Mokady said. Last year the Americas accounted for 61% of its revenues while Europe, Middle East and Africa accounted for 31 percent. Just around 8% of sales were in Asia Pacific and Japan, according to the presentation. “We want to bring it much higher,” Mokady said. “We want it to be toward the teens in the long term. The opportunity is tremendous.” Latin America is also an opportunity for growth, he said. “They have the same problems, the same IT infrastructure, the same weaknesses.”

Even as the company has posted strong results, its share price has has declined about 26% in the past year amid concerns that enterprise spending in cybersecurity software has started to slow, lackluster results from peers and on worries about too-high valuations in the sector. The company has a market capitalization of about $1.61 billion, according to data compiled by Bloomberg.

CyberArk’s share decline spurred speculation in January that the company would become an acquisition target for Israel’s Check Point Software Technologies Ltd.

Mokady shrugged off the possibility of a company sale even as he sees the possibility of some consolidation in the industry among the smaller companies. “CyberArk is a buyer,” he said. “We are going for it and being acquisitive. Naturally in any step of the way we will do what is right for the shareholders. But left alone, we are building it big. ”

The company has made two acquisitions, Viewfinity, Inc., a Waltham, Massachusetts-based provider of Windows privilege management and application control software, for $30.5 million in cash, and Israeli firm CyberIntel.

Acquisitions “is part of our growth strategy and we are very pleased with the first two,” Mokady said. “There is appetite and willingness to do more but there is no pressure because we have such a huge organic opportunity.”

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