CYBR Q1 2025: 50% Multi-Product Adoption; Cautious Q2 Outlook
- Strong Multi-Solution Adoption: Customers are consistently engaging in multi-product discussions—with approximately 50% of new logos landing with multiple solutions—which suggests robust platform stickiness and a scalable revenue model.
- Higher Deal Sizes from Machine Identity Sales: The company’s unified approach to machine identity, including innovations with Venafi and Secrets Management, drives average deal sizes that are 2-3x higher than traditional PAM deals, supporting expanding revenue potential even as per-unit pricing declines with scale.
- Resilient Sales Cycle and Positive Customer Sentiment: Despite macroeconomic uncertainties, CyberArk’s sales cycle remains stable while customers show strong enthusiasm for platform consolidation and long-term identity security roadmaps, reinforcing confidence in sustainable growth.
- Macroeconomic Uncertainty: Executives acknowledged a conservative Q2 guidance driven by uncertain tariffs and broader macro volatility, suggesting potential near-term revenue impact.
- Maintenance Conversion Challenges: Although multiproduct sales are strong, the conversion of legacy maintenance revenue to subscription remains modest and in the single-digit percent range, which could slow recurring revenue growth.
- Pricing Pressure in Machine/AI Identities: As the ratio of machine-to-human identities expands, the per-identity pricing is expected to decline, potentially compressing margins despite larger total deal sizes.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Total Revenue ($USD Billions) | FY 2025 | $1.308 to $1.318 | $1.313 to $1.323 | raised |
Non-GAAP Operating Income ($USD Millions) | FY 2025 | $215 to $225 | $221 to $229 | raised |
Non-GAAP EPS ($USD per diluted share) | FY 2025 | $3.55 to $3.70 | $3.73 to $3.85 | raised |
Weighted Average Diluted Shares Outstanding | FY 2025 | 51.5 | 51.6 | raised |
Financial Income ($USD Millions) | FY 2025 | $26 | $32 | raised |
Tax Rate (%) | FY 2025 | Approximately 24% | 24% | no change |
Annual Recurring Revenue (ARR) ($USD Billions) | FY 2025 | $1.410 to $1.420 | $1.410 to $1.420 | no change |
Adjusted Free Cash Flow ($USD Millions) | FY 2025 | $300 to $310 | $300 to $310 | no change |
Adjusted Free Cash Flow Margin (%) | FY 2025 | 23% at midpoint | 23% at midpoint | no change |
Capital Expenditures ($USD Millions) | FY 2025 | no prior guidance | $15 | no prior guidance |
Capital Expenditures (% of Revenue) | FY 2025 | 1% to 1.5% | 2.5% to 3% | raised |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Multi-Solution Adoption | In Q2, Q3 and Q4 2024, CyberArk repeatedly stressed that customers deploy multiple solutions from its unified platform – for example, about 50% of new logos in Q2 landed with two or more solutions , full-platform deals were noted in Q3 and Q4 highlighted persona‐based and multi-solution adoption. | Q1 2025 emphasized multi-solution engagement across nearly all customer conversations. Nine of the top 10 deals included multiple solutions and larger deal sizes were reported. | Consistent focus across periods with an increasing emphasis on combining multiple product lines, resulting in broader customer engagements and larger deal sizes. |
Cross-Selling Strategies | Q2–Q4 2024 discussions highlighted cross-selling opportunities, notably leveraging Venafi and partner channels. Q3 stressed the integration of machine identity sales to boost average deal sizes and Q4 detailed cross-sell options via persona-based solutions. | Q1 2025 continued to drive cross-sell strategies, showcasing successful integration of Venafi and Zilla into multi-solution deals with deeper customer footprints. | The cross-selling narrative is maintained and strengthened by integrating new acquisitions, driving larger, multi-solution deals over time. |
Machine Identity Sales & Pricing Pressure | In Q2–Q4 2024, CyberArk detailed strong momentum in machine identity sales. Q3 discussed differentiated pricing models and deal multipliers, while Q4 focused on strong sales performance but did not mention pricing pressure explicitly. | Q1 2025 discussed robust machine identity sales, highlighted by an increased machine-to-human identity ratio, and explained pricing differences (1.5–2× cost) despite unit price erosion. | A sustained emphasis on growing machine identity sales combined with evolving pricing strategies – with more nuanced pricing discussion emerging as the market scales. |
Maintenance-to-Subscription Conversion | Across Q2, Q3 and Q4 2024, CyberArk noted that maintenance-to-subscription conversion remained modest—representing only a single-digit percentage of ARR growth, with gradual declines expected. | Q1 2025 confirmed a similar modest level with a slight uptick in conversion activity, though overall maintenance ARR remains a small but declining part of revenue. | Conversion challenges remain steady with slow but consistent progress in shifting from maintenance to subscription; the issue remains a modest, ongoing transition. |
Acquisition Integration & Revenue Synergies | Q2 and Q3 2024 focused on Venafi’s integration into CyberArk’s offerings, while Q4 2024 expanded the discussion to include Zilla, noting immediate accretive contributions and significant channel partner engagement. | Q1 2025 provided detailed insights into the successful integration and revenue synergies of both Venafi and Zilla, with multiple top deals leveraging these acquisitions to drive cross-sell opportunities. | The integration narrative has evolved from an initial Venafi focus to now include Zilla, with synergies and cross-sell benefits becoming more pronounced over time. |
Identity Security Prioritization & Platform Consolidation | In Q2, Q3 and Q4 2024, CyberArk repeatedly underscored that identity security is mission-critical – with customer examples, growing risk from human and machine threats, and a unified platform strategy driving consolidation. | Q1 2025 reiterated that identity security is a nondiscretionary, mission-critical investment with nearly all top deals being multi-solution, reaffirming the unified platform approach. | Consistent messaging that a unified, comprehensive approach to identity security is essential to customer success, reinforcing platform consolidation as a strategic advantage. |
Transition to SaaS & Subscription Model Evolution | Q2 through Q4 2024 emphasized robust subscription ARR growth, higher recurring revenue percentages, and the shift from perpetual licenses, with SaaS bookings and revenue mix improvements detailed in each period. | Q1 2025 continued this trend with strong subscription ARR growth, updated revenue reporting (≈95% recurring revenue) and incremental gains in net new ARR from the migration process. | The evolution to a SaaS/subscription model is steady and marked by strong recurring revenue adoption and clear reporting changes, indicating a mature and growing subscription business. |
Macroeconomic Uncertainty & Regulatory Impacts | Q2 2024 cited challenging IT spending but noted tailwinds from regulatory requirements (e.g. DORA, SEC) benefiting the business; Q4 mentioned federal spending uncertainty but downplayed its impact; Q3 had minimal mention. | In Q1 2025, despite ongoing macroeconomic uncertainty and tariff considerations, CyberArk reported no material impact on demand, and regulatory impacts were mentioned only in passing as part of overall business resilience. | The narrative remains that while macroeconomic headwinds exist, they have not materially affected CyberArk’s performance. Regulatory pressures continue to act as a tailwind, with overall sentiment remaining stable. |
Margin Expansion & Free Cash Flow Generation | In Q2, Q3 and Q4 2024, CyberArk reported steadily expanding margins—from improving operating margins and high gross margins to record free cash flow figures and robust operating efficiency. | Q1 2025 maintained this trend with an 85% gross margin and an 18% operating margin (up 3 percentage points), alongside around 30% free cash flow margins, demonstrating continued operational strength. | Consistent improvement in profitability and free cash flow across periods reflects efficient operations and the benefits of a recurring revenue model. |
Sales Cycle Dynamics & Back-End Loaded Revenue Patterns | Q2 2024 noted a typical “hockey stick” pattern with back-end loaded revenue; Q4 2024 detailed that sales cycles (e.g. for Venafi) are 6–9 months with channel onboarding delays; Q3 2024 did not mention specifics. | Q1 2025 reported stable sales cycle dynamics with slight improvements and strong multi-solution deal performance, with no major deviations from historical patterns. | Sales cycle dynamics remain consistent, with predictable back-end revenue patterns continuing to characterize the business despite minor cyclical adjustments. |
Channel Partnerships & MSPs | Q2 2024 emphasized the strategic importance of MSPs with new console launches and broad portfolio adoption; Q3 2024 noted strong partner enthusiasm for Venafi training and certifications; Q4 2024 detailed robust channel initiatives and MSP contributions. | Q1 2025 mentioned channel partner activation in the context of Venafi integration (with several hundred partners certified), though detailed discussion was less prominent than in previous periods. | While earlier quarters showcased robust channel and MSP growth, the current period has less emphasis, suggesting that while channels remain important, the focus may have shifted to integration and multi-solution deals. |
Leadership Continuity | In Q3 2024, a CFO transition was discussed with outgoing CFO Joshua Siegel praising Erica Smith’s preparedness; Q4 2024 further reinforced leadership stability with positive commentary on the new CFO; Q2 2024 did not mention any concerns. | Q1 2025 did not mention any leadership or CFO transitions, indicating that any prior continuity concerns have been resolved. | Leadership continuity issues have been successfully addressed, with smooth transitions in previous quarters and no ongoing concerns in the current period. |
Workforce Business Growth | Q2 2024 highlighted workforce solutions with strategic pricing and differentiation against competitors. Q3 2024 noted the workforce business reaching a $100 million ARR milestone and low penetration indicating room for growth; Q4 2024 identified workforce as an emerging opportunity with notable customer expansions. | Q1 2025 did not explicitly mention workforce growth, suggesting that while it remains an emerging opportunity, it was not a focal point in the latest discussion. | Previously emerging as an area of opportunity with strong pace and market adoption, workforce growth was emphasized in earlier quarters but did not feature prominently in Q1 2025—possibly indicating integration into the broader platform narrative. |
Federal Government Spending Uncertainty | Q2 2024 noted stable performance across government segments and a global government contribution of about 10% ARR; Q4 2024 addressed uncertainties related to federal spending but downplayed risks; Q3 2024 had no specific mention. | Q1 2025 did not mention federal government spending uncertainty, implying that this concern remains minimal or integrated into overall market stability. | Federal spending uncertainty has not been a major focus and remains a low-impact factor; earlier concerns are now largely absent, reflecting a steady performance across sectors. |
NRR Disclosure & Transparency Concerns | Q2 2024 noted that CyberArk is too early in its cycle to disclose NRR figures, without offering a specific metric; Q3 and Q4 2024 did not discuss this topic further. | Q1 2025 did not mention NRR disclosure or transparency concerns, suggesting that the issue remains unchanged or is no longer a strategic focus. | The topic of NRR disclosure appears to have receded, with no new updates or concerns raised in recent periods. |
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Guidance & Macro
Q: Seen macro headwinds affect guidance?
A: Management noted strong Q1 results and a robust pipeline but adopted conservative guidance due to uncertainties around tariffs and broader macro factors, ensuring prudence moving forward. -
Pricing Dynamics
Q: How will machine pricing evolve?
A: They expect pricing to scale with volume; as machine identities grow, the per-unit cost will decline while overall deals are 1.5–2× larger, and certificate lifespans are being shortened to 47 days by mandate. -
Multiproduct Sales
Q: How are multiple product sales driven?
A: Nearly 50% of new logos are landing with multiple solutions as CyberArk shifts customers towards an integrated Identity Security platform with clear multi-year roadmaps. -
Maintenance Conversion
Q: How is maintenance conversion progressing?
A: There is a modest uptick in converting maintenance ARR to subscriptions, with around $15 million expected to shift as customers move to a recurring model. -
Sales Capacity for Venafi
Q: What about selling Venafi effectively?
A: The go-to-market team is expanding coverage globally—across Americas, EMEA, and APJ—ensuring strong cross-sell momentum for Venafi within CyberArk’s broader platform. -
Adoption Trends
Q: What trends are seen in Zilla and Venafi?
A: Venafi is attracting universal customer interest through certificate lifecycle management, while early momentum for Zilla supports modern IGA needs among financial and healthcare customers. -
Sales Cycle Consistency
Q: Are sales cycles extending due to consolidation?
A: Sales cycles remain consistent despite longer strategic roadmaps because most major deals involve multi-solution purchases, supporting steady platform adoption. -
Machine Identity Awareness
Q: How is the machine identity gap addressed?
A: By centralizing identity controls, CyberArk is ensuring that CISOs gain direct oversight of machine identities, effectively closing the awareness gap highlighted in surveys.