CyberArk Dominates a Fast-Growing PAM Market with AI and Acquisitions

The global privileged access market (PAM) is expected to grow 23% annually over the next few years to reach $28 billion by 2034 from $3.6 billion in 2024. The growth in the industry is driven by increasing cybersecurity threats coupled with the push from stronger regulatory requirements and compliance mandates.

CyberArk’s Offerings & Origins

Newton-based CyberArk was founded in 1999 by Ehud “Udi” Mokady and Alon N.Cohen. Initially set up in Israel, CyberArk has evolved into a leading platform for identity security. Udi was a veteran of Israel’s cyber defense forces, and he wanted to set up a company with the mission of protecting privileged accounts, the master keys that hackers target. Privileged accounts are used by system administrators, third-party and cloud service providers, applications and business users, and they exist in nearly every connected device. Due to the broad access and control they provide, privileged accounts help hackers gain entry into a company’s core infrastructure.

Today, CyberArk’s software secures privileged credentials, secrets, certificates, and other identity types across cloud, on-prem, and AI-driven environments. Its comprehensive Identity Security Platform secures every identity across enterprise environments. At its core is PAM that includes the Enterprise Password Vault, which safely stores and rotates sensitive credentials, SSH keys, API tokens, and digital secrets. Its Privileged Session Manager monitors, isolates, and records privileged access sessions in real time, while Privileged Threat Analytics identifies anomalous or risky user behavior. To protect modern infrastructure, CyberArk offers Secrets Management for apps and DevOps pipelines, Endpoint Privilege Manager to enforce least privilege on endpoints, and Secure Infrastructure Access for agentless, just-in-time privileged access in hybrid and cloud environments.

CyberArk has grown through acquisitions. Its biggest acquisition was last year when it acquired Venafi for approximately $1.54 billion. Founded in 2000, Venafi was known for its subscription-based offering that focused on certificate lifecycle management, IoT identity management, and cryptographic code signing. By integrating Venafi’s machine-identity controls into its existing secrets management platform, CyberArk has been able to enhance security capabilities of both human and machine identities. Prior to the acquisition, Venafi was privately held and had raised $190 million over six funding rounds, with its last round led by Thoma Bravo in December 2020 at a valuation of $1.15 billion. It did not disclose detailed financials but claimed to be generating $150 million in annual recurring revenue (ARR).

Earlier this year, CyberArk acquired Zilla Security for an estimated $175 million. Zilla Security is known for its Identity Governance and Administration (IGA) capabilities that leverage AI-driven automation for access reviews and provisioning. Prior to the acquisition, Zilla had raised $17.6 million across two rounds. Its last round was held in August 2022, led by Tola Capital and FirstMark Capital when it raised $13.5 million at an undisclosed valuation. CyberArk plans on leveraging Zilla’s capabilities to strengthen its Identity Security Platform by adding AI-powered identity governance capabilities.

CyberArk’s Financials

CyberArk recently reported its quarterly earnings. Revenues for the quarter grew 43% to $318 million with subscription revenues growing 60% to $250.6 million. EPS grew 30% to $0.98 per share. The market was looking for revenues of $305 million with an EPS of $0.79. During the quarter, total ARR grew 50% to $1.215 billion and was ahead of estimates of $1.202 billion.

For the current quarter, CyberArk estimated revenues of $315 million, ahead of the market’s forecast of $310 million.

CyberArk holds a leading position in the PAM space with an estimated 38% market share. Its competitor BeyondTrust has a 17% market share. As AI and cloud adoption fuel the growth of machine and agent identities, CyberArk will continue to see strong growth.

Its stock is currently trading at $390.41 with a market capitalization of $19.5 billion. It touched a year high of $421 in February this year. The stock has climbed from the 52-weak low of $230 that it was trading at in August last year.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own experience research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in this company.

Photo Credit: By Train825 – Own work, CC BY-SA 4.0