Breaking Down CyberArk Software Ltd. (CYBR) Financial Health: Key Insights for Investors

You're looking at CyberArk Software Ltd. (CYBR) and trying to square its impressive operational momentum with the major M&A news that dropped this year. Honestly, it's a tricky spot, but the numbers give us a clear starting point: the company is defintely executing. In the third quarter of 2025 alone, CyberArk reported revenue of $342.84 million, easily beating analyst expectations, and delivered a strong non-GAAP earnings per share (EPS) of $1.20. That's a powerful signal of demand for their identity security platform, pushing their Annual Recurring Revenue (ARR) to a robust $1.341 billion as of September 30, a 45% jump year-over-year. But here's the thing: all that strength is now filtered through the lens of the proposed $25 billion acquisition by Palo Alto Networks, which fundamentally changes the risk and return profile for shareholders. The question isn't just how well they're performing-it's how to value a company that's hitting peak performance right before a major corporate change. We need to break down what that M&A premium means for the stock's future and what you should do with your position right now.

Revenue Analysis

You want the bottom line on CyberArk Software Ltd. (CYBR) revenue, so here it is: the company is successfully executing a high-growth, subscription-led transition, with full-year 2025 revenue now expected to hit the range of $1.34 billion to $1.35 billion. This strong top-line performance is defintely driven by the shift to recurring revenue, which is the key metric to watch.

The primary revenue source has decisively moved away from perpetual licenses and toward a subscription-based model. For the third quarter of 2025, Subscription revenue reached $280.1 million, an impressive 60 percent increase year-over-year. This segment contributed approximately 81.7% of the total quarterly revenue, a clear sign that the market is embracing their Identity Security platform as a service.

To be fair, the other segment-Maintenance, Professional Services and Other revenue-was $62.7 million in Q3 2025, a slight dip from the prior year, but this is expected. Here's the quick math on the quarterly breakdown:

The overall growth rate is robust. The trailing twelve months (TTM) revenue ending September 30, 2025, stood at $1.303 billion, which represents a massive 43.26% increase year-over-year. This growth is not just organic; it's also bolstered by strategic moves like the acquisitions of Venafi and Zilla Security, which have expanded their offerings in machine and modern identity governance.

The real indicator of long-term health is the Annual Recurring Revenue (ARR), which hit $1.341 billion as of September 30, 2025, growing 45% year-over-year. The subscription portion of that ARR is now $1.158 billion, making up 86% of the total. That's a strong, sticky revenue base. Understanding this core business focus is crucial to evaluating the company's long-term strategy, which you can read more about in the Mission Statement, Vision, & Core Values of CyberArk Software Ltd. (CYBR).

• Subscription is the engine; everything else is secondary.

Profitability Metrics

You want to know if CyberArk Software Ltd. (CYBR) is actually making money, or if it's just a growth story. The short answer is they are definitively profitable on a non-GAAP basis and are showing strong operational leverage, but they are still running a GAAP loss. That's a common but important distinction in high-growth software-as-a-service (SaaS) companies.

The key takeaway from the Q3 2025 results is the clear expansion in operational efficiency. While the company reported a GAAP net loss of $(50.4) million for the quarter, the Non-GAAP operating income was a strong $64.8 million, translating to a 19 percent margin. This non-GAAP figure strips out things like stock-based compensation and acquisition-related costs, giving you a cleaner view of core business performance.

• Gross Profit Margin: CyberArk's gross margin is exceptionally high, sitting at 76.86% on a trailing-twelve-month basis as of Q3 2025. This is a massive number for a software company, showing the core product has very low cost of revenue.
• Operating Profit Margin: The GAAP operating margin is still negative at -8.25%, which is the cost of growth and acquisitions. However, the Non-GAAP operating margin is 19%, a significant jump from 15% in Q3 2024, showing excellent cost management as revenue scales.
• Net Profit Margin: GAAP net margin is -13.78% on a trailing-twelve-month basis, reflecting the GAAP operating loss. The Non-GAAP net income for Q3 2025 was $64.9 million, or $1.20 per diluted share.

Here's the quick math on their operational efficiency: CyberArk's gross margin is high, so every dollar of new revenue is highly profitable at the product level. The jump in Non-GAAP operating margin from 15% to 19% year-over-year in Q3 2025 shows they are spending less on sales, marketing, and R&D relative to the revenue they bring in. That's operational leverage kicking in.

When you look at the industry, CyberArk's profitability picture is mixed, but trending positive. The average trailing-twelve-month EBIT (Operating) margin for the broader Software - Security industry was around 5.49% as of early 2025. CyberArk's GAAP operating margin of -8.25% is below that average, but their Non-GAAP operating margin of 19% is dramatically higher. This tells you they have a profitable business model at the core, but their aggressive investment (which GAAP captures) is what keeps the official net income negative. For context, industry leaders like Palo Alto Networks are running non-GAAP operating margins over 30%, so CyberArk still has room to run as it matures and slows down its growth-related spending.

The trend is what matters most for investors right now. The nine months ended September 30, 2025, saw revenue hit $988.47 million, but a net loss of $129.8 million. Still, the increase in the Non-GAAP operating margin is a clear signal of improving cost management and scale. This is defintely a case where the Non-GAAP number is a better indicator of the core business's financial health and trajectory.

If you want to understand the drivers behind this growth, you should check out Exploring CyberArk Software Ltd. (CYBR) Investor Profile: Who's Buying and Why? for a look at their investor base and strategy.

Debt vs. Equity Structure

You need to know how CyberArk Software Ltd. (CYBR) is funding its massive growth, and the answer is a measured mix, leaning heavily on equity but with a recent, significant debt injection. The company's Debt-to-Equity (D/E) ratio sits at a modest 0.53 as of late 2025, which is low leverage for most sectors, but a bit higher than the typical pure-play software peer.

This ratio tells you that for every dollar of shareholder equity, CyberArk uses 53 cents of debt to finance its assets. It's a healthy position, signaling that the company is not over-leveraged, but it's a clear step up from the ultra-low D/E ratios common in the technology sector, where the average for related industries like Communication Equipment is around 0.47.

Here's the quick math on the balance sheet structure:

• Total Debt (Long-Term/Short-Term): Approximately $1.21 billion USD (as of June 2025).
• Total Equity (Calculated): Approximately $2.28 billion USD.
• Debt-to-Equity Ratio: 0.53.

CyberArk's debt is almost entirely long-term, meaning short-term debt obligations are minimal and manageable. The company's major financing activity in 2025 was a substantial debt issuance, specifically international bonds (US23248VAC90) issued in June 2025 for USD 1.25 billion, maturing in 2030. This move was a strategic decision to raise growth capital without diluting shareholder value further, a common tactic for high-growth tech firms with strong cash flow potential but negative GAAP earnings.

The company is balancing its funding by using its strong equity base-built from years of capital raises-as a foundation, and then adding debt for specific, large-scale initiatives like the recent acquisitions of Venafi and Zilla Security. While the company does not have a formal credit rating from a major agency, the market sentiment has been cautious, with multiple analyst downgrades in Q3 2025 (e.g., Canaccord Genuity, Barclays) moving the consensus from 'Buy' to 'Hold' or 'Equal-Weight' despite price target increases. This signals a market watching closely to see how the company executes on its subscription model transition and integrates its new debt-funded assets.

What this estimate hides is the true cost of that $1.25 billion debt, which will be serviced by future cash flows. Still, the current D/E ratio is manageable and shows a preference for equity funding overall. For a deeper dive into the company's overall financial health, check out the full post: Breaking Down CyberArk Software Ltd. (CYBR) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You want to know if CyberArk Software Ltd. (CYBR) can cover its near-term bills, and the short answer is a resounding yes. The company's liquidity position is defintely a major strength, built on a massive cash cushion and excellent working capital management. This financial fortitude gives them serious flexibility for growth and acquisitions.

As of the most recent reporting, CyberArk's Current Ratio and Quick Ratio both stood at an extremely strong value of 2.31. This means for every dollar of short-term liability (Current Liabilities), the company holds $2.31 in current assets (like cash, accounts receivable, etc.) to cover it. Since the ratios are identical, it confirms what you'd expect from a software company: they hold virtually no inventory, so all current assets are highly liquid.

Here's the quick math on their immediate resources, using data from the second quarter of 2025. What this estimate hides is the strategic value of this cash pile for future M&A, which is a key part of their growth story.

The working capital trend is robust, showing a substantial buffer of over $1.06 Billion as of the end of Q2 2025. This financial strength is anchored by a massive cash, cash equivalents, and marketable securities balance of $1.964 Billion as of September 30, 2025. That's a war chest that allows them to self-fund operations and invest aggressively in the business without relying on external financing for day-to-day needs.

Looking at the Cash Flow Statement for the third quarter of 2025, the core business is generating cash, even while reporting a GAAP net loss. This is a crucial distinction for subscription-based models (Software-as-a-Service, or SaaS), where cash is often collected upfront and recorded as deferred revenue (a liability) before it hits the income statement.

• Operating Cash Flow (OCF) for Q3 2025 was a positive $50.7 Million.
• Adjusted Free Cash Flow (FCF) was $51.3 Million for the same quarter, indicating healthy cash generation after capital expenditures.
• The company reported a Q3 2025 GAAP net loss of $50.44 Million, which is largely offset by the positive OCF due to non-cash charges like stock-based compensation and amortization.

The slight dip in Q3 2025 OCF to $50.7 Million from $54.2 Million in Q3 2024 is minor and doesn't signal a concern, especially given the overall revenue growth of 43 percent year-over-year in Q3 2025. The strength is not in the quarterly fluctuation, but in the structural liquidity. Investors should view CyberArk Software Ltd. (CYBR) as having exceptional liquidity, which is a significant competitive advantage in the high-growth identity security market. For a deeper dive into the company's strategic position, check out the full post: Breaking Down CyberArk Software Ltd. (CYBR) Financial Health: Key Insights for Investors.

The takeaway is simple: CyberArk is sitting on a ton of cash, so liquidity risk is practically non-existent.

Valuation Analysis

You're looking at CyberArk Software Ltd. (CYBR) and asking the core question: is this stock priced fairly, or is the market running ahead of itself? My take, looking at the Q3 and estimated 2025 data, is that CyberArk is fully valued right now, leaning toward the overvalued side based on traditional metrics, but its strategic position justifies the premium.

The stock has had a phenomenal run, moving from its 52-week low of $288.63 to a high of $526.19 over the last 12 months, with the price currently hovering around $482.50 as of November 2025. This momentum reflects the market's enthusiasm for their identity security platform, especially given the critical nature of Privileged Access Management (PAM) in the current threat landscape.

The Premium on Growth: P/E and EV/EBITDA

When we dive into the multiples (valuation ratios), the picture gets complicated fast. CyberArk is not currently profitable on a generally accepted accounting principles (GAAP) basis, which means its Trailing Twelve Months (TTM) Price-to-Earnings (P/E) ratio is a negative number, around -149.12 as of October 2025. This is a clear red flag for value investors.

However, analysts are focused on future profitability. The estimated 2025 P/E ratio, based on consensus earnings, is still a staggering 128.96. Here's the quick math: you are paying $128.96 for every dollar of expected 2025 earnings. That's a huge growth premium. Also, the Enterprise Value-to-EBITDA (EV/EBITDA) ratio is an astronomical 2,851.07. This ratio compares the company's total value (Enterprise Value) to its operating cash flow proxy (EBITDA), and a number this high suggests the market is pricing in decades of flawless growth and margin expansion.

• P/E (2025 Est.): 128.96
• P/E (TTM): -149.12 (Not profitable on GAAP basis)
• EV/EBITDA: 2,851.07 (Extreme Growth Premium)

Tangible Assets and Analyst Sentiment

The Price-to-Book (P/B) ratio, which compares the stock price to the company's net asset value (Book Value), is another sign of high valuation. As of September 2025, CyberArk Software Ltd.'s P/B ratio stands at 10.55. For a software company, a high P/B is expected because the real value is in the intellectual property and customer base, not physical assets. Still, this is near its 1-year high, which suggests limited margin of safety.

On the income side, don't expect a payout. CyberArk Software Ltd. is a growth company, not a dividend stock. The dividend yield is 0.00% with a $0.00 TTM dividend payout, as all capital is reinvested for growth.

Analyst consensus is mixed but cautious. Based on a survey of 32 Wall Street analysts, the consensus rating is a Hold. Eight analysts recommend 'Buy,' but a majority of 22 recommend 'Hold,' with two 'Sell' ratings. The average 12-month price target is $455.96, which is actually a slight downside from the current price. This tells you the smart money sees the stock as having run its course for the near-term. It's defintely a high-conviction growth play, not a bargain.

To be fair, a high valuation is common for market leaders in high-growth sectors. If you believe CyberArk can execute on the vision outlined in their Mission Statement, Vision, & Core Values of CyberArk Software Ltd. (CYBR), the current price may be justified in the long run.

Next step: You should model a discounted cash flow (DCF) to see what growth rate is required to justify a $482.50 price.

Risk Factors

You're looking at CyberArk Software Ltd. (CYBR) and seeing impressive growth, but as with any high-flying tech stock, you have to map the risks. The biggest near-term factor isn't a market crash or a bad quarter; it's the pending acquisition by Palo Alto Networks (PANW).

On July 30, 2025, CyberArk announced a definitive agreement for the acquisition, valued at approximately $25 billion in equity. This deal, while a massive win for current shareholders, introduces significant execution and regulatory risk until it closes, which is expected in the second half of PANW's fiscal 2026. If the deal hits a snag with regulatory clearances or other closing conditions, the stock price could drop sharply from its current premium.

Operational and Financial Headwinds

Even with strong top-line growth-Q3 2025 total revenue hit $342.8 million, up 43% year-over-year-the company faces internal financial pressures that investors must track. For instance, in the second quarter of 2025, the company incurred a one-time $44 million tax payment related to the intercompany migration of intellectual property following the Venafi acquisition. That's a huge, non-recurring cash outflow that impacts free cash flow.

The core operational risks, detailed in their filings, are typical for a company growing through acquisition and shifting its business model:

• Integration Risk: Successfully integrating acquired technologies like Venafi and Zilla Security without disrupting the core Identity Security Platform.

• Subscription Transition: Maintaining growth momentum as they continue the shift to a subscription-based Annual Recurring Revenue (ARR) model.

• Talent Retention: Keeping key engineering and sales talent motivated and onboard during the transition to being part of Palo Alto Networks.

Competitive and Technological Pressures

The identity security market is a battlefield, and competition is fierce. CyberArk's primary challenge is staying ahead of large, well-funded competitors and smaller, niche players in areas like Privileged Access Management (PAM) and Identity Governance and Administration (IGA).

The rapid rise of AI and machine identities is both an opportunity and a risk. While CyberArk is positioning its platform to secure these new identities, a competitor could launch a truly disruptive, AI-native identity solution that forces a costly R&D pivot. Also, a recent industry mandate to shorten Transport Layer Security (TLS) certificate lifespans-from 398 days to 200 by March 2026-is a major headwind for their customers, which then becomes a sales hurdle for CyberArk if their automation tools aren't seen as the best solution.

Here's the quick math on the certificate problem: a company managing 500 certificates manually could see their annual labor hours for renewals jump from 2,000 to over 24,000 by 2029. That operational strain is a risk for their clients, but it also means a huge, immediate need for CyberArk's automation solutions.

To be fair, CyberArk is actively mitigating this by launching tools like a TLS Certificate Renewal Impact Calculator to help organizations quantify this risk and push them toward automation. You can read more about their strategic direction here: Mission Statement, Vision, & Core Values of CyberArk Software Ltd. (CYBR).

Key Financial and Operational Risk Metrics (CYBR)

The immediate, actionable item for you is to monitor the regulatory approval process for the Palo Alto Networks deal. Any delay there is a red flag.

Growth Opportunities

You're looking for a clear picture of what drives CyberArk Software Ltd. (CYBR) beyond the next quarter, and honestly, the outlook is defined by two things: an accelerating market need and a massive strategic shift. The company's future growth is locked into the non-negotiable demand for identity security, plus the game-changing acquisition by Palo Alto Networks.

The core growth driver is the exponential rise of identities that need protection-not just human users, but machine identities (like application programming interfaces, or APIs) and the emerging threat surface of Artificial Intelligence (AI) agents. CyberArk is positioned as the only platform designed to secure all three. This market tailwind is why the company raised its full-year 2025 revenue outlook to a range between $1.313 billion and $1.323 billion. That's a strong signal.

Here's the quick math on the financial projections for the 2025 fiscal year:

• Revenue Projection: Midpoint of $1.318 billion.
• Annual Recurring Revenue (ARR) Target: Between $1.41 billion and $1.42 billion.
• Non-GAAP EPS Forecast: Midpoint of $3.79 per share.

The shift to a subscription-based model is defintely working, with Annual Recurring Revenue hitting $1.274 billion by the end of Q2 2025, a 47% increase year-over-year. This subscription focus gives us better revenue visibility and predictability, which I always favor.

Product Innovation and Market Expansion

CyberArk is actively expanding its platform to capture more of the total addressable market (TAM). This isn't just about incremental updates; it's about strategic product innovation and inorganic growth through acquisitions.

The recent acquisitions of Venafi, a leader in machine identity management, and Zilla Security, specializing in cloud-based identity governance, are key to this expansion. These moves immediately broaden the platform's reach. For example, the machine identity business is seeing notable success and is a significant contributor to growth. Also, the company is already rolling out solutions purpose-built to protect new identity groups, like the privilege controls for AI Agents. That's forward-thinking. Another near-term opportunity is the new set of tools to help organizations manage the upcoming reduction in Transport Layer Security (TLS) certificate lifespans-a compliance-driven problem that requires automated solutions.

The company's strategic initiatives also include strengthening its channel ecosystem, which earned a 5-Star rating in the 2025 CRN Partner Program Guide for its focus on a structured Managed Service Provider (MSP) framework and SaaS growth. They also continue to leverage powerful cloud partnerships with giants like Microsoft, Amazon, and Alphabet to drive customer adoption in multi-cloud environments.

You can see the foundation of their strategy here: Mission Statement, Vision, & Core Values of CyberArk Software Ltd. (CYBR).

Competitive Advantages and the PANW Acquisition

CyberArk's main competitive advantage is its unified Identity Security Platform, which provides comprehensive coverage of every identity type-human, machine, and AI-with best-in-class privileged access management (PAM) controls. This unified approach helps organizations consolidate their security spending, a major priority for enterprises in 2025. Plus, their customer base is impressive, securing over 5,400 global businesses, including 50% of Fortune 500 companies.

The most significant strategic development is the proposed acquisition by Palo Alto Networks (PANW), which CyberArk shareholders approved in November 2025. This cash-and-stock transaction, which was announced in July 2025, is expected to close in the second half of PANW's fiscal year 2026, subject to regulatory approvals. What this estimate hides is that the acquisition, once complete, will integrate CyberArk's identity security into one of the largest and most comprehensive cybersecurity platforms globally. This move will accelerate CyberArk's vision and scale its identity security offerings much faster than it could alone, especially in the AI era.

The table below summarizes the financial growth trajectory based on the latest 2025 data:

The next step for investors is to track the regulatory approval process for the Palo Alto Networks acquisition, as this will dictate the final timeline and structure of the investment.