Stop IT espionage: CyberArk Software sets terms for $75 million IPO

CyberArk Software, which provides enterprise software that detects cyber attacks on privileged accounts, announced terms for its IPO on Wednesday. The Petach Tikva, Israel-based company plans to raise $75 million by offering 5.4 million shares at a price range of $13 to $15. At the midpoint of the proposed range, CyberArk Software would command a fully diluted market value of $470 million.

The company has over 1,550 customers, including over 35% of the Fortune 100 and about 15% of the Global 2000. CyberArk focuses its security software on protecting privileged accounts; people in an organization with access to critical information and administrative capabilities. Primary shareholders include Jerusalem Venture Partners (48% pre-IPO stake), Goldman Sachs (19%), Vertex Venture Capital (9%), Cabaret Securities (6%) and founder and CEO Ehud Mokady (4%).

Revenue grew 33% to $39 million for the six months ended June 30, 2014 as both license and maintenance and professional services revenue expanded on higher sales volume of its software. The company had 1,550 customers at the end of June compared to 1,300 one year ago. Sales in the US accounted for over 64% of revenue growth. Gross margin declined 220 bps to 83% due to higher licensing costs. Operating income dropped 5% to $3 million and operating margin declined three percentage points to 8.4% because of higher personnel costs across R&D and SG&A.

CyberArk is the first technology company to set terms after Alibaba (BABA); tech IPOs have been notably absent in the last 90 days, possibly due to the attention that the $20 billion deal demands. 2014's other Israeli tech IPO, Mobileye (MBLY), gained 48% on its first day after pricing above the range, and has traded up another 50% since its August 1 debut. The third quarter has only seen 4 out of the year's 41 tech IPOs, but we expect activity to pick up after the Alibaba IPO, considering the Renaissance IPO ETF trades near its all-time highs.

CyberArk Software, which was founded in 1999 and booked $76 million in sales for the 12 months ended June 30, 2014, plans to list on the NASDAQ under the symbol CYBR. J.P. Morgan, Deutsche Bank and Barclays are the joint bookrunners on the deal. It is expected to price during the week of September 22, 2014.