02-07-2025
CYBR Rides the Machine Identity Wave: Can Pricing Models Keep Pace?
CyberArk CYBR is experiencing rapid growth in its machine identity business, but the challenge now lies in scaling its pricing model. During the first quarter, management noted that machine identities now outnumber human identities by more than 80 to 1, which is up from a 45 to 1 ratio just a year ago. This rise reflects the broader shift toward automated systems, AI agents, and workload-based architectures.
However, as volumes scale into the millions, CyberArk knows traditional per-identity pricing won't work. During first-quarter 2025 earnings call, management acknowledged that customers won't pay premium prices for each machine or agent.
Moreover, CyberArk is emphasizing bundled platform deals. This strategy appears to be gaining traction. Machine identity products, including Venafi and Secrets Management, were included in nine of the company's top 10 deals during the first quarter.
Another tailwind is a policy shift from the Certificate Authority/Browser Forum to shorten certificate lifespans from 398 days to just 47 days. This change is expected to significantly increase certificate turnover. That drives a need for security management automation, something CyberArk is ready to capitalize on with its machine identity and PKI offerings.
With machine identity volumes growing rapidly, CyberArk's ability to offer scalable and flexible pricing will be critical. If executed well, it will lead the company to unlock the full potential of this growing market. During the first quarter earnings call, management stated that while per-unit pricing will drop, the total deal size could grow two to three times larger than typical privileged access management deals. So, CyberArk's future in machine identity looks strong, if its pricing scales smartly.
How Competitors Fare Against CYBR
CrowdStrike CRWD and Okta Inc. OKTA are also evolving their platforms to meet enterprise security demands.
CrowdStrike is another established player in the identity security space, providing unified, real-time protection across cloud, identity and endpoint. CrowdStrike is enhancing its identity security platform with the implementation of AI copilots like Charlotte AI and agentic AI solutions like Charlotte AI Agentic Workflows.
OKTA focuses on identity and access management, providing cloud-based solutions that help businesses safeguard user data. Enterprises can now implement Identity Threat Protection with Okta AI to leverage AI and machine learning techniques for real-time detection of the entire spectrum of Identity attacks.
CYBR's Price Performance, Valuation and Estimates
Shares of CyberArk have gained 17.6% year to date compared with the Zacks Security industry's growth of 25.7%.
CYBR YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, CYBR trades at a forward price-to-sales ratio of 13.4, below the industry's 15.11.
CYBR Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CYBR's 2025 and 2026 earnings implies a year-over-year increase of 26.4% and 25.1%, respectively. The estimates for 2025 and 2026 have been revised downward over the past 30 days.
CyberArk currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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