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CyberArk Yanked On Imperva ‘Quota’ Blunder, Lagging FireEye Sales

Cybersecurity stocks toppled broadly Friday despite a  CyberArk Software ( CYBR ) blowout Q1, losing ground on disappointing results from FireEye ( FEYE ) and Imperva ( IMPV ) that included, respectively, a sudden CEO shift and ousted EMEA management on lagging sales. IBD’s 26-company Computer Software-Security industry group, which already ranks a lowly No. 178 of 197 groups tracked, was down 5.5% in morning trading on the stock market today , touching a more than two-month low. Imperva and FireEye stocks led the deluge, down a respective 26% and 18%, near 33.50 and 13. CyberArk stock was down 2%, near 39.50. In fact, the only stocks on the rise in the sector were tiny Mimecast ( MIME ) and Qualys ( QLYS ), which was up just a fraction. Viewfinity ‘Meaningfully’ Helps CyberArk Late Thursday, CyberArk reported 43% year-over-year sales growth to $46.9 million and 23 cents earnings per share, up 44% vs. the year-earlier quarter. Both metrics topped the consensus of 17 analysts polled by Thomson Reuters for $43.4 million and 16 cents. Current-quarter guidance for $47.5 million to $48.5 million in sales and 18-20 cents EPS ex items beat Wall Street’s forecast for $47.5 million and 18 cents at the midpoints. On a year-over-year basis, sales would be up 32%, and EPS minus items would be flat. License sales drove CyberArk’s Q1, up 38% to $27.5 million (59% of total revenue), leading 41% growth in the maintenance and professional services segment. Q1 marked acquisition Viewfinity’s first “meaningful contribution,” Piper Jaffray analyst Andrew Nowinski wrote in a research report. Nowinski reiterated an overweight rating and 55 price target on CyberArk stock, noting “broad adoption” across all segments. “They are seeing increased activity with midsize organizations, including universities, credit unions and law firms, which supports the belief that firms of all sizes need this layer of security,” he wrote. Government growth included six-figure deals in all three regions. FireEye Sees ‘Inflection Point’ Dougherty analyst Catharine Trebnick called FireEye’s Q1 an “inflection point” that saw subscriptions replace products as FireEye’s leading segment — up 71% vs. down 16% on a year-over-year basis. The unexpected transition caused FireEye’s Q1 sales to miss but billings to fly. And CEO David DeWalt stepped down to executive board chairman, succeeded by Kevin Mandia, Mandiant founder. FireEye acquired Mandiant in 2014, and Mandia has held several positions at FireEye since. Late Thursday, FireEye reported $168 million in sales and $186 million in billings minus items, up a respective 34% and 23%. A 47-cent loss per-share ex items shrunk by a penny vs. last year’s loss. Billings topped FireEye’s $163 million-$183 million model, and losses beat the consensus of 35 analysts polled by Thomson Reuters for 50 cents. But sales missed the projection for $171.8 million, and on Friday, at least four analysts cut their price targets on FireEye stock. Of the 28 deals worth more than $1 million, 80% included multiple products/subscriptions, and 50% had three or more, Trebnick wrote in a report. More than half of the seven-figure deals included FireEye-as-a-Service — or cloud — products. Trebnick is neutral on FireEye stock. For the current quarter, FireEye guided to $178 million to $185 million in sales, up 23% at the midpoint, and a 38-cent to 40-cent per-share loss minus items, missing the consensus for $192.8 million and a 36-cent loss. Billings views for $200 million to $215 million would be up 16%. Imperva’s ‘Doubly Whammy’ Hits Q1 Imperva, on the other hand, experienced a “double whammy” during Q1 as Web-application firewall and Europe/Middle East/Asia sales stalled, prompting the firm to shift channel priorities and remove its EMEA head of sales. Summit Research analyst Srini Nandury reiterated a buy rating but trimmed his price target on Imperva stock to 50 from 70. Imperva trimmed Q2 guidance but inched 2016 views up — the latter of which Nandury sees as an impossibility. “We worry that the year will be back-end-loaded with no margin of error,” he wrote in a report. For Q1, Imperva reported $59.8 million in sales, up 34%, and a 25-cent per-share loss minus items vs. a 26-cent loss in the year-earlier quarter. Sales met Wall Street expectations, while losses were better by 3 cents. Imperva’s Q2 view for $65.5 million to $66.5 million in sales would be up 23%, but it missed the consensus of 22 analysts polled by Thomson Reuters for $70.2 million. The company’s outlook for a 2-cent to 4-cent loss per share ex items edged views for a 4-cent loss. “Guidance was lowered mainly due to sales execution challenges in EMEA and U.S.,” Nandury wrote in a report. “Some sales force reps were only selling Database Security product so that they can close out their quota for the quarter, while ignoring lower-priced WAF products.” But Nandury sees the issues as fixable. Gartner, IDC and Forrester industry trackers rate Imperva’s products highly, he wrote. Amazon.com ‘s ( AMZN ) Amazon Web Services cloud business can’t touch Imperva’s Database Security, he said. “We do not see evidence that enterprises are going to rely on cloud providers such as AWS to provide security to their data,” he wrote.

Drone Delay Bad Karma For GoPro; Stock Skids On Q1 Report

Action-camera maker GoPro ( GPRO ) took an ugly spill on Friday, a day after it reported mixed Q1 earnings results and postponed the launch of its flying-camera drone. GoPro shares tumbled more than 7%, below 10, in morning trading on the stock market today . GoPro stock started the year near 18. Investors have dumped GoPro shares in recent months on concerns that the company is a one-hit wonder that has largely saturated the market for its wearable cameras. In the March quarter, San Mateo, Calif.-based GoPro lost 63 cents a share, compared with earnings per share of 24 cents in the year-earlier period. Sales fell 49%, $183.5 million. Analysts polled by Thomson Reuters expected GoPro to lose 60 cents a share on sales of $169.1 million. GoPro pushed back the launch of its Karma drone by about six months to the holiday season from the end of Q2. GoPro needs Karma to be a hit, Dougherty analyst Charles Anderson said in a research report Friday. “It is incumbent upon GoPro to release a great drone, not merely a good one, considering how strong the competition is,” Anderson said. “So if they need more time to work on it, we endorse the idea.” Anderson rates GoPro stock as neutral. “Until investors can judge the commercial appeal of Karma and the forthcoming Hero 5 camera, we don’t see any upside or downside catalysts for the stock,” he said. GoPro is preparing to launch a consumer drone at a time when current vendors, such as DJI, Parrot and 3DR, are cutting prices, Piper Jaffray analyst Erinn Murphy said in a report Friday. She rates GoPro stock as underweight. “Pricing has slipped from the $700-$900 range to the $400-$600 range, and we are continuing to see promotional activity accelerate in the space,” Murphy said. “GoPro will be releasing its drone at a time where the consumer has not only seen growing options of drones, but following what amounted to be an increasing promotional environment for the category since last holiday.” GoPro Promises Drone With ‘Revolutionary Features’ On the company’s earnings conference call with analysts late Thursday, GoPro CEO Nick Woodman said Karma will have “revolutionary features” not found on other drones currently on the market. “Karma includes revolutionary features that differentiate it from other drones — features that make it much more than a drone and deliver the versatility, value and performance that consumers expect from GoPro,” Woodman said. “To give ourselves more time to fine-tune these features, we have made the difficult decision to push Karma’s launch to the holidays.” Wedbush analyst Michael Pachter remained positive on GoPro’s longer-term prospects. He reiterated his outperform rating on GoPro stock, with a 12-month price target of 13. “After a series of high-profile missteps, including the disastrous Hero 4 Session launch, the lack of new Hero cameras at year-end, and a negative pre-announcement in January, 2016 presents an inflection point for GoPro stock,” Pachter said. “Given its history of innovation, we are willing to give GoPro the benefit of the doubt for the time being, and see upside if the Karma drone and the Hero 5 are well-received. “However, the delay of the Karma launch suggests delayed gratification for investors, and we do not expect investors to return to GoPro stock until there is greater visibility into the company’s product launches.” GoPro maintained its full-year revenue guidance, but might be too optimistic, Pachter said. “In order to hit the high end of its guidance, GoPro would have to have wild success with its next motion-capture devices, and the Q4 Karma launch would have to drive all-time record quarterly sales,” Pachter said. “While we think that these outcomes are possible, we are reluctant to remain Pollyannaish about GoPro’s prospects.” GoPro expects full-year sales of $1.35 billion to $1.5 billion, or $1.43 billion at the midpoint. Wall Street had been modeling full-year sales at $1.37 billion. In 2015, GoPro posted sales of $1.62 billion. Shares of Ambarella ( AMBA ), which makes image processing chips for GoPro cameras, were flat, near 38, in morning trading Friday. RELATED: GoPro Adds Developer Program After Snatching Apple Designer

Square Downgraded Despite Guidance Hike, As Lockup Expiration Looms

Shares of mobile-payments firm Square ( SQ ) were tumbling early Friday as the company was downgraded following a mixed Q1 earnings report issued late the previous day. Square lost 29 cents a share in the quarter, or 14 cents excluding a one-time legal cost. Either way, it was worse than the 9-cent loss analysts had expected, according to Thomson Reuters. Revenue beat expectations, though, rising 51% to $379 million. Square lifted its adjusted-revenue guidance for the year (which excludes the soon-to-be-defunct partnership with Starbucks ( SBUX )) by $15 million, now $615 million to $635 million. It also raised its EBITDA (earnings before interest, taxes, depreciation and amortization) guidance by $2 million, now $8 million to $14 million. However, the May 16 expiration of Square’s post-IPO lockup period was looming on analysts’ minds. Wedbush’s Gil Luria downgraded the stock to underperform from neutral, with a 9 price target, predicting that insider shareholders will use this opening as a chance to get out. “We believe that Square is rapidly growing a business that may never reach peer (or guided) profitability, which will become apparent as growth slows over the next couple of years on competition and saturation,” Luria wrote. Square stock was down more than 17% in early trading on the stock market today , below 11 and sitting at a two-month low. The stock went public at 9 last November and peaked at 15.91 on March 31. BTIG analyst Mark Palmer was more confident about Square’s future but was still concerned about the lockup expiration. “Square arguably needed to post a strong Q1 2016 report to convince the soon-to-be unlocked investors to hold on to their shares,” Palmer wrote in a research note affirming his neutral rating. “While the company posted a headline earnings miss, much more important at this stage in its life cycle was a better-than-expected revenue print and increased fiscal 2016 guidance for both revenue and adjusted EBITDA.”