CyberArks Machine Identity Push: Venafi as a Game Changer in Identity Security Space

CyberArk (CYBR) is making significant strides in the rapidly growing machine identity market, thanks to its acquisition of Venafi, a leader in machine identity management. In the first quarter of fiscal 2025, Venafi was included in nine of CyberArk's top 10 deals, reinforcing its position as a key cross-sell driver within CyberArk's identity security platform. Early traction is evident in notable wins, including a Fortune 100 financial services firm that expanded into certificate lifecycle management and Public Key Infrastructure (PKI) offerings with a competitive multi-six-figure Annual Contract Value (ACV) deal. Another notable win was with PDS Health, a customer with CyberArk since 2019, which expanded on the machine identity side by deploying all of Venafi's Certificate Manager and Zero Touch PKI in a six-figure ACV deal during the first quarter. During the first quarter, management noted that machine identities now outnumber human identities by more than 80 to 1, which is up from a 45:1 ratio just a year ago. This makes machine identities one of the largest and fastest-growing attack surfaces in enterprise IT. With Venafi, CyberArk is addressing these challenges through end-to-end machine identity security, focused on visibility, governance, and control. When the acquisition closed in late 2024, CyberArk estimated that Venafi would expand its total addressable market by $10 billion to approximately $60 billion. As cloud complexity grows and machine identities continue to outnumber humans, Venafi appears well-positioned to become a foundational pillar in CyberArk's platform-led growth strategy. Competitors in the identity security space include CrowdStrike (CRWD) and Palo Alto Networks (PANW), which are also evolving their platforms to meet enterprise security demands. 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. Meanwhile, Palo Alto Networks is doubling down on its platformization strategy with strong momentum in its Extended Security Intelligence and Automation Management or XSIAM security operation platform. Shares of CyberArk have gained 19.4% year to date compared with the Zacks Security industry's growth of 20.2%. From a valuation standpoint, CYBR trades at a forward price-to-sales ratio of 13.16, below the industry's 14.5. The Zacks Consensus Estimate for CYBR's 2025 and 2026 earnings implies a year-over-year increase of 25.74% and 25.72%, respectively. However, the estimates for 2025 and 2026 have been revised downward over the past seven days. CyberArk currently carries a Zacks Rank #2 (Buy). In conclusion, CyberArk is making significant strides in the machine identity market through its acquisition of Venafi. With early traction in notable wins and a strong platform-led growth strategy, CYBR appears well-positioned to continue its upward trajectory. However, investors should also consider the downward revisions to earnings estimates over the past week and monitor the company's performance closely.