This article was last updated in June 2019
Quick read: 2 min
This is the first in a new series of posts we are commencing in 2019, which we are calling “Behind the Ticker” (ticker being the name that some people use for stock code). In this ongoing series, we will delve deeper into the constituents which underlie our funds. We hope these posts will provide investors with insights into the kinds of companies they are getting exposure to when investing in a BetaShares fund. Let’s get into it!
One of our more popular thematic funds over the past couple of years has been the BetaShares Global Cybersecurity ETF – ASX code: HACK. If you aren’t familiar with the fund, HACK aims to provide simple and transparent exposure to the leading companies in the global cybersecurity sector – by aiming to track an index made up of the global leading companies that are in the business of combatting the rapidly growing presence of cybercrime. Whilst many of the companies that make up this index are growing rapidly, quite a number of them may be unknown to most investors. As such, I wanted to shine a light on one of the most interesting growth stories currently in this index – CyberArk Software. As you can see from the stock chart below, CyberArk’s growth over the last year has been impressive.
Source: Yahoo Finance. Past performance is not an indicator of future performance. No assurance is given that the Fund’s holding of CyberArk will be profitable.
CyberArk is an Israeli company which offers information security services for its growing number of clients – including more than 50% of the Fortune 5001. Specifically, CyberArk provides “Privileged Account Security” for businesses and individuals who want to protect themselves from nefarious hackers looking for confidential data. Put simply, Privileged Accounts refer to the web of access accounts across a business’ enterprise environment – these accounts are everywhere, and cyber attackers want access to them. CyberArk’s software is designed to provide security across these Privileged Account environments and ultimately aims to protect critical data from falling into the wrong hands.
In mid-May 2019, CyberArk Software reported first-quarter 2019 financial results where revenue surged 34% compared with the first quarter of 2018 to $95.9 million2 and, for the current year, the company projects revenue to rise further between 21% and 22%, being a range of $415 million to $419 million.
In a conference call to analysts in February 2019, CEO and Chairman of CyberArk, Udi Mokady, highlighted how cybersecurity is becoming pivotal to the company’s strategic decision-making, saying: “Today’s business paradigm dictates that every organization — the insurance company, the retailer, the airline, the utility — is a software company, implementing digital transformation strategies and migrating workloads to the cloud. They are leveraging speed, automation, and agility as a competitive advantage. This is causing organizations around the world to rethink security and prioritize impactful initiatives.3” CyberArk have positioned themselves well for this shift in thinking and are poised to capitalise on the need for data protection in the growing age of cybercrime.
As at 20 June 2019, CyberArk makes up 3.5% of the HACK portfolio and the company is just one example of the positive growth stories we have observed within the HACK portfolio over the past 12 months. As our lives turn increasingly online and the threat from cybercriminals grows, the cybersecurity sector appears to have the potential to be a true global growth sector. The HACK ETF allows investors to easily invest into this thematic via a single trade on the ASX.
Since HACK’s inception in August 2016 to 31 May 2019 the fund has experienced annualised returns of ~17.2%.*
*Past performance is not an indicator of future performance. Investment value can go down as well as up. See PDS for more information about risks.
1 CyberArk Software Ltd. (CYBR) CEO Udi Mokady on Q3 2018 Results – Earnings Call Transcript”. Seeking Alpha. November 7, 2018.