CyberArk Announces Strong Third Quarter 2022 Results

Subscription Portion of Annual Recurring Revenue (ARR) of $301 million; Growth of 117%

Total ARR of $512 million; Growth Accelerating to 49%

Subscription Revenue of $74.2 million; Growth of 110%

Total Revenue of $152.7 million; Growth Accelerating to 26%

Net Cash Flow from Operating Activities of $29.2 million for Nine Months Ended September 30, 2022

Full Year ARR Guidance Range Increased to a Range of $552 million to $558 million

Newton, Mass. and Petach Tikva, Israel – November 3, 2022 – CyberArk (NASDAQ: CYBR), the global leader in Identity Security, today announced strong financial results for the third quarter ended September 30, 2022.

“Strong demand for our Identity Security platform centered on intelligent privilege controls continues to fuel our growth and demonstrates the durability of demand for our solutions,” said Udi Mokady, CyberArk Chairman and CEO. “Digital transformation, the adoption of Zero Trust strategies and the heightened threat landscape are pushing identity security to the top of priority lists for Chief Information Security Officers. Our execution, combined with strong secular trends, resulted in total Annual Recurring Revenue reaching $512 million with year over year growth in ARR accelerating for the third consecutive quarter to 49 percent. We also experienced the highest ever sequential increase in subscription ARR. We remain confident in our ability to deliver against our tremendous growth opportunity with strong cash flow and profitability. Given the strength of our results year to date, we are again significantly raising our full year ARR guidance to 41 percent growth at the midpoint.”

Balance Sheet and Net Cash Provided by Operating Activities

Recent Developments

Business Outlook

Based on information available as of November 3, 2022, CyberArk is issuing guidance for the fourth quarter and full year 2022 as indicated below.

 

Fourth Quarter 2022:

Full Year 2022:

Conference Call Information

 

In conjunction with this announcement, CyberArk will host a conference call on Thursday, November 3, 2022 at 8:00 a.m. Eastern Time (ET) to discuss the Company’s third quarter financial results and its business outlook. To access this call, dial +1 (888) 330-2455 (U.S.) or +1 (240) 789-2717 (international). The conference ID is 6515982. Additionally, a live webcast of the conference call will be available via the “Investor Relations” section of the company’s website at www.cyberark.com.

Following the conference call, a replay will be available for one week at +1 (800) 770-2030 (U.S.) or +1 (647) 362-9199 (international). The replay pass code is 6515982. An archived webcast of the conference call will also be available in the “Investor Relations” section of the company’s website at www.cyberark.com.

About CyberArk                                                                                                       

CyberArk (NASDAQ: CYBR) is the global leader in Identity Security. Centered on privileged access management, CyberArk provides the most comprehensive security offering for any identity – human or machine – across business applications, distributed workforces, hybrid cloud workloads and throughout the DevOps lifecycle. The world’s leading organizations trust CyberArk to help secure their most critical assets. To learn more about CyberArk, visit https://www.cyberark.com, read the CyberArk blogs or follow on Twitter via @CyberArk, LinkedIn or Facebook.

Copyright © 2022 CyberArk Software. All Rights Reserved. All other brand names, product names, or trademarks belong to their respective holders.

Key Performance Indicators and Non-GAAP Financial Measures

Annual Recurring Revenue (ARR)

 

Subscription Portion of Annual Recurring Revenue

 

Maintenance Portion of Annual Recurring Revenue

 

Recurring Revenue

 

 

Non-GAAP Financial Measures

CyberArk believes that the use of non-GAAP gross profit, non-GAAP operating expense, non-GAAP operating income (loss), non-GAAP net income (loss) and free cash flow is helpful to our investors. These financial measures are not measures of the Company’s financial performance under U.S. GAAP and should not be considered as alternatives to gross profit, operating loss, net loss or net cash provided by operating activities or any other performance measures derived in accordance with GAAP.

 

 

 

 

 

 

Non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in the Company’s industry, as other companies in the industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. In addition, there are limitations in using non-GAAP financial measures as they exclude expenses that may have a material impact on the Company’s reported financial results. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with U.S. GAAP. CyberArk urges investors to review the reconciliation of its non-GAAP financial measures to the comparable U.S. GAAP financial measures included below, and not to rely on any single financial measure to evaluate its business.

Guidance for non-GAAP financial measures excludes, as applicable, share-based compensation expense, acquisition related expenses, amortization of intangible assets related to acquisitions, non-cash interest expense related to the amortization of debt discount and issuance costs and the tax effect of the non-GAAP adjustments. A reconciliation of the non-GAAP financial measures guidance to the corresponding GAAP measures is not available on a forward-looking basis due to the uncertainty regarding, and the potential variability and significance of, the amounts of share-based compensation expense, amortization of intangible assets related to acquisitions, and the non-recurring expenses that are excluded from the guidance. Accordingly, a reconciliation of the non-GAAP financial measures guidance to the corresponding GAAP measures for future periods is not available without unreasonable effort.

 

Cautionary Language Concerning Forward-Looking Statements

 

This release contains forward-looking statements, which express the current beliefs and expectations of CyberArk’s (the “Company”) management. In some cases, forward-looking statements may be identified by terminology such as “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential” or the negative of these terms or other similar expressions.  Such statements involve a number of known and unknown risks and uncertainties that could cause the Company’s future results, levels of activity, performance or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risks relating to: changes to the drivers of the Company’s growth and its ability to adapt its solutions to IT security market demands; the transition of the Company’s business to a subscription model that began in 2021; the Company’s sales cycles and multiple pricing and delivery models; unanticipated product vulnerabilities or cybersecurity breaches of the Company’s, or the Company’s customers’ or partners’ systems; an increase in competition within the Privileged Access Management and Identity Security markets; the Company’s ability to hire, train, retain and motivate qualified personnel; the Company’s ability to sell into existing and new customers and industry verticals; risks related to compliance with privacy and data protection laws and regulations; the Company’s history of incurring net losses and our ability to achieve profitability in the future; the duration and scope of the COVID-19 pandemic and its impact on global and regional economies and the resulting effect on the demand for the Company’s solutions and on its expected revenue growth rates and costs; the Company’s ability to find, complete, fully integrate or achieve the expected benefits of additional strategic acquisitions; reliance on third-party cloud providers for the Company’s operations and SaaS solutions; the Company’s ability to expand its sales and marketing efforts and expand its channel partnerships across existing and new geographies; risks related to sales made to government entities; regulatory and geopolitical risks associated with global sales and operations (including the current conflict between Russia and Ukraine) and changes in regulatory requirements or fluctuations in currency exchange rates; the ability of the Company’s products to help customers achieve and maintain compliance with government regulations or industry standards; risks related to intellectual property claims or the Company’s ability to protect its proprietary technology and intellectual property rights; and other factors discussed under the heading “Risk Factors” in the Company’s most recent annual report on Form 20-F filed with the Securities and Exchange Commission. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

 

###

Investor Contact:

Erica Smith

CyberArk

Phone:  +1 617-558-2132

ir@cyberark.com

Liz Campbell

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2021				2022				2021				2022
Revenues:
Subscription		$	35,290			$	74,249			$	87,071			$	192,198
Perpetual license			23,041				13,790				77,064				35,385
Maintenance and professional services			63,270				64,631				187,462				194,976
Total revenues			121,601				152,670				351,597				422,559
Cost of revenues:
Subscription			6,457				12,214				17,714				32,487
Perpetual license			936				703				2,925				1,980
Maintenance and professional services			16,022				19,548				46,972				56,751
Total cost of revenues			23,415				32,465				67,611				91,218
Gross profit			98,186				120,205				283,986				331,341
Operating expenses:
Research and development			38,014				48,437				101,374				138,844
Sales and marketing			69,596				90,298				196,837				254,536
General and administrative			18,305				20,738				52,263				60,342
Total operating expenses			125,915				159,473				350,474				453,722
Operating loss			(27,729	)			(39,268	)			(66,488	)			(122,381	)
Financial income (expense), net			(3,686	)			3,641				(9,747	)			6,269
Loss before taxes on income			(31,415	)			(35,627	)			(76,235	)			(116,112	)
Tax benefit			2,309				2,902				9,176				7,948
Net loss		$	(29,106	)		$	(32,725	)		$	(67,059	)		$	(108,164	)
Basic loss per ordinary share, net		$	(0.73	)		$	(0.80	)		$	(1.70	)		$	(2.67	)
Diluted loss per ordinary share, net		$	(0.73	)		$	(0.80	)		$	(1.70	)		$	(2.67	)
Shares used in computing net loss
per ordinary shares, basic			39,848,343				40,834,640				39,531,960				40,488,909
Shares used in computing net loss
per ordinary shares, diluted			39,848,343				40,834,640				39,531,960				40,488,909

		December 31,				September 30,
		2021				2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	356,850			$	324,533
Short-term bank deposits			369,645				323,618
Marketable securities			199,933				301,341
Trade receivables			113,211				89,346
Prepaid expenses and other current assets			22,225				22,807
Total current assets			1,061,864				1,061,645
LONG-TERM ASSETS:
Marketable securities			300,662				237,063
Property and equipment, net			20,183				22,347
Intangible assets, net			17,866				29,366
Goodwill			123,717				154,506
Other long-term assets			121,743				168,083
Deferred tax asset			47,167				72,458
Total long-term assets			631,338				683,823
TOTAL ASSETS		$	1,693,202			$	1,745,468
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables		$	10,076			$	10,416
Employees and payroll accruals			75,442				63,314
Accrued expenses and other current liabilities			23,576				35,964
Deferred revenues			230,908				288,847
Total current liabilities			340,002				398,541
LONG-TERM LIABILITIES:
Convertible senior notes, net			520,094				568,597
Deferred revenues			86,367				87,242
Other long-term liabilities			20,227				34,773
Total long-term liabilities			626,688				690,612
TOTAL LIABILITIES			966,690				1,089,153
SHAREHOLDERS' EQUITY:
Ordinary shares of NIS 0.01 par value			104				107
Additional paid-in capital			588,937				621,316
Accumulated other comprehensive income (loss)			397				(20,621	)
Retained earnings			137,074				55,513
Total shareholders' equity			726,512				656,315
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,693,202			$	1,745,468

		Nine Months Ended
		September 30,
		2021				2022
Cash flows from operating activities:
Net loss		$	(67,059	)		$	(108,164	)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization			10,523				11,883
Amortization of premium and accretion of discount on marketable securities, net			5,593				3,976
Share-based compensation			68,774				88,593
Deferred income taxes, net			(11,928	)			(14,267	)
Decrease in trade receivables			11,681				23,865
Amortization of debt discount and issuance costs			13,285				2,234
Increase in prepaid expenses, other current and long-term assets and others			(14,049	)			(16,988	)
Increase in trade payables			1,628				509
Increase in short-term and long-term deferred revenues			38,353				58,814
Increase (decrease) in employees and payroll accruals			3,385				(16,285	)
Decrease in accrued expenses and other current and long-term liabilities			(5,883	)			(4,959	)
Net cash provided by operating activities			54,303				29,211
Cash flows from investing activities:
Proceeds from (investment in) short and long term deposits, net			(73,832	)			43,585
Investment in marketable securities and other			(221,347	)			(318,566	)
Proceeds from sales and maturities of marketable securities			170,511				256,899
Purchase of property and equipment			(7,187	)			(8,778	)
Payments for business acquisitions, net of cash acquired			-				(41,285	)
Net cash used in investing activities			(131,855	)			(68,145	)
Cash flows from financing activities:
Proceeds from (payment of) withholding tax related to employee stock plans			4,498				(811	)
Proceeds from exercise of stock options			9,608				1,729
Proceeds in connection with employees stock purchase plan			-				12,322
Payments of contingent consideration related to acquisitions			-				(1,578	)
Net cash provided by financing activities			14,106				11,662
Decrease in cash, cash equivalents and restricted cash			(63,446	)			(27,272	)
Effect of exchange rate differences on cash, cash equivalents and restricted cash			(788	)			(5,045	)
Cash, cash equivalents and restricted cash at the beginning of the period			500,044				356,850
Cash, cash equivalents and restricted cash at the end of the period		$	435,810			$	324,533

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2021				2022				2021				2022
Net cash provided by operating activities		$	4,801			$	18,481			$	54,303			$	29,211
Less:
Purchase of property and equipment			(2,862	)			(4,618	)			(7,187	)			(8,778	)
Free cash flow		$	1,939			$	13,863			$	47,116			$	20,433
GAAP net cash used in investing activities			(2,068	)			(72,380	)			(131,855	)			(68,145	)
GAAP net cash provided by (used in) financing activities			6,648				(1,602	)			14,106				11,662

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2021				2022				2021				2022
Gross profit		$	98,186			$	120,205			$	283,986			$	331,341
Plus:
Share-based compensation (1)			2,984				4,030				7,991				10,962
Amortization of share-based compensation capitalized in software development costs (3)			65				88				172				264
Amortization of intangible assets (2)			1,277				1,639				3,833				4,339
Non-GAAP gross profit		$	102,512			$	125,962			$	295,982			$	346,906

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2021				2022				2021				2022
Operating expenses		$	125,915			$	159,473			$	350,474			$	453,722
Less:
Share-based compensation (1)			23,358				27,712				60,783				77,631
Amortization of intangible assets (2)			175				154				523				458
Acquisition related expenses			-				1,653				-				2,244
Facility exit and transition costs			-				-				760				-
Non-GAAP operating expenses		$	102,382			$	129,954			$	288,408			$	373,389

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2021				2022				2021				2022
Operating loss		$	(27,729	)		$	(39,268	)		$	(66,488	)		$	(122,381	)
Plus:
Share-based compensation (1)			26,342				31,742				68,774				88,593
Amortization of share-based compensation capitalized in software development costs (3)			65				88				172				264
Amortization of intangible assets (2)			1,452				1,793				4,356				4,797
Acquisition related expenses			-				1,653				-				2,244
Facility exit and transition costs			-				-				760				-
Non-GAAP operating income (loss)		$	130			$	(3,992	)		$	7,574			$	(26,483	)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2021				2022				2021				2022
Cost of revenues - Subscription		$	216			$	634			$	544			$	1,527
Cost of revenues - Perpetual license			54				42				168				103
Cost of revenues - Maintenance and Professional services			2,714				3,354				7,279				9,332
Research and development			5,591				6,983				14,878				19,787
Sales and marketing			10,856				13,654				27,620				37,415
General and administrative			6,911				7,075				18,285				20,429
Total share-based compensation		$	26,342			$	31,742			$	68,774			$	88,593

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2022				2022				2021				2022
Cost of revenues - Subscription		$	1,111			$	1,598			$	3,311			$	4,231
Cost of revenues - Perpetual license			166				41				522				108
Sales and marketing			175				154				523				458
Total amortization of intangible assets		$	1,452			$	1,793			$	4,356			$	4,797

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