CyberArk Announces Strong Third Quarter 2021 Results

Total Revenue of $121.6 Million

Subscription Bookings Mix Reaches 72%

Subscription Portion of Annual Recurring Revenue (ARR) of $139 Million with Growth Accelerating to 131%

Total ARR of $344 million with Growth Accelerating to 38%

Newton, Mass. and Petach Tikva, Israel – November 4, 2021–  CyberArk (NASDAQ: CYBR), the global leader in Identity Security, today announced strong financial results for the third quarter ended September 30, 2021.

“We had another amazing quarter as the momentum in our business continued to accelerate,” said Udi Mokady, CyberArk Chairman and CEO. “Great execution of our identity security strategy and subscription transformation, a robust demand environment, and strong industry tailwinds drove our results. We landed more than 230 marquee logos as enterprises move to secure all identities across human users, applications, containers and bots with our identity security platform. SaaS bookings led the way, reaching an all-time high and contributing to the largest ever sequential increase in the subscription portion of Annual Recurring Revenue (ARR). Total revenue above the midpoint of our guidance range, even with the higher subscription mix, demonstrates that our bookings were ahead of our expectations for the third consecutive quarter, with Q3 bookings overperformance the best so far in 2021. Our tremendous results in the first nine months of 2021 give us confidence in the durability of our growth and as a result, we are increasing the bookings assumption underlying our guidance framework for the full year 2021.”

     Financial Summary for the Third Quarter Ended September 30, 2021

Balance Sheet and Net Cash Provided by Operating Activities

 

Recent Developments

Business Outlook

Based on information available as of November 4, 2021, CyberArk is issuing guidance for the fourth quarter 2021 as indicated below.

 

Fourth Quarter 2021:

Full Year 2021:

 

 

Conference Call Information

 

In conjunction with this announcement, CyberArk will host a conference call on Thursday, November 4, 2021 at 8:30 a.m. Eastern Time (ET) to discuss the Company’s third quarter financial results and its business outlook. To access this call, dial +1 (833) 968-2251 (U.S.) or +1 (778) 560-2670 (international). The conference ID is 5978753. 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) 585-8367 (U.S.) or +1 (416) 621-4642 (international). The replay pass code is 5978753. 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 ^© 2021 CyberArk Software. All Rights Reserved. All other brand names, product names, or trademarks belong to their respective holders.

Financial Presentation

 

Beginning in the first quarter of 2021, CyberArk revised the presentation of its lines of revenue and cost of revenue. The Company believes that the revised categories for revenue and cost of revenue as presented on the income statement align with how management evaluates the business. In addition, this disclosure will increase transparency into the Company’s business and shift toward recurring revenues, providing investors with more visibility into the subscription transition program. Historical information by quarter for fiscal years 2020 and 2019, which has been retroactively reclassified to reflect the new lines of revenue and cost of revenue, can be found in the PowerPoint presentation posted to CyberArk’s investor relations website. The new revenue lines consist of (a) Subscription revenue, which represents SaaS and on-premises subscription revenue including the license portion of on-premises subscription revenue and the ratable maintenance component of on-premises subscription revenue, (b) Perpetual license revenue and (c) Maintenance and professional services revenue, which represents the maintenance component related to perpetual license sales and professional services revenue.

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, 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.

 

The Company believes that providing non-GAAP financial measures that are adjusted by, as applicable, share-based compensation expense, facility exit and transition costs, acquisition related expenses, amortization of intangible assets related to acquisitions, non-cash interest expense related to the amortization of debt discount and issuance cost, the tax effect of the non-GAAP adjustments and IP transfer, and purchase of property and equipment allows for more meaningful comparisons of its period to period operating results. Share-based compensation expense has been, and will continue to be for the foreseeable future, a significant recurring expense in the Company’s business and an important part of the compensation provided to its employees. Share based compensation expense has varying available valuation methodologies, subjective assumptions and a variety of equity instruments that can impact a company’s non-cash expense. The Company believes that expenses related to its facility exits, acquisitions, amortization of intangible assets related to acquisitions and non-cash interest expense related to the amortization of debt discount and issuance costs do not reflect the performance of its core business and impact period-to-period comparability. The Company believes free cash flow is a liquidity measure that, after the purchase of property and equipment, provides useful information about the amount of cash generated by the business. 

 

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, facility exit costs, 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 and IP transfer. 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, performance or achievements to differ significantly from the results, 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: the duration and scope of the COVID-19 pandemic and the impact of the pandemic and actions taken in response, on global and regional economies and economic activity and the resulting impact on the demand for the Company’s solutions and on its expected revenue growth rates and costs; the Company’s ability to adjust its operations in response to impacts from the COVID-19 pandemic; difficulties predicting future financial results, including due to impacts from the COVID-19 pandemic; the Company’s plan to begin actively transitioning its business to a recurring revenue model in 2021; and the Company’s ability to complete the transition in the time frame expected; the Company’s ability to meet financial and operating targets during the transition period and after the transition is complete; changes to the drivers of the Company’s growth and our ability to adapt our solutions to IT security market demands; the Company’s ability to sell into existing and new industry verticals; the Company’s sales cycles and multiple licensing models may cause results to fluctuate; the Company’s ability to sell into existing customers; potential changes in the Company’s operating and net profit margins and the Company’s revenue growth rate; the Company’s ability to successfully find, complete, fully integrate and achieve the expected benefits of future acquisitions, including the Company’s ability to integrate and achieve the expected benefits of Idaptive; real or perceived shortcomings, defects or vulnerabilities in the Company’s solutions or internal network systems; the Company’s ability to hire, retain and motivate qualified personnel; the Company’s ability to expand its channel partnerships across existing and new geographies; the Company’s ability to further diversify its product deployments and licensing options; 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 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

 

CYBERARK SOFTWARE LTD.

Consolidated Statements of Operations

U.S. dollars in thousands (except per share data)

(Unaudited)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2020				2021				2020				2021
Revenues:
Subcription		$	14,538			$	35,290			$	36,795			$	87,071
Perpetual license			33,102				23,041				112,620				77,064
Maintenance and professional services			58,949				63,270				170,497				187,462
Total revenues			106,589				121,601				319,912				351,597
Cost of revenues:
Subcription			5,667				6,457				12,224				17,714
Perpetual license			1,102				936				3,560				2,925
Maintenance and professional services			15,619				16,022				44,079				46,972
Total cost of revenues			22,388				23,415				59,863				67,611
Gross profit			84,201				98,186				260,049				283,986
Operating expenses:
Research and development			24,609				38,014				68,767				101,374
Sales and marketing			55,418				69,596				158,961				196,837
General and administrative			14,649				18,305				45,104				52,263
Total operating expenses			94,676				125,915				272,832				350,474
Operating loss			(10,475	)			(27,729	)			(12,783	)			(66,488	)
Financial expense, net			(1,453	)			(3,686	)			(3,662	)			(9,747	)
Loss before taxes on income			(11,928	)			(31,415	)			(16,445	)			(76,235	)
Tax benefit (taxes on income)			(3,954	)			2,309				(1,367	)			9,176
Net loss		$	(15,882	)		$	(29,106	)		$	(17,812	)		$	(67,059	)
Basic loss per ordinary share, net		$	(0.41	)		$	(0.73	)		$	(0.46	)		$	(1.70	)
Diluted loss per ordinary share, net		$	(0.41	)		$	(0.73	)		$	(0.46	)		$	(1.70	)
Shares used in computing net loss
per ordinary shares, basic			38,797,347				39,848,343				38,532,563				39,531,960
Shares used in computing net loss
per ordinary shares, diluted			38,797,347				39,848,343				38,532,563				39,531,960

 

CYBERARK SOFTWARE LTD.

Consolidated Balance Sheets

U.S. dollars in thousands

(Unaudited)

		December 31,				September 30,
		2020				2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	499,992			$	435,809
Short-term bank deposits			256,143				329,932
Marketable securities			196,856				212,588
Trade receivables			93,128				81,447
Prepaid expenses and other current assets			15,312				21,306
Total current assets			1,061,431				1,081,082
LONG-TERM ASSETS:
Marketable securities			202,190				229,448
Property and equipment, net			18,537				19,874
Intangible assets, net			23,676				19,320
Goodwill			123,717				123,717
Other long-term assets			99,992				105,520
Deferred tax asset			32,809				46,695
Total long-term assets			500,921				544,574
TOTAL ASSETS		$	1,562,352			$	1,625,656
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables		$	8,250			$	9,692
Employees and payroll accruals			52,169				60,155
Accrued expenses and other current liabilities			24,915				22,726
Deferred revenues			161,679				202,233
Total current liabilities			247,013				294,806
LONG-TERM LIABILITIES:
Convertible senior notes, net			502,302				515,588
Deferred revenues			80,829				78,628
Other long-term liabilities			24,920				21,256
Total long-term liabilities			608,051				615,472
TOTAL LIABILITIES			855,064				910,278
SHAREHOLDERS' EQUITY:
Ordinary shares of NIS 0.01 par value			101				104
Additional paid-in capital			481,992				559,851
Accumulated other comprehensive income			4,175				1,462
Retained earnings			221,020				153,961
Total shareholders' equity			707,288				715,378
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,562,352			$	1,625,656

CYBERARK SOFTWARE LTD.

Consolidated Statements of Cash Flows

U.S. dollars in thousands

(Unaudited)

		Nine Months Ended
		September 30,
		2020				2021
Cash flows from operating activities:
Net loss		$	(17,812	)		$	(67,059	)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization			10,956				10,523
Amortization of premium and accretion of discount on marketable securities, net			1,422				5,593
Share-based compensation			53,375				68,774
Deferred income taxes, net			(2,531	)			(11,928	)
Decrease in trade receivables			12,479				11,681
Amortization of debt discount and issuance costs			12,831				13,285
Increase in prepaid expenses, other current and long-term assets and others			(14,974	)			(14,049	)
Increase (decrease) in trade payables			(1,528	)			1,628
Increase in short-term and long-term deferred revenues			30,537				38,353
Increase (decrease) in employees and payroll accruals			(5,130	)			3,385
Decrease in accrued expenses and other current and long-term liabilities			(11,804	)			(5,883	)
Net cash provided by operating activities			67,821				54,303
Cash flows from investing activities:
Investment in short and long term deposits, net			(85,092	)			(73,832	)
Investment in marketable securities			(349,755	)			(221,347	)
Proceeds from sales and maturities of marketable securities			148,121				170,511
Purchase of property and equipment			(4,937	)			(7,187	)
Payments for business acquisitions, net of cash acquired			(68,603	)			-
Net cash used in investing activities			(360,266	)			(131,855	)
Cash flows from financing activities:
Proceeds from (payment of) withholding tax related to employee stock plans			(439	)			4,498
Proceeds from exercise of stock options			7,604				9,608
Net cash provided by financing activities			7,165				14,106
Decrease in cash, cash equivalents and restricted cash			(285,280	)			(63,446	)
Effect of exchange rate differences on cash, cash equivalents and restricted cash			-				(788	)
Cash, cash equivalents and restricted cash at the beginning of the period			792,413				500,044
Cash, cash equivalents and restricted cash at the end of the period		$	507,133			$	435,810

CYBERARK SOFTWARE LTD.

Reconciliation of GAAP Measures to Non-GAAP Measures

U.S. dollars in thousands (except per share data)

(Unaudited)

Reconciliation of Net cash provided by operating activities to Free cash flow:
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2020				2021				2020				2021
Net cash provided by operating activities		$	14,533			$	4,801			$	67,821			$	54,303
Less:
Purchase of property and equipment			(2,063	)			(2,862	)			(4,937	)			(7,187	)
Free cash flow		$	12,470			$	1,939			$	62,884			$	47,116
GAAP net cash used in investing activities			(60,796	)			(2,068	)			(360,266	)			(131,855	)
GAAP net cash provided by financing activities			1,643				6,648				7,165				14,106

Reconciliation of Gross Profit to Non-GAAP Gross Profit:
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2020				2021				2020				2021
Gross profit		$	84,201			$	98,186			$	260,049			$	283,986
Plus:
Share-based compensation (1)			2,573				2,984				6,325				7,991
Amortization of share-based compensation capitalized in software development costs (3)			-				65				-				172
Amortization of intangible assets (2)			2,654				1,277				5,829				3,833
Acquisition related expenses			46				-				447				-
Non-GAAP gross profit		$	89,474			$	102,512			$	272,650			$	295,982

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses:
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2020				2021				2020				2021
Operating expenses		$	94,676			$	125,915			$	272,832			$	350,474
Less:
Share-based compensation (1)			17,743				23,358				47,050				60,783
Amortization of intangible assets (2)			205				175				478				523
Acquisition related expenses			224				-				4,079				-
Facility exit and transition costs			140				-				140				760
Non-GAAP operating expenses		$	76,364			$	102,382			$	221,085			$	288,408

Reconciliation of Operating Loss to Non-GAAP Operating Income:
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2020				2021				2020				2021
Operating loss		$	(10,475	)		$	(27,729	)		$	(12,783	)		$	(66,488	)
Plus:
Share-based compensation (1)			20,316				26,342				53,375				68,774
Amortization of share-based compensation capitalized in software development costs (3)			-				65				-				172
Amortization of intangible assets (2)			2,859				1,452				6,307				4,356
Acquisition related expenses			270				-				4,526				-
Facility exit and transition costs			140				-				140				760
Non-GAAP operating income		$	13,110			$	130			$	51,565			$	7,574

(1) Share-based Compensation :
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2020				2021				2020				2021
Cost of revenues - Subscription		$	191			$	216			$	428			$	544
Cost of revenues - Perpetual license			48				54				120				168
Cost of revenues - Maintenance and Professional services			2,334				2,714				5,777				7,279
Research and development			4,223				5,591				10,606				14,878
Sales and marketing			8,070				10,856				21,223				27,620
General and administrative			5,450				6,911				15,221				18,285
Total share-based compensation		$	20,316			$	26,342			$	53,375			$	68,774

(2) Amortization of intangible assets :
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2020				2021				2020				2021
Cost of revenues - Subscription		$	2,279			$	1,111			$	4,716			$	3,311
Cost of revenues - Perpetual license			375				166				1,113				522
Sales and marketing			205				175				478				523
Total amortization of intangible assets		$	2,859			$	1,452			$	6,307			$	4,356

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