CyberArk Announces Strong Second Quarter 2021 Results

Total Revenue of $117.2 Million

Subscription Bookings Mix Reaches 65%

Subscription Portion of Annual Recurring Revenue (ARR) of $109.5 Million Increased 128%
Year-over-Year

ARR of $315 Million Grew 35% Year-over-Year

Newton, Mass. and Petach Tikva, Israel – August 12, 2021–  CyberArk (NASDAQ: CYBR), the global leader in Identity Security, today announced strong financial results for the second quarter ended June 30, 2021.

“We are thrilled with our performance in the second quarter,” said Udi Mokady, CyberArk Chairman and CEO. “Our momentum continued, and our underlying business growth meaningfully accelerated in the second quarter, driven by robust industry tailwinds and excellence in our execution. A combination of record bookings across all of our SaaS solutions and strong demand for our on-premises subscription offerings resulted in 128 percent growth in the Subscription portion of ARR and 35 percent growth in total ARR. With our push to execute our subscription transition, we achieved a 65 percent subscription booking mix, which was significantly higher than our guidance framework. With the increased headwind from this mix acceleration, we were still able to generate $117.2 million in total revenue, above the mid-point of our guidance, which demonstrates that our bookings in the second quarter were well ahead of our expectations. With these exceptional results in the second quarter and our continued leadership position in identity security anchored on privileged access, we are increasing the assumption for total bookings growth underlying our guidance framework for the year. As we look ahead, we are in a great position to execute our strategy and deliver long term-growth and profitability.”

     Financial Summary for the Second Quarter Ended June 30, 2021

Balance Sheet and Net Cash Provided by Operating Activities

 

Recent Developments

Business Outlook

Based on information available as of August 12, 2021, CyberArk is issuing guidance for the third quarter and for full year 2021 as indicated below.

 

Third Quarter 2021:

Full Year 2021:

 

 

Conference Call Information

 

In conjunction with this announcement, CyberArk will host a conference call on Thursday, August 12, 2021 at 8:30 a.m. Eastern Time (ET) to discuss the Company’s second 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 8583025. 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 8583025. 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 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 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 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. 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.

 

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###

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								Six Months Ended
		June 30,								June 30,
		2020				2021				2020				2021
Revenues:
Subcription		$	13,433			$	27,054			$	22,257			$	51,781
Perpetual license			35,744				27,329				79,518				54,023
Maintenance and professional services			57,320				62,851				111,548				124,192
Total revenues			106,497				117,234				213,323				229,996
Cost of revenues:
Subcription			4,617				6,047				6,557				11,257
Perpetual license			1,113				985				2,458				1,989
Maintenance and professional services			14,660				16,232				28,460				30,950
Total cost of revenues			20,390				23,264				37,475				44,196
Gross profit			86,107				93,970				175,848				185,800
Operating expenses:
Research and development			22,873				33,623				44,158				63,360
Sales and marketing			52,347				65,801				103,543				127,241
General and administrative			15,766				17,959				30,455				33,958
Total operating expenses			90,986				117,383				178,156				224,559
Operating loss			(4,879	)			(23,413	)			(2,308	)			(38,759	)
Financial expense, net			(1,473	)			(3,155	)			(2,209	)			(6,061	)
Loss before taxes on income			(6,352	)			(26,568	)			(4,517	)			(44,820	)
Tax benefit			2,036				3,810				2,587				6,867
Net loss		$	(4,316	)		$	(22,758	)		$	(1,930	)		$	(37,953	)
Basic loss per ordinary share		$	(0.11	)		$	(0.58	)		$	(0.05	)		$	(0.96	)
Diluted loss per ordinary share		$	(0.11	)		$	(0.58	)		$	(0.05	)		$	(0.96	)
Shares used in computing net loss
per ordinary shares, basic			38,565,175				39,565,087				38,393,938				39,371,147
Shares used in computing net loss
per ordinary shares, diluted			38,565,175				39,565,087				38,393,938				39,371,147

 

CYBERARK SOFTWARE LTD.

Consolidated Balance Sheets

U.S. dollars in thousands

(Unaudited)

		December 31,				June 30,
		2020				2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	499,992			$	426,835
Short-term bank deposits			256,143				321,045
Marketable securities			196,856				228,234
Trade receivables			93,128				75,957
Prepaid expenses and other current assets			15,312				22,362
Total current assets			1,061,431				1,074,433
LONG-TERM ASSETS:
Marketable securities			202,190				215,623
Property and equipment, net			18,537				19,646
Intangible assets, net			23,676				20,772
Goodwill			123,717				123,717
Other long-term assets			99,992				107,547
Deferred tax asset			32,809				43,450
Total long-term assets			500,921				530,755
TOTAL ASSETS		$	1,562,352			$	1,605,188
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables		$	8,250			$	8,382
Employees and payroll accruals			52,169				51,717
Accrued expenses and other current liabilities			24,915				21,748
Deferred revenues			161,679				190,470
Total current liabilities			247,013				272,317
LONG-TERM LIABILITIES:
Convertible senior notes, net			502,302				511,121
Deferred revenues			80,829				84,550
Other long-term liabilities			24,920				22,137
Total long-term liabilities			608,051				617,808
TOTAL LIABILITIES			855,064				890,125

SHAREHOLDERS' EQUITY:
Ordinary shares of NIS 0.01 par value			101				104
Additional paid-in capital			481,992				530,065
Accumulated other comprehensive income			4,175				1,827
Retained earnings			221,020				183,067
Total shareholders' equity			707,288				715,063
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,562,352			$	1,605,188

CYBERARK SOFTWARE LTD.

Consolidated Statements of Cash Flows

U.S. dollars in thousands

(Unaudited)

		Six Months Ended
		June 30,
		2020				2021
Cash flows from operating activities:
Net loss		$	(1,930	)		$	(37,953	)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization			6,911				6,889
Amortization of premium and accretion of discount on marketable securities, net			222				3,624
Share-based compensation			33,059				42,432
Deferred income taxes, net			(3,766	)			(9,177	)
Decrease in trade receivables			15,677				17,171
Amortization of debt discount and issuance costs			8,517				8,818
Increase in prepaid expenses, other current and long-term assets and others			(13,850	)			(4,346	)
Increase (decrease) in trade payables			477				(616	)
Increase in short-term and long-term deferred revenues			28,627				32,512
Decrease in employees and payroll accruals			(8,116	)			(1,368	)
Decrease in accrued expenses and other current and long-term liabilities			(12,540	)			(8,484	)
Net cash provided by operating activities			53,288				49,502
Cash flows from investing activities:
Investment in short and long term deposits, net			(108,138	)			(75,115	)
Investment in marketable securities			(223,733	)			(155,981	)
Proceeds from maturities of marketable securities			102,239				105,634
Purchase of property and equipment			(2,874	)			(4,325	)
Payments for business acquisitions, net of cash acquired			(66,964	)			-
Net cash used in investing activities			(299,470	)			(129,787	)
Cash flows from financing activities:
Proceeds from (payment of) withholding tax related to employee stock plans			(603	)			1,116
Proceeds from exercise of stock options			6,125				6,342
Net cash provided by financing activities			5,522				7,458
Decrease in cash, cash equivalents and restricted cash			(240,660	)			(72,827	)
Effect of exchange rate differences on cash, cash equivalents and restricted cash			-				(326	)
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		$	551,753			$	426,891

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								Six Months Ended
		June 30,								June 30,
		2020				2021				2020				2021
Net cash provided by operating activities		$	19,462			$	15,527			$	53,288			$	49,502
Less:
Purchase of property and equipment			(1,547	)			(1,660	)			(2,874	)			(4,325	)
Free cash flow		$	17,915			$	13,867			$	50,414			$	45,177
GAAP net cash used in investing activities			(281,941	)			(104,629	)			(299,470	)			(129,787	)
GAAP net cash provided by financing activities			1,515				1,086				5,522				7,458

Reconciliation of Gross Profit to Non-GAAP Gross Profit:
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2020				2021				2020				2021
Gross profit		$	86,107			$	93,970			$	175,848			$	185,800
Plus:
Share-based compensation (1)			1,949				2,612				3,752				5,007
Amortization of share-based compensation capitalized in software development costs (3)			-				60				-				107
Amortization of intangible assets (2)			2,239				1,278				3,175				2,556
Acquisition related expenses			400				-				400				-
Non-GAAP gross profit		$	90,695			$	97,920			$	183,175			$	193,470

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses:
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2020				2021				2020				2021
Operating expenses		$	90,986			$	117,383			$	178,156			$	224,559
Less:
Share-based compensation (1)			14,802				20,523				29,307				37,425
Amortization of intangible assets (2)			160				174				273				348
Acquisition related expenses			2,246				-				3,856				-
Facility exit and transition costs			-				760				-				760
Non-GAAP operating expenses		$	73,778			$	95,926			$	144,720			$	186,026

Reconciliation of Operating Loss to Non-GAAP Operating Income:
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2020				2021				2020				2021
Operating loss		$	(4,879	)		$	(23,413	)		$	(2,308	)		$	(38,759	)
Plus:
Share-based compensation (1)			16,751				23,135				33,059				42,432
Amortization of share-based compensation capitalized in software development costs (3)			-				60				-				107
Amortization of intangible assets (2)			2,399				1,452				3,448				2,904
Acquisition related expenses			2,646				-				4,256				-
Facility exit and transition costs			-				760				-				760
Non-GAAP operating income		$	16,917			$	1,994			$	38,455			$	7,444

Reconciliation of Net Loss to Non-GAAP Net Income:
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2020				2021				2020				2021
Net loss		$	(4,316	)		$	(22,758	)		$	(1,930	)		$	(37,953	)
Plus:
Share-based compensation (1)			16,751				23,135				33,059				42,432
Amortization of share-based compensation capitalized in software development costs (3)			-				60				-				107
Amortization of intangible assets (2)			2,399				1,452				3,448				2,904
Acquisition related expenses			2,646				-				4,256				-
Facility exit and transition costs			-				760				-				760
Amortization of debt discount and issuance costs			4,277				4,428				8,517				8,818
Taxes on income related to non-GAAP adjustments			(5,066	)			(6,827	)			(11,078	)			(12,986	)
Non-GAAP net income		$	16,691			$	250			$	36,272			$	4,082
Non-GAAP net income per share
Basic		$	0.43			$	0.01			$	0.94			$	0.10
Diluted		$	0.42			$	0.01			$	0.92			$	0.10
Weighted average number of shares
Basic			38,565,175				39,565,087				38,393,938				39,371,147
Diluted			39,320,124				40,456,168				39,301,975				40,476,136

(1) Share-based Compensation :
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2020				2021				2020				2021
Cost of revenues - Subscription		$	137			$	74			$	237			$	328
Cost of revenues - Perpetual license			36				60				72				114
Cost of revenues - Maintenance and Professional services			1,776				2,478				3,443				4,565
Research and development			3,362				4,937				6,383				9,287
Sales and marketing			6,753				9,266				13,153				16,764
General and administrative			4,687				6,320				9,771				11,374
Total share-based compensation		$	16,751			$	23,135			$	33,059			$	42,432

(2) Amortization of intangible assets :
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2020				2021				2020				2021
Cost of revenues - Subscription		$	1,896			$	1,111			$	2,437			$	2,200
Cost of revenues - Perpetual license			343				167				738				356
Sales and marketing			160				174				273				348
Total amortization of intangible assets		$	2,399			$	1,452			$	3,448			$	2,904

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