Enhanced Investments - Financial Portal

Published: 2021-02-11 16:01:19 ET

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EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1

Exhibit 99.1

CyberArk Announces Record Fourth Quarter and Full Year 2020 Results

Record fourth quarter total revenue of $145 million

Record full year total revenue of $464 million

Annual Recurring Revenue (ARR) of $274 million grew 43% year-over-year

Newton, Mass. and Petach Tikva, Israel – February 11, 2021 – CyberArk, (NASDAQ: CYBR), the global leader in identity security, today announced record financial results for the fourth quarter and year ended December 31, 2020.

“Our record fourth quarter results demonstrate the strength of demand across our identity security platform that has a foundation in Privileged Access Management (PAM),” said Udi Mokady, CyberArk Chairman and CEO. “Digital transformation, cloud migration and work from anywhere are creating a heightened sense of urgency to implement our solutions across DevSecOps, PAM and Access. As organizations embrace the flexibility and agility of cloud and automation, we are empowering customers to confidently and securely drive their mission critical strategies forward.”

Continued Mokady, “Our fourth quarter results, including another record for SaaS and subscription bookings, put us in a great position as we begin actively transitioning our business to a recurring revenue model in the first quarter of 2021, shifting our sales from perpetual licenses to recurring subscriptions. As we look ahead, we continue to see strong industry tailwinds, including increasing awareness of privileged access as a primary attack vector. We are the clear market leader in PAM and have set the standard for innovation with our differentiated identity security portfolio. We are confident that our identity security strategy and our comprehensive subscription transformation program will deliver long-term growth and profitability, creating significant value for CyberArk, our customers, partners and shareholders.”

Financial Highlights for the Fourth Quarter Ended December 31, 2020

Revenue:

•

Total revenue was $144.5 million.

•

License revenue was $80.8 million.

•

Maintenance and Professional Services revenue was $63.7 million.

Operating Income:

•

GAAP operating income was $18.8 million, and non-GAAP operating income was $39.9 million.

Net Income:

•

GAAP net income was $12.1 million, or $0.30 per diluted share, and non-GAAP net income was $32.6 million, or $0.82 per diluted share.

Financial Highlights for the Full Year Ended December 31, 2020

Revenue:

•

Total revenue was $464.4 million.

•

License revenue was $226.1 million.

•

Maintenance and Professional Services revenue was $238.3 million.

Operating Income:

•

GAAP operating income was $6.0 million, and non-GAAP operating income was $91.4 million.

Net Income (Loss):

•

GAAP net loss was $(5.8) million, or $(0.15) per basic and diluted share, and non-GAAP net income was $81.1 million, or $2.05 per diluted share.

The tables at the end of this press release include a reconciliation of the following non-GAAP financial measures to their most directly comparable GAAP financial measures: non-GAAP gross profit, non-GAAP operating income, non-GAAP net income and free cash flow. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Balance Sheet and Cash Flow From Operations:

•

As of December 31, 2020, CyberArk had $1.2 billion in cash, cash equivalents, marketable securities and short-term deposits. This compares to $1.1 billion in cash, cash equivalents, marketable securities and short-term deposits as of December 31, 2019.

•

As of December 31, 2020, total deferred revenue was $242.5 million, a 27% increase from $190.4 million at December 31, 2019.

•

During 2020, the Company generated $106.8 million in net cash provided by operating activities compared to $141.7 million in 2019.

Annual Recurring Revenue (ARR):

•

Annual Recurring Revenue (ARR) was $274 million, an increase of 43% from $192 million at December 31, 2019.

Business Outlook

Based on information available as of February 11, 2021, CyberArk is issuing guidance for the first quarter and full year 2021 as indicated below.

First Quarter 2021:

•

Total revenue is expected to be in the range of $106.0 million to $112.0 million.

•

Non-GAAP operating income (loss) is expected to be in the range of an operating loss of $(2.5) million to operating income of $2.5 million.

•

Non-GAAP net income (loss) per share is expected to be in the range of a net loss of $(0.03) per basic and diluted share to net income of $0.07 per diluted share.

Assumes 39.2 million weighted average basic and diluted shares and 40.7 million weighted average diluted shares.

Full Year 2021:

•

Total revenue is expected to be in the range of $484.0 million to $496.0 million.

•

Non-GAAP operating income is expected to be in the range of $20.0 million to $30.0 million.

•

Non-GAAP net income per share is expected to be in the range of $0.45 to $0.64 per diluted share.

Assumes 40.8 million weighted average diluted shares.

Conference Call Information

In conjunction with this announcement, CyberArk will host a conference call today, February 11, 2021, at 8:30 a.m. Eastern Time (ET) to discuss the company’s fourth quarter and year end 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 6893829. 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 (416) 621-4642 (international). The replay pass code is 6893829. 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 www.cyberark.com.

# # #

Key Performance Indicators and Non-GAAP Financial Measures

Annual Recurring Revenue (ARR)

•

Annual Recurring Revenue (ARR) is defined as the annualized value of active SaaS, subscription or term-based license and maintenance contracts related to perpetual licenses in effect at the end of the reported period.

Non-GAAP Financial Measures

CyberArk believes that the use of non-GAAP gross profit, 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 income, net income (loss) or net cash provided by operating activities or any other performance measures derived in accordance with GAAP.

•

Non-GAAP gross profit is calculated as GAAP gross profit excluding share-based compensation expense, acquisition related expenses and amortization of intangible assets related to acquisitions.

•

Non-GAAP operating income is calculated as GAAP operating income excluding share-based compensation expense, acquisition related expenses, facility exit and transition costs and amortization of intangible assets related to acquisitions.

•

Non-GAAP net income is calculated as GAAP net income (loss) excluding share-based compensation expense, acquisition related expenses, amortization of intangible assets related to acquisitions, facility exit and transition costs, amortization of debt discount and issuance costs, intra-entity IP transfer tax effect, net and the tax effect of non-GAAP adjustments.

•

Free cash flow is calculated as net cash provided by operating activities less purchase of property and equipment.

The Company believes that providing non-GAAP financial measures that are adjusted by, as applicable, share-based compensation expense, acquisition related expenses, amortization of intangible assets related to acquisitions, facility exit and transition costs, non-cash interest expense related to the amortization of debt discount and issuance costs, intra-entity IP transfer tax effect, net 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 acquisitions, amortization of intangible assets related to acquisitions, facility exit and transition costs, intra-entity IP transfer tax effect, net 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, acquisition related expenses, amortization of intangible assets related to acquisitions, facility exit and transition costs, non-cash interest expense related to the amortization of debt discount and issuance costs, intra-entity IP transfer tax effect, net 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; changes to the drivers of the Company’s growth; 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 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 Relations Contact:

Erica Smith

CyberArk

617-558-2132

ir@cyberark.com

Media Contact:

Liz Campbell

CyberArk

617-558-2191

press@cyberark.com


CYBERARK SOFTWARE LTD.
Consolidated Statements of Operations
U.S. dollars in thousands (except per share data)
(Unaudited)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2019			2020			2019			2020

Revenues:
License	$	76,526		$	80,821		$	237,879		$	226,113
Maintenance and professional services		53,138			63,698			196,016			238,318

Total revenues		129,664			144,519			433,895			464,431

Cost of revenues:
License		2,801			5,845			10,569			19,341
Maintenance and professional services		14,048			16,863			52,046			63,230

Total cost of revenues		16,849			22,708			62,615			82,571

Gross profit		112,815			121,811			371,280			381,860

Operating expenses:
Research and development		20,930			26,659			72,520			95,426
Sales and marketing		52,939			61,038			184,168			219,999
General and administrative		16,005			15,325			52,308			60,429

Total operating expenses		89,874			103,022			308,996			375,854

Operating income		22,941			18,789			62,284			6,006

Financial income (expenses), net		2,394			(2,733	)		7,800			(6,395	)

Income (loss) before taxes on income		25,335			16,056			70,084			(389	)

Taxes on income		(4,599	)		(4,002	)		(7,020	)		(5,369	)

Net income (loss)	$	20,736		$	12,054		$	63,064		$	(5,758	)

Basic net income (loss) per ordinary share	$	0.55		$	0.31		$	1.68		$	(0.15	)
Diluted net income (loss) per ordinary share	$	0.53		$	0.30		$	1.62		$	(0.15	)

Shares used in computing net income (loss)
per ordinary shares, basic		37,957,899			38,913,923			37,586,387			38,628,770
Shares used in computing net income (loss)
per ordinary shares, diluted		39,148,849			39,938,780			38,890,108			38,628,770

Share-based Compensation Expense:

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2019		2020		2019		2020

Cost of revenues	$	1,802	$	2,409	$	5,690	$	8,734
Research and development		3,347		4,085		10,960		14,691
Sales and marketing		6,464		6,996		20,976		28,220
General and administrative		6,418		4,984		17,891		20,204

Total share-based compensation expense	$	18,031	$	18,474	$	55,517	$	71,849

CYBERARK SOFTWARE LTD.

Consolidated Balance Sheets

U.S. dollars in thousands

(Unaudited)

	December 31,		December 31,
	2019		2020

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	792,363	$	499,992
Short-term bank deposits		140,067		256,143
Marketable securities		132,412		196,856
Trade receivables		72,953		93,128
Prepaid expenses and other current assets		8,406		15,312

Total current assets		1,146,201		1,061,431

LONG-TERM ASSETS:
Marketable securities		54,408		202,190
Property and equipment, net		16,472		18,537
Intangible assets, net		9,143		23,676
Goodwill		82,400		123,717
Other long-term assets		72,091		99,992
Deferred tax asset		24,451		32,809

Total long-term assets		258,965		500,921

TOTAL ASSETS	$	1,405,166	$	1,562,352

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Trade payables	$	5,675	$	8,250
Employees and payroll accruals		41,345		52,169
Accrued expenses and other current liabilities		27,132		24,915
Deferred revenues		118,519		161,679

Total current liabilities		192,671		247,013

LONG-TERM LIABILITIES:
Convertible senior notes, net		485,119		502,302
Deferred revenues		71,836		80,829
Other long-term liabilities		31,408		24,920

Total long-term liabilities		588,363		608,051

TOTAL LIABILITIES		781,034		855,064

SHAREHOLDERS' EQUITY:
Ordinary shares of NIS 0.01 par value		99		101
Additional paid-in capital		396,437		481,992
Accumulated other comprehensive income		818		4,175
Retained earnings		226,778		221,020

Total shareholders' equity		624,132		707,288

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,405,166	$	1,562,352

CYBERARK SOFTWARE LTD.

Consolidated Statements of Cash Flows

U.S. dollars in thousands

(Unaudited)

	Twelve Months Ended
	December 31,
	2019			2020

Cash flows from operating activities:
Net income (loss)	$	63,064		$	(5,758	)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		10,646			15,475
Amortization of premium and accretion of discount on marketable securities, net		(47	)		3,068
Share-based compensation		55,517			71,849
Deferred income taxes, net		(6,974	)		(1,988	)
Increase in trade receivables		(24,522	)		(17,315	)
Amortization of debt discount and issuance costs		1,966			17,183
Increase in prepaid expenses and other current and long-term assets		(14,321	)		(20,487	)
Increase in trade payables		1,571			558
Increase in short-term and long-term deferred revenues		40,821			45,397
Increase in employees and payroll accruals		7,337			7,846
Increase (decrease) in accrued expenses and other current and long-term liabilities		6,652			(9,059	)

Net cash provided by operating activities		141,710			106,769

Cash flows from investing activities:
Investment in short and long term deposits		(33,961	)		(123,054	)
Investment in marketable securities		(165,714	)		(403,279	)
Proceeds from maturities of marketable securities		63,489			189,723
Purchase of property and equipment		(7,036	)		(7,174	)
Payments for business acquisitions, net of cash acquired		-			(68,603	)

Net cash used in investing activities		(143,222	)		(412,387	)

Cash flows from financing activities:
Proceeds from withholding tax related to employee stock plans		1,155			1,069
Proceeds from the issuance of convertible senior notes, net of issuance costs		560,107			-
Purchase of capped calls		(53,648	)		-
Proceeds from exercise of stock options		24,428			12,180

Net cash provided by financing activities		532,042			13,249

Increase (decrease) in cash, cash equivalents and restricted cash		530,530			(292,369	)

Cash, cash equivalents and restricted cash at the beginning of the period		261,883			792,413

Cash, cash equivalents and restricted cash at the end of the period	$	792,413		$	500,044

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						Twelve Months Ended
	December 31,						December 31,
	2019			2020			2019			2020

Net cash provided by operating activities	$	53,113		$	38,948		$	141,710		$	106,769
Less:
Purchase of property and equipment		(1,647	)		(2,237	)		(7,036	)		(7,174	)

Free cash flow	$	51,466		$	36,711		$	134,674		$	99,595

GAAP net cash used in investing activities	$	(119,768	)	$	(52,121	)	$	(143,222	)	$	(412,387	)
GAAP net cash provided by financing activities	$	511,985		$	6,084		$	532,042		$	13,249

Reconciliation of Gross Profit to Non-GAAP Gross Profit:

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2019		2020		2019		2020

Gross profit	$	112,815	$	121,811	$	371,280	$	381,860
Plus:
Share-based compensation - License, Maintenance & professional services		1,802		2,409		5,690		8,734
Amortization of intangible assets - License		968		2,415		5,029		8,244
Acquisition related expenses		-		-		-		447

Non-GAAP gross profit	$	115,585	$	126,635	$	381,999	$	399,285

Reconciliation of Operating Income to Non-GAAP Operating Income:

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2019		2020		2019		2020

Operating income	$	22,941	$	18,789	$	62,284	$	6,006
Plus:
Share-based compensation		18,031		18,474		55,517		71,849
Amortization of intangible assets - Cost of revenues		968		2,415		5,029		8,244
Amortization of intangible assets - Sales and marketing		144		205		576		683
Acquisition related expenses		-		-		-		4,526
Facility exit and transitions costs		-		-		-		140

Non-GAAP operating income	$	42,084	$	39,883	$	123,406	$	91,448

Reconciliation of Net Income (Loss) to Non-GAAP Net Income:

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2019			2020			2019			2020

Net income (loss)	$	20,736		$	12,054		$	63,064		$	(5,758	)
Plus:
Share-based compensation		18,031			18,474			55,517			71,849
Amortization of intangible assets - Cost of revenues		968			2,415			5,029			8,244
Amortization of intangible assets - Sales and marketing		144			205			576			683
Acquisition related expenses		-			-			-			4,526
Facility exit and transitions costs		-			-			-			140
Amortization of debt discount and issuance costs		1,966			4,352			1,966			17,183
Taxes on income related to non-GAAP adjustments		(4,014	)		(4,851	)		(18,251	)		(20,807	)
Intra-entity IP transfer tax effect, net		-			-			-			5,036

Non-GAAP net income	$	37,831		$	32,649		$	107,901		$	81,096

Non-GAAP net income per share
Basic	$	1.00		$	0.84		$	2.87		$	2.10
Diluted	$	0.97		$	0.82		$	2.77		$	2.05

Weighted average number of shares
Basic		37,957,899			38,913,923			37,586,387			38,628,770
Diluted		39,148,849			39,938,780			38,890,108			39,553,203

Enhanced Investments, Inc.
329 South Oyster Bay Road #2085
Plainview, NY 11803
team@eninvs.com

Important disclosures

Performance results were prepared by Enhanced Investments, and have not been compiled, reviewed or audited by an independent accountant. Performance estimates are subject to future adjustment and revision. Investors should be aware that a loss of investment is possible. Account holdings are for illustrative purposes only and are not investment recommendations. Additional information, including (i) the calculation methodology; and (ii) a list showing the contribution of each holding to the portfolio’s performance during the time period will be provided upon request.
All statements made via social media sites sponsored or maintained by Enhanced Investments and its affiliates are for informational purposes only and do not constitute a comprehensive description of Enhanced Investments' investment advisory services.
Certain investments are not suitable for all investors. Before investing, consider your investment objectives and applicable fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Information provided by Enhanced Investments is for informational and general educational purposes only and is not investment or financial advice.

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Performance results were prepared by Enhanced Investments, and have not been compiled, reviewed or audited by an independent accountant. Performance estimates are subject to future adjustment and revision. Investors should be aware that a loss of investment is possible. Account holdings are for illustrative purposes only and are not investment recommendations. Additional information, including (i) the calculation methodology; and (ii) a list showing the contribution of each holding to the portfolio’s performance during the time period will be provided upon request.
All statements made via social media sites sponsored or maintained by Enhanced Investments and its affiliates are for informational purposes only and do not constitute a comprehensive description of Enhanced Investments' investment advisory services.
Certain investments are not suitable for all investors. Before investing, consider your investment objectives and applicable fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Information provided by Enhanced Investments is for informational and general educational purposes only and is not investment or financial advice.