CyberArk Announces Strong Third Quarter 2023 Results

Company Exceeds Expectations Across all Guided Metrics

Subscription Portion of Annual Recurring Revenue (ARR) of $504 million; Growth of 68% Year-over-Year

Total ARR of $705 million; Growth of 38% Year-over-Year

Subscription Revenue of $122.9 million in Q3; Growth of 65% Year-Over-Year

Record Total Revenue of $191.2 million in Q3 Exceeds Guidance; Growth Accelerating to 25% Year-Over-Year

Company Significantly Raises Full Year ARR Guidance to a Range of $758 million to $768 million from $743 million to $753 million

Newton, Mass. and Petach Tikva, Israel – November 2, 2023 – CyberArk (NASDAQ: CYBR), the identity security company, today announced strong financial results for the third quarter ended September 30, 2023.

“Strong execution and robust industry tailwinds drove our outperformance in the third quarter and our results significantly exceeded expectations across all guided metrics,” said Matt Cohen, CyberArk's Chief Executive Officer. “We delivered one of the best financial performances in the company’s history in the third quarter and our business accelerated. Our identity security platform is gaining momentum in both our customer base and with new customers who recognize the critical requirement to secure all identities, human and machine, with intelligent privileged controls. The durable demand for our solutions is the result of the severe threat landscape paired with the exponential growth of identities and environments. We delivered robust net new ARR, 68 percent growth in Subscription ARR to $504 million and 38 percent growth in total ARR to $705 million. Our consistent execution, strong competitive position and confidence in the demand environment is best demonstrated by the significant increase in our full year ARR guidance. As the clear leader in identity security, we have a tremendous opportunity in front of us and are well positioned to deliver strong long-term growth, profitability and cash flow.”

Balance Sheet and Net Cash Provided by Operating Activities

 

Recent Developments

Business Outlook

Based on information available as of November 2, 2023, CyberArk is issuing guidance for the fourth quarter and full year 2023 as indicated below.

 

Fourth Quarter 2023:

Full Year 2023:

 

 

Conference Call Information

In conjunction with this announcement, CyberArk will host a conference call on Thursday, November 2, 2023 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 (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 intelligent privilege controls, CyberArk provides the most comprehensive security offering for any identity – human or machine – across business applications, distributed workforces, hybrid cloud environments 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 LinkedIn, Twitter, Facebook or YouTube.

Copyright © 2023 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.

 

 

 

 

 

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, impairment of capitalized software development costs, non-cash interest expense related to the amortization of debt discount and issuance cost, gain from investment in privately held companies, and 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, 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, 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; fluctuation in the Company’s quarterly results of operations due to sales cycles and multiple pricing and delivery models; the Company’s ability to sell into existing and new customers and industry verticals; an increase in competition within the Privileged Access Management and Identity Security markets; unanticipated product vulnerabilities or cybersecurity breaches of the Company’s, or the Company’s customers’ or partners’ systems; complications or risks in connection with the Company’s subscription model, including uncertainty regarding renewals from its existing customer base, and retaining sufficient subscription or maintenance and support service renewal rates; risks related to compliance with privacy and data protection laws and regulations; risks regarding potential negative economic conditions in the global economy or certain regions, including conditions resulting from financial and credit market fluctuations, rising interest rates, bank failures, inflation, and the potential for regional or global recessions; the Company’s ability to hire, train, retain and motivate qualified personnel; reliance on third-party cloud providers for the Company’s operations and SaaS solutions; the Company’s history of incurring net losses and its ability to achieve profitability in the future; risks related to the Company’s ongoing transition to a new Chief Executive Officer; risks related to sales made to government entities; the Company’s ability to find, complete, fully integrate or achieve the expected benefits of strategic acquisitions; the duration and scope of the COVID-19 pandemic and its resulting effect on the demand for the Company’s solutions and on its expected revenue growth rates and costs; the Company’s ability to expand its sales and marketing efforts and expand its channel partnerships across existing and new geographies; regulatory and geopolitical risks associated with global sales and operations, as well as the location of our principal executive offices, most of our research and development activities and other significant operations in Israel; 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.

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###

Investor Contact:

Erica Smith

CyberArk

Phone:  +1-617-558-2132

ir@cyberark.com

Liz Campbell

		December 31,				September 30,
		2022				2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	347,338			$	372,196
Short-term bank deposits			305,843				284,461
Marketable securities			301,101				249,539
Trade receivables			120,817				118,983
Prepaid expenses and other current assets			22,482				26,308
Total current assets			1,097,581				1,051,487
LONG-TERM ASSETS:
Marketable securities			227,748				322,026
Property and equipment, net			23,474				17,814
Intangible assets, net			27,508				22,050
Goodwill			153,241				153,241
Other long-term assets			217,040				213,243
Deferred tax asset			72,809				85,005
Total long-term assets			721,820				813,379
TOTAL ASSETS		$	1,819,401			$	1,864,866
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables		$	13,642			$	12,624
Employees and payroll accruals			77,328				70,750
Accrued expenses and other current liabilities			33,584				33,022
Deferred revenues			327,918				357,282
Total current liabilities			452,472				473,678
LONG-TERM LIABILITIES:
Convertible senior notes, net			569,344				571,590
Deferred revenues			80,524				65,773
Other long-term liabilities			38,917				33,376
Total long-term liabilities			688,785				670,739
TOTAL LIABILITIES			1,141,257				1,144,417
SHAREHOLDERS' EQUITY:
Ordinary shares of NIS 0.01 par value			107				110
Additional paid-in capital			660,289				774,882
Accumulated other comprehensive income (loss)			(15,560	)			(12,436	)
Retained earnings (accumulated deficit)			33,308				(42,107	)
Total shareholders' equity			678,144				720,449
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,819,401			$	1,864,866

		Nine Months Ended
		September 30,
		2022				2023
Cash flows from operating activities:
Net loss		$	(108,164	)		$	(75,415	)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization			11,883				15,097
Amortization of premium and accretion of discount on marketable securities, net			3,976				(2,724	)
Share-based compensation			88,593				102,565
Deferred income taxes, net			(14,267	)			(10,763	)
Decrease in trade receivables			23,865				1,834
Amortization of debt discount and issuance costs			2,234				2,245
Increase in prepaid expenses, other current and long-term assets and others			(19,769	)			(22,564	)
Changes in operating lease right-of-use assets			2,781				5,495
Increase (decrease) in trade payables			509				(980	)
Increase in short-term and long-term deferred revenues			58,814				14,613
Decrease in employees and payroll accruals			(16,285	)			(13,579	)
Increase in accrued expenses and other current and long-term liabilities			2,259				669
Changes in operating lease liabilities			(7,218	)			(7,187	)
Net cash provided by operating activities			29,211				9,306
Cash flows from investing activities:
Investment in short and long term deposits			(320,320	)			(204,461	)
Proceeds from short and long term deposits			363,905				243,630
Investment in marketable securities and other			(318,566	)			(322,049	)
Proceeds from sales and maturities of marketable securities and other			256,899				285,445
Purchase of property and equipment			(8,778	)			(4,253	)
Payments for business acquisitions, net of cash acquired			(41,285	)			-
Net cash used in investing activities			(68,145	)			(1,688	)
Cash flows from financing activities:
Proceeds from (payment of) withholding tax related to employee stock plans			(811	)			3,210
Proceeds from exercise of stock options			1,729				4,209
Proceeds in connection with employees stock purchase plan			12,322				11,776
Payments of contingent consideration related to acquisitions			(1,578	)			-
Net cash provided by financing activities			11,662				19,195
Increase (decrease) in cash, cash equivalents			(27,272	)			26,813
Effect of exchange rate differences on cash, cash equivalents			(5,045	)			(1,955	)
Cash and cash equivalents at the beginning of the period			356,850				347,338
Cash and cash equivalents at the end of the period		$	324,533			$	372,196