CyberArk Announces Strong Fourth Quarter and Full Year 2023 Results

Company Exceeds Expectations Across all Guided Metrics

Subscription Portion of Annual Recurring Revenue (ARR) of $582 million; Growth of 60% Year-over-Year

Total ARR of $774 million; Growth of 36% Year-over-Year

Subscription Revenue of $472.0 million for Full Year 2023; Growth of 68% Year-Over-Year

Record Total Revenue of $751.9 million for Full Year 2023; Growth Accelerates to 27% Year-Over-Year

Net Cash Provided by Operating Activities of $56.2 million for the Full Year 2023

“2023 was a momentous year for CyberArk and with our excellence in execution, we solidified our position as the leader in identity security,” said Matt Cohen, CyberArk's Chief Executive Officer. “Throughout the year, we consistently delivered strong results, including in the fourth quarter where top line growth accelerated, operating income and cash flow increased, and we again beat expectations across all guided metrics. Record demand for our SaaS solutions drove our subscription bookings mix to 95 percent in 2023 and recurring revenue reached 90 percent of our total revenue – we are now a fully recurring revenue company. The momentum in our business and our platform selling motion is demonstrated by our ARR reaching $774 million and growing 36 percent as well as our Subscription ARR reaching $582 million, growing 60 percent, with a record for net new Subscription ARR of $78 million in the fourth quarter. Our identity security platform is applying the right level of controls across all identities, human or machine, regardless of environment. In today’s threat landscape, our platform and security first approach are a business imperative, resulting in customers consolidating on our identity platform. With our execution in 2023, we enter 2024 in a position of strength, poised to continue to deliver durable growth, profitability, and cash flow.”

Balance Sheet and Net Cash Provided by Operating Activities

Recent Developments

Business Outlook

Based on information available as of February 8, 2024, CyberArk is issuing guidance for the first quarter and full year 2024 as indicated below.

 

First Quarter 2024:

Full Year 2024:

 

Conference Call Information

 

In conjunction with this announcement, CyberArk will host a conference call on Thursday, February 8, 2024 at 8:30 a.m. Eastern Time (ET) to discuss the Company’s fourth quarter and full year 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 © 2024 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 income (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, the tax effect of the non-GAAP adjustments, and purchase of property and equipment. 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 as well as changes in interest rates and foreign exchange rates, which impact other GAAP performance metrics. 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; regulatory and geopolitical risks associated with global sales and operations, as well as impacts from the ongoing war between Israel and Hamas and other conflicts in the region, as  our principal executive offices, most of our research and development activities and other significant operations are located in Israel; 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 Company’s ability to expand its sales and marketing efforts and expand its channel partnerships across existing and new geographies; 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 Relations Contact:

Erica Smith

CyberArk

617-558-2132

Media Contact:

Nick Bowman

CyberArk

+44 (0) 7841 673378

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,
		2022				2023				2022				2023
Revenues:
Subscription		$	88,451			$	150,257			$	280,649			$	472,023
Perpetual license			14,579				8,009				49,964				21,037
Maintenance and professional services			66,121				64,838				261,097				258,828
Total revenues			169,151				223,104				591,710				751,888
Cost of revenues:
Subscription			13,762				19,764				46,249				74,623
Perpetual license			913				700				2,893				1,873
Maintenance and professional services			20,153				19,189				76,904				79,635
Total cost of revenues			34,828				39,653				126,046				156,131
Gross profit			134,323				183,451				465,664				595,757
Operating expenses:
Research and development			51,477				53,792				190,321				211,445
Sales and marketing			90,737				106,607				345,273				405,983
General and administrative			22,178				27,763				82,520				94,801
Total operating expenses			164,392				188,162				618,114				712,229
Operating loss			(30,069	)			(4,711	)			(152,450	)			(116,472	)
Financial income, net			9,163				19,302				15,432				53,214
Income (loss) before taxes on income			(20,906	)			14,591				(137,018	)			(63,258	)
Tax benefit (taxes on income)			(1,298	)			(5,680	)			6,650				(3,246	)
Net income (loss)		$	(22,204	)		$	8,911			$	(130,368	)		$	(66,504	)
Basic net income (loss) per ordinary share		$	(0.54	)		$	0.21			$	(3.21	)		$	(1.60	)
Diluted net income (loss) per ordinary share		$	(0.54	)		$	0.20			$	(3.21	)		$	(1.60	)
Shares used in computing net income (loss)
per ordinary shares, basic			40,923,682				42,069,678				40,583,002				41,658,424
Shares used in computing net income (loss)
per ordinary shares, diluted			40,923,682				47,107,294				40,583,002				41,658,424

CYBERARK SOFTWARE LTD.

Consolidated Balance Sheets

U.S. dollars in thousands

(Unaudited)

		December 31,				December 31,
		2022				2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	347,338			$	355,933
Short-term bank deposits			305,843				354,472
Marketable securities			301,101				283,016
Trade receivables			120,817				186,472
Prepaid expenses and other current assets			22,482				31,550
Total current assets			1,097,581				1,211,443
LONG-TERM ASSETS:
Marketable securities			227,748				324,548
Property and equipment, net			23,474				16,494
Intangible assets, net			27,508				20,202
Goodwill			153,241				153,241
Other long-term assets			217,040				214,816
Deferred tax asset			72,809				81,464
Total long-term assets			721,820				810,765
TOTAL ASSETS		$	1,819,401			$	2,022,208
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables		$	13,642			$	10,971
Employees and payroll accruals			77,328				95,538
Accrued expenses and other current liabilities			33,584				36,562
Convertible senior notes, net			-				572,340
Deferred revenues			327,918				409,219
Total current liabilities			452,472				1,124,630
LONG-TERM LIABILITIES:
Convertible senior notes, net			569,344				-
Deferred revenues			80,524				71,413
Other long-term liabilities			38,917				33,839
Total long-term liabilities			688,785				105,252
TOTAL LIABILITIES			1,141,257				1,229,882
SHAREHOLDERS' EQUITY:
Ordinary shares of NIS 0.01 par value			107				111
Additional paid-in capital			660,289				827,260
Accumulated other comprehensive loss			(15,560	)			(1,849	)
Retained earnings (accumulated deficit)			33,308				(33,196	)
Total shareholders' equity			678,144				792,326
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,819,401			$	2,022,208

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,
		2022				2023				2022				2023
Net cash provided by operating activities		$	20,497			$	46,898			$	49,708			$	56,204
Less:
Purchase of property and equipment			(3,739	)			(695	)			(12,517	)			(4,948	)
Free cash flow		$	16,758			$	46,203			$	37,191			$	51,256
GAAP net cash used in investing activities			(247	)			(84,140	)			(68,392	)			(85,828	)
GAAP net cash provided by financing activities			563				18,889				12,225				38,084

Reconciliation of Gross Profit to Non-GAAP Gross Profit:

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2022				2023				2022				2023
Gross profit		$	134,323			$	183,451			$	465,664			$	595,757
Plus:
Share-based compensation (1)			4,098				4,500				15,060				17,612
Amortization of share-based compensation capitalized in software development costs (3)			82				84				346				393
Amortization of intangible assets (2)			1,705				1,704				6,044				6,817
Impairment of capitalized software development costs (3)			-				-				-				2,067
Non-GAAP gross profit		$	140,208			$	189,739			$	487,114			$	622,646

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses:

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2022				2023				2022				2023
Operating expenses		$	164,392			$	188,162			$	618,114			$	712,229
Less:
Share-based compensation (1)			28,130				33,035				105,761				122,489
Amortization of intangible assets (2)			153				137				611				547
Acquisition related expenses			-				-				2,244				-
Non-GAAP operating expenses		$	136,109			$	154,990			$	509,498			$	589,193

Reconciliation of Operating loss to Non-GAAP Operating Income (loss):

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2022				2023				2022				2023
Operating loss		$	(30,069	)		$	(4,711	)		$	(152,450	)		$	(116,472	)
Plus:
Share-based compensation (1)			32,228				37,535				120,821				140,101
Amortization of share-based compensation capitalized in software development costs (3)			82				84				346				393
Amortization of intangible assets (2)			1,858				1,841				6,655				7,364
Acquisition related expenses			-				-				2,244				-
Impairment of capitalized software development costs (3)			-				-				-				2,067
Non-GAAP operating income (loss)		$	4,099			$	34,749			$	(22,384	)		$	33,453

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

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2022				2023				2022				2023
Net income (loss)		$	(22,204	)		$	8,911			$	(130,368	)		$	(66,504	)
Plus:
Share-based compensation (1)			32,228				37,535				120,821				140,101
Amortization of share-based compensation capitalized in software development costs (3)			82				84				346				393
Amortization of intangible assets (2)			1,858				1,841				6,655				7,364
Acquisition related expenses			-				-				2,244				-
Amortization of debt discount and issuance costs			746				752				2,980				2,996
Gain from investment in privately held companies			-				(2,213	)			(324	)			(2,757	)
Impairment of capitalized software development costs (3)			-				-				-				2,067
Taxes on income related to non-GAAP adjustments			(5,560	)			(8,848	)			(20,189	)			(31,656	)
Non-GAAP net income (loss)		$	7,150			$	38,062			$	(17,835	)		$	52,004
Non-GAAP net income (loss) per share
Basic		$	0.17			$	0.90			$	(0.44	)		$	1.25
Diluted		$	0.16			$	0.81			$	(0.44	)		$	1.12
Weighted average number of shares
Basic			40,923,682				42,069,678				40,583,002				41,658,424
Diluted			45,600,508				47,107,294				40,583,002				46,375,198

(1) Share-based Compensation :
		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2022				2023				2022				2023
Cost of revenues - Subscription		$	737			$	1,219			$	2,264			$	4,178
Cost of revenues - Perpetual license			40				15				143				45
Cost of revenues - Maintenance and Professional services			3,321				3,266				12,653				13,389
Research and development			7,315				7,661				27,102				29,458
Sales and marketing			13,684				14,800				51,099				58,790
General and administrative			7,131				10,574				27,560				34,241
Total share-based compensation		$	32,228			$	37,535			$	120,821			$	140,101

(2) Amortization of intangible assets :
		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2022				2023				2022				2023
Cost of revenues - Subscription		$	1,663			$	1,704			$	5,894			$	6,817
Cost of revenues - Perpetual license			42				-				150				-
Sales and marketing			153				137				611				547
Total amortization of intangible assets		$	1,858			$	1,841			$	6,655			$	7,364