CYBR CyberArk Software Ltd

Second quarter total revenue of $50.4 million increases 39% year-over-year

CyberArk (NASDAQ: CYBR), the company that protects organizations from cyber attacks that have made their way inside the network perimeter, today announced financial results for the second quarter ended June 30, 2016.

“The second quarter was another strong quarter for CyberArk,” said Udi Mokady, CyberArk Chairman and CEO. “Our top line growth demonstrates the increasing demand for our privileged account security platform while our bottom line outperformance shows the power of our business model. As we move into the second half of the year, we plan to continue making thoughtful investments including enhancing our technology platform and expanding market presence.”

Financial Highlights for the Second Quarter Ended June 30, 2016

Revenue:

• Total revenue was $50.4 million, up 39% year-over-year compared with the second quarter of 2015.
• License revenue was $30.0 million, up 35% compared with the second quarter of 2015.
• Maintenance and Professional Services revenue was $20.4 million, up 45% from the second quarter of 2015.

Operating Income:

• GAAP operating income was $8.5 million for the quarter, up from $6.5 million in the second quarter of 2015.
• Non-GAAP operating income was $13.6 million for the quarter, up from $8.2 million in the second quarter of 2015.

Net Income:

• GAAP net income was $6.4 million, or $0.18 per diluted share, compared to GAAP net income of $4.9 million, or $0.14 per diluted share, in the second quarter of 2015.
• Non-GAAP net income was $10.5 million, or $0.29 per diluted share, compared to $6.5 million, or $0.19 per diluted share, in the second quarter of 2015.

The tables at the end of this press release include a reconciliation of GAAP to non-GAAP operating income and net income for the three months and six months ended June 30, 2016 and 2015. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Balance Sheet and Cash Flow:

• As of June 30, 2016, CyberArk had $259.0 million in cash, cash equivalents, marketable securities and short-term deposits, compared to $238.3 million as of December 31, 2015.
• During the first six months of 2016, the Company generated $21.4 million in cash flow from operations, compared to $35.1 million in the first six months of 2015.

Business Outlook

Based on information available as of August 9, 2016, CyberArk is issuing guidance for the third quarter and full year 2016 as indicated below.

Third Quarter 2016:

• Total revenue is expected to be in the range of $51.5 million to $52.5 million, which represents 29% to 31% year-over-year growth.
• Non-GAAP operating income is expected to be in the range of $10.1 million to $11.0 million.
• Non-GAAP net income per share is expected to be in the range of $0.21 to $0.23 per diluted share. This assumes 36.0 million weighted average diluted shares.

Full Year 2016:

• Total revenue is expected to be in the range of $210.5 million to $212.5 million, which represents 31% to 32% year-over-year growth.
• Non-GAAP operating income is expected to be in the range of $48.4 million to $50.0 million.
• Non-GAAP net income per share is expected to be in the range of $1.03 to $1.07 per diluted share. This assumes 35.9 million weighted average diluted shares.

Conference Call Information

CyberArk will host a conference call on Tuesday, August 9, 2016 at 5:00 p.m. Eastern Time (ET) to discuss the company’s second quarter financial results and its business outlook. To access this call, dial +1 844-237-3590 (U.S.) or +1 484-747-6582 (international). The conference ID is 47864998. Additionally, a live webcast of the conference call will be available via the “Investor Relations” section of the company’s web site at www.cyberark.com. A replay will be available for one week at +1 855-859-2056 (U.S.) or +1 404-537-3406 (international). The replay pass code is 47864998. An archived webcast of the conference call will also be available in the “Investor Relations” section of the company’s web site at www.cyberark.com.

About CyberArk

CyberArk is the only security company focused on eliminating the most advanced cyber threats; those that use insider privileges to attack the heart of the enterprise. Dedicated to stopping attacks before they stop business, CyberArk proactively secures against cyber threats before attacks can escalate and do irreparable damage. The company is trusted by the world’s leading companies – including 45 percent of the Fortune 100 – to protect their highest value information assets, infrastructure and applications. A global company, CyberArk is headquartered in Petach Tikvah, Israel, with U.S. headquarters located in Newton, Mass. The company also has offices throughout EMEA and Asia Pacific and Japan. To learn more about CyberArk, visit www.cyberark.com, read the company blog, http://www.cyberark.com/blog/, follow on Twitter @CyberArk or Facebook at https://www.facebook.com/CyberArk.

Copyright © 2016 CyberArk Software. All Rights Reserved. All other brand names, product names, or trademarks belong to their respective holders.

Non-GAAP Financial MeasuresCyberArk believes that the use of non-GAAP operating income and non-GAAP net income 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 operating income or net income or any other performance measures derived in accordance with GAAP.

• For the three and six months ended June 30, 2016, non-GAAP operating income is calculated as operating income excluding share-based compensation expense and amortization of intangible assets related to acquisitions. For the three and six months ended June 30, 2015, non-GAAP operating income is calculated as operating income excluding public offering and acquisition related expenses as well as share-based compensation expense.
• For the three and six months ended June 30, 2016, non-GAAP net income is calculated as net income excluding share-based compensation expense, amortization of intangible assets related to acquisitions and the tax effects related to the non-GAAP adjustments. For the three and six months ended June 30, 2015, non-GAAP net income is calculated as net income excluding public offering and acquisition related expenses as well as share-based compensation expense and the tax effects related to the non-GAAP adjustments.

Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company’s non-cash expense, the Company believes that providing non-GAAP financial measures that exclude share-based compensation, public offering and acquisition related expenses and amortization of intangible assets related to acquisitions 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. The Company believes that expenses related to its public offerings, acquisitions and amortization of intangible assets related to acquisitions do not reflect the performance of its core business and impact period-to-period comparability.

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 measures to evaluate its business.

Cautionary Language Concerning Forward-Looking Statements

This release may contain 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: changes in the rapidly evolving cyber threat landscape; failure to effectively manage growth; near-term declines in our operating and net profit margins and our revenue growth rate; real or perceived shortcomings, defects or vulnerabilities in the Company’s solutions or internal network system, or the failure of the Company’s customers or channel partners to correctly implement the Company’s solutions; fluctuations in quarterly results of operations; the inability to acquire new customers or sell additional products and services to existing customers; competition from IT security vendors; the Company’s ability to successfully integrate recent and or future acquisitions; 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.

         

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

  Three Months EndedJune 30, Six Months EndedJune 30, 2015 2016 2015 2016   Revenues: License $ 22,278 $ 29,965 $ 42,256 $ 57,479 Maintenance and professional services 14,097 20,415 27,034 39,812         Total revenues 36,375 50,380 69,290 97,291   Cost of revenues: License 1,831 1,283 2,381 2,557 Maintenance and professional services 4,243 5,628 7,950 10,788         Total cost of revenues 6,074 6,911 10,331 13,345         Gross profit 30,301 43,469 58,959 83,946         Operating expenses: Research and development 4,263 8,165 8,380 16,098 Sales and marketing 15,449 21,837 28,909 43,500 General and administrative 4,058 5,016 7,636 9,686         Total operating expenses 23,770 35,018 44,925 69,284         Operating income 6,531 8,451 14,034 14,662   Financial income (expenses), net   327     (94 )   (1,304 )   (27 )   Income before taxes on income 6,858 8,357 12,730 14,635   Taxes on income   (1,936 )   (1,908 )   (3,642 )   (3,862 )   Net income $ 4,922   $ 6,449   $ 9,088   $ 10,773       Basic net income per ordinary share $ 0.16   $ 0.19   $ 0.29   $ 0.32   Diluted net income per ordinary share $ 0.14   $ 0.18   $ 0.26   $ 0.30     Shares used in computing net income per ordinary shares, basic   31,530,242     33,547,975     31,049,379     33,457,149   Shares used in computing net income per ordinary shares, diluted   35,001,262     35,787,574     34,896,092     35,740,107           Share-based Compensation Expense:   Three Months EndedJune 30, Six Months EndedJune 30, 2015 2016 2015 2016     Cost of revenues $ 84 $ 285 $ 147 $ 526 Research and development 85 998 167 1,938 Sales and marketing 177 1,371 316 2,596 General and administrative   797     1,325     978     2,292     Total share-based compensation expense $ 1,143   $ 3,979   $ 1,608   $ 7,352          

CYBERARK SOFTWARE LTD.Consolidated Balance SheetsU.S. dollars in thousands(Unaudited)

  December 31,2015 June 30,2016     ASSETS   CURRENT ASSETS: Cash and cash equivalents $ 234,539 $ 178,420 Short-term bank deposits 3,713 45,850 Marketable securities - 12,386 Trade receivables 20,410 20,804 Prepaid expenses and other current assets   3,293     5,196   Total current assets   261,955     262,656   LONG-TERM ASSETS: Property and equipment, net 3,584 4,366 Intangible assets, net 18,558 16,290 Goodwill 35,145 35,145 Marketable securities - 22,390 Severance pay fund 3,230 3,187 Prepaid expenses and other long-term assets 1,954 2,005 Deferred tax asset   9,998     10,030   Total long-term assets   72,469     93,413   TOTAL ASSETS $ 334,424   $ 356,069   LIABILITIES AND SHAREHOLDERS' EQUITY   CURRENT LIABILITIES: Trade payables $ 2,530 $ 2,215 Employees and payroll accruals 15,860 13,699 Deferred revenues 37,104 42,812 Accrued expenses and other current liabilities   9,366     5,851   Total current liabilities   64,860     64,577   LONG-TERM LIABILITIES: Deferred revenues 17,285 20,004 Other long-term liabilities 188 236 Accrued severance pay 4,667 4,601 Deferred tax liabilities   754     595   Total long-term liabilities   22,894     25,436   TOTAL LIABILITIES   87,754     90,013   SHAREHOLDERS' EQUITY: Ordinary shares of NIS 0.01 par value 86 86 Additional paid-in capital 200,107 208,507 Accumulated other comprehensive income (loss) (93 ) 120 Retained earnings   46,570     57,343   Total shareholders' equity   246,670     266,056   TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 334,424   $ 356,069        

CYBERARK SOFTWARE LTD.Consolidated Statements of Cash FlowsU.S. dollars in thousands(Unaudited)

  Six Months EndedJune 30,

2015

2016

  Cash flows from operating activities: Net income $ 9,088 $ 10,773 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and Amortization 459 3,126 Share-based compensation expenses 1,608 7,352 Tax benefit related to share-based compensation (1,176 ) (411 ) Deferred income taxes, net (731 ) (189 ) Decrease (increase) in trade receivables 4,965 (394 ) Increase in prepaid expenses and other current and long-term assets (1,175 ) (1,672 ) Increase (decrease) in trade payables 263 (179 ) Increase in short term and long term deferred revenues 21,106 8,427 Decrease in employees and payroll accruals (1,153 ) (2,161 ) Increase (decrease) in accrued expenses and other current and long-term liabilities 1,586 (3,240 ) Increase (decrease) in accrued severance pay, net   280     (23 )   Net cash provided by operating activities   35,120     21,409     Cash flows from investing activities: Proceeds from short and long term deposits 39,289 - Investment in short and long term deposits - (42,149 ) Investment in marketable securities - (34,650 ) Purchase of property and equipment   (1,060 )   (1,777 )   Net cash provided by (used in) investing activities   38,229     (78,576 )   Cash flows from financing activities: Issuance of shares, net 52,685 - Withholding proceeds related to exercise of options 17,201 - Tax benefit related to share-based compensation 1,176 411 Proceeds from exercise of options   1,524     637     Net cash provided by financing activities   72,586     1,048     Increase (decrease) in cash and cash equivalents 145,935 (56,119 )   Cash and cash equivalents at the beginning of the period   124,184     234,539     Cash and cash equivalents at the end of the period $ 270,119   $ 178,420              

CYBERARK SOFTWARE LTD.Reconciliation of GAAP Measures to Non-GAAP MeasuresU.S. dollars in thousands (except per share data)(Unaudited)

    Reconciliation of Operating Income to Non-GAAP Operating Income:   Three Months EndedJune 30, Six Months EndedJune 30,

2015

2016

2015

2016

    Operating income $ 6,531 $ 8,451 $ 14,034 $ 14,662 Public offering related expenses 487 - 1,568 - Share-based compensation 1,143 3,979 1,608 7,352 Amortization of intangible assets - Cost of revenues - 355 - 710 Amortization of intangible assets - Research and development - 478 - 956 Amortization of intangible assets - Sales and marketing - 301 - 602 Acquisition related expenses   88     -     88     -     Non-GAAP operating income $ 8,249   $ 13,564   $ 17,298   $ 24,282       Reconciliation of Net Income to Non-GAAP Net Income:   Three Months EndedJune 30, Six Months EndedJune 30,

2015

2016

2015

2016

    Net income $ 4,922 $ 6,449 $ 9,088 $ 10,773 Public offering related expenses 487 - 1,568 - Share-based compensation 1,143 3,979 1,608 7,352 Amortization of intangible assets - Cost of revenues - 355 - 710 Amortization of intangible assets - Research and development - 478 - 956 Amortization of intangible assets - Sales and marketing - 301 - 602 Acquisition related expenses 88 - 88 - Taxes on income related to non-GAAP adjustments   (114 )   (1,066 )   (114 )   (1,579 )   Non-GAAP net income $ 6,526   $ 10,496   $ 12,238   $ 18,814     Non-GAAP net income per share Basic $ 0.21   $ 0.31   $ 0.39   $ 0.56   Diluted $ 0.19   $ 0.29   $ 0.35   $ 0.53     Weighted average number of shares Basic   31,530,242     33,547,975     31,049,379     33,457,149   Diluted   35,001,262     35,787,574     34,896,092     35,740,107    

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CyberArkInvestor Contact:Erica Smith, 617-558-2132ir@cyberark.comorMedia Contact:Christy Lynch, 617-796-3210press@cyberark.com