Total Revenue of $107 million
Annual Recurring Revenue (ARR) of $250 million
grew 40 percent year over year
Company to Begin Active Transition to Recurring
Revenue Model in 2021
CyberArk (NASDAQ: CYBR), the global leader in privileged access
management, today announced financial results for the third quarter
ended September 30, 2020.
“We are pleased with the momentum in the business including
posting another quarter of record SaaS bookings,” said Udi Mokady,
CyberArk Chairman and CEO. “Enterprise demand for our SaaS
solutions continued to build in the third quarter, particularly for
CyberArk Privilege Cloud and Endpoint Privilege Manager. Customers
are increasingly turning to CyberArk as their trusted advisor to
securely implement digital transformation, cloud migration, and
identity and risk reduction programs. Our ongoing cloud innovation,
including CyberArk Cloud Entitlements Manager, our recently
introduced AI-powered solution that strengthens cloud security,
further extends our leadership position in the market. The
significant increase in new SaaS and subscription bookings grew our
annual recurring revenue (ARR) by 40 percent to $250 million and
our deferred revenue by 28 percent to $228 million. In addition,
the combination of SaaS and subscription revenue increased nearly
200 percent year over year and represents about 28 percent of total
license revenue compared to 7 percent of license revenue in the
third quarter of 2019. While the bookings mix shift toward
high-value recurring subscriptions created a headwind to our
recognized revenue and profitability in the quarter, looking
through the near-term effect on the reported P&L, our business
performance was strong and the level of customer and prospect
engagement was at an all-time high.”
Continued Mokady, “As we look ahead, we will begin actively
transitioning our business to a recurring revenue model in 2021, by
further accelerating our SaaS business and shifting the Company
sales from perpetual licenses to recurring subscriptions. As a
result of our robust SaaS and subscription bookings, our strong and
growing mix of recurring revenue, our expanding SaaS portfolio, and
our comprehensive review of enterprise buying patterns, we are
confident that our strategy will create significant long-term value
for CyberArk, our customers, partners, and shareholders.”
Financial Highlights for the Third Quarter Ended September
30, 2020
Revenue:
- Total revenue was $106.6 million.
- License revenue was $45.8 million.
- Maintenance and professional services revenue was $60.8
million.
Operating Income (Loss):
- GAAP operating loss was $(10.5) million and non-GAAP operating
income was $13.1 million.
Net Income (Loss):
- GAAP net loss was $(15.9) million, or $(0.41) per basic and
diluted share. Non-GAAP net income was $12.2 million, or $0.31 per
diluted share.
The tables at the end of this press release include a
reconciliation of GAAP to non-GAAP gross profit, operating income
(loss) and net income (loss) for the three months and nine months
ended September 30, 2020 and 2019. An explanation of these measures
is also included below under the heading “Non-GAAP Financial
Measures.”
Balance Sheet and Cash Flow:
- As of September 30, 2020, CyberArk had $1.1 billion in cash,
cash equivalents, marketable securities and short-term deposits.
This compares to $555.1 million at September 30, 2019.
- As of September 30, 2020, total deferred revenue was $227.6
million, a 28% increase from $177.3 million at September 30,
2019.
- During the nine months ended September 30, 2020, the Company
generated $67.8 million in net cash provided by operating
activities, compared to $88.6 million in the first nine months of
2019.
Annual Recurring Revenue (ARR):
- Annual Recurring Revenue (ARR) was $250 million, an increase of
40% from $178 million at September 30, 2019.
Recent Business Highlights
- CyberArk was named a Leader in the Gartner 2020 Magic Quadrant
for Privileged Access Management*
- Introduced general availability of CyberArk Cloud Entitlements
Manager, our latest SaaS solution, an AI-Powered service to remove
excessive cloud permissions
- Strengthened ability to secure identities and privileged
credentials in the cloud:
- Availability on Microsoft Azure
- Achieved AWS Digital Workplace Competency Status
- Achieved AWS Outposts Ready designation
(*) Gartner, Magic Quadrant for Privileged Access Management,
Felix Gaehtgens, Abhyuday Data, Michael Kelley, 4 August 2020
Gartner does not endorse any vendor, product or service depicted
in its research publications, and does not advise technology users
to select only those vendors with the highest ratings or other
designation. Gartner research publications consist of the opinions
of Gartner’s research organization and should not be construed as
statements of fact. Gartner disclaims all warranties, expressed or
implied, with respect to this research, including any warranties of
merchantability or fitness for a particular purpose.
Business Outlook
Based on information available as of November 10, 2020, CyberArk
is issuing guidance for the fourth quarter as indicated below.
Fourth Quarter 2020:
- Total revenue between $125.0 million and $135.0 million.
- Non-GAAP operating income between $25.0 million and $33.0
million.
- Non-GAAP net income per share between $0.52 and $0.67 per
diluted share.
- Estimated tax rate of 23 percent.
- Assumes 40.0 million weighted average diluted shares.
Conference Call Information
CyberArk will host a conference call today 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 (833)
968-2251 (U.S.) or +1 (778) 560-2670 (international). The
conference ID is 3387489. 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 3387489. 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 privileged
access management, a critical layer of IT security to protect data,
infrastructure and assets across cloud and hybrid environments, and
throughout the DevOps pipeline. CyberArk delivers the industry’s
most complete solution to reduce risk created by privileged
credentials and secrets. The company is trusted by the world’s
leading organizations, including more than 50 percent of the
Fortune 500, to protect against external attackers and malicious
insiders. A global company, CyberArk is headquartered in Petach
Tikva, Israel, with U.S. headquarters located in Newton, Mass. The
company also has offices throughout the Americas, EMEA, Asia
Pacific and Japan. To learn more about CyberArk, visit
www.cyberark.com, read the CyberArk blogs or follow on Twitter via
@CyberArk, LinkedIn or Facebook.
Copyright © 2020 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)
- 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 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 gross profit, operating income (loss)
or net income (loss) 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 (loss) 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.
The Company believes that providing non-GAAP financial measures
that exclude, 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 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.
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.
CYBERARK SOFTWARE LTD. Consolidated Statements of
Operations U.S. dollars in thousands (except per share
data) (Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2020
2019
2020
Revenues: License
$ 57,868
$ 45,772
$ 161,353
$ 145,292
Maintenance and professional services
50,247
60,817
142,878
174,620
Total revenues
108,115
106,589
304,231
319,912
Cost of revenues: License
2,274
6,038
7,768
13,496
Maintenance and professional services
14,714
16,350
37,998
46,367
Total cost of revenues
16,988
22,388
45,766
59,863
Gross profit
91,127
84,201
258,465
260,049
Operating expenses: Research and development
18,264
24,609
51,590
68,767
Sales and marketing
46,151
55,418
131,229
158,961
General and administrative
13,972
14,649
36,303
45,104
Total operating expenses
78,387
94,676
219,122
272,832
Operating income (loss)
12,740
(10,475)
39,343
(12,783)
Financial income (expenses), net
1,500
(1,453)
5,406
(3,662)
Income (loss) before taxes on income
14,240
(11,928)
44,749
(16,445)
Tax benefit (taxes on income)
1,008
(3,954)
(2,421)
(1,367)
Net income (loss)
$ 15,248
$ (15,882)
$ 42,328
$ (17,812)
Basic net income (loss) per ordinary share
$ 0.40
$ (0.41)
$ 1.13
$ (0.46)
Diluted net income (loss) per ordinary share
$ 0.39
$ (0.41)
$ 1.09
$ (0.46)
Shares used in computing net income (loss) per ordinary
shares, basic
37,805,442
38,797,347
37,460,829
38,532,563
Shares used in computing net income (loss) per ordinary shares,
diluted
39,057,545
38,797,347
38,831,275
38,532,563
Share-based Compensation
Expense:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2020
2019
2020
Cost of revenues
$ 1,680
$ 2,573
$ 3,888
$ 6,325
Research and development
2,912
4,223
7,613
10,606
Sales and marketing
5,949
8,071
14,512
21,224
General and administrative
4,797
5,449
11,473
15,220
Total share-based compensation expense
$ 15,338
$ 20,316
$ 37,486
$ 53,375
CYBERARK SOFTWARE LTD.
Consolidated Balance
Sheets
U.S. dollars in
thousands
(Unaudited)
December 31,
September 30,
2019
2020
ASSETS CURRENT ASSETS: Cash and cash
equivalents
$ 792,363
$ 507,079
Short-term bank deposits
140,067
224,929
Marketable securities
132,412
152,188
Trade receivables
72,953
63,334
Prepaid expenses and other current assets
8,406
14,753
Total current assets
1,146,201
962,283
LONG-TERM ASSETS: Marketable securities
54,408
237,178
Property and equipment, net
16,472
17,804
Intangible assets, net
9,143
26,259
Goodwill
82,400
123,717
Other long-term assets
72,091
86,604
Deferred tax asset
24,451
33,558
Total long-term assets
258,965
525,120
TOTAL ASSETS
$ 1,405,166
$ 1,487,403
LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT
LIABILITIES: Trade payables
$ 5,675
$ 5,726
Employees and payroll accruals
41,345
37,941
Accrued expenses and other current liabilities
27,132
21,936
Deferred revenues
118,519
149,732
Total current liabilities
192,671
215,335
LONG-TERM LIABILITIES: Convertible senior notes, net
485,119
497,950
Deferred revenues
71,836
77,916
Other long-term liabilities
31,408
25,972
Total long-term liabilities
588,363
601,838
TOTAL LIABILITIES
781,034
817,173
SHAREHOLDERS' EQUITY: Ordinary shares of NIS 0.01 par value
99
101
Additional paid-in capital
396,437
457,766
Accumulated other comprehensive income
818
3,393
Retained earnings
226,778
208,970
Total shareholders' equity
624,132
670,230
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$ 1,405,166
$ 1,487,403
CYBERARK SOFTWARE LTD.
Consolidated Statements of
Cash Flows
U.S. dollars in
thousands
(Unaudited)
Nine Months Ended
September 30,
2019
2020
Cash flows from operating activities: Net income
(loss)
$ 42,328
$ (17,812)
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
8,122
10,956
Amortization of premium and accretion of discount on marketable
securities, net
(39)
1,422
Share-based compensation
37,486
53,375
Deferred income taxes, net
(4,989)
(2,531)
Decrease (increase) in trade receivables
(7,075)
12,479
Amortization of debt discount and issuance costs
-
12,831
Increase in prepaid expenses and other current and long-term assets
(12,629)
(14,974)
Decrease in trade payables
(501)
(1,528)
Increase in short-term and long-term deferred revenues
27,741
30,537
Decrease in employees and payroll accruals
(4,318)
(5,130)
Increase (decrease) in accrued expenses and other current and
long-term liabilities
2,471
(11,804)
Net cash provided by operating activities
88,597
67,821
Cash flows from investing activities: Investment in
short and long term deposits
(1,821)
(85,092)
Investment in marketable securities
(66,883)
(347,842)
Proceeds from maturities of marketable securities
50,639
146,208
Purchase of property and equipment
(5,389)
(4,937)
Payments for business acquisitions, net of cash acquired
-
(68,603)
Net cash used in investing activities
(23,454)
(360,266)
Cash flows from financing activities: Proceeds from
(payment of) withholding tax related to employee stock plans
547
(439)
Proceeds from exercise of stock options
19,510
7,604
Net cash provided by financing activities
20,057
7,165
Increase (decrease) in cash, cash equivalents and restricted
cash
85,200
(285,280)
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
$ 347,083
$ 507,133
CYBERARK SOFTWARE LTD.
Reconciliation of GAAP Measures to Non-GAAP Measures U.S.
dollars in thousands (except per share data) (Unaudited)
Reconciliation of Gross Profit to Non-GAAP
Gross Profit:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2020
2019
2020
Gross profit
$ 91,127
$ 84,201
$ 258,465
$ 260,049
Plus: Share-based compensation - License, Maintenance &
professional services
1,680
2,573
3,888
6,325
Amortization of intangible assets - License
1,173
2,654
4,061
5,829
Acquisition related expenses
-
46
-
447
Non-GAAP gross profit
$ 93,980
$ 89,474
$ 266,414
$ 272,650
Reconciliation of Operating
Income (Loss) to Non-GAAP Operating Income:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2020
2019
2020
Operating income (loss)
$ 12,740
$ (10,475)
$ 39,343
$ (12,783)
Plus: Share-based compensation
15,338
20,316
37,486
53,375
Amortization of intangible assets - Cost of revenues
1,173
2,654
4,061
5,829
Amortization of intangible assets - Sales and marketing
144
205
432
478
Acquisition related expenses
-
270
-
4,526
Facility exit and transitions costs
-
140
-
140
Non-GAAP operating income
$ 29,395
$ 13,110
$ 81,322
$ 51,565
Reconciliation of Net Income (Loss) to Non-GAAP
Net Income:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2020
2019
2020
Net income (loss)
$ 15,248
$ (15,882)
$ 42,328
$ (17,812)
Plus: Share-based compensation
15,338
20,316
37,486
53,375
Amortization of intangible assets - Cost of revenues
1,173
2,654
4,061
5,829
Amortization of intangible assets - Sales and marketing
144
205
432
478
Acquisition related expenses
-
270
-
4,526
Facility exit and transitions costs
-
140
-
140
Amortization of debt discount and issuance costs
-
4,314
-
12,831
Taxes on income related to non-GAAP adjustments
(6,345)
(4,878)
(14,237)
(15,956)
Intra-entity IP transfer tax effect, net
-
5,036
-
5,036
Non-GAAP net income
$ 25,558
$ 12,175
$ 70,070
$ 48,447
Non-GAAP net income per share Basic
$ 0.68
$ 0.31
$ 1.87
$ 1.26
Diluted
$ 0.65
$ 0.31
$ 1.80
$ 1.23
Weighted average number of shares Basic
37,805,442
38,797,347
37,460,829
38,532,563
Diluted
39,057,545
39,634,165
38,831,275
39,424,949
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201110005655/en/
Investor Relations Contact: Erica Smith CyberArk
617-558-2132 ir@cyberark.com Media Contact: Liz Campbell
CyberArk 617-558-2191 press@cyberark.com
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