CYBR CyberArk Software Ltd

Second quarter total revenue of $77.7 million increases 35% year-over-year

GAAP operating income of $7.0 million and non-GAAP operating income of $17.0 million

Cash flow from operations of $56.2 million increases 90% year-over-year

Deferred revenue of $129.6 increases 56% year-over-year

CyberArk, (NASDAQ: CYBR), the global leader in privileged access security, today announced financial results for the second quarter ended June 30, 2018.

“CyberArk had a great second quarter,” said Udi Mokady, CyberArk Chairman and CEO. “We exceeded our guidance across all metrics. We posted strong revenue growth, profitability and operating cash flow. Our growth was driven by strong execution and robust demand from both new and existing customers across all geographies. We were thrilled to sign nearly 200 new logos in the second quarter bringing our total number of customers to more than 4,000, which demonstrates that we are still in the early innings of our market opportunity. In addition, the significant value our solution provides coupled with our unwavering commitment to customer satisfaction drove our add on business during the quarter. Given our strong execution in the first half of the year and our tremendous market opportunity, we are positioned well for the remainder of 2018.”

Financial Highlights for the Second Quarter Ended June 30, 2018

Revenue:

• Total revenue was $77.7 million, up 35% compared with the second quarter of 2017.
• License revenue was $41.1 million, up 36% compared with the second quarter of 2017.
• Maintenance and professional services revenue was $36.6 million, up 35% compared with the second quarter of 2017.

Operating Income:

• GAAP operating income was $7.0 million, an increase from $1.0 million in the second quarter of 2017. Non-GAAP operating income was $17.0 million, an increase from $8.8 million in the second quarter of 2017.

Net Income:

• GAAP net income was $8.4 million, or $0.23 per diluted share, an increase from GAAP net income of $3.2 million, or $0.09 per diluted share, in the second quarter of 2017. Non-GAAP net income was $13.5 million, or $0.36 per diluted share, an increase from $7.7 million, or $0.21 per diluted share, in the second quarter of 2017.

The tables at the end of this press release include a reconciliation of GAAP to non-GAAP gross margin, operating income and net income for the three months and six months ended June 30, 2018 and 2017. 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, 2018, CyberArk had $377.5 million in cash, cash equivalents, marketable securities and short-term deposits. This compares to $330.3 million as of December 31, 2017 and $283.2 million at June 30, 2017.
• As of June 30, 2018, total deferred revenue was $129.6 million, a 23% increase from $105.2 million at December 31, 2017 and a 56% increase from $82.8 million at June 30, 2017.
• During the six months ended June 30, 2018, the Company generated $56.2 million in cash flow from operations, a 90% increase from $29.7 million in the first six months of 2017.

Business Outlook

Based on information available as of August 7, 2018, CyberArk is issuing guidance for the third quarter and increasing its guidance for the full year 2018 as indicated below.

Third Quarter 2018:

• Total revenue is expected to be in the range of $77.75 million to $79.25 million, which represents 20% to 22% year-over-year growth.
• Non-GAAP operating income is expected to be in the range of $11.4 million to $12.6 million.
• Non-GAAP net income per share is expected to be in the range of $0.25 to $0.28 per diluted share. This assumes 37.5 million weighted average diluted shares.

Full Year 2018:

• Total revenue is expected to be in the range of $320.0 million to $324.0 million, which represents 22% to 24% year-over-year growth.
• Non-GAAP operating income is expected to be in the range of $64.0 million to $67.0 million.
• Non-GAAP net income per share is expected to be in the range of $1.43 to $1.50 per diluted share. This assumes 37.0 million weighted average diluted shares.

Conference Call Information

CyberArk will host a conference call today, August 7, 2018 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 2687958. 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. Following the conference call, 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 2687958. 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 CyberArkCyberArk (NASDAQ: CYBR) is the global leader in privileged access security, a critical layer of IT security to protect data, infrastructure and assets across the enterprise, in the cloud 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 100, 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 © 2018 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 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 operating income or net income or any other performance measures derived in accordance with GAAP.

• Non-GAAP gross profit is calculated as gross profit excluding share-based compensation expense and amortization of intangible assets related to acquisitions.
• Non-GAAP operating income is calculated as operating income excluding share-based compensation expense, acquisition related expenses, and amortization of intangible assets related to acquisitions.
• Non-GAAP net income is calculated as net income excluding share-based compensation expense, acquisition related expenses, amortization of intangible assets related to acquisitions and the tax effect of the non-GAAP adjustments.

The Company believes that providing non-GAAP financial measures that exclude share-based compensation, acquisition related expenses, amortization of intangible assets related to acquisitions 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 the variety of equity instruments that can impact a company’s non-cash expense. The Company believes that expenses related to its 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 Ended Six Months Ended June 30, June 30, 2017 2018 2017 2018   Revenues: License $ 30,318 $ 41,121 $ 63,270 $ 79,615 Maintenance and professional services 27,162 36,592 53,245 69,881         Total revenues 57,480 77,713 116,515 149,496   Cost of revenues: License 1,907 2,510 3,491 4,907 Maintenance and professional services 8,093 9,198 15,776 18,089         Total cost of revenues 10,000 11,708 19,267 22,996         Gross profit 47,480 66,005 97,248 126,500         Operating expenses: Research and development 9,561 13,808 18,775 26,792 Sales and marketing 29,500 35,521 57,178 70,103 General and administrative 7,409 9,714 14,287 18,613         Total operating expenses 46,470 59,043 90,240 115,508         Operating income 1,010 6,962 7,008 10,992   Financial income, net   1,127   225   1,675   2,066   Income before taxes on income 2,137 7,187 8,683 13,058   Tax benefit   1,109   1,190   2,099   1,740   Net income $ 3,246 $ 8,377 $ 10,782 $ 14,798     Basic net income per ordinary share $ 0.09 $ 0.23 $ 0.31 $ 0.41 Diluted net income per ordinary share $ 0.09 $ 0.23 $ 0.30 $ 0.40   Shares used in computing net income per ordinary shares, basic   34,729,119   36,001,580   34,563,040   35,724,717 Shares used in computing net income per ordinary shares, diluted   36,194,471   36,923,520   36,147,712   36,680,585         Share-based Compensation Expense:   Three Months Ended Six Months Ended June 30, June 30, 2017 2018 2017 2018     Cost of revenues $ 504 $ 758 $ 957 $ 1,413 Research and development 1,523 2,007 2,832 3,511 Sales and marketing 2,018 2,874 3,689 5,291 General and administrative   2,197   2,774   3,963   5,121   Total share-based compensation expense $ 6,242 $ 8,413 $ 11,441 $ 15,336

 

 

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

    December 31,     June 30, 2017 2018     ASSETS   CURRENT ASSETS: Cash and cash equivalents $ 161,261 $ 205,193 Short-term bank deposits 107,647 100,818 Marketable securities 34,025 51,025 Trade receivables 45,315 32,959 Prepaid expenses and other current assets   7,407   10,344     Total current assets   355,655   400,339     LONG-TERM ASSETS: Property and equipment, net 9,230 11,858 Intangible assets, net 15,664 18,017 Goodwill 69,217 83,157 Marketable securities 27,407 20,477 Severance pay fund 3,692 3,558 Other long-term assets 2,368 18,451 Deferred tax asset   19,343   21,383     Total long-term assets   146,921   176,901     TOTAL ASSETS $ 502,576 $ 577,240     LIABILITIES AND SHAREHOLDERS' EQUITY   CURRENT LIABILITIES: Trade payables $ 1,960 $ 4,359 Employees and payroll accruals 25,253 26,298 Accrued expenses and other current liabilities 10,209 6,474 Deferred revenues   66,986   81,660     Total current liabilities   104,408   118,791     LONG-TERM LIABILITIES: Deferred revenues 38,249 47,901 Other long-term liabilities 242 1,400 Accrued severance pay   5,712   5,445     Total long-term liabilities   44,203   54,746     TOTAL LIABILITIES   148,611   173,537     SHAREHOLDERS' EQUITY: Ordinary shares of NIS 0.01 par value 91 94 Additional paid-in capital 249,874 273,323 Accumulated other comprehensive income (loss) 107 (1,154 ) Retained earnings   103,893   131,440     Total shareholders' equity   353,965   403,703     TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 502,576 $ 577,240          

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

  Six Months Ended June 30, 2017 2018   Cash flows from operating activities: Net income $ 10,782 $ 14,798 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,509 4,676 Amortization of premium on marketable securities 190 208 Share-based compensation expenses 11,441 15,336 Deferred income taxes, net (3,642 ) (4,710 ) Decrease in trade receivables 3,412 12,357 Increase in prepaid expenses and other current and long-term assets (1,257 ) (6,272 ) Increase (decrease) in trade payables (869 ) 2,003 Increase in short term and long term deferred revenues 9,339 27,845 Decrease in employees and payroll accruals (1,953 ) (5,168 ) Decrease in accrued expenses and other current and long-term liabilities (1,391 ) (4,716 ) Increase (decrease) in accrued severance pay, net   91     (133 )   Net cash provided by operating activities   29,652     56,224     Cash flows from investing activities: Proceeds from short and long term deposit - 7,775 Investment in short and long term deposits (9,646 ) - Investment in marketable securities (17,760 ) (30,563 ) Proceeds from maturities of marketable securities 9,106 20,114 Purchase of property and equipment (2,038 ) (4,098 ) Payments for business acquisitions, net of cash acquired   (41,448 )   (18,450 )   Net cash used in investing activities   (61,786 )   (25,222 )   Cash flows from financing activities: Proceeds from withholding tax related to employee stock plans - 5,509 Proceeds from exercise of stock options   1,926     8,090     Net cash provided by financing activities   1,926     13,599     Increase (decrease) in cash, cash equivalents and restricted cash (30,208 ) 44,601   Cash, cash equivalents and restricted cash at the beginning of the period   174,156     162,520     Cash, cash equivalents and restricted cash at the end of the period $ 143,948   $ 207,121              

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

      Reconciliation of Gross Profit to Non-GAAP Gross Profit:   Three Months Ended Six Months Ended June 30, June 30, 2017 2018 2017 2018   Gross profit $ 47,480 $ 66,005 $ 97,248 $ 126,500 Plus: Share-based compensation - Maintenance & professional services 504 758 957 1,413 Amortization of intangible assets - License   992     1,444     1,835     2,674     Non-GAAP gross profit $ 48,976   $ 68,207   $ 100,040   $ 130,587             Reconciliation of Operating Income to Non-GAAP Operating Income:   Three Months Ended Six Months Ended June 30, June 30, 2017 2018 2017 2018     Operating income $ 1,010 $ 6,962 $ 7,008 $ 10,992 Plus: Share-based compensation 6,242 8,413 11,441 15,336 Amortization of intangible assets - Cost of revenues 992 1,444 1,835 2,674 Amortization of intangible assets - Sales and marketing 289 199 535 397 Acquisition related expenses   248     -     686     268     Non-GAAP operating income $ 8,781   $ 17,018   $ 21,505   $ 29,667       Reconciliation of Net Income to Non-GAAP Net Income:   Three Months Ended Six Months Ended June 30, June 30, 2017 2018 2017 2018     Net income $ 3,246 $ 8,377 $ 10,782 $ 14,798 Plus: Share-based compensation 6,242 8,413 11,441 15,336 Amortization of intangible assets - Cost of revenues 992 1,444 1,835 2,674 Amortization of intangible assets - Sales and marketing 289 199 535 397 Acquisition related expenses 248 - 686 268 Taxes on income related to non-GAAP adjustments   (3,274 )   (4,964 )   (7,289 )   (8,193 )   Non-GAAP net income $ 7,743   $ 13,469   $ 17,990   $ 25,280     Non-GAAP net income per share Basic $ 0.22   $ 0.37   $ 0.52   $ 0.71   Diluted $ 0.21   $ 0.36   $ 0.50   $ 0.69     Weighted average number of shares Basic   34,729,119     36,001,580     34,563,040     35,724,717   Diluted   36,194,471     36,923,520     36,147,712     36,680,585  

View source version on businesswire.com: https://www.businesswire.com/news/home/20180807005886/en/

CyberArkInvestor Contact:Erica Smith, +1 617-558-2132ir@cyberark.comorMedia Contact:Liz Campbell, +1-617-558-2191press@cyberark.com