BusinessWire

CyberArk Announces First Quarter 2020 Results

Total revenue of $106.8 million
GAAP operating income of $2.6 million and non-GAAP operating income of $21.5 million
CyberArk Acquires Identity as a Service Provider, Idaptive

NEWTON, Mass. & PETACH TIKVA, Israel--(BUSINESS WIRE)--CyberArk (NASDAQ:CYBR), the global leader in privileged access management, today announced financial results for the first quarter ended March 31, 2020.


“The health and well-being of our global community of employees, customers and partners continues to be our first priority,” said Udi Mokady, CyberArk Chairman and CEO. “We were pleased to deliver results in line with or exceeding all guided metrics for the first quarter. Privileged Access Management (PAM) is even more critical today with attackers exploiting the sudden and dramatic change in enterprise IT created by remote work environments. In this higher threat environment, our level of engagement with customers has increased as they look to better secure their extended enterprise by expanding their PAM programs. Given our leadership position in PAM, our team’s extensive experience during prior market downturns as well as our ongoing commitment to innovation and customer satisfaction, we believe that we will emerge from the COVID-19 pandemic stronger than before. We are also pleased with today’s acquisition of Idaptive, which positions us as the only modern identity security platform, adds another SaaS offering to our portfolio, and expands our Total Addressable Market.”

“Given the weakened economic environment due to Covid-19, we expect customers to make more cautious purchasing decisions which will impact our revenue and cash flow from operations in the near term,” stated Josh Siegel, CyberArk Chief Financial Officer. “We believe deal close rates, particularly for new business and in certain verticals, will be less predictable and have therefore decided to withdraw our full year 2020 guidance. We continue to believe in the long-term growth opportunity given that Privileged Access Management is a priority for customers. The management team remains focused on delivering growth and profitability in 2020. As we monitor COVID-19 developments, our current plan is to manage expenses for the full year to better align with our top line, but also make disciplined investments and hire for key roles. We believe this approach will allow CyberArk to navigate through the current environment and prepare the Company for accelerated growth when the business environment stabilizes.”

Financial Highlights for the First Quarter Ended March 31, 2020

Revenue:

  • Total revenue was $106.8 million, up 11% compared with the first quarter of 2019.
  • License revenue was $51.7 million, up from $51.3 million in the first quarter of 2019.
  • Maintenance and professional services revenue was $55.2 million, compared to $44.7 million in the first quarter of 2019.

Operating Income:

  • GAAP operating income was $2.6 million, compared to $13.6 million in the first quarter of 2019. Non-GAAP operating income was $21.5 million, compared to $25.5 million in the first quarter of 2019.

Net Income:

  • GAAP net income was $2.4 million, or $0.06 per diluted share, compared to GAAP net income of $13.7 million, or $0.36 per diluted share, in the first quarter of 2019. Non-GAAP net income was $19.6 million, or $0.50 per diluted share, compared to $21.5 million, or $0.56 per diluted share, in the first quarter of 2019.

The tables at the end of this press release include a reconciliation of GAAP to non-GAAP gross profit, operating income and net income for the three months ended March 31, 2020 and 2019. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Balance Sheet and Net Cash Provided by Operating Activities:

  • As of March 31, 2020, CyberArk had $1.2 billion in cash, cash equivalents, marketable securities and short-term deposits. This compares with $509.7 million in cash, cash equivalents, marketable securities and short-term deposits as of March 31, 2019.
  • As of March 31, 2020, total deferred revenue was $210.7 million, a 23% increase from $171.1 million at March 31, 2019.
  • During the first quarter of 2020, the Company generated $33.8 million in net cash provided by operating activities, compared to $45.9 million in the first quarter of 2019.

CyberArk Acquires IDaptive Holdings, Inc.

  • In a separate announcement, CyberArk announced the acquisition of Idaptive, a leading Identity as a Service (IDaaS) provider. Together, CyberArk and Idaptive will deliver the industry’s only modern identity platform with a security-first approach.

CyberArk’s COVID-19 Response: Business Operations

As the COVID-19 situation evolved, CyberArk quickly took action to protect its community of employees, customers and partners and is continually evolving its COVID-19 response plan. To date, following actions have been taken:

  • Created an executive level task force to respond to the situation and monitor guidance from the World Health Organization, CDC as well as local authorities to shape the Company’s policies and guidelines.
  • Closed offices and enabled all employees to work securely from home.
  • Transitioned sales and marketing to focus on virtual and digital programs.
  • Restricted non-essential business travel.

CyberArk’s COVID-19 Response: Customers, Partners and Community

  • Transitioned support and service staff to be available from remote locations 24 hours a day, 7 days a week to help our customers and partners implement business continuity strategies in response to the COVID-19 pandemic.
  • Converted the Company’s major customer events in the U.S. and Europe to a global virtual program.
  • Adjusted our Security Services organization to deliver all services remotely.
  • Offered CyberArk Alero to customers at no cost into June. Alero enables remote employees and contractors to securely access CyberArk.
  • Published research from CyberArk Labs communicating information about how attackers are capitalizing on the disruptions caused by COVID-19.
  • Donated to local charities to help support COVID-19 response efforts.

Business Outlook

Based on information available as of May 13, 2020, CyberArk is issuing guidance as indicated below:

Second Quarter 2020:

  • Total revenue between $95.0 million and $105.0 million.
  • Non-GAAP operating income between $7.0 million and $16.0 million, which includes expenses from the acquisition of Idaptive.
  • Non-GAAP net income per share between $0.17 and $0.35 per diluted share, which includes expenses from the acquisition of Idaptive.
    • Assumes 39.4 million weighted average diluted shares.

Full Year 2020:

Given the uncertainty created by the COVID-19 pandemic as well as its impact on the overall economy, our business, our customers and our partners, we are withdrawing our full year 2020 guidance for total revenue, non-GAAP operating income, and non-GAAP earnings per share that we provided on February 12, 2020.

Conference Call Information

CyberArk will host a conference call today, Wednesday, May 13, 2020 at 8:30 a.m. Eastern Time (ET) to discuss the Company’s first quarter financial results and its business outlook. To access this call, dial +1 877-823-7693 (U.S.) or +1 647-689-4543 (international). The conference ID is 1148659. 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 +1 416-621-4642 (international). The replay pass code is 1148659. 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.

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 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, amortization of debt discount and issuance costs 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, non-cash interest expense related to the amortization of debt discount and issuance costs 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 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, 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, 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, which may have a material 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 any impacts from the COVID-19 pandemic; difficulties predicting future financial results, including due to impacts from the COVID-19 pandemic; the drivers of the Company’s growth may change; 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 system; 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
  March 31,
 

2019

 

2020

   
Revenues:    
License  

$

51,284

 

 

$

51,656

 

Maintenance and professional services  

 

44,651

 

 

 

55,170

 

   
Total revenues  

 

95,935

 

 

 

106,826

 

   
Cost of revenues:    
License  

 

2,588

 

 

 

2,235

 

Maintenance and professional services  

 

10,979

 

 

 

14,850

 

   
Total cost of revenues  

 

13,567

 

 

 

17,085

 

   
Gross profit  

 

82,368

 

 

 

89,741

 

   
Operating expenses:    
Research and development  

 

16,331

 

 

 

21,285

 

Sales and marketing  

 

41,505

 

 

 

51,196

 

General and administrative  

 

10,905

 

 

 

14,689

 

   
Total operating expenses  

 

68,741

 

 

 

87,170

 

   
Operating income  

 

13,627

 

 

 

2,571

 

   
Financial income (expenses), net  

 

1,421

 

 

 

(736

)

   
Income before taxes on income  

 

15,048

 

 

 

1,835

 

   
Tax benefit (taxes on income)  

 

(1,371

)

 

 

551

 

   
Net income  

$

13,677

 

 

$

2,386

 

   
   
Basic net income per ordinary share  

$

0.37

 

 

$

0.06

 

Diluted net income per ordinary share  

$

0.36

 

 

$

0.06

 

   
Shares used in computing net income    
per ordinary shares, basic  

 

37,046,472

 

 

 

38,222,867

 

Shares used in computing net income    
per ordinary shares, diluted  

 

38,440,461

 

 

 

39,309,750

 

   
   
Share-based Compensation Expense:    
   
  Three Months Ended
  March 31,
 

2019

 

2020

   
   
Cost of revenues  

$

957

 

 

$

1,803

 

Research and development  

 

2,307

 

 

 

3,021

 

Sales and marketing  

 

3,685

 

 

 

6,400

 

General and administrative  

 

3,303

 

 

 

5,084

 

   
Total share-based compensation expense  

$

10,252

 

 

$

16,308

 

CYBERARK SOFTWARE LTD.

Consolidated Balance Sheets

U.S. dollars in thousands

(Unaudited)

 
  December 31,   March 31,
 

2019

 

2020

     
     
ASSETS    
     
CURRENT ASSETS:    
Cash and cash equivalents  

$

792,363

 

$

812,667

Short-term bank deposits  

 

140,067

 

 

152,631

Marketable securities  

 

132,412

 

 

124,517

Trade receivables  

 

72,953

 

 

51,970

Prepaid expenses and other current assets  

 

8,406

 

 

11,943

     
Total current assets  

 

1,146,201

 

 

1,153,728

     
LONG-TERM ASSETS:    
Marketable securities  

 

54,408

 

 

65,706

Property and equipment, net  

 

16,472

 

 

16,427

Intangible assets, net  

 

9,143

 

 

8,110

Goodwill  

 

82,400

 

 

82,400

Other long-term assets  

 

72,091

 

 

78,970

Deferred tax asset  

 

24,451

 

 

24,863

     
Total long-term assets  

 

258,965

 

 

276,476

     
TOTAL ASSETS  

$

1,405,166

 

$

1,430,204

     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
CURRENT LIABILITIES:    
Trade payables  

$

5,675

 

$

6,172

Employees and payroll accruals  

 

41,345

 

 

26,384

Accrued expenses and other current liabilities  

 

27,132

 

 

21,672

Deferred revenues  

 

118,519

 

 

130,400

     
Total current liabilities  

 

192,671

 

 

184,628

     
LONG-TERM LIABILITIES:    
Convertible senior notes, net  

 

485,119

 

 

489,359

Deferred revenues  

 

71,836

 

 

80,253

Other long-term liabilities  

 

31,408

 

 

28,646

     
Total long-term liabilities  

 

588,363

 

 

598,258

     
TOTAL LIABILITIES  

 

781,034

 

 

782,886

     
SHAREHOLDERS' EQUITY:    
Ordinary shares of NIS 0.01 par value  

 

99

 

 

99

Additional paid-in capital  

 

396,437

 

 

418,036

Accumulated other comprehensive income  

 

818

 

 

19

Retained earnings  

 

226,778

 

 

229,164

     
Total shareholders' equity  

 

624,132

 

 

647,318

     
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  

$

1,405,166

 

$

1,430,204

CYBERARK SOFTWARE LTD.

Consolidated Statements of Cash Flows

U.S. dollars in thousands

(Unaudited)

     
  Three Months Ended
  March 31,
 

2019

 

2020

     
Cash flows from operating activities:    
Net income  

$

13,677

 

 

$

2,386

 

Adjustments to reconcile net income to net cash    
provided by operating activities:    
Depreciation and amortization  

 

2,778

 

 

 

2,479

 

Amortization of premium and accretion of discount on marketable securities, net  

 

(10

)

 

 

(80

)

Share-based compensation  

 

10,252

 

 

 

16,308

 

Deferred income taxes, net  

 

(1,311

)

 

 

(2,516

)

Decrease in trade receivables  

 

13,914

 

 

 

20,983

 

Amortization of debt discount and issuance costs  

 

-

 

 

 

4,240

 

Increase in prepaid expenses and other current and long-term assets  

 

(5,347

)

 

 

(8,160

)

Increase in trade payables  

 

871

 

 

 

421

 

Increase in short-term and long-term deferred revenues  

 

21,537

 

 

 

20,298

 

Decrease in employees and payroll accruals  

 

(11,797

)

 

 

(14,162

)

Increase (decrease) in accrued expenses and other current and long-term liabilities  

 

1,294

 

 

 

(8,371

)

     
Net cash provided by operating activities  

 

45,858

 

 

 

33,826

 

     
Cash flows from investing activities:    
Investment in short and long term deposits  

 

(2,913

)

 

 

(12,527

)

Investment in marketable securities  

 

(35,768

)

 

 

(44,921

)

Proceeds from maturities of marketable securities  

 

21,651

 

 

 

41,246

 

Purchase of property and equipment  

 

(2,297

)

 

 

(1,327

)

     
Net cash used in investing activities  

 

(19,327

)

 

 

(17,529

)

     
Cash flows from financing activities:    
Proceeds from (payment of) withholding tax related to employee stock plans  

 

4,842

 

 

 

(799

)

Proceeds from exercise of stock options  

 

9,918

 

 

 

4,806

 

     
Net cash provided by financing activities  

 

14,760

 

 

 

4,007

 

     
Increase in cash, cash equivalents and restricted cash  

 

41,291

 

 

 

20,304

 

     
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  

$

303,174

 

 

$

812,717

 

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
  March 31,
 

2019

 

2020

   
Gross profit  

$

82,368

 

 

$

89,741

 

Plus:    
Share-based compensation - Maintenance & professional services  

 

957

 

 

 

1,803

 

Amortization of intangible assets - License  

 

1,444

 

 

 

936

 

   
Non-GAAP gross profit  

$

84,769

 

 

$

92,480

 

   
   
Reconciliation of Operating Income to Non-GAAP Operating Income:    
   
  Three Months Ended
  March 31,
 

2019

 

2020

   
   
Operating income  

$

13,627

 

 

$

2,571

 

Plus:    
Share-based compensation  

 

10,252

 

 

 

16,308

 

Amortization of intangible assets - Cost of revenues  

 

1,444

 

 

 

936

 

Amortization of intangible assets - Sales and marketing  

 

144

 

 

 

113

 

Acquisition related expenses  

 

-

 

 

 

1,610

 

   
Non-GAAP operating income  

$

25,467

 

 

$

21,538

 

   
   
Reconciliation of Net Income to Non-GAAP Net Income:    
   
  Three Months Ended
  March 31,
 

2019

 

2020

   
   
Net income  

$

13,677

 

 

$

2,386

 

Plus:    
Share-based compensation  

 

10,252

 

 

 

16,308

 

Amortization of intangible assets - Cost of revenues  

 

1,444

 

 

 

936

 

Amortization of intangible assets - Sales and marketing  

 

144

 

 

 

113

 

Acquisition related expenses  

 

-

 

 

 

1,610

 

Amortization of debt discount and issuance costs  

 

-

 

 

 

4,240

 

Taxes on income related to non-GAAP adjustments  

 

(4,046

)

 

 

(6,012

)

   
Non-GAAP net income  

$

21,471

 

 

$

19,581

 

   
Non-GAAP net income per share    
Basic  

$

0.58

 

 

$

0.51

 

Diluted  

$

0.56

 

 

$

0.50

 

   
Weighted average number of shares    
Basic  

 

37,046,472

 

 

 

38,222,867

 

Diluted  

 

38,440,461

 

 

 

39,309,750

 

 


Contacts

Investors:
Erica Smith
CyberArk
+1 617-558-2132
ir@cyberark.com

Media:
Liz Campbell
CyberArk
+1 617-558-2191
press@cyberark.com