CyberArk Announces Strong First Quarter 2018 Results

First quarter total revenue of $71.8 million increases 22% year-over-year

GAAP operating income of $4.0 million and non-GAAP operating income of $12.6 million

Cash flow from operations of $33.1 million increases 107% year-over-year

NEWTON, Mass. & PETACH TIKVA, Israel--()--CyberArk, (NASDAQ: CYBR), the global leader in privileged access security, today announced financial results for the first quarter ended March 31, 2018.

“We were pleased to start 2018 with a very strong quarter, exceeding our guidance across revenue, operating income and EPS,” said Udi Mokady, CyberArk Chairman and CEO. “We continue to see robust demand for our solution across geographies and vertical markets. Our strong results were driven by both new and existing customers who are protecting credentials and secrets on premises, in the cloud and in the DevOps pipeline. The year is off to a great start and with our strong results in the first quarter, we are well positioned to execute our strategy and capitalize on our tremendous opportunity.”

Financial Highlights for the First Quarter Ended March 31, 2018

Revenue:

  • Total revenue was $71.8 million, up 22% compared with the first quarter of 2017.
  • License revenue was $38.5 million, up 17% compared with the first quarter of 2017.
  • Maintenance and professional services revenue was $33.3 million, up 28% compared with the first quarter of 2017.

Operating Income:

  • GAAP operating income was $4.0 million, compared to $6.0 million in the first quarter of 2017. Non-GAAP operating income was $12.6 million, compared to $12.7 million in the first quarter of 2017.

Net Income:

  • GAAP net income was $6.4 million, or $0.18 per diluted share, compared to GAAP net income of $7.5 million, or $0.21 per diluted share, in the first quarter of 2017. Non-GAAP net income was $11.8 million, or $0.32 per diluted share, compared to $10.2 million, or $0.28 per diluted share, in the first 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 ended March 31, 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 March 31, 2018, CyberArk had $344.2 million in cash, cash equivalents, marketable securities and short-term deposits, which reflects the cash consideration paid for Vaultive Ltd. during the first quarter of 2018. This compares to $330.3 million as of December 31, 2017.
  • During the first quarter of 2018, the Company generated $33.1 million in cash flow from operations, an increase from $16.0 million in the first quarter of 2017.

Business Outlook

Based on information available as of May 3, 2018, CyberArk is issuing guidance for the second quarter and full year 2018 as indicated below.

Second Quarter 2018:

  • Total revenue is expected to be in the range of $72.0 million to $73.5 million, which represents 25% to 28% year-over-year growth.
  • Non-GAAP operating income is expected to be in the range of $10.2 million to $11.4 million.
  • Non-GAAP net income per share is expected to be in the range of $0.23 to $0.25 per diluted share. This assumes 36.9 million weighted average diluted shares.

Full Year 2018:

  • Total revenue is expected to be in the range of $315.0 million to $319.0 million, which represents 20% to 22% year-over-year growth.
  • Non-GAAP operating income is expected to be in the range of $57.5 million to $60.5 million.
  • Non-GAAP net income per share is expected to be in the range of $1.31 to $1.37 per diluted share. This assumes 36.8 million weighted average diluted shares.

Conference Call Information

CyberArk will host a conference call today, Thursday, May 3, 2018 at 4:30 p.m. Eastern Time (ET) to discuss the company’s first 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 9355458. 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 9355458. 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 (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 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 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 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. 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 measure 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 Operations
U.S. dollars in thousands (except per share data)
(Unaudited)
 
Three Months Ended
March 31,
2017 2018
 
Revenues:
License $ 32,952 $ 38,494
Maintenance and professional services 26,083 33,289
   
Total revenues 59,035 71,783
 
Cost of revenues:
License 1,584 2,397
Maintenance and professional services 7,683 8,891
   
Total cost of revenues 9,267 11,288
   
Gross profit 49,768 60,495
   
Operating expenses:
Research and development 9,214 12,984
Sales and marketing 27,678 34,582
General and administrative 6,878 8,899
   
Total operating expenses 43,770 56,465
   
Operating income 5,998 4,030
 
Financial income, net   548   1,841
 
Income before taxes on income 6,546 5,871
 
Tax benefit   990   550
 
Net income $ 7,536 $ 6,421
 
 
Basic net income per ordinary share $ 0.22 $ 0.18
Diluted net income per ordinary share $ 0.21 $ 0.18
 
Shares used in computing net income
per ordinary shares, basic   34,395,084   35,454,102
Shares used in computing net income
per ordinary shares, diluted   36,113,216   36,464,230
 
 
 
 
Share-based Compensation Expense:
 
Three Months Ended
March 31,
2017 2018
 
 
Cost of revenues $ 453 $ 655
Research and development 1,309 1,504
Sales and marketing 1,671 2,417
General and administrative   1,766   2,347
 
Total share-based compensation expense $ 5,199 $ 6,923
         
CYBERARK SOFTWARE LTD.
Consolidated Balance Sheets
U.S. dollars in thousands
(Unaudited)
December 31, March 31,
2017 2018
 
 
ASSETS
 
CURRENT ASSETS:
Cash and cash equivalents $ 161,261 $ 182,042
Short-term bank deposits 107,647 98,511
Marketable securities 34,025 44,807
Trade receivables 45,315 38,388
Prepaid expenses and other current assets   7,407   11,216  
 
Total current assets   355,655   374,964  
 
LONG-TERM ASSETS:
Property and equipment, net 9,230 10,587
Intangible assets, net 15,664 19,660
Goodwill 69,217 83,195
Marketable securities 27,407 18,791
Severance pay fund 3,692 3,647
Other long-term assets 2,368 13,809
Deferred tax asset   19,343   17,956  
 
Total long-term assets   146,921   167,645  
 
TOTAL ASSETS $ 502,576 $ 542,609  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
CURRENT LIABILITIES:
Trade payables $ 1,960 $ 5,033
Employees and payroll accruals 25,253 22,954
Accrued expenses and other current liabilities 10,209 6,635
Deferred revenues   66,986   74,728  
 
Total current liabilities   104,408   109,350  
 
LONG-TERM LIABILITIES:
Deferred revenues 38,249 44,748
Other long-term liabilities 242 1,500
Accrued severance pay   5,712   5,549  
 
Total long-term liabilities   44,203   51,797  
 
TOTAL LIABILITIES   148,611   161,147  
 
SHAREHOLDERS' EQUITY:
Ordinary shares of NIS 0.01 par value 91 92
Additional paid-in capital 249,874 258,763
Accumulated other comprehensive income (loss) 107 (456 )
Retained earnings   103,893   123,063  
 
Total shareholders' equity   353,965   381,462  
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 502,576 $ 542,609  
         
 
CYBERARK SOFTWARE LTD.
Consolidated Statements of Cash Flows

U.S. dollars in thousands

(Unaudited)
 
Three Months Ended
March 31,
2017 2018
 
Cash flows from operating activities:
Net income $ 7,536 $ 6,421
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,685 2,194
Amortization of premium on marketable securities 97 101
Share-based compensation expenses 5,199 6,923
Deferred income taxes, net (2,727 ) (1,272 )
Decrease (increase) in trade receivables (1,560 ) 6,927
Increase in prepaid expenses and other
current and long-term assets (1,341 ) (2,294 )
Increase in trade payables 797 3,191
Increase in short term and long term deferred revenues 7,237 17,760
Decrease in employees and payroll accruals (1,932 ) (3,003 )
Increase (decrease) in accrued expenses and other
current and long-term liabilities 851 (3,758 )
Increase (decrease) in accrued severance pay, net   139     (118 )
 
Net cash provided by operating activities   15,981     33,072  
 
Cash flows from investing activities:
Proceeds from short and long term deposit - 9,254
Investment in short and long term deposits (4,965 ) -
Investment in marketable securities (9,845 ) (9,933 )
Proceeds from maturities of marketable securities 2,545 7,423
Purchase of property and equipment (1,255 ) (2,502 )
Payments for business acquisitions, net of cash acquired   -     (18,488 )
 
Net cash used in investing activities   (13,520 )   (14,246 )
 
Cash flows from financing activities:
Proceeds from exercise of stock options   703     1,942  
 
Net cash provided by financing activities   703     1,942  
 
Increase in cash, cash equivalents and restricted cash 3,164 20,768
 
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 $ 177,320   $ 183,288  
         
 
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,
2017 2018
 
Gross profit $ 49,768 $ 60,495
Plus:
Share-based compensation - Maintenance & professional services 453 655
Amortization of intangible assets - License   843     1,230  
 
Non-GAAP gross profit $ 51,064   $ 62,380  
 
 
 
 
 
Reconciliation of Operating Income to Non-GAAP Operating Income:
 
Three Months Ended
March 31,
2017 2018
 
 
Operating income $ 5,998 $ 4,030
Plus:
Share-based compensation 5,199 6,923
Amortization of intangible assets - Cost of revenues 843 1,230
Amortization of intangible assets - Sales and marketing 246 198
Acquisition related expenses   438     268  
 
Non-GAAP operating income $ 12,724   $ 12,649  
 
 
Reconciliation of Net Income to Non-GAAP Net Income:
 
Three Months Ended
March 31,
2017 2018
 
 
Net income $ 7,536 $ 6,421
Plus:
Share-based compensation 5,199 6,923
Amortization of intangible assets - Cost of revenues 843 1,230
Amortization of intangible assets - Sales and marketing 246 198
Acquisition related expenses 438 268
Taxes on income related to non-GAAP adjustments   (4,015 )   (3,229 )
 
Non-GAAP net income $ 10,247   $ 11,811  
 
Non-GAAP net income per share
Basic $ 0.30   $ 0.33  
Diluted $ 0.28   $ 0.32  
 
Weighted average number of shares
Basic   34,395,084     35,454,102  
Diluted   36,113,216     36,464,230  

Contacts

CyberArk
Investor Contact:
Erica Smith, +1 617-558-2132
ir@cyberark.com
or
Media Contact:
Liz Campbell, +1-617-558-2191
press@cyberark.com

Contacts

CyberArk
Investor Contact:
Erica Smith, +1 617-558-2132
ir@cyberark.com
or
Media Contact:
Liz Campbell, +1-617-558-2191
press@cyberark.com