CyberArk Announces Strong First Quarter 2019 Results

Total revenue of $95.9 million increases 34% year-over-year

License revenue of $51.3 million increases 33% year-over-year

GAAP operating income of $13.6 million and non-GAAP operating income of $25.5 million

Record net cash provided by operating activities of $45.9 million increases 39% year-over-year

NEWTON, Mass. & PETACH TIKVA, Israel--()--CyberArk, (NASDAQ: CYBR), the global leader in privileged access security, today announced strong financial results for the first quarter ended March 31, 2019.

“We were pleased to deliver results ahead of all guided metrics as well as record cash flow from operations,” said Udi Mokady, CyberArk Chairman and CEO. “Our results demonstrate that Privileged Access Security is the foundation of comprehensive cybersecurity programs. As the leader in the market, organizations of all sizes and industries are turning to CyberArk as a trusted advisor to secure digital transformation and cloud migration strategies. As we look at the remainder of 2019 and beyond, we are committed to delivering sustainable growth, strong profitability and continual innovation to secure privileged access across on-premises, hybrid and cloud environments.”

Financial Highlights for the First Quarter Ended March 31, 2019

Revenue:

  • Total revenue was $95.9 million, up 34% compared with the first quarter of 2018.
  • License revenue was $51.3 million, up 33% compared with the first quarter of 2018.
  • Maintenance and professional services revenue was $44.7 million, up 34% compared with the first quarter of 2018.

Operating Income:

  • GAAP operating income was $13.6 million, compared to $4.0 million in the first quarter of 2018. Non-GAAP operating income was $25.5 million, compared to $12.6 million in the first quarter of 2018.

Net Income:

  • GAAP net income was $13.7 million, or $0.36 per diluted share, compared to GAAP net income of $6.4 million, or $0.18 per diluted share, in the first quarter of 2018. Non-GAAP net income was $21.5 million, or $0.56 per diluted share, compared to $11.8 million, or $0.32 per diluted share, in the first quarter of 2018.

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, 2019 and 2018. 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, 2019, CyberArk had $509.7 million in cash, cash equivalents, marketable securities and short-term deposits. This compares with $344.2 million in cash, cash equivalents, marketable securities and short-term deposits as of March 31, 2018 and $451.2 million as of December 31, 2018.
  • As of March 31, 2019, total deferred revenue was $171.1 million, a 43% increase from $119.5 million at March 31, 2018.
  • During the first quarter of 2019, the Company generated $45.9 million in net cash provided by operating activities, a 39% increase compared to $33.1 million in the first quarter of 2018.

Business Outlook

Based on information available as of May 14, 2019, CyberArk is issuing guidance as indicated below:

Second Quarter 2019:

  • Total revenue between $96.0 million and $98.0 million, representing 24% to 26% year-over-year growth.
  • Non-GAAP operating income between $22.0 million and $23.5 million.
  • Non-GAAP net income per share between of $0.45 and $0.48 per diluted share.
    • Assumes 39.1 million weighted average diluted shares.

Full Year 2019:

  • Total revenue between $415.0 million and $419.0 million, representing 21% to 22% year-over-year growth.
  • Non-GAAP operating income between $100.5 million and $103.5 million.
  • Non-GAAP net income per share between $2.10 and $2.16 per diluted share.
    • Assumes 38.9 million weighted average diluted shares.

Conference Call Information

CyberArk will host a conference call today, Tuesday, May 14, 2019 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 5885529. 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 5885529. 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 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 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 © 2019 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 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 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 the tax effect of the non-GAAP adjustments 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 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: changes in the rapidly evolving cyber threat landscape; failure to effectively manage growth; potential 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 a wide variety of 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,
2018 2019
 
Revenues:
License $ 38,494 $ 51,284
Maintenance and professional services 33,289 44,651
   
Total revenues 71,783 95,935
 
Cost of revenues:
License 2,397 2,588
Maintenance and professional services 8,891 10,979
   
Total cost of revenues 11,288 13,567
   
Gross profit 60,495 82,368
   
Operating expenses:
Research and development 12,984 16,331
Sales and marketing 34,582 41,505
General and administrative 8,899 10,905
   
Total operating expenses 56,465 68,741
   
Operating income 4,030 13,627
 
Financial income, net   1,841   1,421
 
Income before taxes on income 5,871 15,048
 
Tax benefit (taxes on income)   550   (1,371)
 
Net income $ 6,421 $ 13,677
 
 
Basic net income per ordinary share $ 0.18 $ 0.37
Diluted net income per ordinary share $ 0.18 $ 0.36
 
Shares used in computing net income
per ordinary shares, basic   35,454,102   37,046,472
Shares used in computing net income
per ordinary shares, diluted   36,464,230   38,440,461
 
 
 
 
Share-based Compensation Expense:
 
Three Months Ended
March 31,
2018 2019
 
 
Cost of revenues $ 655 $ 957
Research and development 1,504 2,307
Sales and marketing 2,417 3,685
General and administrative   2,347   3,303
 
Total share-based compensation expense $ 6,923 $ 10,252
   

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

December 31, March 31,
2018 2019
 
 
ASSETS
 
CURRENT ASSETS:
Cash and cash equivalents $ 260,636 $ 301,902
Short-term bank deposits 106,399 109,285
Marketable securities 59,948 55,161
Trade receivables 48,431 34,517
Prepaid expenses and other current assets   6,349   9,800
 
Total current assets   481,763   510,665
 
LONG-TERM ASSETS:
Property and equipment, net 15,120 15,325
Intangible assets, net 14,732 13,144
Goodwill 82,400 82,400
Marketable securities 24,261 43,376
Other long-term assets 31,863 59,341
Deferred tax asset   23,481   24,618
 
Total long-term assets   191,857   238,204
 
TOTAL ASSETS $ 673,620 $ 748,869
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
CURRENT LIABILITIES:
Trade payables $ 4,924 $ 4,893
Employees and payroll accruals 32,853 25,898
Accrued expenses and other current liabilities 13,271 17,798
Deferred revenues   92,375   104,506
 
Total current liabilities   143,423   153,095
 
LONG-TERM LIABILITIES:
Deferred revenues 57,159 66,565
Other long-term liabilities   6,268   27,113
 
Total long-term liabilities   63,427   93,678
 
TOTAL LIABILITIES   206,850   246,773
 
SHAREHOLDERS' EQUITY:
Ordinary shares of NIS 0.01 par value 95 96
Additional paid-in capital 303,900 324,457
Accumulated other comprehensive income (loss) (939) 152
Retained earnings   163,714   177,391
 
Total shareholders' equity   466,770   502,096
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 673,620 $ 748,869
   

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

 
Three Months Ended
March 31,
2018 2019
 
Cash flows from operating activities:
Net income $ 6,421 $ 13,677
Adjustments to reconcile net income to net cash provided by operating activities:
 
Depreciation and amortization 2,194 2,778
Amortization of premium and accretion of discount on marketable securities, net 101 (10 )
Share-based compensation 6,923 10,252
Deferred income taxes, net (1,272 ) (1,311 )
Decrease in trade receivables 6,927 13,914
Increase in prepaid expenses and other current and long-term assets (2,248 ) (5,347 )
Increase in trade payables 3,191 871
Increase in short-term and long-term deferred revenues 17,760 21,537
Decrease in employees and payroll accruals (3,003 ) (11,797 )

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

  (3,922 )   1,294  
 
Net cash provided by operating activities   33,072     45,858  
 
Cash flows from investing activities:
Proceeds from (Investment in) short and long term deposits 9,254 (2,913 )
Investment in marketable securities (9,933 ) (35,768 )
Proceeds from maturities of marketable securities 7,423 21,651
Purchase of property and equipment (2,502 ) (2,297 )
Payments for business acquisitions, net of cash acquired   (18,488 )   -
 
Net cash used in investing activities   (14,246 )   (19,327 )
 
Cash flows from financing activities:
Proceeds from withholding tax related to employee stock plans - 4,842
Proceeds from exercise of stock options   1,942     9,918  
 
Net cash provided by financing activities   1,942     14,760  
 
Increase in cash, cash equivalents and restricted cash 20,768 41,291
 
Cash, cash equivalents and restricted cash at the beginning of the period $ 162,521   $ 261,883  
 
Cash, cash equivalents and restricted cash at the end of the period $ 183,289   $ 303,174  
   
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,
2018 2019
 
Gross profit $ 60,495 $ 82,368
Plus:
Share-based compensation - Maintenance & professional services 655 957
Amortization of intangible assets - License   1,230     1,444  
 
Non-GAAP gross profit $ 62,380   $ 84,769  
 
 
 
 
 
Reconciliation of Operating Income to Non-GAAP Operating Income:
 
Three Months Ended
March 31,
2018 2019
 
 
Operating income $ 4,030 $ 13,627
Plus:
Share-based compensation 6,923 10,252
Amortization of intangible assets - Cost of revenues 1,230 1,444
Amortization of intangible assets - Sales and marketing 198 144
Acquisition related expenses   268     -
 
Non-GAAP operating income $ 12,649   $ 25,467  
 
 
Reconciliation of Net Income to Non-GAAP Net Income:
 
Three Months Ended
March 31,
2018 2019
 
 
Net income $ 6,421 $ 13,677
Plus:
Share-based compensation 6,923 10,252
Amortization of intangible assets - Cost of revenues 1,230 1,444
Amortization of intangible assets - Sales and marketing 198 144
Acquisition related expenses 268 -
Taxes on income related to non-GAAP adjustments   (3,229 )   (4,046 )
 
Non-GAAP net income $ 11,811   $ 21,471  
 
Non-GAAP net income per share
Basic $ 0.33   $ 0.58  
Diluted $ 0.32   $ 0.56  
 
Weighted average number of shares
Basic   35,454,102     37,046,472  
Diluted   36,464,230     38,440,461  

Contacts

Investor Contact:
Erica Smith
CyberArk
Phone: +1 617-558-2132
ir@cyberark.com

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

Contacts

Investor Contact:
Erica Smith
CyberArk
Phone: +1 617-558-2132
ir@cyberark.com

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