Business Wire | Feb 11, 2021 07:05AM EST

CyberArk Announces Record Fourth Quarter and Full Year 2020 Results

Feb. 11, 2021

NEWTON, Mass. & PETACH TIKVA, Israel--(BUSINESS WIRE)--Feb. 11, 2021--CyberArk, (NASDAQ: CYBR), the global leader in identity security, today announced record financial results for the fourth quarter and year ended December 31, 2020.

"Our record fourth quarter results demonstrate the strength of demand across our identity security platform that has a foundation in Privileged Access Management (PAM)," said Udi Mokady, CyberArk Chairman and CEO. "Digital transformation, cloud migration and work from anywhere are creating a heightened sense of urgency to implement our solutions across DevSecOps, PAM and Access. As organizations embrace the flexibility and agility of cloud and automation, we are empowering customers to confidently and securely drive their mission critical strategies forward."

Continued Mokady, "Our fourth quarter results, including another record for SaaS and subscription bookings, put us in a great position as we begin actively transitioning our business to a recurring revenue model in the first quarter of 2021, shifting our sales from perpetual licenses to recurring subscriptions. As we look ahead, we continue to see strong industry tailwinds, including increasing awareness of privileged access as a primary attack vector. We are the clear market leader in PAM and have set the standard for innovation with our differentiated identity security portfolio. We are confident that our identity security strategy and our comprehensive subscription transformation program will deliver long-term growth and profitability, creating significant value for CyberArk, our customers, partners and shareholders."

Financial Highlights for the Fourth Quarter Ended December 31, 2020

Revenue:

* Total revenue was $144.5 million. * License revenue was $80.8 million. * Maintenance and Professional Services revenue was $63.7 million.

Operating Income:

* GAAP operating income was $18.8 million, and non-GAAP operating income was $39.9 million.

Net Income:

* GAAP net income was $12.1 million, or $0.30 per diluted share, and non-GAAP net income was $32.6 million, or $0.82 per diluted share.

Financial Highlights for the Full Year Ended December 31, 2020

Revenue:

* Total revenue was $464.4 million. * License revenue was $226.1 million. * Maintenance and Professional Services revenue was $238.3 million.

Operating Income:

* GAAP operating income was $6.0 million, and non-GAAP operating income was $91.4 million.

Net Income (Loss):

* GAAP net loss was $(5.8) million, or $(0.15) per basic and diluted share, and non-GAAP net income was $81.1 million, or $2.05 per diluted share.

The tables at the end of this press release include a reconciliation of the following non-GAAP financial measures to their most directly comparable GAAP financial measures: non-GAAP gross profit, non-GAAP operating income, non-GAAP net income and free cash flow. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

Balance Sheet and Cash Flow From Operations:

* As of December 31, 2020, CyberArk had $1.2 billion in cash, cash equivalents, marketable securities and short-term deposits. This compares to $1.1 billion in cash, cash equivalents, marketable securities and short-term deposits as of December 31, 2019. * As of December 31, 2020, total deferred revenue was $242.5 million, a 27% increase from $190.4 million at December 31, 2019. * During 2020, the Company generated $106.8 million in net cash provided by operating activities compared to $141.7 million in 2019.

Annual Recurring Revenue (ARR):

* Annual Recurring Revenue (ARR) was $274 million, an increase of 43% from $192 million at December 31, 2019.

Business OutlookBased on information available as of February 11, 2021, CyberArk is issuing guidance for the first quarter and full year 2021 as indicated below.

First Quarter 2021:

* Total revenue is expected to be in the range of $106.0 million to $112.0 million. * Non-GAAP operating income (loss) is expected to be in the range of an operating loss of $(2.5) million to operating income of $2.5 million. * Non-GAAP net income (loss) per share is expected to be in the range of a net loss of $(0.03) per basic and diluted share to net income of $0.07 per diluted share. Assumes 39.2 million weighted average basic and diluted shares and 40.7 million weighted average diluted shares.

Full Year 2021:

* Total revenue is expected to be in the range of $484.0 million to $496.0 million. * Non-GAAP operating income is expected to be in the range of $20.0 million to $30.0 million. * Non-GAAP net income per share is expected to be in the range of $0.45 to $0.64 per diluted share. Assumes 40.8 million weighted average diluted shares.

Conference Call InformationIn conjunction with this announcement, CyberArk will host a conference call today, February 11, 2021, at 8:30 a.m. Eastern Time (ET) to discuss the company's fourth quarter and year end 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 6893829. 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 6893829. 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 CyberArkCyberArk (NASDAQ: CYBR) is the global leader in Identity Security. Centered on privileged access management, CyberArk provides the most comprehensive security offering for any identity - human or machine - across business applications, distributed workforces, hybrid cloud workloads, and throughout the DevOps lifecycle. The world's leading organizations trust CyberArk to help secure their most critical assets. To learn more about CyberArk, visit www.cyberark.com.

Copyright (c) 2021 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 MeasuresCyberArk believes that the use of non-GAAP gross profit, non-GAAP operating income, non-GAAP net income and free cash flow 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, net income (loss) or net cash provided by operating activities 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 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. * Free cash flow is calculated as net cash provided by operating activities less purchase of property and equipment.

The Company believes that providing non-GAAP financial measures that are adjusted by, 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 the tax effect of the non-GAAP adjustments and purchase of property and equipment 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. The Company believes free cash flow is a liquidity measure that, after the purchase of property and equipment, provides useful information about the amount of cash generated by the business.

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 StatementsThis 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 OperationsU.S. dollars in thousands (except per share data)(Unaudited) Three Months Ended Twelve Months Ended

December 31, December 31,

2019 2020 2019 2020

Revenues: License $ 76,526 $ 80,821 $ 237,879 $ 226,113

Maintenance and professional 53,138 63,698 196,016 238,318services Total revenues 129,664 144,519 433,895 464,431

Cost of revenues: License 2,801 5,845 10,569 19,341

Maintenance and professional 14,048 16,863 52,046 63,230services Total cost of revenues 16,849 22,708 62,615 82,571

Gross profit 112,815 121,811 371,280 381,860

Operating expenses: Research and development 20,930 26,659 72,520 95,426

Sales and marketing 52,939 61,038 184,168 219,999

General and administrative 16,005 15,325 52,308 60,429

Total operating expenses 89,874 103,022 308,996 375,854

Operating income 22,941 18,789 62,284 6,006

Financial income (expenses), 2,394 (2,733) 7,800 (6,395)net Income (loss) before taxes on 25,335 16,056 70,084 (389)income Taxes on income (4,599) (4,002) (7,020) (5,369)

Net income (loss) $ 20,736 $ 12,054 $ 63,064 $ (5,758)

Basic net income (loss) per $ 0.55 $ 0.31 $ 1.68 $ (0.15)ordinary shareDiluted net income (loss) per $ 0.53 $ 0.30 $ 1.62 $ (0.15)ordinary share Shares used in computing net income (loss)per ordinary shares, basic 37,957,899 38,913,923 37,586,387 38,628,770

Shares used in computing net income (loss)per ordinary shares, diluted 39,148,849 39,938,780 38,890,108 38,628,770

Share-based Compensation Expense: Three Months Ended Twelve Months Ended

December 31, December 31,

2019 2020 2019 2020

Cost of revenues $ 1,802 $ 2,409 $ 5,690 $ 8,734

Research and development 3,347 4,085 10,960 14,691

Sales and marketing 6,464 6,996 20,976 28,220

General and administrative 6,418 4,984 17,891 20,204

Total share-based compensation $ 18,031 $ 18,474 $ 55,517 $ 71,849expenseCYBERARK SOFTWARE LTD.

Consolidated Balance Sheets

U.S. dollars in thousands

(Unaudited)

December 31,

December 31,

2019

2020

ASSETSCURRENT ASSETS:Cash and cash equivalents792,363

499,992

Short-term bank deposits140,067

256,143

Marketable securities132,412

196,856

Trade receivables72,953

93,128

Prepaid expenses and other current assets8,406

15,312

Total current assets1,146,201

1,061,431

LONG-TERM ASSETS:Marketable securities54,408

202,190

Property and equipment, net16,472

18,537

Intangible assets, net9,143

23,676

Goodwill82,400

123,717

Other long-term assets72,091

99,992

Deferred tax asset24,451

32,809

Total long-term assets258,965

500,921

TOTAL ASSETS$ 1,405,166

$ 1,562,352

LIABILITIES AND SHAREHOLDERS' EQUITYCURRENT LIABILITIES:Trade payables$ 5,675

$ 8,250

Employees and payroll accruals41,345

52,169

Accrued expenses and other current liabilities27,132

24,915

Deferred revenues118,519

161,679

Total current liabilities192,671

247,013

LONG-TERM LIABILITIES:Convertible senior notes, net485,119

502,302

Deferred revenues71,836

80,829

Other long-term liabilities31,408

24,920

Total long-term liabilities588,363

608,051

TOTAL LIABILITIES781,034

855,064

SHAREHOLDERS' EQUITY:Ordinary shares of NIS 0.01 par value99

101

Additional paid-in capital396,437

481,992

Accumulated other comprehensive income818

4,175

Retained earnings226,778

221,020

Total shareholders' equity624,132

707,288

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$ 1,405,166

$ 1,562,352

CYBERARK SOFTWARE LTD.

Consolidated Balance Sheets

U.S. dollars in thousands

(Unaudited)

December 31, December 31,

2019 2020

ASSETS CURRENT ASSETS:Cash and cash equivalents 792,363 499,992

Short-term bank deposits 140,067 256,143

Marketable securities 132,412 196,856

Trade receivables 72,953 93,128

Prepaid expenses and other current assets 8,406 15,312

Total current assets 1,146,201 1,061,431

LONG-TERM ASSETS:Marketable securities 54,408 202,190

Property and equipment, net 16,472 18,537

Intangible assets, net 9,143 23,676

Goodwill 82,400 123,717

Other long-term assets 72,091 99,992

Deferred tax asset 24,451 32,809

Total long-term assets 258,965 500,921

TOTAL ASSETS $ 1,405,166 $ 1,562,352

LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES:Trade payables $ 5,675 $ 8,250

Employees and payroll accruals 41,345 52,169

Accrued expenses and other current liabilities 27,132 24,915

Deferred revenues 118,519 161,679

Total current liabilities 192,671 247,013

LONG-TERM LIABILITIES:Convertible senior notes, net 485,119 502,302

Deferred revenues 71,836 80,829

Other long-term liabilities 31,408 24,920

Total long-term liabilities 588,363 608,051

TOTAL LIABILITIES 781,034 855,064

SHAREHOLDERS' EQUITY:Ordinary shares of NIS 0.01 par value 99 101

Additional paid-in capital 396,437 481,992

Accumulated other comprehensive income 818 4,175

Retained earnings 226,778 221,020

Total shareholders' equity 624,132 707,288

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,405,166 $ 1,562,352

CYBERARK SOFTWARE LTD.

Consolidated Statements of Cash Flows

U.S. dollars in thousands

(Unaudited)

Twelve Months Ended

December 31,

2019

2020

Cash flows from operating activities:Net income (loss)$ 63,064

$ (5,758)

Adjustments to reconcile net income to net cashprovided by operating activities:Depreciation and amortization10,646

15,475

Amortization of premium and accretion of discount on marketable securities, net(47)

3,068

Share-based compensation55,517

71,849

Deferred income taxes, net(6,974)

(1,988)

Increase in trade receivables(24,522)

(17,315)

Amortization of debt discount and issuance costs1,966

17,183

Increase in prepaid expenses and other current and long-term assets(14,321)

(20,487)

Increase in trade payables1,571

558

Increase in short-term and long-term deferred revenues40,821

45,397

Increase in employees and payroll accruals7,337

7,846

Increase (decrease) in accrued expenses and other current and long-term liabilities6,652

(9,059)

Net cash provided by operating activities141,710

106,769

Cash flows from investing activities:Investment in short and long term deposits(33,961)

(123,054)

Investment in marketable securities(165,714)

(403,279)

Proceeds from maturities of marketable securities63,489

189,723

Purchase of property and equipment(7,036)

(7,174)

Payments for business acquisitions, net of cash acquired-

(68,603)

Net cash used in investing activities(143,222)

(412,387)

Cash flows from financing activities:Proceeds from withholding tax related to employee stock plans1,155

1,069

Proceeds from the issuance of convertible senior notes, net of issuance costs560,107

-

Purchase of capped calls(53,648)

-

Proceeds from exercise of stock options24,428

12,180

Net cash provided by financing activities532,042

13,249

Increase (decrease) in cash, cash equivalents and restricted cash530,530

(292,369)

Cash, cash equivalents and restricted cash at the beginning of the period261,883

792,413

Cash, cash equivalents and restricted cash at the end of the period$ 792,413

$ 500,044

CYBERARK SOFTWARE LTD.

Consolidated Statements of Cash Flows

U.S. dollars in thousands

(Unaudited)

Twelve Months Ended

December 31,

2019 2020

Cash flows from operating activities:Net income (loss) $ 63,064 $ (5,758)

Adjustments to reconcile net income to net cashprovided by operating activities:Depreciation and amortization 10,646 15,475

Amortization of premium and accretion of discount on (47) 3,068marketable securities, netShare-based compensation 55,517 71,849

Deferred income taxes, net (6,974) (1,988)

Increase in trade receivables (24,522) (17,315)

Amortization of debt discount and issuance costs 1,966 17,183

Increase in prepaid expenses and other current and (14,321) (20,487)long-term assetsIncrease in trade payables 1,571 558

Increase in short-term and long-term deferred revenues 40,821 45,397

Increase in employees and payroll accruals 7,337 7,846

Increase (decrease) in accrued expenses and other current 6,652 (9,059)and long-term liabilities Net cash provided by operating activities 141,710 106,769

Cash flows from investing activities:Investment in short and long term deposits (33,961) (123,054)

Investment in marketable securities (165,714) (403,279)

Proceeds from maturities of marketable securities 63,489 189,723

Purchase of property and equipment (7,036) (7,174)

Payments for business acquisitions, net of cash acquired - (68,603)

Net cash used in investing activities (143,222) (412,387)

Cash flows from financing activities:Proceeds from withholding tax related to employee stock 1,155 1,069plansProceeds from the issuance of convertible senior notes, 560,107 -net of issuance costsPurchase of capped calls (53,648) -

Proceeds from exercise of stock options 24,428 12,180

Net cash provided by financing activities 532,042 13,249

Increase (decrease) in cash, cash equivalents and 530,530 (292,369)restricted cash Cash, cash equivalents and restricted cash at the 261,883 792,413beginning of the period Cash, cash equivalents and restricted cash at the end of $ 792,413 $ 500,044the periodCYBERARK SOFTWARE LTD.Reconciliation of GAAP Measures to Non-GAAP MeasuresU.S. dollars in thousands (except per share data)(Unaudited)Reconciliation of Net cash provided by operating activities to Free cash flow:Three Months Ended

Twelve Months Ended

December 31,

December 31,

2019

2020

2019

2020

Net cash provided by operating activities$ 53,113

$ 38,948

$ 141,710

$ 106,769

Less:Purchase of property and equipment(1,647)

(2,237)

(7,036)

(7,174)

Free cash flow$ 51,466

$ 36,711

$ 134,674

$ 99,595

GAAP net cash used in investing activities$ (119,768)

$ (52,121)

$ (143,222)

$ (412,387)

GAAP net cash provided by financing activities$ 511,985

$ 6,084

$ 532,042

$ 13,249

Reconciliation of Gross Profit to Non-GAAP Gross Profit:Three Months Ended

Twelve Months Ended

December 31,

December 31,

2019

2020

2019

2020

Gross profit$ 112,815

$ 121,811

$ 371,280

$ 381,860

Plus:Share-based compensation - License, Maintenance & professional services1,802

2,409

5,690

8,734

Amortization of intangible assets - License968

2,415

5,029

8,244

Acquisition related expenses-

-

-

447

Non-GAAP gross profit$ 115,585

$ 126,635

$ 381,999

$ 399,285

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

Twelve Months Ended

December 31,

December 31,

2019

2020

2019

2020

Operating income$ 22,941

$ 18,789

$ 62,284

$ 6,006

Plus:Share-based compensation18,031

18,474

55,517

71,849

Amortization of intangible assets - Cost of revenues968

2,415

5,029

8,244

Amortization of intangible assets - Sales and marketing144

205

576

683

Acquisition related expenses-

-

-

4,526

Facility exit and transitions costs-

-

-

140

Non-GAAP operating income$ 42,084

$ 39,883

$ 123,406

$ 91,448

Reconciliation of Net Income (Loss) to Non-GAAP Net Income:Three Months Ended

Twelve Months Ended

December 31,

December 31,

2019

2020

2019

2020

Net income (loss)$ 20,736

$ 12,054

$ 63,064

$ (5,758)

Plus:Share-based compensation18,031

18,474

55,517

71,849

Amortization of intangible assets - Cost of revenues968

2,415

5,029

8,244

Amortization of intangible assets - Sales and marketing144

205

576

683

Acquisition related expenses-

-

-

4,526

Facility exit and transitions costs-

-

-

140

Amortization of debt discount and issuance costs1,966

4,352

1,966

17,183

Taxes on income related to non-GAAP adjustments(4,014)

(4,851)

(18,251)

(20,807)

Intra-entity IP transfer tax effect, net-

-

-

5,036

Non-GAAP net income$ 37,831

$ 32,649

$ 107,901

$ 81,096

Non-GAAP net income per shareBasic$ 1.00

$ 0.84

$ 2.87

$ 2.10

Diluted$ 0.97

$ 0.82

$ 2.77

$ 2.05

Weighted average number of sharesBasic37,957,899

38,913,923

37,586,387

38,628,770

Diluted39,148,849

39,938,780

38,890,108

39,553,203

View source version on businesswire.com: https://www.businesswire.com/news/home/20210211005439/en/

CONTACT: Investor Relations Contact: Erica Smith CyberArk 617-558-2132 ir@cyberark.com

CONTACT: Media Contact: Liz Campbell CyberArk 617-558-2191 press@cyberark.com