Business Wire | Aug 4, 2020 07:01AM EDT

CyberArk Announces Second Quarter 2020 Results

Aug. 04, 2020

NEWTON, Mass. & PETACH TIKVA, Israel--(BUSINESS WIRE)--Aug. 04, 2020--CyberArk (NASDAQ: CYBR), the global leader in privileged access management, today announced financial results for the second quarter ended June 30, 2020.

"We were pleased to deliver results ahead of all guided metrics for the second quarter," said Udi Mokady, CyberArk Chairman and CEO. "The integration of our Idaptive acquisition is progressing well and the feedback from customers and partners has been positive. Our SaaS solutions are gaining momentum resulting in record SaaS bookings in the second quarter, contributing to our strong 30 percent deferred revenue growth. While SaaS acceleration results in a short-term revenue headwind, the recurring revenue base creates significant longer-term value for both our customers and CyberArk. It was a very active quarter overall with the impact from the global pandemic confined to new business progression, which was in line with our expectations. Cybersecurity market fundamentals remain strong, identity security is at the top of customers' priority lists, and our pipeline growth is robust. We are confident that we are positioned to accelerate growth as the overall business environment stabilizes."

Financial Highlights for the Second Quarter Ended June 30, 2020

Revenue:

* Total revenue was $106.5 million, compared to $100.2 million in the second quarter of 2019. * License revenue was $47.9 million, compared to $52.2 million in the second quarter of 2019. * Maintenance and professional services revenue was $58.6 million, compared to $48.0 million in the second quarter of 2019.

Operating Income (Loss):

* GAAP operating loss was $(4.9) million, compared to operating income of $13.0 million in the second quarter of 2019. Non-GAAP operating income was $16.9 million, compared to $26.5 million in the second quarter of 2019.

Net Income (Loss):

* GAAP net loss was $(4.3) million, or $(0.11) per basic and diluted share, compared to GAAP net income of $13.4 million, or $0.34 per diluted share, in the second quarter of 2019. Non-GAAP net income was $16.7 million, or $0.42 per diluted share, compared to $23.0 million, or $0.59 per diluted share, in the second quarter of 2019.

The tables at the end of this press release include a reconciliation of GAAP to non-GAAP gross profit, operating income (loss) and net income (loss) for the three months and six months ended June 30, 2020 and 2019. 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, 2020, CyberArk had $1.1 billion in cash, cash equivalents, marketable securities and short-term deposits. This compares to $537.9 million at June 30, 2019. * As of June 30, 2020, total deferred revenue was $225.7 million, a 30% increase from $174.2 million at June 30, 2019. * During the six months ended June 30, 2020, the company generated $53.3 million in net cash provided by operating activities, compared to $67.3 million in the first six months of 2019.

Business Outlook

Based on information available as of August 4, 2020, CyberArk is issuing guidance for the third quarter of 2020 as indicated below.

Third Quarter 2020:

* Total revenue between $107.0 million and $115.0 million. * Non-GAAP operating income between $8.0 million and $15.0 million. * Non-GAAP net income per share between $0.19 and $0.33 per diluted share. Assumes 39.8 million weighted average diluted shares.

Conference Call Information

In conjunction with this announcement, CyberArk will host a conference call on Tuesday, August 4, 2020 at 8:30 a.m. Eastern Time (ET) to discuss the company's second quarter 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 3597059. 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 3597059. 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 (c) 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 (loss) or net income (loss) 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 (loss) excluding share-based compensation expense, acquisition related expenses 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, 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 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; 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 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 OperationsU.S. dollars in thousands (except per share data)(Unaudited) Three Months Ended Six Months Ended

June 30, June 30,

2019 2020 2019 2020

Revenues:License $ 52,201 $ 47,864 $ 103,485 $ 99,520

Maintenanceand 47,980 58,633 92,631 113,803 professionalservices Total revenues 100,181 106,497 196,116 213,323

Cost ofrevenues:License 2,906 5,223 5,494 7,458

Maintenanceand 12,305 15,167 23,284 30,017 professionalservices Total cost of 15,211 20,390 28,778 37,475 revenues Gross profit 84,970 86,107 167,338 175,848

Operatingexpenses:Research and 16,995 22,873 33,326 44,158 developmentSales and 43,573 52,347 85,078 103,543 marketingGeneral and 11,426 15,766 22,331 30,455 administrative Total 71,994 90,986 140,735 178,156 operatingexpenses Operating 12,976 (4,879 ) 26,603 (2,308 )income (loss) Financialincome 2,485 (1,473 ) 3,906 (2,209 )(expenses),net Income (loss) 15,461 (6,352 ) 30,509 (4,517 )before taxeson income Tax benefit (2,058 ) 2,036 (3,429 ) 2,587 (taxes onincome) Net income $ 13,403 $ (4,316 ) $ 27,080 $ (1,930 )(loss) Basic netincome (loss) $ 0.36 $ (0.11 ) $ 0.73 $ (0.05 )per ordinaryshareDiluted netincome (loss) $ 0.34 $ (0.11 ) $ 0.70 $ (0.05 )per ordinaryshare Shares used incomputing netincome (loss)per ordinary 37,522,410 38,565,175 37,285,788 38,393,938 shares, basicShares used incomputing netincome (loss)per ordinary 38,993,170 38,565,175 38,735,078 38,393,938 shares,diluted Share-basedCompensationExpense: Three Months Ended Six Months Ended

June 30, June 30,

2019 2020 2019 2020

Cost of $ 1,251 $ 1,949 $ 2,208 $ 3,752 revenuesResearch and 2,394 3,362 4,701 6,383 developmentSales and 4,878 6,753 8,563 13,153 marketingGeneral and 3,373 4,687 6,676 9,771 administrative Totalshare-based $ 11,896 $ 16,751 $ 22,148 $ 33,059 compensationexpense

CYBERARK SOFTWARE LTD.

Consolidated Balance Sheets

U.S. dollars in thousands

(Unaudited)

December 31, June 30,

2019 2020

ASSETS CURRENT ASSETS:Cash and cash equivalents $ 792,363 $ 551,706

Short-term bank deposits 140,067 247,965

Marketable securities 132,412 120,050

Trade receivables 72,953 60,136

Prepaid expenses and other current assets 8,406 13,762

Total current assets 1,146,201 993,619

LONG-TERM ASSETS:Marketable securities 54,408 190,134

Property and equipment, net 16,472 16,865

Intangible assets, net 9,143 29,102

Goodwill 82,400 133,280

Other long-term assets 72,091 87,098

Deferred tax asset 24,451 27,555

Total long-term assets 258,965 484,034

TOTAL ASSETS $ 1,405,166 $ 1,477,653

LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES:Trade payables $ 5,675 $ 8,946

Employees and payroll accruals 41,345 34,933

Accrued expenses and other current liabilities 27,132 20,272

Deferred revenues 118,519 145,526

Total current liabilities 192,671 209,677

LONG-TERM LIABILITIES:Convertible senior notes, net 485,119 493,636

Deferred revenues 71,836 80,212

Other long-term liabilities 31,408 30,007

Total long-term liabilities 588,363 603,855

TOTAL LIABILITIES 781,034 813,532

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

Additional paid-in capital 396,437 435,769

Accumulated other comprehensive income 818 3,403

Retained earnings 226,778 224,848

Total shareholders' equity 624,132 664,121

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,405,166 $ 1,477,653



CYBERARK SOFTWARE LTD.

Consolidated Statements of Cash Flows

U.S. dollars in thousands

(Unaudited)



Six Months Ended

June 30,

2019 2020

Cash flows from operating activities:Net income (loss) $ 27,080 $ (1,930 )

Adjustments to reconcile net income to net cashprovided by operating activities:Depreciation and amortization 5,551 6,911

Amortization of premium and accretion of discount (42 ) 222 on marketable securities, netShare-based compensation 22,148 33,059

Deferred income taxes, net (1,857 ) (3,766 )

Decrease in trade receivables 3,156 15,677

Amortization of debt discount and issuance costs - 8,517

Increase in prepaid expenses and other current and (9,656 ) (13,850 )long-term assetsIncrease (decrease) in trade payables (123 ) 477

Increase in short-term and long-term deferred 24,655 28,627 revenuesDecrease in employees and payroll accruals (7,595 ) (8,116 )

Increase (decrease) in accrued expenses and othercurrent and long-term liabilities 4,029 (12,540 )

Net cash provided by operating activities 67,346 53,288

Cash flows from investing activities:Proceeds from (investment in) short and long term 8,948 (108,138 )depositsInvestment in marketable securities (50,464 ) (223,733 )

Proceeds from maturities of marketable securities 36,653 102,239

Purchase of property and equipment (3,231 ) (2,874 )

Payments for business acquisitions, net of cash - (66,964 )acquired Net cash used in investing activities (8,094 ) (299,470 )

Cash flows from financing activities:Proceeds from (payment of) withholding tax related 5,319 (603 )to employee stock plansProceeds from exercise of stock options 16,572 6,125

Net cash provided by financing activities 21,891 5,522

Increase (decrease) in cash, cash equivalents and 81,143 (240,660 )restricted cash Cash, cash equivalents and restricted cash at the 261,883 792,413 beginning of the period Cash, cash equivalents and restricted cash at the $ 343,026 $ 551,753 end of the period

CYBERARK SOFTWARE LTD.Reconciliation of GAAP Measures to Non-GAAP MeasuresU.S. dollars in thousands (except per share data)(Unaudited) Reconciliationof GrossProfit toNon-GAAP GrossProfit: Three Months Ended Six Months Ended

June 30, June 30,

2019 2020 2019 2020

Gross profit $ 84,970 $ 86,107 $ 167,338 $ 175,848

Plus:Share-basedcompensation -License, 1,251 1,949 2,208 3,752 Maintenance &professionalservicesAmortizationof intangible 1,444 2,239 2,888 3,175 assets -LicenseAcquisition - 400 - 400 relatedexpenses Non-GAAP gross $ 87,665 $ 90,695 $ 172,434 $ 183,175 profit Reconciliationof OperatingIncome (Loss)to Non-GAAPOperatingIncome: Three Months Ended Six Months Ended

June 30, June 30,

2019 2020 2019 2020

Operating $ 12,976 $ (4,879 ) $ 26,603 $ (2,308 )income (loss)Plus:Share-based 11,896 16,751 22,148 33,059 compensationAmortizationof intangible 1,444 2,239 2,888 3,175 assets - Costof revenuesAmortizationof intangible 144 160 288 273 assets - Salesand marketingAcquisition - 2,646 - 4,256 relatedexpenses Non-GAAP $ 26,460 $ 16,917 $ 51,927 $ 38,455 operatingincome Reconciliationof Net Income(Loss) toNon-GAAP NetIncome: Three Months Ended Six Months Ended

June 30, June 30,

2019 2020 2019 2020

Net income $ 13,403 $ (4,316 ) $ 27,080 $ (1,930 )(loss)Plus:Share-based 11,896 16,751 22,148 33,059 compensationAmortizationof intangible 1,444 2,239 2,888 3,175 assets - Costof revenuesAmortizationof intangible 144 160 288 273 assets - Salesand marketingAcquisition - 2,646 - 4,256 relatedexpensesAmortizationof debt - 4,277 - 8,517 discount andissuance costsTaxes onincome related (3,846 ) (5,066 ) (7,892 ) (11,078 )to non-GAAPadjustments Non-GAAP net $ 23,041 $ 16,691 $ 44,512 $ 36,272 income Non-GAAP netincome pershareBasic $ 0.61 $ 0.43 $ 1.19 $ 0.94

Diluted $ 0.59 $ 0.42 $ 1.15 $ 0.92

Weightedaverage numberof sharesBasic 37,522,410 38,565,175 37,285,788 38,393,938

Diluted 38,993,170 39,320,124 38,735,078 39,301,975



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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