CyberArk Announces Record Fourth Quarter and Full Year 2019 Results

CyberArk, (NASDAQ: CYBR), the global leader in privileged access management, today announced record financial results for the fourth quarter and year ended December 31, 2019.

“Our record fourth quarter results capped off another great year of strong growth driven by disciplined investments,” said Udi Mokady, CyberArk Chairman and CEO. “We were thrilled to win a record number of logos in the fourth quarter, signing nearly 300 new customers. Throughout 2019, organizations continued to recognize that protecting privileged access is foundational to a comprehensive security program and increasingly turned to CyberArk as a trusted advisor, particularly to secure mission-critical digital transformation and cloud migration strategies. Our clear leadership position in the market and ongoing commitment to deliver innovation, positions us well to deliver profitable growth in 2020 and beyond.”

Financial Highlights for the Fourth Quarter Ended December 31, 2019

Revenue:

  • Total revenue was $129.7 million, up 19% compared with the fourth quarter of 2018.
  • License revenue was $76.5 million, up 15% compared with the fourth quarter of 2018.
  • Maintenance and Professional Services revenue was $53.1 million, up 26% compared with the fourth quarter of 2018.

Operating Income:

  • GAAP operating income was $22.9 million, compared to $27.5 million in the fourth quarter of 2018. Non-GAAP operating income was a record $42.1 million, compared to $39.8 million in the fourth quarter of 2018.

Net Income:

  • GAAP net income was $20.7 million, or $0.53 per diluted share, compared to GAAP net income of $24.2 million, or $0.64 per diluted share, in the fourth quarter of 2018. Non-GAAP net income was a record $37.8 million, or $0.97 per diluted share, compared to $33.4 million, or $0.89 per diluted share, in the fourth quarter of 2018.

Financial Highlights for the Full Year Ended December 31, 2019

Revenue:

  • Total revenue was $433.9 million, up 26% compared with 2018.
  • License revenue was $237.9 million, up 24% compared with 2018.
  • Maintenance and Professional Services revenue was $196.0 million, up 30% compared with 2018.

Operating Income:

  • GAAP operating income was $62.3 million, compared to $47.3 million in 2018. Non-GAAP operating income was $123.4 million, compared to $90.5 million in 2018.

Net Income:

  • GAAP net income was $63.1 million, or $1.62 per diluted share, compared to GAAP net income of $47.1 million, or $1.27 per diluted share, in 2018. Non-GAAP net income was $107.9 million, or $2.77 per diluted share, compared to $76.5 million, or $2.06 per diluted share, in 2018.

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 and year ended December 31, 2019 and 2018. 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, 2019, CyberArk had $1.1 billion in cash, cash equivalents, marketable securities and short-term deposits. This compares to $451.2 million in cash, cash equivalents, marketable securities and short-term deposits as of December 31, 2018.
  • As of December 31, 2019, total deferred revenue was $190.4 million, a 27% increase from $149.5 million at December 31, 2018.
  • During 2019, the Company generated $141.7 million in net cash provided by operating activities compared to $130.1 million in 2018.

Business Outlook
Based on information available as of February 12, 2020, CyberArk is issuing guidance for the first quarter and full year 2020 as indicated below.

First Quarter 2020:

  • Total revenue is expected to be in the range of $106.0 million to $110.0 million.
  • Non-GAAP operating income is expected to be in the range of $16.5 million to $19.5 million.
  • Non-GAAP net income per share is expected to be in the range of $0.35 to $0.41 per share. This assumes 39.6 million weighted average diluted shares.

Full Year 2020:

  • Total revenue is expected to be in the range of $511.0 million to $519.0 million.
  • Non-GAAP operating income is expected to be in the range of $109.0 million to $115.0 million.
  • Non-GAAP net income per share is expected to be in the range of $2.26 to $2.38 per share. This assumes 39.8 million weighted average diluted shares.

Conference Call Information
In conjunction with this announcement, CyberArk will host a conference call on Wednesday, February 12, 2020 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 +1 877-823-7693 (U.S.) or +1 647-689-4543 (international). The conference ID is 7689662. 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 7689662. 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% 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, facility exit and transition costs 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, facility exit and transition costs, amortization of intangible assets related to acquisitions, intra-entity intellectual property transfer tax effect, amortization of debt discount and issuance costs and the tax effect of other 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, facility exit and transition costs, intra-entity intellectual property transfer tax effect, 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 and amortization of intangible assets related to acquisitions, facility exit and transition costs, intra-entity intellectual property transfer tax effect 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, facility exit and transition costs, amortization of intangible assets related to acquisitions, intra-entity intellectual property transfer tax effect, non-cash interest expense related to the amortization of debt discount and issuance costs and the tax effect of the other 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; the Company’s ability to increase its sales of software as a service (“SaaS”) solutions, while supporting and maintaining multiple software pricing and delivery models; 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; the Company’s ability to comply with evolving laws and regulations, including those relating to privacy and data protection; 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 EndedTwelve Months Ended
  December 31,December 31,
  

2018

2019

2018

2019

   
Revenues:  
License  

$

66,769

$

76,526

$

192,514

$

237,879

Maintenance and professional services  

42,281

53,138

150,685

196,016

   
Total revenues  

109,050

129,664

343,199

433,895

   
Cost of revenues:  
License  

3,005

2,801

10,526

10,569

Maintenance and professional services  

10,316

14,048

37,935

52,046

   
Total cost of revenues  

13,321

16,849

48,461

62,615

   
Gross profit  

95,729

112,815

294,738

371,280

   
Operating expenses:  
Research and development  

15,340

20,930

57,112

72,520

Sales and marketing  

40,307

52,939

148,290

184,168

General and administrative  

12,561

16,005

42,044

52,308

   
Total operating expenses  

68,208

89,874

247,446

308,996

   
Operating income  

27,521

22,941

47,292

62,284

   
Financial income, net  

1,078

2,394

4,551

7,800

   
Income before taxes on income  

28,599

25,335

51,843

70,084

   
Taxes on income  

(4,419

)

(4,599

)

(4,771

)

(7,020

)

   
Net income  

$

24,180

$

20,736

$

47,072

$

63,064

   
   
Basic net income per ordinary share  

$

0.66

$

0.55

$

1.30

$

1.68

Diluted net income per ordinary share  

$

0.64

$

0.53

$

1.27

$

1.62

   
Shares used in computing net income  
per ordinary shares, basic  

36,570,609

37,957,899

36,174,316

37,586,387

Shares used in computing net income  
per ordinary shares, diluted  

37,607,625

39,148,849

37,065,727

38,890,108

   
   
Share-based Compensation Expense:   
   
  Three Months EndedTwelve Months Ended
  December 31,December 31,
  

2018

2019

2018

2019

   
   
Cost of revenues  

$

980

$

1,802

$

3,350

$

5,690

Research and development  

2,174

3,347

7,922

10,960

Sales and marketing  

3,647

6,464

12,708

20,976

General and administrative  

3,493

6,418

11,984

17,891

   
Total share-based compensation expense  

$

10,294

$

18,031

$

35,964

$

55,517

   
   

CYBERARK SOFTWARE LTD.

Consolidated Balance Sheets

U.S. dollars in thousands

(Unaudited)

  December 31,December 31,
  

2018

2019

   
ASSETS   
   
CURRENT ASSETS:  
Cash and cash equivalents  

$

260,636

$

792,363

Short-term bank deposits  

106,399

140,067

Marketable securities  

59,948

132,412

Trade receivables  

48,431

72,953

Prepaid expenses and other current assets  

6,349

8,406

   
Total current assets  

481,763

1,146,201

   
LONG-TERM ASSETS:  
Property and equipment, net  

15,120

16,472

Intangible assets, net  

14,732

9,143

Goodwill  

82,400

82,400

Marketable securities  

24,261

54,408

Other long-term assets  

31,863

72,091

Deferred tax asset  

23,481

24,451

   
Total long-term assets  

191,857

258,965

   
TOTAL ASSETS   

$

673,620

$

1,405,166

   
LIABILITIES AND SHAREHOLDERS' EQUITY   
   
CURRENT LIABILITIES:  
Trade payables  

$

4,924

$

5,675

Employees and payroll accruals  

32,853

41,345

Accrued expenses and other current liabilities  

13,271

27,132

Deferred revenues  

92,375

118,519

   
Total current liabilities  

143,423

192,671

   
LONG-TERM LIABILITIES:  
Deferred revenues  

57,159

71,836

Other long-term liabilities  

6,268

31,408

Convertible senior notes, net  

-

485,119

   
Total long-term liabilities  

63,427

588,363

   
TOTAL LIABILITIES   

206,850

781,034

   
SHAREHOLDERS' EQUITY:  
Ordinary shares of NIS 0.01 par value  

95

99

Additional paid-in capital  

303,900

396,437

Accumulated other comprehensive income (loss)  

(939

)

818

Retained earnings  

163,714

226,778

   
Total shareholders' equity  

466,770

624,132

   
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   

$

673,620

$

1,405,166

   

CYBERARK SOFTWARE LTD.

Consolidated Statements of Cash Flows

U.S. dollars in thousands

(Unaudited)

   
  Twelve Months Ended
  December 31,
  

2018

2019

   
Cash flows from operating activities:   
Net income  

$

47,072

$

63,064

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

10,078

10,646

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

293

(47

)

Share-based compensation  

35,964

55,517

Deferred income taxes, net  

(7,056

)

(6,974

)

Increase in trade receivables  

(3,116

)

(24,522

)

Amortization of debt discount and issuance costs  

-

1,966

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

(11,893

)

(14,321

)

Increase in trade payables  

1,955

1,571

Increase in short-term and long-term deferred revenues  

47,818

40,821

Increase in employees and payroll accruals  

6,896

7,337

Increase in accrued expenses and other current and long-term liabilities  

2,114

6,652

   
Net cash provided by operating activities  

130,125

141,710

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

1,600

(33,961

)

Investment in marketable securities  

(61,118

)

(165,714

)

Proceeds from maturities of marketable securities  

37,838

63,489

Purchase of property and equipment  

(8,613

)

(7,036

)

Payments for business acquisitions, net of cash acquired  

(18,450

)

-

   
Net cash used in investing activities  

(48,743

)

(143,222

)

   
Cash flows from financing activities:   
Proceeds from withholding tax related to employee stock plans  

-

1,155

Proceeds from the issuance of convertible senior notes, net of issuance costs  

-

560,107

Purchase of capped calls  

-

(53,648

)

Proceeds from exercise of stock options  

17,980

24,428

   
Net cash provided by financing activities  

17,980

532,042

   
Increase in cash, cash equivalents and restricted cash  

99,362

530,530

   
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  

$

261,883

$

792,413

            
 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 Twelve Months Ended
     December 31, December 31,
     

2018

 

2019

 

2018

 

2019

            
  Gross profit    

 $

           95,729

 

 $

       112,815

 

 $

   294,738

 

 $

     371,280

  Plus:           
 Share-based compensation - Maintenance & professional services   

                  980

 

             1,802

 

         3,350

 

           5,690

  Amortization of intangible assets - License    

               1,445

 

                968

 

         5,563

 

           5,029

            
  Non-GAAP gross profit    

 $

           98,154

 

 $

       115,585

 

 $

   303,651

 

 $

     381,999

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

2018

 

2019

 

2018

 

2019

            
            
  Operating income    

 $

           27,521

 

 $

        22,941

 

 $

     47,292

 

 $

      62,284

  Plus:           
  Share-based compensation    

             10,294

 

           18,031

 

       35,964

 

         55,517

  Amortization of intangible assets - Cost of revenues   

               1,445

 

                968

 

         5,563

 

           5,029

  Amortization of intangible assets -  Sales and marketing   

                  198

 

                144

 

            793

 

              576

  Acquisition related expenses    

                    -  

 

                  -  

 

            268

 

                -  

  Facility exit and transitions costs    

                  327

 

                  -  

 

            580

 

                -  

            
  Non-GAAP operating income    

 $

           39,785

 

 $

        42,084

 

 $

     90,460

 

 $

     123,406

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

2018

 

2019

 

2018

 

2019

            
            
  Net income    

 $

           24,180

 

 $

        20,736

 

 $

     47,072

 

 $

      63,064

  Plus:           
  Share-based compensation    

             10,294

 

           18,031

 

       35,964

 

         55,517

  Amortization of intangible assets - Cost of revenues   

               1,445

 

                968

 

         5,563

 

           5,029

  Amortization of intangible assets -  Sales and marketing   

                  198

 

                144

 

            793

 

              576

  Acquisition related expenses    

                    -  

 

                  -  

 

            268

 

                -  

  Facility exit and transitions costs    

                  327

 

                  -  

 

            580

 

                -  

  Amortization of debt discount and issuance costs   

                    -  

 

             1,966

 

              -  

 

           1,966

  Taxes on income related to non-GAAP adjustments   

              (2,528

)

 

            (4,014

)

 

      (15,485

)

 

        (18,251

)

  Intra-entity IP transfer tax effect, net    

                 (475

)

 

                  -  

 

         1,768

 

                -  

            
  Non-GAAP net income    

 $

           33,441

 

 $

        37,831

 

 $

     76,523

 

 $

     107,901

            
  Non-GAAP net income per share           
  Basic    

 $

              0.91

 

 $

            1.00

 

 $

        2.12

 

 $

          2.87

  Diluted    

 $

              0.89

 

 $

            0.97

 

 $

        2.06

 

 $

          2.77

            
  Weighted average number of shares           
  Basic    

       36,570,609

 

     37,957,899

 

 36,174,316

 

   37,586,387

  Diluted    

       37,607,625

 

     39,148,849

 

 37,065,727

 

   38,890,108

            

Contacts:

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

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