CyberArk Announces Record Fourth Quarter and Full Year 2019 Results

Fourth quarter total revenue of $129.7 million increases 19% year-over-year

Fourth quarter GAAP operating income of $22.9 million and non-GAAP operating income of $42.1 million

Full year total revenue of $433.9 million increases 26% year-over-year

Full year GAAP operating income of $62.3 million and non-GAAP operating income of $123.4 million

Full year net cash provided by operating activities of $141.7 million

NEWTON, Mass. & PETACH TIKVA, Israel--(BUSINESS WIRE)--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 [phone] (U.S.) or [phone] (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 [phone] (U.S.) or [phone] (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 Ended						Twelve 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 Ended						Twelve 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