Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries CyberArk Announces Strong Third Quarter 2022 Results By: CyberArk via Business Wire November 03, 2022 at 07:01 AM EDT Subscription Portion of Annual Recurring Revenue (ARR) of $301 million; Growth of 117% Total ARR of $512 million; Growth Accelerating to 49% Subscription Revenue of $74.2 million; Growth of 110% Total Revenue of $152.7 million; Growth Accelerating to 26% Net Cash Flow from Operating Activities of $29.2 million for Nine Months Ended September 30, 2022 Full Year ARR Guidance Range Increased to a Range of $552 million to $558 million CyberArk (NASDAQ: CYBR), the global leader in Identity Security, today announced strong financial results for the third quarter ended September 30, 2022. “Strong demand for our Identity Security platform centered on intelligent privilege controls continues to fuel our growth and demonstrates the durability of demand for our solutions,” said Udi Mokady, CyberArk Chairman and CEO. “Digital transformation, the adoption of Zero Trust strategies and the heightened threat landscape are pushing identity security to the top of priority lists for Chief Information Security Officers. Our execution, combined with strong secular trends, resulted in total Annual Recurring Revenue reaching $512 million with year over year growth in ARR accelerating for the third consecutive quarter to 49 percent. We also experienced the highest ever sequential increase in subscription ARR. We remain confident in our ability to deliver against our tremendous growth opportunity with strong cash flow and profitability. Given the strength of our results year to date, we are again significantly raising our full year ARR guidance to 41 percent growth at the midpoint.” Financial Summary for the Third Quarter Ended September 30, 2022 Subscription revenue was $74.2 million in the third quarter of 2022, an increase of 110 percent from $35.3 million in the third quarter of 2021. Maintenance and professional services revenue was $64.6 million in the third quarter of 2022, compared to $63.3 million in the third quarter of 2021. Perpetual license revenue was $13.8 million in the third quarter of 2022, compared to $23.0 million in the third quarter of 2021. Total revenue was $152.7 million in the third quarter of 2022, with growth accelerating to 26 percent from $121.6 million in the third quarter of 2021. GAAP operating loss was $(39.3) million and non-GAAP operating loss was $(4.0) million in the third quarter of 2022. GAAP net loss was $(32.7) million, or $(0.80) per basic and diluted share, in the third quarter of 2022. Non-GAAP net loss was $(2.3) million, or $(0.06) per basic and diluted share, in the third quarter of 2022. Balance Sheet and Net Cash Provided by Operating Activities As of September 30, 2022, CyberArk had $1.2 billion in cash, cash equivalents, marketable securities, and short-term deposits. During the first nine months of 2022, the Company generated $29.2 million in net cash provided by operating activities. As of September 30, 2022, total deferred revenue was $376.1 million, a 34 percent increase from $280.9 million at September 30, 2021. Key Business Highlights Annual Recurring Revenue (ARR) was $512 million, an increase of 49 percent from $344 million at September 30, 2021. The subscription portion of ARR was $301 million, or 59 percent of total ARR at September 30, 2022. This represents an increase of 117 percent from $139 million, or 40 percent of total ARR, at September 30, 2021. The Maintenance portion of ARR was $211 million at September 30, 2022, compared to $206 million at September 30, 2021. Recurring revenue was $128.5 million, an increase of 44 percent from $88.9 million for the third quarter of 2021. Added a strong number of new logos in the quarter, signing nearly 230 new customers during the third quarter of 2022. 87 percent of total license bookings were related to subscription bookings, compared to approximately 72 percent in the third quarter of 2021. Recent Developments CyberArk announces appointment of Peretz Regev as Chief Product Officer, bringing more than 20 years of senior leadership and product engineering experience to CyberArk. CyberArk won the 2022 SC Award for Best Identity Management Solution, recognizing our Identity Security Platform’s leading position. CyberArk publishes its Second Annual Environmental, Social and Governance (ESG) Report. Business Outlook Based on information available as of November 3, 2022, CyberArk is issuing guidance for the fourth quarter and full year 2022 as indicated below. Fourth Quarter 2022: Total revenue is expected to be in the range of $169.9 million and $176.9 million. Non-GAAP operating income is expected to be in the range of $2.0 million to $8.0 million. Non-GAAP net income per share is expected to be in the range of $0.07 to $0.20 per diluted share. Assumes 45.8 million weighted average diluted shares. Full Year 2022: Total revenue is expected to be in the range of $592.5 million to $599.5 million. Non-GAAP operating loss is expected to be in the range of $(24.5) million to $(18.5) million. Non-GAAP net loss per share is expected to be in the range of $(0.54) to $(0.39) per basic and diluted share. Assumes 40.7 million weighted average basic and diluted shares. ARR as of December 31, 2022 is expected to be in the range of $552 million to $558 million, representing growth of 40 percent to 42 percent from December 31, 2021. Conference Call Information In conjunction with this announcement, CyberArk will host a conference call on Thursday, November 3, 2022 at 8:00 a.m. Eastern Time (ET) to discuss the Company’s third quarter financial results and its business outlook. To access this call, dial +1 (888) 330-2455 (U.S.) or +1 (240) 789-2717 (international). The conference ID is 6515982. 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) 770-2030 (U.S.) or +1 (647) 362-9199 (international). The replay pass code is 6515982. 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 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 https://www.cyberark.com, read the CyberArk blogs or follow on Twitter via @CyberArk, LinkedIn or Facebook. Copyright © 2022 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. Subscription Portion of Annual Recurring Revenue Subscription portion of ARR is defined as the annualized value of active SaaS and subscription or term-based license contracts in effect at the end of the reported period. The subscription portion of ARR excludes maintenance contracts related to perpetual licenses. Maintenance Portion of Annual Recurring Revenue Maintenance portion of ARR is defined as the annualized value of active maintenance contracts related to perpetual licenses. The Maintenance portion of ARR excludes SaaS and subscription or term-based license contracts in effect at the end of the reported period. Recurring Revenue Recurring Revenue is defined as revenue derived from SaaS and subscription or term-based license contracts, and maintenance contracts related to perpetual licenses during the reported period. Non-GAAP Financial Measures CyberArk believes that the use of non-GAAP gross profit, non-GAAP operating expense, non-GAAP operating income (loss), non-GAAP net income (loss) 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 loss, net 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, and amortization of intangible assets related to acquisitions. Non-GAAP operating expense is calculated as GAAP operating expenses excluding share-based compensation expense, facility exit costs, acquisition related expenses and amortization of intangible assets related to acquisitions. Non-GAAP operating income (loss) is calculated as GAAP operating loss excluding share-based compensation expense, facility exit costs, acquisition related expenses and amortization of intangible assets related to acquisitions. Non-GAAP net income (loss) is calculated as GAAP net loss excluding share-based compensation expense, facility exit costs, acquisition related expenses, amortization of intangible assets related to acquisitions, amortization of debt discount and issuance costs, the tax effect of non-GAAP adjustments and unrealized gain from investment in private held companies. 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, facility exit costs, acquisition related expenses, amortization of intangible assets related to acquisitions, non-cash interest expense related to the amortization of debt discount and issuance cost, the tax effect of the non-GAAP adjustments, unrealized gain from investment in private held companies 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 facility exit costs, 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. 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, 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, levels of activity, performance or achievements to differ materially from the results, levels of activity, 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 to the drivers of the Company’s growth and its ability to adapt its solutions to IT security market demands; the transition of the Company’s business to a subscription model that began in 2021; the Company’s sales cycles and multiple pricing and delivery models; unanticipated product vulnerabilities or cybersecurity breaches of the Company’s, or the Company’s customers’ or partners’ systems; an increase in competition within the Privileged Access Management and Identity Security markets; the Company’s ability to hire, train, retain and motivate qualified personnel; the Company’s ability to sell into existing and new customers and industry verticals; risks related to compliance with privacy and data protection laws and regulations; the Company’s history of incurring net losses and our ability to achieve profitability in the future; the duration and scope of the COVID-19 pandemic and its impact on global and regional economies and the resulting effect on the demand for the Company’s solutions and on its expected revenue growth rates and costs; the Company’s ability to find, complete, fully integrate or achieve the expected benefits of additional strategic acquisitions; reliance on third-party cloud providers for the Company’s operations and SaaS solutions; the Company’s ability to expand its sales and marketing efforts and expand its channel partnerships across existing and new geographies; risks related to sales made to government entities; regulatory and geopolitical risks associated with global sales and operations (including the current conflict between Russia and Ukraine) and changes in regulatory requirements or fluctuations in currency exchange rates; the ability of the Company’s products to help customers achieve and maintain compliance with government regulations or industry standards; risks related to intellectual property claims or the Company’s ability to protect its proprietary technology and intellectual property rights; 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 U.S. 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 Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Revenues: Subscription $ 35,290 $ 74,249 $ 87,071 $ 192,198 Perpetual license 23,041 13,790 77,064 35,385 Maintenance and professional services 63,270 64,631 187,462 194,976 Total revenues 121,601 152,670 351,597 422,559 Cost of revenues: Subscription 6,457 12,214 17,714 32,487 Perpetual license 936 703 2,925 1,980 Maintenance and professional services 16,022 19,548 46,972 56,751 Total cost of revenues 23,415 32,465 67,611 91,218 Gross profit 98,186 120,205 283,986 331,341 Operating expenses: Research and development 38,014 48,437 101,374 138,844 Sales and marketing 69,596 90,298 196,837 254,536 General and administrative 18,305 20,738 52,263 60,342 Total operating expenses 125,915 159,473 350,474 453,722 Operating loss (27,729 ) (39,268 ) (66,488 ) (122,381 ) Financial income (expense), net (3,686 ) 3,641 (9,747 ) 6,269 Loss before taxes on income (31,415 ) (35,627 ) (76,235 ) (116,112 ) Tax benefit 2,309 2,902 9,176 7,948 Net loss $ (29,106 ) $ (32,725 ) $ (67,059 ) $ (108,164 ) Basic loss per ordinary share, net $ (0.73 ) $ (0.80 ) $ (1.70 ) $ (2.67 ) Diluted loss per ordinary share, net $ (0.73 ) $ (0.80 ) $ (1.70 ) $ (2.67 ) Shares used in computing net loss per ordinary shares, basic 39,848,343 40,834,640 39,531,960 40,488,909 Shares used in computing net loss per ordinary shares, diluted 39,848,343 40,834,640 39,531,960 40,488,909 CYBERARK SOFTWARE LTD. Consolidated Balance Sheets U.S. dollars in thousands (Unaudited) December 31, September 30, 2021 2022 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 356,850 $ 324,533 Short-term bank deposits 369,645 323,618 Marketable securities 199,933 301,341 Trade receivables 113,211 89,346 Prepaid expenses and other current assets 22,225 22,807 Total current assets 1,061,864 1,061,645 LONG-TERM ASSETS: Marketable securities 300,662 237,063 Property and equipment, net 20,183 22,347 Intangible assets, net 17,866 29,366 Goodwill 123,717 154,506 Other long-term assets 121,743 168,083 Deferred tax asset 47,167 72,458 Total long-term assets 631,338 683,823 TOTAL ASSETS $ 1,693,202 $ 1,745,468 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 10,076 $ 10,416 Employees and payroll accruals 75,442 63,314 Accrued expenses and other current liabilities 23,576 35,964 Deferred revenues 230,908 288,847 Total current liabilities 340,002 398,541 LONG-TERM LIABILITIES: Convertible senior notes, net 520,094 568,597 Deferred revenues 86,367 87,242 Other long-term liabilities 20,227 34,773 Total long-term liabilities 626,688 690,612 TOTAL LIABILITIES 966,690 1,089,153 SHAREHOLDERS' EQUITY: Ordinary shares of NIS 0.01 par value 104 107 Additional paid-in capital 588,937 621,316 Accumulated other comprehensive income (loss) 397 (20,621) Retained earnings 137,074 55,513 Total shareholders' equity 726,512 656,315 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,693,202 $ 1,745,468 CYBERARK SOFTWARE LTD. Consolidated Statements of Cash Flows U.S. dollars in thousands (Unaudited) Nine Months Ended September 30, 2021 2022 Cash flows from operating activities: Net loss $ (67,059) $ (108,164) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 10,523 11,883 Amortization of premium and accretion of discount on marketable securities, net 5,593 3,976 Share-based compensation 68,774 88,593 Deferred income taxes, net (11,928) (14,267) Decrease in trade receivables 11,681 23,865 Amortization of debt discount and issuance costs 13,285 2,234 Increase in prepaid expenses, other current and long-term assets and others (14,049) (16,988) Increase in trade payables 1,628 509 Increase in short-term and long-term deferred revenues 38,353 58,814 Increase (decrease) in employees and payroll accruals 3,385 (16,285) Decrease in accrued expenses and other current and long-term liabilities (5,883) (4,959) Net cash provided by operating activities 54,303 29,211 Cash flows from investing activities: Proceeds from (investment in) short and long term deposits, net (73,832) 43,585 Investment in marketable securities and other (221,347) (318,566) Proceeds from sales and maturities of marketable securities 170,511 256,899 Purchase of property and equipment (7,187) (8,778) Payments for business acquisitions, net of cash acquired - (41,285) Net cash used in investing activities (131,855) (68,145) Cash flows from financing activities: Proceeds from (payment of) withholding tax related to employee stock plans 4,498 (811) Proceeds from exercise of stock options 9,608 1,729 Proceeds in connection with employees stock purchase plan - 12,322 Payments of contingent consideration related to acquisitions - (1,578) Net cash provided by financing activities 14,106 11,662 Decrease in cash, cash equivalents and restricted cash (63,446) (27,272) Effect of exchange rate differences on cash, cash equivalents and restricted cash (788) (5,045) Cash, cash equivalents and restricted cash at the beginning of the period 500,044 356,850 Cash, cash equivalents and restricted cash at the end of the period $ 435,810 $ 324,533 CYBERARK SOFTWARE LTD. Reconciliation of GAAP Measures to Non-GAAP Measures U.S. dollars in thousands (except per share data) (Unaudited) Reconciliation of Net cash provided by operating activities to Free cash flow: Three Months Ended Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Net cash provided by operating activities $ 4,801 $ 18,481 $ 54,303 $ 29,211 Less: Purchase of property and equipment (2,862) (4,618) (7,187) (8,778) Free cash flow $ 1,939 $ 13,863 $ 47,116 $ 20,433 GAAP net cash used in investing activities (2,068) (72,380) (131,855) (68,145) GAAP net cash provided by (used in) financing activities 6,648 (1,602) 14,106 11,662 Reconciliation of Gross Profit to Non-GAAP Gross Profit: Three Months Ended Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Gross profit $ 98,186 $ 120,205 $ 283,986 $ 331,341 Plus: Share-based compensation (1) 2,984 4,030 7,991 10,962 Amortization of share-based compensation capitalized in software development costs (3) 65 88 172 264 Amortization of intangible assets (2) 1,277 1,639 3,833 4,339 Non-GAAP gross profit $ 102,512 $ 125,962 $ 295,982 $ 346,906 Reconciliation of Operating Expenses to Non-GAAP Operating Expenses: Three Months Ended Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Operating expenses $ 125,915 $ 159,473 $ 350,474 $ 453,722 Less: Share-based compensation (1) 23,358 27,712 60,783 77,631 Amortization of intangible assets (2) 175 154 523 458 Acquisition related expenses - 1,653 - 2,244 Facility exit and transition costs - - 760 - Non-GAAP operating expenses $ 102,382 $ 129,954 $ 288,408 $ 373,389 Reconciliation of Operating Loss to Non-GAAP Operating Income (Loss): Three Months Ended Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Operating loss $ (27,729) $ (39,268) $ (66,488) $ (122,381) Plus: Share-based compensation (1) 26,342 31,742 68,774 88,593 Amortization of share-based compensation capitalized in software development costs (3) 65 88 172 264 Amortization of intangible assets (2) 1,452 1,793 4,356 4,797 Acquisition related expenses - 1,653 - 2,244 Facility exit and transition costs - - 760 - Non-GAAP operating income (loss) $ 130 $ (3,992) $ 7,574 $ (26,483) Reconciliation of Net Loss to Non-GAAP Net Income (loss): Three Months Ended Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Net loss $ (29,106) $ (32,725) $ (67,059) $ (108,164) Plus: Share-based compensation (1) 26,342 31,742 68,774 88,593 Amortization of share-based compensation capitalized in software development costs (3) 65 88 172 264 Amortization of intangible assets (2) 1,452 1,793 4,356 4,797 Acquisition related expenses - 1,653 - 2,244 Facility exit and transition costs - - 760 - Amortization of debt discount and issuance costs 4,467 746 13,285 2,234 Unrealized Gain from investment in private held companies - (324) - (324) Taxes on income related to non-GAAP adjustments (5,651) (5,307) (18,637) (14,629) Non-GAAP net income (loss) $ (2,431) $ (2,334) $ 1,651 $ (24,985) Non-GAAP net income (loss) per share Basic $ (0.06) $ (0.06) $ 0.04 $ (0.62) Diluted $ (0.06) $ (0.06) $ 0.04 $ (0.62) Weighted average number of shares Basic 39,848,343 40,834,640 39,531,960 40,488,909 Diluted 39,848,343 40,834,640 40,609,680 40,488,909 (1) Share-based Compensation : Three Months Ended Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Cost of revenues - Subscription $ 216 $ 634 $ 544 $ 1,527 Cost of revenues - Perpetual license 54 42 168 103 Cost of revenues - Maintenance and Professional services 2,714 3,354 7,279 9,332 Research and development 5,591 6,983 14,878 19,787 Sales and marketing 10,856 13,654 27,620 37,415 General and administrative 6,911 7,075 18,285 20,429 Total share-based compensation $ 26,342 $ 31,742 $ 68,774 $ 88,593 (2) Amortization of intangible assets : Three Months Ended Nine Months Ended September 30, September 30, 2022 2022 2021 2022 Cost of revenues - Subscription $ 1,111 $ 1,598 $ 3,311 $ 4,231 Cost of revenues - Perpetual license 166 41 522 108 Sales and marketing 175 154 523 458 Total amortization of intangible assets $ 1,452 $ 1,793 $ 4,356 $ 4,797 (3) Classified as Cost of revenues - Subscription. View source version on businesswire.com: https://www.businesswire.com/news/home/20221102006153/en/Contacts Investor: Erica Smith CyberArk Phone: +1 617-558-2132 ir@cyberark.com Media: Liz Campbell CyberArk Phone: +1-617-558-2191 press@cyberark.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
CyberArk Announces Strong Third Quarter 2022 Results By: CyberArk via Business Wire November 03, 2022 at 07:01 AM EDT Subscription Portion of Annual Recurring Revenue (ARR) of $301 million; Growth of 117% Total ARR of $512 million; Growth Accelerating to 49% Subscription Revenue of $74.2 million; Growth of 110% Total Revenue of $152.7 million; Growth Accelerating to 26% Net Cash Flow from Operating Activities of $29.2 million for Nine Months Ended September 30, 2022 Full Year ARR Guidance Range Increased to a Range of $552 million to $558 million CyberArk (NASDAQ: CYBR), the global leader in Identity Security, today announced strong financial results for the third quarter ended September 30, 2022. “Strong demand for our Identity Security platform centered on intelligent privilege controls continues to fuel our growth and demonstrates the durability of demand for our solutions,” said Udi Mokady, CyberArk Chairman and CEO. “Digital transformation, the adoption of Zero Trust strategies and the heightened threat landscape are pushing identity security to the top of priority lists for Chief Information Security Officers. Our execution, combined with strong secular trends, resulted in total Annual Recurring Revenue reaching $512 million with year over year growth in ARR accelerating for the third consecutive quarter to 49 percent. We also experienced the highest ever sequential increase in subscription ARR. We remain confident in our ability to deliver against our tremendous growth opportunity with strong cash flow and profitability. Given the strength of our results year to date, we are again significantly raising our full year ARR guidance to 41 percent growth at the midpoint.” Financial Summary for the Third Quarter Ended September 30, 2022 Subscription revenue was $74.2 million in the third quarter of 2022, an increase of 110 percent from $35.3 million in the third quarter of 2021. Maintenance and professional services revenue was $64.6 million in the third quarter of 2022, compared to $63.3 million in the third quarter of 2021. Perpetual license revenue was $13.8 million in the third quarter of 2022, compared to $23.0 million in the third quarter of 2021. Total revenue was $152.7 million in the third quarter of 2022, with growth accelerating to 26 percent from $121.6 million in the third quarter of 2021. GAAP operating loss was $(39.3) million and non-GAAP operating loss was $(4.0) million in the third quarter of 2022. GAAP net loss was $(32.7) million, or $(0.80) per basic and diluted share, in the third quarter of 2022. Non-GAAP net loss was $(2.3) million, or $(0.06) per basic and diluted share, in the third quarter of 2022. Balance Sheet and Net Cash Provided by Operating Activities As of September 30, 2022, CyberArk had $1.2 billion in cash, cash equivalents, marketable securities, and short-term deposits. During the first nine months of 2022, the Company generated $29.2 million in net cash provided by operating activities. As of September 30, 2022, total deferred revenue was $376.1 million, a 34 percent increase from $280.9 million at September 30, 2021. Key Business Highlights Annual Recurring Revenue (ARR) was $512 million, an increase of 49 percent from $344 million at September 30, 2021. The subscription portion of ARR was $301 million, or 59 percent of total ARR at September 30, 2022. This represents an increase of 117 percent from $139 million, or 40 percent of total ARR, at September 30, 2021. The Maintenance portion of ARR was $211 million at September 30, 2022, compared to $206 million at September 30, 2021. Recurring revenue was $128.5 million, an increase of 44 percent from $88.9 million for the third quarter of 2021. Added a strong number of new logos in the quarter, signing nearly 230 new customers during the third quarter of 2022. 87 percent of total license bookings were related to subscription bookings, compared to approximately 72 percent in the third quarter of 2021. Recent Developments CyberArk announces appointment of Peretz Regev as Chief Product Officer, bringing more than 20 years of senior leadership and product engineering experience to CyberArk. CyberArk won the 2022 SC Award for Best Identity Management Solution, recognizing our Identity Security Platform’s leading position. CyberArk publishes its Second Annual Environmental, Social and Governance (ESG) Report. Business Outlook Based on information available as of November 3, 2022, CyberArk is issuing guidance for the fourth quarter and full year 2022 as indicated below. Fourth Quarter 2022: Total revenue is expected to be in the range of $169.9 million and $176.9 million. Non-GAAP operating income is expected to be in the range of $2.0 million to $8.0 million. Non-GAAP net income per share is expected to be in the range of $0.07 to $0.20 per diluted share. Assumes 45.8 million weighted average diluted shares. Full Year 2022: Total revenue is expected to be in the range of $592.5 million to $599.5 million. Non-GAAP operating loss is expected to be in the range of $(24.5) million to $(18.5) million. Non-GAAP net loss per share is expected to be in the range of $(0.54) to $(0.39) per basic and diluted share. Assumes 40.7 million weighted average basic and diluted shares. ARR as of December 31, 2022 is expected to be in the range of $552 million to $558 million, representing growth of 40 percent to 42 percent from December 31, 2021. Conference Call Information In conjunction with this announcement, CyberArk will host a conference call on Thursday, November 3, 2022 at 8:00 a.m. Eastern Time (ET) to discuss the Company’s third quarter financial results and its business outlook. To access this call, dial +1 (888) 330-2455 (U.S.) or +1 (240) 789-2717 (international). The conference ID is 6515982. 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) 770-2030 (U.S.) or +1 (647) 362-9199 (international). The replay pass code is 6515982. 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 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 https://www.cyberark.com, read the CyberArk blogs or follow on Twitter via @CyberArk, LinkedIn or Facebook. Copyright © 2022 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. Subscription Portion of Annual Recurring Revenue Subscription portion of ARR is defined as the annualized value of active SaaS and subscription or term-based license contracts in effect at the end of the reported period. The subscription portion of ARR excludes maintenance contracts related to perpetual licenses. Maintenance Portion of Annual Recurring Revenue Maintenance portion of ARR is defined as the annualized value of active maintenance contracts related to perpetual licenses. The Maintenance portion of ARR excludes SaaS and subscription or term-based license contracts in effect at the end of the reported period. Recurring Revenue Recurring Revenue is defined as revenue derived from SaaS and subscription or term-based license contracts, and maintenance contracts related to perpetual licenses during the reported period. Non-GAAP Financial Measures CyberArk believes that the use of non-GAAP gross profit, non-GAAP operating expense, non-GAAP operating income (loss), non-GAAP net income (loss) 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 loss, net 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, and amortization of intangible assets related to acquisitions. Non-GAAP operating expense is calculated as GAAP operating expenses excluding share-based compensation expense, facility exit costs, acquisition related expenses and amortization of intangible assets related to acquisitions. Non-GAAP operating income (loss) is calculated as GAAP operating loss excluding share-based compensation expense, facility exit costs, acquisition related expenses and amortization of intangible assets related to acquisitions. Non-GAAP net income (loss) is calculated as GAAP net loss excluding share-based compensation expense, facility exit costs, acquisition related expenses, amortization of intangible assets related to acquisitions, amortization of debt discount and issuance costs, the tax effect of non-GAAP adjustments and unrealized gain from investment in private held companies. 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, facility exit costs, acquisition related expenses, amortization of intangible assets related to acquisitions, non-cash interest expense related to the amortization of debt discount and issuance cost, the tax effect of the non-GAAP adjustments, unrealized gain from investment in private held companies 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 facility exit costs, 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. 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, 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, levels of activity, performance or achievements to differ materially from the results, levels of activity, 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 to the drivers of the Company’s growth and its ability to adapt its solutions to IT security market demands; the transition of the Company’s business to a subscription model that began in 2021; the Company’s sales cycles and multiple pricing and delivery models; unanticipated product vulnerabilities or cybersecurity breaches of the Company’s, or the Company’s customers’ or partners’ systems; an increase in competition within the Privileged Access Management and Identity Security markets; the Company’s ability to hire, train, retain and motivate qualified personnel; the Company’s ability to sell into existing and new customers and industry verticals; risks related to compliance with privacy and data protection laws and regulations; the Company’s history of incurring net losses and our ability to achieve profitability in the future; the duration and scope of the COVID-19 pandemic and its impact on global and regional economies and the resulting effect on the demand for the Company’s solutions and on its expected revenue growth rates and costs; the Company’s ability to find, complete, fully integrate or achieve the expected benefits of additional strategic acquisitions; reliance on third-party cloud providers for the Company’s operations and SaaS solutions; the Company’s ability to expand its sales and marketing efforts and expand its channel partnerships across existing and new geographies; risks related to sales made to government entities; regulatory and geopolitical risks associated with global sales and operations (including the current conflict between Russia and Ukraine) and changes in regulatory requirements or fluctuations in currency exchange rates; the ability of the Company’s products to help customers achieve and maintain compliance with government regulations or industry standards; risks related to intellectual property claims or the Company’s ability to protect its proprietary technology and intellectual property rights; 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 U.S. 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 Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Revenues: Subscription $ 35,290 $ 74,249 $ 87,071 $ 192,198 Perpetual license 23,041 13,790 77,064 35,385 Maintenance and professional services 63,270 64,631 187,462 194,976 Total revenues 121,601 152,670 351,597 422,559 Cost of revenues: Subscription 6,457 12,214 17,714 32,487 Perpetual license 936 703 2,925 1,980 Maintenance and professional services 16,022 19,548 46,972 56,751 Total cost of revenues 23,415 32,465 67,611 91,218 Gross profit 98,186 120,205 283,986 331,341 Operating expenses: Research and development 38,014 48,437 101,374 138,844 Sales and marketing 69,596 90,298 196,837 254,536 General and administrative 18,305 20,738 52,263 60,342 Total operating expenses 125,915 159,473 350,474 453,722 Operating loss (27,729 ) (39,268 ) (66,488 ) (122,381 ) Financial income (expense), net (3,686 ) 3,641 (9,747 ) 6,269 Loss before taxes on income (31,415 ) (35,627 ) (76,235 ) (116,112 ) Tax benefit 2,309 2,902 9,176 7,948 Net loss $ (29,106 ) $ (32,725 ) $ (67,059 ) $ (108,164 ) Basic loss per ordinary share, net $ (0.73 ) $ (0.80 ) $ (1.70 ) $ (2.67 ) Diluted loss per ordinary share, net $ (0.73 ) $ (0.80 ) $ (1.70 ) $ (2.67 ) Shares used in computing net loss per ordinary shares, basic 39,848,343 40,834,640 39,531,960 40,488,909 Shares used in computing net loss per ordinary shares, diluted 39,848,343 40,834,640 39,531,960 40,488,909 CYBERARK SOFTWARE LTD. Consolidated Balance Sheets U.S. dollars in thousands (Unaudited) December 31, September 30, 2021 2022 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 356,850 $ 324,533 Short-term bank deposits 369,645 323,618 Marketable securities 199,933 301,341 Trade receivables 113,211 89,346 Prepaid expenses and other current assets 22,225 22,807 Total current assets 1,061,864 1,061,645 LONG-TERM ASSETS: Marketable securities 300,662 237,063 Property and equipment, net 20,183 22,347 Intangible assets, net 17,866 29,366 Goodwill 123,717 154,506 Other long-term assets 121,743 168,083 Deferred tax asset 47,167 72,458 Total long-term assets 631,338 683,823 TOTAL ASSETS $ 1,693,202 $ 1,745,468 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 10,076 $ 10,416 Employees and payroll accruals 75,442 63,314 Accrued expenses and other current liabilities 23,576 35,964 Deferred revenues 230,908 288,847 Total current liabilities 340,002 398,541 LONG-TERM LIABILITIES: Convertible senior notes, net 520,094 568,597 Deferred revenues 86,367 87,242 Other long-term liabilities 20,227 34,773 Total long-term liabilities 626,688 690,612 TOTAL LIABILITIES 966,690 1,089,153 SHAREHOLDERS' EQUITY: Ordinary shares of NIS 0.01 par value 104 107 Additional paid-in capital 588,937 621,316 Accumulated other comprehensive income (loss) 397 (20,621) Retained earnings 137,074 55,513 Total shareholders' equity 726,512 656,315 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,693,202 $ 1,745,468 CYBERARK SOFTWARE LTD. Consolidated Statements of Cash Flows U.S. dollars in thousands (Unaudited) Nine Months Ended September 30, 2021 2022 Cash flows from operating activities: Net loss $ (67,059) $ (108,164) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 10,523 11,883 Amortization of premium and accretion of discount on marketable securities, net 5,593 3,976 Share-based compensation 68,774 88,593 Deferred income taxes, net (11,928) (14,267) Decrease in trade receivables 11,681 23,865 Amortization of debt discount and issuance costs 13,285 2,234 Increase in prepaid expenses, other current and long-term assets and others (14,049) (16,988) Increase in trade payables 1,628 509 Increase in short-term and long-term deferred revenues 38,353 58,814 Increase (decrease) in employees and payroll accruals 3,385 (16,285) Decrease in accrued expenses and other current and long-term liabilities (5,883) (4,959) Net cash provided by operating activities 54,303 29,211 Cash flows from investing activities: Proceeds from (investment in) short and long term deposits, net (73,832) 43,585 Investment in marketable securities and other (221,347) (318,566) Proceeds from sales and maturities of marketable securities 170,511 256,899 Purchase of property and equipment (7,187) (8,778) Payments for business acquisitions, net of cash acquired - (41,285) Net cash used in investing activities (131,855) (68,145) Cash flows from financing activities: Proceeds from (payment of) withholding tax related to employee stock plans 4,498 (811) Proceeds from exercise of stock options 9,608 1,729 Proceeds in connection with employees stock purchase plan - 12,322 Payments of contingent consideration related to acquisitions - (1,578) Net cash provided by financing activities 14,106 11,662 Decrease in cash, cash equivalents and restricted cash (63,446) (27,272) Effect of exchange rate differences on cash, cash equivalents and restricted cash (788) (5,045) Cash, cash equivalents and restricted cash at the beginning of the period 500,044 356,850 Cash, cash equivalents and restricted cash at the end of the period $ 435,810 $ 324,533 CYBERARK SOFTWARE LTD. Reconciliation of GAAP Measures to Non-GAAP Measures U.S. dollars in thousands (except per share data) (Unaudited) Reconciliation of Net cash provided by operating activities to Free cash flow: Three Months Ended Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Net cash provided by operating activities $ 4,801 $ 18,481 $ 54,303 $ 29,211 Less: Purchase of property and equipment (2,862) (4,618) (7,187) (8,778) Free cash flow $ 1,939 $ 13,863 $ 47,116 $ 20,433 GAAP net cash used in investing activities (2,068) (72,380) (131,855) (68,145) GAAP net cash provided by (used in) financing activities 6,648 (1,602) 14,106 11,662 Reconciliation of Gross Profit to Non-GAAP Gross Profit: Three Months Ended Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Gross profit $ 98,186 $ 120,205 $ 283,986 $ 331,341 Plus: Share-based compensation (1) 2,984 4,030 7,991 10,962 Amortization of share-based compensation capitalized in software development costs (3) 65 88 172 264 Amortization of intangible assets (2) 1,277 1,639 3,833 4,339 Non-GAAP gross profit $ 102,512 $ 125,962 $ 295,982 $ 346,906 Reconciliation of Operating Expenses to Non-GAAP Operating Expenses: Three Months Ended Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Operating expenses $ 125,915 $ 159,473 $ 350,474 $ 453,722 Less: Share-based compensation (1) 23,358 27,712 60,783 77,631 Amortization of intangible assets (2) 175 154 523 458 Acquisition related expenses - 1,653 - 2,244 Facility exit and transition costs - - 760 - Non-GAAP operating expenses $ 102,382 $ 129,954 $ 288,408 $ 373,389 Reconciliation of Operating Loss to Non-GAAP Operating Income (Loss): Three Months Ended Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Operating loss $ (27,729) $ (39,268) $ (66,488) $ (122,381) Plus: Share-based compensation (1) 26,342 31,742 68,774 88,593 Amortization of share-based compensation capitalized in software development costs (3) 65 88 172 264 Amortization of intangible assets (2) 1,452 1,793 4,356 4,797 Acquisition related expenses - 1,653 - 2,244 Facility exit and transition costs - - 760 - Non-GAAP operating income (loss) $ 130 $ (3,992) $ 7,574 $ (26,483) Reconciliation of Net Loss to Non-GAAP Net Income (loss): Three Months Ended Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Net loss $ (29,106) $ (32,725) $ (67,059) $ (108,164) Plus: Share-based compensation (1) 26,342 31,742 68,774 88,593 Amortization of share-based compensation capitalized in software development costs (3) 65 88 172 264 Amortization of intangible assets (2) 1,452 1,793 4,356 4,797 Acquisition related expenses - 1,653 - 2,244 Facility exit and transition costs - - 760 - Amortization of debt discount and issuance costs 4,467 746 13,285 2,234 Unrealized Gain from investment in private held companies - (324) - (324) Taxes on income related to non-GAAP adjustments (5,651) (5,307) (18,637) (14,629) Non-GAAP net income (loss) $ (2,431) $ (2,334) $ 1,651 $ (24,985) Non-GAAP net income (loss) per share Basic $ (0.06) $ (0.06) $ 0.04 $ (0.62) Diluted $ (0.06) $ (0.06) $ 0.04 $ (0.62) Weighted average number of shares Basic 39,848,343 40,834,640 39,531,960 40,488,909 Diluted 39,848,343 40,834,640 40,609,680 40,488,909 (1) Share-based Compensation : Three Months Ended Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Cost of revenues - Subscription $ 216 $ 634 $ 544 $ 1,527 Cost of revenues - Perpetual license 54 42 168 103 Cost of revenues - Maintenance and Professional services 2,714 3,354 7,279 9,332 Research and development 5,591 6,983 14,878 19,787 Sales and marketing 10,856 13,654 27,620 37,415 General and administrative 6,911 7,075 18,285 20,429 Total share-based compensation $ 26,342 $ 31,742 $ 68,774 $ 88,593 (2) Amortization of intangible assets : Three Months Ended Nine Months Ended September 30, September 30, 2022 2022 2021 2022 Cost of revenues - Subscription $ 1,111 $ 1,598 $ 3,311 $ 4,231 Cost of revenues - Perpetual license 166 41 522 108 Sales and marketing 175 154 523 458 Total amortization of intangible assets $ 1,452 $ 1,793 $ 4,356 $ 4,797 (3) Classified as Cost of revenues - Subscription. View source version on businesswire.com: https://www.businesswire.com/news/home/20221102006153/en/Contacts Investor: Erica Smith CyberArk Phone: +1 617-558-2132 ir@cyberark.com Media: Liz Campbell CyberArk Phone: +1-617-558-2191 press@cyberark.com
Subscription Portion of Annual Recurring Revenue (ARR) of $301 million; Growth of 117% Total ARR of $512 million; Growth Accelerating to 49% Subscription Revenue of $74.2 million; Growth of 110% Total Revenue of $152.7 million; Growth Accelerating to 26% Net Cash Flow from Operating Activities of $29.2 million for Nine Months Ended September 30, 2022 Full Year ARR Guidance Range Increased to a Range of $552 million to $558 million
CyberArk (NASDAQ: CYBR), the global leader in Identity Security, today announced strong financial results for the third quarter ended September 30, 2022. “Strong demand for our Identity Security platform centered on intelligent privilege controls continues to fuel our growth and demonstrates the durability of demand for our solutions,” said Udi Mokady, CyberArk Chairman and CEO. “Digital transformation, the adoption of Zero Trust strategies and the heightened threat landscape are pushing identity security to the top of priority lists for Chief Information Security Officers. Our execution, combined with strong secular trends, resulted in total Annual Recurring Revenue reaching $512 million with year over year growth in ARR accelerating for the third consecutive quarter to 49 percent. We also experienced the highest ever sequential increase in subscription ARR. We remain confident in our ability to deliver against our tremendous growth opportunity with strong cash flow and profitability. Given the strength of our results year to date, we are again significantly raising our full year ARR guidance to 41 percent growth at the midpoint.” Financial Summary for the Third Quarter Ended September 30, 2022 Subscription revenue was $74.2 million in the third quarter of 2022, an increase of 110 percent from $35.3 million in the third quarter of 2021. Maintenance and professional services revenue was $64.6 million in the third quarter of 2022, compared to $63.3 million in the third quarter of 2021. Perpetual license revenue was $13.8 million in the third quarter of 2022, compared to $23.0 million in the third quarter of 2021. Total revenue was $152.7 million in the third quarter of 2022, with growth accelerating to 26 percent from $121.6 million in the third quarter of 2021. GAAP operating loss was $(39.3) million and non-GAAP operating loss was $(4.0) million in the third quarter of 2022. GAAP net loss was $(32.7) million, or $(0.80) per basic and diluted share, in the third quarter of 2022. Non-GAAP net loss was $(2.3) million, or $(0.06) per basic and diluted share, in the third quarter of 2022. Balance Sheet and Net Cash Provided by Operating Activities As of September 30, 2022, CyberArk had $1.2 billion in cash, cash equivalents, marketable securities, and short-term deposits. During the first nine months of 2022, the Company generated $29.2 million in net cash provided by operating activities. As of September 30, 2022, total deferred revenue was $376.1 million, a 34 percent increase from $280.9 million at September 30, 2021. Key Business Highlights Annual Recurring Revenue (ARR) was $512 million, an increase of 49 percent from $344 million at September 30, 2021. The subscription portion of ARR was $301 million, or 59 percent of total ARR at September 30, 2022. This represents an increase of 117 percent from $139 million, or 40 percent of total ARR, at September 30, 2021. The Maintenance portion of ARR was $211 million at September 30, 2022, compared to $206 million at September 30, 2021. Recurring revenue was $128.5 million, an increase of 44 percent from $88.9 million for the third quarter of 2021. Added a strong number of new logos in the quarter, signing nearly 230 new customers during the third quarter of 2022. 87 percent of total license bookings were related to subscription bookings, compared to approximately 72 percent in the third quarter of 2021. Recent Developments CyberArk announces appointment of Peretz Regev as Chief Product Officer, bringing more than 20 years of senior leadership and product engineering experience to CyberArk. CyberArk won the 2022 SC Award for Best Identity Management Solution, recognizing our Identity Security Platform’s leading position. CyberArk publishes its Second Annual Environmental, Social and Governance (ESG) Report. Business Outlook Based on information available as of November 3, 2022, CyberArk is issuing guidance for the fourth quarter and full year 2022 as indicated below. Fourth Quarter 2022: Total revenue is expected to be in the range of $169.9 million and $176.9 million. Non-GAAP operating income is expected to be in the range of $2.0 million to $8.0 million. Non-GAAP net income per share is expected to be in the range of $0.07 to $0.20 per diluted share. Assumes 45.8 million weighted average diluted shares. Full Year 2022: Total revenue is expected to be in the range of $592.5 million to $599.5 million. Non-GAAP operating loss is expected to be in the range of $(24.5) million to $(18.5) million. Non-GAAP net loss per share is expected to be in the range of $(0.54) to $(0.39) per basic and diluted share. Assumes 40.7 million weighted average basic and diluted shares. ARR as of December 31, 2022 is expected to be in the range of $552 million to $558 million, representing growth of 40 percent to 42 percent from December 31, 2021. Conference Call Information In conjunction with this announcement, CyberArk will host a conference call on Thursday, November 3, 2022 at 8:00 a.m. Eastern Time (ET) to discuss the Company’s third quarter financial results and its business outlook. To access this call, dial +1 (888) 330-2455 (U.S.) or +1 (240) 789-2717 (international). The conference ID is 6515982. 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) 770-2030 (U.S.) or +1 (647) 362-9199 (international). The replay pass code is 6515982. 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 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 https://www.cyberark.com, read the CyberArk blogs or follow on Twitter via @CyberArk, LinkedIn or Facebook. Copyright © 2022 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. Subscription Portion of Annual Recurring Revenue Subscription portion of ARR is defined as the annualized value of active SaaS and subscription or term-based license contracts in effect at the end of the reported period. The subscription portion of ARR excludes maintenance contracts related to perpetual licenses. Maintenance Portion of Annual Recurring Revenue Maintenance portion of ARR is defined as the annualized value of active maintenance contracts related to perpetual licenses. The Maintenance portion of ARR excludes SaaS and subscription or term-based license contracts in effect at the end of the reported period. Recurring Revenue Recurring Revenue is defined as revenue derived from SaaS and subscription or term-based license contracts, and maintenance contracts related to perpetual licenses during the reported period. Non-GAAP Financial Measures CyberArk believes that the use of non-GAAP gross profit, non-GAAP operating expense, non-GAAP operating income (loss), non-GAAP net income (loss) 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 loss, net 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, and amortization of intangible assets related to acquisitions. Non-GAAP operating expense is calculated as GAAP operating expenses excluding share-based compensation expense, facility exit costs, acquisition related expenses and amortization of intangible assets related to acquisitions. Non-GAAP operating income (loss) is calculated as GAAP operating loss excluding share-based compensation expense, facility exit costs, acquisition related expenses and amortization of intangible assets related to acquisitions. Non-GAAP net income (loss) is calculated as GAAP net loss excluding share-based compensation expense, facility exit costs, acquisition related expenses, amortization of intangible assets related to acquisitions, amortization of debt discount and issuance costs, the tax effect of non-GAAP adjustments and unrealized gain from investment in private held companies. 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, facility exit costs, acquisition related expenses, amortization of intangible assets related to acquisitions, non-cash interest expense related to the amortization of debt discount and issuance cost, the tax effect of the non-GAAP adjustments, unrealized gain from investment in private held companies 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 facility exit costs, 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. 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, 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, levels of activity, performance or achievements to differ materially from the results, levels of activity, 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 to the drivers of the Company’s growth and its ability to adapt its solutions to IT security market demands; the transition of the Company’s business to a subscription model that began in 2021; the Company’s sales cycles and multiple pricing and delivery models; unanticipated product vulnerabilities or cybersecurity breaches of the Company’s, or the Company’s customers’ or partners’ systems; an increase in competition within the Privileged Access Management and Identity Security markets; the Company’s ability to hire, train, retain and motivate qualified personnel; the Company’s ability to sell into existing and new customers and industry verticals; risks related to compliance with privacy and data protection laws and regulations; the Company’s history of incurring net losses and our ability to achieve profitability in the future; the duration and scope of the COVID-19 pandemic and its impact on global and regional economies and the resulting effect on the demand for the Company’s solutions and on its expected revenue growth rates and costs; the Company’s ability to find, complete, fully integrate or achieve the expected benefits of additional strategic acquisitions; reliance on third-party cloud providers for the Company’s operations and SaaS solutions; the Company’s ability to expand its sales and marketing efforts and expand its channel partnerships across existing and new geographies; risks related to sales made to government entities; regulatory and geopolitical risks associated with global sales and operations (including the current conflict between Russia and Ukraine) and changes in regulatory requirements or fluctuations in currency exchange rates; the ability of the Company’s products to help customers achieve and maintain compliance with government regulations or industry standards; risks related to intellectual property claims or the Company’s ability to protect its proprietary technology and intellectual property rights; 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 U.S. 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 Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Revenues: Subscription $ 35,290 $ 74,249 $ 87,071 $ 192,198 Perpetual license 23,041 13,790 77,064 35,385 Maintenance and professional services 63,270 64,631 187,462 194,976 Total revenues 121,601 152,670 351,597 422,559 Cost of revenues: Subscription 6,457 12,214 17,714 32,487 Perpetual license 936 703 2,925 1,980 Maintenance and professional services 16,022 19,548 46,972 56,751 Total cost of revenues 23,415 32,465 67,611 91,218 Gross profit 98,186 120,205 283,986 331,341 Operating expenses: Research and development 38,014 48,437 101,374 138,844 Sales and marketing 69,596 90,298 196,837 254,536 General and administrative 18,305 20,738 52,263 60,342 Total operating expenses 125,915 159,473 350,474 453,722 Operating loss (27,729 ) (39,268 ) (66,488 ) (122,381 ) Financial income (expense), net (3,686 ) 3,641 (9,747 ) 6,269 Loss before taxes on income (31,415 ) (35,627 ) (76,235 ) (116,112 ) Tax benefit 2,309 2,902 9,176 7,948 Net loss $ (29,106 ) $ (32,725 ) $ (67,059 ) $ (108,164 ) Basic loss per ordinary share, net $ (0.73 ) $ (0.80 ) $ (1.70 ) $ (2.67 ) Diluted loss per ordinary share, net $ (0.73 ) $ (0.80 ) $ (1.70 ) $ (2.67 ) Shares used in computing net loss per ordinary shares, basic 39,848,343 40,834,640 39,531,960 40,488,909 Shares used in computing net loss per ordinary shares, diluted 39,848,343 40,834,640 39,531,960 40,488,909 CYBERARK SOFTWARE LTD. Consolidated Balance Sheets U.S. dollars in thousands (Unaudited) December 31, September 30, 2021 2022 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 356,850 $ 324,533 Short-term bank deposits 369,645 323,618 Marketable securities 199,933 301,341 Trade receivables 113,211 89,346 Prepaid expenses and other current assets 22,225 22,807 Total current assets 1,061,864 1,061,645 LONG-TERM ASSETS: Marketable securities 300,662 237,063 Property and equipment, net 20,183 22,347 Intangible assets, net 17,866 29,366 Goodwill 123,717 154,506 Other long-term assets 121,743 168,083 Deferred tax asset 47,167 72,458 Total long-term assets 631,338 683,823 TOTAL ASSETS $ 1,693,202 $ 1,745,468 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 10,076 $ 10,416 Employees and payroll accruals 75,442 63,314 Accrued expenses and other current liabilities 23,576 35,964 Deferred revenues 230,908 288,847 Total current liabilities 340,002 398,541 LONG-TERM LIABILITIES: Convertible senior notes, net 520,094 568,597 Deferred revenues 86,367 87,242 Other long-term liabilities 20,227 34,773 Total long-term liabilities 626,688 690,612 TOTAL LIABILITIES 966,690 1,089,153 SHAREHOLDERS' EQUITY: Ordinary shares of NIS 0.01 par value 104 107 Additional paid-in capital 588,937 621,316 Accumulated other comprehensive income (loss) 397 (20,621) Retained earnings 137,074 55,513 Total shareholders' equity 726,512 656,315 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,693,202 $ 1,745,468 CYBERARK SOFTWARE LTD. Consolidated Statements of Cash Flows U.S. dollars in thousands (Unaudited) Nine Months Ended September 30, 2021 2022 Cash flows from operating activities: Net loss $ (67,059) $ (108,164) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 10,523 11,883 Amortization of premium and accretion of discount on marketable securities, net 5,593 3,976 Share-based compensation 68,774 88,593 Deferred income taxes, net (11,928) (14,267) Decrease in trade receivables 11,681 23,865 Amortization of debt discount and issuance costs 13,285 2,234 Increase in prepaid expenses, other current and long-term assets and others (14,049) (16,988) Increase in trade payables 1,628 509 Increase in short-term and long-term deferred revenues 38,353 58,814 Increase (decrease) in employees and payroll accruals 3,385 (16,285) Decrease in accrued expenses and other current and long-term liabilities (5,883) (4,959) Net cash provided by operating activities 54,303 29,211 Cash flows from investing activities: Proceeds from (investment in) short and long term deposits, net (73,832) 43,585 Investment in marketable securities and other (221,347) (318,566) Proceeds from sales and maturities of marketable securities 170,511 256,899 Purchase of property and equipment (7,187) (8,778) Payments for business acquisitions, net of cash acquired - (41,285) Net cash used in investing activities (131,855) (68,145) Cash flows from financing activities: Proceeds from (payment of) withholding tax related to employee stock plans 4,498 (811) Proceeds from exercise of stock options 9,608 1,729 Proceeds in connection with employees stock purchase plan - 12,322 Payments of contingent consideration related to acquisitions - (1,578) Net cash provided by financing activities 14,106 11,662 Decrease in cash, cash equivalents and restricted cash (63,446) (27,272) Effect of exchange rate differences on cash, cash equivalents and restricted cash (788) (5,045) Cash, cash equivalents and restricted cash at the beginning of the period 500,044 356,850 Cash, cash equivalents and restricted cash at the end of the period $ 435,810 $ 324,533 CYBERARK SOFTWARE LTD. Reconciliation of GAAP Measures to Non-GAAP Measures U.S. dollars in thousands (except per share data) (Unaudited) Reconciliation of Net cash provided by operating activities to Free cash flow: Three Months Ended Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Net cash provided by operating activities $ 4,801 $ 18,481 $ 54,303 $ 29,211 Less: Purchase of property and equipment (2,862) (4,618) (7,187) (8,778) Free cash flow $ 1,939 $ 13,863 $ 47,116 $ 20,433 GAAP net cash used in investing activities (2,068) (72,380) (131,855) (68,145) GAAP net cash provided by (used in) financing activities 6,648 (1,602) 14,106 11,662 Reconciliation of Gross Profit to Non-GAAP Gross Profit: Three Months Ended Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Gross profit $ 98,186 $ 120,205 $ 283,986 $ 331,341 Plus: Share-based compensation (1) 2,984 4,030 7,991 10,962 Amortization of share-based compensation capitalized in software development costs (3) 65 88 172 264 Amortization of intangible assets (2) 1,277 1,639 3,833 4,339 Non-GAAP gross profit $ 102,512 $ 125,962 $ 295,982 $ 346,906 Reconciliation of Operating Expenses to Non-GAAP Operating Expenses: Three Months Ended Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Operating expenses $ 125,915 $ 159,473 $ 350,474 $ 453,722 Less: Share-based compensation (1) 23,358 27,712 60,783 77,631 Amortization of intangible assets (2) 175 154 523 458 Acquisition related expenses - 1,653 - 2,244 Facility exit and transition costs - - 760 - Non-GAAP operating expenses $ 102,382 $ 129,954 $ 288,408 $ 373,389 Reconciliation of Operating Loss to Non-GAAP Operating Income (Loss): Three Months Ended Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Operating loss $ (27,729) $ (39,268) $ (66,488) $ (122,381) Plus: Share-based compensation (1) 26,342 31,742 68,774 88,593 Amortization of share-based compensation capitalized in software development costs (3) 65 88 172 264 Amortization of intangible assets (2) 1,452 1,793 4,356 4,797 Acquisition related expenses - 1,653 - 2,244 Facility exit and transition costs - - 760 - Non-GAAP operating income (loss) $ 130 $ (3,992) $ 7,574 $ (26,483) Reconciliation of Net Loss to Non-GAAP Net Income (loss): Three Months Ended Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Net loss $ (29,106) $ (32,725) $ (67,059) $ (108,164) Plus: Share-based compensation (1) 26,342 31,742 68,774 88,593 Amortization of share-based compensation capitalized in software development costs (3) 65 88 172 264 Amortization of intangible assets (2) 1,452 1,793 4,356 4,797 Acquisition related expenses - 1,653 - 2,244 Facility exit and transition costs - - 760 - Amortization of debt discount and issuance costs 4,467 746 13,285 2,234 Unrealized Gain from investment in private held companies - (324) - (324) Taxes on income related to non-GAAP adjustments (5,651) (5,307) (18,637) (14,629) Non-GAAP net income (loss) $ (2,431) $ (2,334) $ 1,651 $ (24,985) Non-GAAP net income (loss) per share Basic $ (0.06) $ (0.06) $ 0.04 $ (0.62) Diluted $ (0.06) $ (0.06) $ 0.04 $ (0.62) Weighted average number of shares Basic 39,848,343 40,834,640 39,531,960 40,488,909 Diluted 39,848,343 40,834,640 40,609,680 40,488,909 (1) Share-based Compensation : Three Months Ended Nine Months Ended September 30, September 30, 2021 2022 2021 2022 Cost of revenues - Subscription $ 216 $ 634 $ 544 $ 1,527 Cost of revenues - Perpetual license 54 42 168 103 Cost of revenues - Maintenance and Professional services 2,714 3,354 7,279 9,332 Research and development 5,591 6,983 14,878 19,787 Sales and marketing 10,856 13,654 27,620 37,415 General and administrative 6,911 7,075 18,285 20,429 Total share-based compensation $ 26,342 $ 31,742 $ 68,774 $ 88,593 (2) Amortization of intangible assets : Three Months Ended Nine Months Ended September 30, September 30, 2022 2022 2021 2022 Cost of revenues - Subscription $ 1,111 $ 1,598 $ 3,311 $ 4,231 Cost of revenues - Perpetual license 166 41 522 108 Sales and marketing 175 154 523 458 Total amortization of intangible assets $ 1,452 $ 1,793 $ 4,356 $ 4,797 (3) Classified as Cost of revenues - Subscription. 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Investor: Erica Smith CyberArk Phone: +1 617-558-2132 ir@cyberark.com Media: Liz Campbell CyberArk Phone: +1-617-558-2191 press@cyberark.com