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 2023 Results By: CyberArk via Business Wire November 02, 2023 at 07:00 AM EDT Company Exceeds Expectations Across all Guided Metrics Subscription Portion of Annual Recurring Revenue (ARR) of $504 million; Growth of 68% Year-over-Year Total ARR of $705 million; Growth of 38% Year-over-Year Subscription Revenue of $122.9 million in Q3; Growth of 65% Year-Over-Year Record Total Revenue of $191.2 million in Q3 Exceeds Guidance; Growth Accelerating to 25% Year-Over-Year Company Significantly Raises Full Year ARR Guidance to a Range of $758 million to $768 million from $743 million to $753 million CyberArk (NASDAQ: CYBR), the identity security company, today announced strong financial results for the third quarter ended September 30, 2023. “Strong execution and robust industry tailwinds drove our outperformance in the third quarter and our results significantly exceeded expectations across all guided metrics,” said Matt Cohen, CyberArk's Chief Executive Officer. “We delivered one of the best financial performances in the company’s history in the third quarter and our business accelerated. Our identity security platform is gaining momentum in both our customer base and with new customers who recognize the critical requirement to secure all identities, human and machine, with intelligent privileged controls. The durable demand for our solutions is the result of the severe threat landscape paired with the exponential growth of identities and environments. We delivered robust net new ARR, 68 percent growth in Subscription ARR to $504 million and 38 percent growth in total ARR to $705 million. Our consistent execution, strong competitive position and confidence in the demand environment is best demonstrated by the significant increase in our full year ARR guidance. As the clear leader in identity security, we have a tremendous opportunity in front of us and are well positioned to deliver strong long-term growth, profitability and cash flow.” Financial Summary for the Third Quarter Ended September 30, 2023 Subscription revenue was $122.9 million in the third quarter of 2023, an increase of 65 percent from $74.2 million in the third quarter of 2022. Maintenance and professional services revenue was $64.3 million in the third quarter of 2023, compared to $64.6 million in the third quarter of 2022. Perpetual license revenue was $4.1 million in the third quarter of 2023, compared to $13.8 million in the third quarter of 2022. Total revenue was $191.2 million in the third quarter of 2023, up 25 percent from $152.7 million in the third quarter of 2022, outperforming guidance. GAAP operating loss was $(25.7) million and non-GAAP operating income was $16.9 million in the third quarter of 2023, outperforming guidance. GAAP net loss was $(14.6) million, or $(0.35) per basic and diluted share, in the third quarter of 2023. Non-GAAP net income was $19.6 million, or $0.42 per diluted share, in the third quarter of 2023, outperforming guidance. Balance Sheet and Net Cash Provided by Operating Activities As of September 30, 2023, CyberArk had $1.2 billion in cash, cash equivalents, marketable securities, and short-term deposits. During the nine months ended September 30, 2023, the Company’s net cash provided by operating activities was $9.3 million. As of September 30, 2023, total deferred revenue was $423.1 million, a 12 percent increase from $376.1 million at September 30, 2022. Key Business Highlights Annual Recurring Revenue (ARR) was $705 million, an increase of 38 percent from $512 million at September 30, 2022. The Subscription portion of ARR was $504 million, or 72 percent of total ARR at September 30, 2023. This represents an increase of 68 percent from $301 million, or 59 percent of total ARR, at September 30, 2022. The Maintenance portion of ARR was $200 million at September 30, 2023, compared to $211 million at September 30, 2022. Recurring revenue in the third quarter was $174.4 million, an increase of 36 percent from $128.5 million for the third quarter of 2022. Recent Developments CyberArk was named a Leader in 2023 Gartner Magic Quadrant for Privileged Access Management.(1) CyberArk is recognized in this report for the fifth consecutive time. CyberArk launched Artificial Intelligence Center of Excellence to combat attacker innovation with identity security innovation. CyberArk was named a Leader in The Forrester Wave™: Privileged Identity Management, Q4 2023,(2) receiving the top score in the ‘Current Offering’ category as well as the highest possible score in 16 criteria including: least privilege access, just-in-time access, development and DevOps support, threat detection and response, innovation and partner ecosystem. Business Outlook Based on information available as of November 2, 2023, CyberArk is issuing guidance for the fourth quarter and full year 2023 as indicated below. Fourth Quarter 2023: Total revenue is expected to be in the range of $206.5 million and $211.5 million, representing growth of 22 percent to 25 percent compared to the fourth quarter of 2022. Non-GAAP operating income is expected to be in the range of $19.0 million to $23.0 million. Non-GAAP net income per share is expected to be in the range of $0.41 to $0.50 per diluted share. Assumes 47.1 million weighted average diluted shares. Full Year 2023: Total revenue is expected to be in the range of $735.3 million to $740.3 million, representing growth of 24 percent to 25 percent compared to the full year 2022. Non-GAAP operating income is expected to be in the range of $17.7 million to $21.7 million. Non-GAAP net income per share is expected to be in the range of $0.72 to $0.80 per diluted share. Assumes 46.5 million weighted average diluted shares. ARR as of December 31, 2023 is expected to be in the range of $758 million to $768 million, representing growth of 33 percent to 35 percent from December 31, 2022. (1) Gartner® Magic Quadrant™ for Privileged Access Management, by Felix Gaehtgens, James Hoover, Michael Kelley, Brian Guthrie, Abhyuday Data, 5 September 2023 (2) The Forrester Wave™: Privileged Identity Management, Q4 2023 by Geoff Cairns, October 11, 2023 Conference Call Information In conjunction with this announcement, CyberArk will host a conference call on Thursday, November 2, 2023 at 8:30 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 intelligent privilege controls, CyberArk provides the most comprehensive security offering for any identity – human or machine – across business applications, distributed workforces, hybrid cloud environments 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 LinkedIn, Twitter, Facebook or YouTube. Copyright © 2023 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, self-hosted subscription 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 self-hosted subscription 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 self-hosted subscription contracts in effect at the end of the reported period. Recurring Revenue Recurring Revenue is defined as revenue derived from SaaS and self-hosted subscription 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, amortization of intangible assets related to acquisitions, and impairment of capitalized software development costs. Non-GAAP operating expense is calculated as GAAP operating expenses excluding share-based compensation expense, 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, impairment of capitalized software development 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, acquisition related expenses, amortization of intangible assets related to acquisitions, impairment of capitalized software development costs, amortization of debt discount and issuance costs, gain from investment in privately held companies, and the tax effect of non-GAAP adjustments. Free cash flow is calculated as net cash provided by operating activities less purchase of property and equipment. The Company believes that providing non-GAAP financial measures that are adjusted by, as applicable, share-based compensation expense, acquisition related expenses, amortization of intangible assets related to acquisitions, impairment of capitalized software development costs, non-cash interest expense related to the amortization of debt discount and issuance cost, gain from investment in privately held companies, and the tax effect of the non-GAAP adjustments and purchase of property and equipment allows for more meaningful comparisons of its period to period operating results. Share-based compensation expense has been, and will continue to be for the foreseeable future, a significant recurring expense in the Company’s business and an important part of the compensation provided to its employees. Share based compensation expense has varying available valuation methodologies, subjective assumptions and a variety of equity instruments that can impact a company’s non-cash expense. The Company believes that expenses related to its acquisitions, amortization of intangible assets related to acquisitions, 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; fluctuation in the Company’s quarterly results of operations due to sales cycles and multiple pricing and delivery models; the Company’s ability to sell into existing and new customers and industry verticals; an increase in competition within the Privileged Access Management and Identity Security markets; unanticipated product vulnerabilities or cybersecurity breaches of the Company’s, or the Company’s customers’ or partners’ systems; complications or risks in connection with the Company’s subscription model, including uncertainty regarding renewals from its existing customer base, and retaining sufficient subscription or maintenance and support service renewal rates; risks related to compliance with privacy and data protection laws and regulations; risks regarding potential negative economic conditions in the global economy or certain regions, including conditions resulting from financial and credit market fluctuations, rising interest rates, bank failures, inflation, and the potential for regional or global recessions; the Company’s ability to hire, train, retain and motivate qualified personnel; reliance on third-party cloud providers for the Company’s operations and SaaS solutions; the Company’s history of incurring net losses and its ability to achieve profitability in the future; risks related to the Company’s ongoing transition to a new Chief Executive Officer; risks related to sales made to government entities; the Company’s ability to find, complete, fully integrate or achieve the expected benefits of strategic acquisitions; the duration and scope of the COVID-19 pandemic and its resulting effect on the demand for the Company’s solutions and on its expected revenue growth rates and costs; the Company’s ability to expand its sales and marketing efforts and expand its channel partnerships across existing and new geographies; regulatory and geopolitical risks associated with global sales and operations, as well as the location of our principal executive offices, most of our research and development activities and other significant operations in Israel; 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. Gartner Disclaimers GARTNER is a registered trademark and service mark of Gartner and Magic Quadrant and Peer Insights are a registered trademark, of Gartner, Inc. and/or its affiliates in the U.S. and internationally and are used herein with permission. All rights reserved. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. Gartner Peer Insights content consists of the opinions of individual end users based on their own experiences with the vendors listed on the platform, should not be construed as statements of fact, nor do they represent the views of Gartner or its affiliates. Gartner does not endorse any vendor, product or service depicted in this content nor makes any warranties, expressed or implied, with respect to this content, about its accuracy or completeness, including any warranties of merchantability or fitness for a particular purpose. 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, 2022 2023 2022 2023 Revenues: Subscription $ 74,249 $ 122,879 $ 192,198 $ 321,766 Perpetual license 13,790 4,056 35,385 13,028 Maintenance and professional services 64,631 64,301 194,976 193,990 Total revenues 152,670 191,236 422,559 528,784 Cost of revenues: Subscription 12,214 21,281 32,487 54,859 Perpetual license 703 642 1,980 1,173 Maintenance and professional services 19,548 19,816 56,751 60,446 Total cost of revenues 32,465 41,739 91,218 116,478 Gross profit 120,205 149,497 331,341 412,306 Operating expenses: Research and development 48,437 51,733 138,844 157,653 Sales and marketing 90,298 98,859 254,536 299,376 General and administrative 20,738 24,642 60,342 67,038 Total operating expenses 159,473 175,234 453,722 524,067 Operating loss (39,268 ) (25,737 ) (122,381 ) (111,761 ) Financial income, net 3,641 12,424 6,269 33,912 Loss before taxes on income (35,627 ) (13,313 ) (116,112 ) (77,849 ) Tax benefit (taxes on income) 2,902 (1,296 ) 7,948 2,434 Net loss $ (32,725 ) $ (14,609 ) $ (108,164 ) $ (75,415 ) Basic loss per ordinary share $ (0.80 ) $ (0.35 ) $ (2.67 ) $ (1.82 ) Diluted loss per ordinary share $ (0.80 ) $ (0.35 ) $ (2.67 ) $ (1.82 ) Shares used in computing net loss per ordinary shares, basic 40,834,640 41,899,371 40,488,909 41,539,052 Shares used in computing net loss per ordinary shares, diluted 40,834,640 41,899,371 40,488,909 41,539,052 CYBERARK SOFTWARE LTD. Consolidated Balance Sheets U.S. dollars in thousands (Unaudited) December 31, September 30, 2022 2023 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 347,338 $ 372,196 Short-term bank deposits 305,843 284,461 Marketable securities 301,101 249,539 Trade receivables 120,817 118,983 Prepaid expenses and other current assets 22,482 26,308 Total current assets 1,097,581 1,051,487 LONG-TERM ASSETS: Marketable securities 227,748 322,026 Property and equipment, net 23,474 17,814 Intangible assets, net 27,508 22,050 Goodwill 153,241 153,241 Other long-term assets 217,040 213,243 Deferred tax asset 72,809 85,005 Total long-term assets 721,820 813,379 TOTAL ASSETS $ 1,819,401 $ 1,864,866 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 13,642 $ 12,624 Employees and payroll accruals 77,328 70,750 Accrued expenses and other current liabilities 33,584 33,022 Deferred revenues 327,918 357,282 Total current liabilities 452,472 473,678 LONG-TERM LIABILITIES: Convertible senior notes, net 569,344 571,590 Deferred revenues 80,524 65,773 Other long-term liabilities 38,917 33,376 Total long-term liabilities 688,785 670,739 TOTAL LIABILITIES 1,141,257 1,144,417 SHAREHOLDERS' EQUITY: Ordinary shares of NIS 0.01 par value 107 110 Additional paid-in capital 660,289 774,882 Accumulated other comprehensive income (loss) (15,560 ) (12,436 ) Retained earnings (accumulated deficit) 33,308 (42,107 ) Total shareholders' equity 678,144 720,449 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,819,401 $ 1,864,866 CYBERARK SOFTWARE LTD. Consolidated Statements of Cash Flows U.S. dollars in thousands (Unaudited) Nine Months Ended September 30, 2022 2023 Cash flows from operating activities: Net loss $ (108,164 ) $ (75,415 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 11,883 15,097 Amortization of premium and accretion of discount on marketable securities, net 3,976 (2,724 ) Share-based compensation 88,593 102,565 Deferred income taxes, net (14,267 ) (10,763 ) Decrease in trade receivables 23,865 1,834 Amortization of debt discount and issuance costs 2,234 2,245 Increase in prepaid expenses, other current and long-term assets and others (19,769 ) (22,564 ) Changes in operating lease right-of-use assets 2,781 5,495 Increase (decrease) in trade payables 509 (980 ) Increase in short-term and long-term deferred revenues 58,814 14,613 Decrease in employees and payroll accruals (16,285 ) (13,579 ) Increase in accrued expenses and other current and long-term liabilities 2,259 669 Changes in operating lease liabilities (7,218 ) (7,187 ) Net cash provided by operating activities 29,211 9,306 Cash flows from investing activities: Investment in short and long term deposits (320,320 ) (204,461 ) Proceeds from short and long term deposits 363,905 243,630 Investment in marketable securities and other (318,566 ) (322,049 ) Proceeds from sales and maturities of marketable securities and other 256,899 285,445 Purchase of property and equipment (8,778 ) (4,253 ) Payments for business acquisitions, net of cash acquired (41,285 ) - Net cash used in investing activities (68,145 ) (1,688 ) Cash flows from financing activities: Proceeds from (payment of) withholding tax related to employee stock plans (811 ) 3,210 Proceeds from exercise of stock options 1,729 4,209 Proceeds in connection with employees stock purchase plan 12,322 11,776 Payments of contingent consideration related to acquisitions (1,578 ) - Net cash provided by financing activities 11,662 19,195 Increase (decrease) in cash, cash equivalents (27,272 ) 26,813 Effect of exchange rate differences on cash, cash equivalents (5,045 ) (1,955 ) Cash and cash equivalents at the beginning of the period 356,850 347,338 Cash and cash equivalents at the end of the period $ 324,533 $ 372,196 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, 2022 2023 2022 2023 Net cash provided by operating activities $ 18,481 $ 14,353 $ 29,211 $ 9,306 Less: Purchase of property and equipment (4,618 ) (731 ) (8,778 ) (4,253 ) Free cash flow $ 13,863 $ 13,622 $ 20,433 $ 5,053 GAAP net cash used in investing activities (72,380 ) (42,788 ) (68,145 ) (1,688 ) GAAP net cash provided by (used in) financing activities (1,602 ) 5,510 11,662 19,195 Reconciliation of Gross Profit to Non-GAAP Gross Profit: Three Months Ended Nine Months Ended September 30, September 30, 2022 2023 2022 2023 Gross profit $ 120,205 $ 149,497 $ 331,341 $ 412,306 Plus: Share-based compensation (1) 4,030 4,780 10,962 13,112 Amortization of share-based compensation capitalized in software development costs (3) 88 103 264 309 Amortization of intangible assets (2) 1,639 1,704 4,339 5,113 Impairment of capitalized software development costs - 2,067 - 2,067 Non-GAAP gross profit $ 125,962 $ 158,151 $ 346,906 $ 432,907 Reconciliation of Operating Expenses to Non-GAAP Operating Expenses: Three Months Ended Nine Months Ended September 30, September 30, 2022 2023 2022 2023 Operating expenses $ 159,473 $ 175,234 $ 453,722 $ 524,067 Less: Share-based compensation (1) 27,712 33,821 77,631 89,454 Amortization of intangible assets (2) 154 139 458 410 Acquisition related expenses 1,653 - 2,244 - Non-GAAP operating expenses $ 129,954 $ 141,274 $ 373,389 $ 434,203 Reconciliation of Operating Loss to Non-GAAP Operating Income (Loss): Three Months Ended Nine Months Ended September 30, September 30, 2022 2023 2022 2023 Operating loss $ (39,268 ) $ (25,737 ) $ (122,381 ) $ (111,761 ) Plus: Share-based compensation (1) 31,742 38,601 88,593 102,566 Amortization of share-based compensation capitalized in software development costs (3) 88 103 264 309 Amortization of intangible assets (2) 1,793 1,843 4,797 5,523 Acquisition related expenses 1,653 - 2,244 - Impairment of capitalized software development costs 2,067 - 2,067 Non-GAAP operating income (loss) $ (3,992 ) $ 16,877 $ (26,483 ) $ (1,296 ) Reconciliation of Net Loss to Non-GAAP Net Income (loss): Three Months Ended Nine Months Ended September 30, September 30, 2022 2023 2022 2023 Net loss $ (32,725 ) $ (14,609 ) $ (108,164 ) $ (75,415 ) Plus: Share-based compensation (1) 31,742 38,601 88,593 102,566 Amortization of share-based compensation capitalized in software development costs (3) 88 103 264 309 Amortization of intangible assets (2) 1,793 1,843 4,797 5,523 Acquisition related expenses 1,653 - 2,244 - Amortization of debt discount and issuance costs 746 748 2,234 2,244 Unrealized Gain from investment in privately held companies (324 ) (250 ) (324 ) (544 ) Impairment of capitalized software development costs - 2,067 - 2,067 Taxes on income related to non-GAAP adjustments (5,307 ) (8,894 ) (14,629 ) (22,808 ) Non-GAAP net income (loss) $ (2,334 ) $ 19,609 $ (24,985 ) $ 13,942 Non-GAAP net income (loss) per share Basic $ (0.06 ) $ 0.47 $ (0.62 ) $ 0.34 Diluted $ (0.06 ) $ 0.42 $ (0.62 ) $ 0.30 Weighted average number of shares Basic 40,834,640 41,899,371 40,488,909 41,539,052 Diluted 40,834,640 46,641,527 40,488,909 46,134,041 (1) Share-based Compensation : Three Months Ended Nine Months Ended September 30, September 30, 2022 2023 2022 2023 Cost of revenues - Subscription $ 634 $ 1,149 $ 1,527 $ 2,959 Cost of revenues - Perpetual license 42 11 103 30 Cost of revenues - Maintenance and Professional services 3,354 3,620 9,332 10,123 Research and development 6,983 7,867 19,787 21,797 Sales and marketing 13,654 15,800 37,415 43,990 General and administrative 7,075 10,154 20,429 23,667 Total share-based compensation $ 31,742 $ 38,601 $ 88,593 $ 102,566 (2) Amortization of intangible assets : Three Months Ended Nine Months Ended September 30, September 30, 2022 2023 2022 2023 Cost of revenues - Subscription $ 1,598 $ 1,704 $ 4,231 $ 5,113 Cost of revenues - Perpetual license 41 - 108 - Sales and marketing 154 139 458 410 Total amortization of intangible assets $ 1,793 $ 1,843 $ 4,797 $ 5,523 (3) Classified as Cost of revenues - Subscription. View source version on businesswire.com: https://www.businesswire.com/news/home/20231102454423/en/Contacts Investor Contact: Erica Smith CyberArk Phone: +1-617-558-2132 ir@cyberark.com Media Contact: 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 2023 Results By: CyberArk via Business Wire November 02, 2023 at 07:00 AM EDT Company Exceeds Expectations Across all Guided Metrics Subscription Portion of Annual Recurring Revenue (ARR) of $504 million; Growth of 68% Year-over-Year Total ARR of $705 million; Growth of 38% Year-over-Year Subscription Revenue of $122.9 million in Q3; Growth of 65% Year-Over-Year Record Total Revenue of $191.2 million in Q3 Exceeds Guidance; Growth Accelerating to 25% Year-Over-Year Company Significantly Raises Full Year ARR Guidance to a Range of $758 million to $768 million from $743 million to $753 million CyberArk (NASDAQ: CYBR), the identity security company, today announced strong financial results for the third quarter ended September 30, 2023. “Strong execution and robust industry tailwinds drove our outperformance in the third quarter and our results significantly exceeded expectations across all guided metrics,” said Matt Cohen, CyberArk's Chief Executive Officer. “We delivered one of the best financial performances in the company’s history in the third quarter and our business accelerated. Our identity security platform is gaining momentum in both our customer base and with new customers who recognize the critical requirement to secure all identities, human and machine, with intelligent privileged controls. The durable demand for our solutions is the result of the severe threat landscape paired with the exponential growth of identities and environments. We delivered robust net new ARR, 68 percent growth in Subscription ARR to $504 million and 38 percent growth in total ARR to $705 million. Our consistent execution, strong competitive position and confidence in the demand environment is best demonstrated by the significant increase in our full year ARR guidance. As the clear leader in identity security, we have a tremendous opportunity in front of us and are well positioned to deliver strong long-term growth, profitability and cash flow.” Financial Summary for the Third Quarter Ended September 30, 2023 Subscription revenue was $122.9 million in the third quarter of 2023, an increase of 65 percent from $74.2 million in the third quarter of 2022. Maintenance and professional services revenue was $64.3 million in the third quarter of 2023, compared to $64.6 million in the third quarter of 2022. Perpetual license revenue was $4.1 million in the third quarter of 2023, compared to $13.8 million in the third quarter of 2022. Total revenue was $191.2 million in the third quarter of 2023, up 25 percent from $152.7 million in the third quarter of 2022, outperforming guidance. GAAP operating loss was $(25.7) million and non-GAAP operating income was $16.9 million in the third quarter of 2023, outperforming guidance. GAAP net loss was $(14.6) million, or $(0.35) per basic and diluted share, in the third quarter of 2023. Non-GAAP net income was $19.6 million, or $0.42 per diluted share, in the third quarter of 2023, outperforming guidance. Balance Sheet and Net Cash Provided by Operating Activities As of September 30, 2023, CyberArk had $1.2 billion in cash, cash equivalents, marketable securities, and short-term deposits. During the nine months ended September 30, 2023, the Company’s net cash provided by operating activities was $9.3 million. As of September 30, 2023, total deferred revenue was $423.1 million, a 12 percent increase from $376.1 million at September 30, 2022. Key Business Highlights Annual Recurring Revenue (ARR) was $705 million, an increase of 38 percent from $512 million at September 30, 2022. The Subscription portion of ARR was $504 million, or 72 percent of total ARR at September 30, 2023. This represents an increase of 68 percent from $301 million, or 59 percent of total ARR, at September 30, 2022. The Maintenance portion of ARR was $200 million at September 30, 2023, compared to $211 million at September 30, 2022. Recurring revenue in the third quarter was $174.4 million, an increase of 36 percent from $128.5 million for the third quarter of 2022. Recent Developments CyberArk was named a Leader in 2023 Gartner Magic Quadrant for Privileged Access Management.(1) CyberArk is recognized in this report for the fifth consecutive time. CyberArk launched Artificial Intelligence Center of Excellence to combat attacker innovation with identity security innovation. CyberArk was named a Leader in The Forrester Wave™: Privileged Identity Management, Q4 2023,(2) receiving the top score in the ‘Current Offering’ category as well as the highest possible score in 16 criteria including: least privilege access, just-in-time access, development and DevOps support, threat detection and response, innovation and partner ecosystem. Business Outlook Based on information available as of November 2, 2023, CyberArk is issuing guidance for the fourth quarter and full year 2023 as indicated below. Fourth Quarter 2023: Total revenue is expected to be in the range of $206.5 million and $211.5 million, representing growth of 22 percent to 25 percent compared to the fourth quarter of 2022. Non-GAAP operating income is expected to be in the range of $19.0 million to $23.0 million. Non-GAAP net income per share is expected to be in the range of $0.41 to $0.50 per diluted share. Assumes 47.1 million weighted average diluted shares. Full Year 2023: Total revenue is expected to be in the range of $735.3 million to $740.3 million, representing growth of 24 percent to 25 percent compared to the full year 2022. Non-GAAP operating income is expected to be in the range of $17.7 million to $21.7 million. Non-GAAP net income per share is expected to be in the range of $0.72 to $0.80 per diluted share. Assumes 46.5 million weighted average diluted shares. ARR as of December 31, 2023 is expected to be in the range of $758 million to $768 million, representing growth of 33 percent to 35 percent from December 31, 2022. (1) Gartner® Magic Quadrant™ for Privileged Access Management, by Felix Gaehtgens, James Hoover, Michael Kelley, Brian Guthrie, Abhyuday Data, 5 September 2023 (2) The Forrester Wave™: Privileged Identity Management, Q4 2023 by Geoff Cairns, October 11, 2023 Conference Call Information In conjunction with this announcement, CyberArk will host a conference call on Thursday, November 2, 2023 at 8:30 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 intelligent privilege controls, CyberArk provides the most comprehensive security offering for any identity – human or machine – across business applications, distributed workforces, hybrid cloud environments 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 LinkedIn, Twitter, Facebook or YouTube. Copyright © 2023 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, self-hosted subscription 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 self-hosted subscription 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 self-hosted subscription contracts in effect at the end of the reported period. Recurring Revenue Recurring Revenue is defined as revenue derived from SaaS and self-hosted subscription 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, amortization of intangible assets related to acquisitions, and impairment of capitalized software development costs. Non-GAAP operating expense is calculated as GAAP operating expenses excluding share-based compensation expense, 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, impairment of capitalized software development 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, acquisition related expenses, amortization of intangible assets related to acquisitions, impairment of capitalized software development costs, amortization of debt discount and issuance costs, gain from investment in privately held companies, and the tax effect of non-GAAP adjustments. Free cash flow is calculated as net cash provided by operating activities less purchase of property and equipment. The Company believes that providing non-GAAP financial measures that are adjusted by, as applicable, share-based compensation expense, acquisition related expenses, amortization of intangible assets related to acquisitions, impairment of capitalized software development costs, non-cash interest expense related to the amortization of debt discount and issuance cost, gain from investment in privately held companies, and the tax effect of the non-GAAP adjustments and purchase of property and equipment allows for more meaningful comparisons of its period to period operating results. Share-based compensation expense has been, and will continue to be for the foreseeable future, a significant recurring expense in the Company’s business and an important part of the compensation provided to its employees. Share based compensation expense has varying available valuation methodologies, subjective assumptions and a variety of equity instruments that can impact a company’s non-cash expense. The Company believes that expenses related to its acquisitions, amortization of intangible assets related to acquisitions, 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; fluctuation in the Company’s quarterly results of operations due to sales cycles and multiple pricing and delivery models; the Company’s ability to sell into existing and new customers and industry verticals; an increase in competition within the Privileged Access Management and Identity Security markets; unanticipated product vulnerabilities or cybersecurity breaches of the Company’s, or the Company’s customers’ or partners’ systems; complications or risks in connection with the Company’s subscription model, including uncertainty regarding renewals from its existing customer base, and retaining sufficient subscription or maintenance and support service renewal rates; risks related to compliance with privacy and data protection laws and regulations; risks regarding potential negative economic conditions in the global economy or certain regions, including conditions resulting from financial and credit market fluctuations, rising interest rates, bank failures, inflation, and the potential for regional or global recessions; the Company’s ability to hire, train, retain and motivate qualified personnel; reliance on third-party cloud providers for the Company’s operations and SaaS solutions; the Company’s history of incurring net losses and its ability to achieve profitability in the future; risks related to the Company’s ongoing transition to a new Chief Executive Officer; risks related to sales made to government entities; the Company’s ability to find, complete, fully integrate or achieve the expected benefits of strategic acquisitions; the duration and scope of the COVID-19 pandemic and its resulting effect on the demand for the Company’s solutions and on its expected revenue growth rates and costs; the Company’s ability to expand its sales and marketing efforts and expand its channel partnerships across existing and new geographies; regulatory and geopolitical risks associated with global sales and operations, as well as the location of our principal executive offices, most of our research and development activities and other significant operations in Israel; 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. Gartner Disclaimers GARTNER is a registered trademark and service mark of Gartner and Magic Quadrant and Peer Insights are a registered trademark, of Gartner, Inc. and/or its affiliates in the U.S. and internationally and are used herein with permission. All rights reserved. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. Gartner Peer Insights content consists of the opinions of individual end users based on their own experiences with the vendors listed on the platform, should not be construed as statements of fact, nor do they represent the views of Gartner or its affiliates. Gartner does not endorse any vendor, product or service depicted in this content nor makes any warranties, expressed or implied, with respect to this content, about its accuracy or completeness, including any warranties of merchantability or fitness for a particular purpose. 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, 2022 2023 2022 2023 Revenues: Subscription $ 74,249 $ 122,879 $ 192,198 $ 321,766 Perpetual license 13,790 4,056 35,385 13,028 Maintenance and professional services 64,631 64,301 194,976 193,990 Total revenues 152,670 191,236 422,559 528,784 Cost of revenues: Subscription 12,214 21,281 32,487 54,859 Perpetual license 703 642 1,980 1,173 Maintenance and professional services 19,548 19,816 56,751 60,446 Total cost of revenues 32,465 41,739 91,218 116,478 Gross profit 120,205 149,497 331,341 412,306 Operating expenses: Research and development 48,437 51,733 138,844 157,653 Sales and marketing 90,298 98,859 254,536 299,376 General and administrative 20,738 24,642 60,342 67,038 Total operating expenses 159,473 175,234 453,722 524,067 Operating loss (39,268 ) (25,737 ) (122,381 ) (111,761 ) Financial income, net 3,641 12,424 6,269 33,912 Loss before taxes on income (35,627 ) (13,313 ) (116,112 ) (77,849 ) Tax benefit (taxes on income) 2,902 (1,296 ) 7,948 2,434 Net loss $ (32,725 ) $ (14,609 ) $ (108,164 ) $ (75,415 ) Basic loss per ordinary share $ (0.80 ) $ (0.35 ) $ (2.67 ) $ (1.82 ) Diluted loss per ordinary share $ (0.80 ) $ (0.35 ) $ (2.67 ) $ (1.82 ) Shares used in computing net loss per ordinary shares, basic 40,834,640 41,899,371 40,488,909 41,539,052 Shares used in computing net loss per ordinary shares, diluted 40,834,640 41,899,371 40,488,909 41,539,052 CYBERARK SOFTWARE LTD. Consolidated Balance Sheets U.S. dollars in thousands (Unaudited) December 31, September 30, 2022 2023 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 347,338 $ 372,196 Short-term bank deposits 305,843 284,461 Marketable securities 301,101 249,539 Trade receivables 120,817 118,983 Prepaid expenses and other current assets 22,482 26,308 Total current assets 1,097,581 1,051,487 LONG-TERM ASSETS: Marketable securities 227,748 322,026 Property and equipment, net 23,474 17,814 Intangible assets, net 27,508 22,050 Goodwill 153,241 153,241 Other long-term assets 217,040 213,243 Deferred tax asset 72,809 85,005 Total long-term assets 721,820 813,379 TOTAL ASSETS $ 1,819,401 $ 1,864,866 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 13,642 $ 12,624 Employees and payroll accruals 77,328 70,750 Accrued expenses and other current liabilities 33,584 33,022 Deferred revenues 327,918 357,282 Total current liabilities 452,472 473,678 LONG-TERM LIABILITIES: Convertible senior notes, net 569,344 571,590 Deferred revenues 80,524 65,773 Other long-term liabilities 38,917 33,376 Total long-term liabilities 688,785 670,739 TOTAL LIABILITIES 1,141,257 1,144,417 SHAREHOLDERS' EQUITY: Ordinary shares of NIS 0.01 par value 107 110 Additional paid-in capital 660,289 774,882 Accumulated other comprehensive income (loss) (15,560 ) (12,436 ) Retained earnings (accumulated deficit) 33,308 (42,107 ) Total shareholders' equity 678,144 720,449 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,819,401 $ 1,864,866 CYBERARK SOFTWARE LTD. Consolidated Statements of Cash Flows U.S. dollars in thousands (Unaudited) Nine Months Ended September 30, 2022 2023 Cash flows from operating activities: Net loss $ (108,164 ) $ (75,415 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 11,883 15,097 Amortization of premium and accretion of discount on marketable securities, net 3,976 (2,724 ) Share-based compensation 88,593 102,565 Deferred income taxes, net (14,267 ) (10,763 ) Decrease in trade receivables 23,865 1,834 Amortization of debt discount and issuance costs 2,234 2,245 Increase in prepaid expenses, other current and long-term assets and others (19,769 ) (22,564 ) Changes in operating lease right-of-use assets 2,781 5,495 Increase (decrease) in trade payables 509 (980 ) Increase in short-term and long-term deferred revenues 58,814 14,613 Decrease in employees and payroll accruals (16,285 ) (13,579 ) Increase in accrued expenses and other current and long-term liabilities 2,259 669 Changes in operating lease liabilities (7,218 ) (7,187 ) Net cash provided by operating activities 29,211 9,306 Cash flows from investing activities: Investment in short and long term deposits (320,320 ) (204,461 ) Proceeds from short and long term deposits 363,905 243,630 Investment in marketable securities and other (318,566 ) (322,049 ) Proceeds from sales and maturities of marketable securities and other 256,899 285,445 Purchase of property and equipment (8,778 ) (4,253 ) Payments for business acquisitions, net of cash acquired (41,285 ) - Net cash used in investing activities (68,145 ) (1,688 ) Cash flows from financing activities: Proceeds from (payment of) withholding tax related to employee stock plans (811 ) 3,210 Proceeds from exercise of stock options 1,729 4,209 Proceeds in connection with employees stock purchase plan 12,322 11,776 Payments of contingent consideration related to acquisitions (1,578 ) - Net cash provided by financing activities 11,662 19,195 Increase (decrease) in cash, cash equivalents (27,272 ) 26,813 Effect of exchange rate differences on cash, cash equivalents (5,045 ) (1,955 ) Cash and cash equivalents at the beginning of the period 356,850 347,338 Cash and cash equivalents at the end of the period $ 324,533 $ 372,196 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, 2022 2023 2022 2023 Net cash provided by operating activities $ 18,481 $ 14,353 $ 29,211 $ 9,306 Less: Purchase of property and equipment (4,618 ) (731 ) (8,778 ) (4,253 ) Free cash flow $ 13,863 $ 13,622 $ 20,433 $ 5,053 GAAP net cash used in investing activities (72,380 ) (42,788 ) (68,145 ) (1,688 ) GAAP net cash provided by (used in) financing activities (1,602 ) 5,510 11,662 19,195 Reconciliation of Gross Profit to Non-GAAP Gross Profit: Three Months Ended Nine Months Ended September 30, September 30, 2022 2023 2022 2023 Gross profit $ 120,205 $ 149,497 $ 331,341 $ 412,306 Plus: Share-based compensation (1) 4,030 4,780 10,962 13,112 Amortization of share-based compensation capitalized in software development costs (3) 88 103 264 309 Amortization of intangible assets (2) 1,639 1,704 4,339 5,113 Impairment of capitalized software development costs - 2,067 - 2,067 Non-GAAP gross profit $ 125,962 $ 158,151 $ 346,906 $ 432,907 Reconciliation of Operating Expenses to Non-GAAP Operating Expenses: Three Months Ended Nine Months Ended September 30, September 30, 2022 2023 2022 2023 Operating expenses $ 159,473 $ 175,234 $ 453,722 $ 524,067 Less: Share-based compensation (1) 27,712 33,821 77,631 89,454 Amortization of intangible assets (2) 154 139 458 410 Acquisition related expenses 1,653 - 2,244 - Non-GAAP operating expenses $ 129,954 $ 141,274 $ 373,389 $ 434,203 Reconciliation of Operating Loss to Non-GAAP Operating Income (Loss): Three Months Ended Nine Months Ended September 30, September 30, 2022 2023 2022 2023 Operating loss $ (39,268 ) $ (25,737 ) $ (122,381 ) $ (111,761 ) Plus: Share-based compensation (1) 31,742 38,601 88,593 102,566 Amortization of share-based compensation capitalized in software development costs (3) 88 103 264 309 Amortization of intangible assets (2) 1,793 1,843 4,797 5,523 Acquisition related expenses 1,653 - 2,244 - Impairment of capitalized software development costs 2,067 - 2,067 Non-GAAP operating income (loss) $ (3,992 ) $ 16,877 $ (26,483 ) $ (1,296 ) Reconciliation of Net Loss to Non-GAAP Net Income (loss): Three Months Ended Nine Months Ended September 30, September 30, 2022 2023 2022 2023 Net loss $ (32,725 ) $ (14,609 ) $ (108,164 ) $ (75,415 ) Plus: Share-based compensation (1) 31,742 38,601 88,593 102,566 Amortization of share-based compensation capitalized in software development costs (3) 88 103 264 309 Amortization of intangible assets (2) 1,793 1,843 4,797 5,523 Acquisition related expenses 1,653 - 2,244 - Amortization of debt discount and issuance costs 746 748 2,234 2,244 Unrealized Gain from investment in privately held companies (324 ) (250 ) (324 ) (544 ) Impairment of capitalized software development costs - 2,067 - 2,067 Taxes on income related to non-GAAP adjustments (5,307 ) (8,894 ) (14,629 ) (22,808 ) Non-GAAP net income (loss) $ (2,334 ) $ 19,609 $ (24,985 ) $ 13,942 Non-GAAP net income (loss) per share Basic $ (0.06 ) $ 0.47 $ (0.62 ) $ 0.34 Diluted $ (0.06 ) $ 0.42 $ (0.62 ) $ 0.30 Weighted average number of shares Basic 40,834,640 41,899,371 40,488,909 41,539,052 Diluted 40,834,640 46,641,527 40,488,909 46,134,041 (1) Share-based Compensation : Three Months Ended Nine Months Ended September 30, September 30, 2022 2023 2022 2023 Cost of revenues - Subscription $ 634 $ 1,149 $ 1,527 $ 2,959 Cost of revenues - Perpetual license 42 11 103 30 Cost of revenues - Maintenance and Professional services 3,354 3,620 9,332 10,123 Research and development 6,983 7,867 19,787 21,797 Sales and marketing 13,654 15,800 37,415 43,990 General and administrative 7,075 10,154 20,429 23,667 Total share-based compensation $ 31,742 $ 38,601 $ 88,593 $ 102,566 (2) Amortization of intangible assets : Three Months Ended Nine Months Ended September 30, September 30, 2022 2023 2022 2023 Cost of revenues - Subscription $ 1,598 $ 1,704 $ 4,231 $ 5,113 Cost of revenues - Perpetual license 41 - 108 - Sales and marketing 154 139 458 410 Total amortization of intangible assets $ 1,793 $ 1,843 $ 4,797 $ 5,523 (3) Classified as Cost of revenues - Subscription. View source version on businesswire.com: https://www.businesswire.com/news/home/20231102454423/en/Contacts Investor Contact: Erica Smith CyberArk Phone: +1-617-558-2132 ir@cyberark.com Media Contact: Liz Campbell CyberArk Phone: +1-617-558-2191 press@cyberark.com
Company Exceeds Expectations Across all Guided Metrics Subscription Portion of Annual Recurring Revenue (ARR) of $504 million; Growth of 68% Year-over-Year Total ARR of $705 million; Growth of 38% Year-over-Year Subscription Revenue of $122.9 million in Q3; Growth of 65% Year-Over-Year Record Total Revenue of $191.2 million in Q3 Exceeds Guidance; Growth Accelerating to 25% Year-Over-Year Company Significantly Raises Full Year ARR Guidance to a Range of $758 million to $768 million from $743 million to $753 million
CyberArk (NASDAQ: CYBR), the identity security company, today announced strong financial results for the third quarter ended September 30, 2023. “Strong execution and robust industry tailwinds drove our outperformance in the third quarter and our results significantly exceeded expectations across all guided metrics,” said Matt Cohen, CyberArk's Chief Executive Officer. “We delivered one of the best financial performances in the company’s history in the third quarter and our business accelerated. Our identity security platform is gaining momentum in both our customer base and with new customers who recognize the critical requirement to secure all identities, human and machine, with intelligent privileged controls. The durable demand for our solutions is the result of the severe threat landscape paired with the exponential growth of identities and environments. We delivered robust net new ARR, 68 percent growth in Subscription ARR to $504 million and 38 percent growth in total ARR to $705 million. Our consistent execution, strong competitive position and confidence in the demand environment is best demonstrated by the significant increase in our full year ARR guidance. As the clear leader in identity security, we have a tremendous opportunity in front of us and are well positioned to deliver strong long-term growth, profitability and cash flow.” Financial Summary for the Third Quarter Ended September 30, 2023 Subscription revenue was $122.9 million in the third quarter of 2023, an increase of 65 percent from $74.2 million in the third quarter of 2022. Maintenance and professional services revenue was $64.3 million in the third quarter of 2023, compared to $64.6 million in the third quarter of 2022. Perpetual license revenue was $4.1 million in the third quarter of 2023, compared to $13.8 million in the third quarter of 2022. Total revenue was $191.2 million in the third quarter of 2023, up 25 percent from $152.7 million in the third quarter of 2022, outperforming guidance. GAAP operating loss was $(25.7) million and non-GAAP operating income was $16.9 million in the third quarter of 2023, outperforming guidance. GAAP net loss was $(14.6) million, or $(0.35) per basic and diluted share, in the third quarter of 2023. Non-GAAP net income was $19.6 million, or $0.42 per diluted share, in the third quarter of 2023, outperforming guidance. Balance Sheet and Net Cash Provided by Operating Activities As of September 30, 2023, CyberArk had $1.2 billion in cash, cash equivalents, marketable securities, and short-term deposits. During the nine months ended September 30, 2023, the Company’s net cash provided by operating activities was $9.3 million. As of September 30, 2023, total deferred revenue was $423.1 million, a 12 percent increase from $376.1 million at September 30, 2022. Key Business Highlights Annual Recurring Revenue (ARR) was $705 million, an increase of 38 percent from $512 million at September 30, 2022. The Subscription portion of ARR was $504 million, or 72 percent of total ARR at September 30, 2023. This represents an increase of 68 percent from $301 million, or 59 percent of total ARR, at September 30, 2022. The Maintenance portion of ARR was $200 million at September 30, 2023, compared to $211 million at September 30, 2022. Recurring revenue in the third quarter was $174.4 million, an increase of 36 percent from $128.5 million for the third quarter of 2022. Recent Developments CyberArk was named a Leader in 2023 Gartner Magic Quadrant for Privileged Access Management.(1) CyberArk is recognized in this report for the fifth consecutive time. CyberArk launched Artificial Intelligence Center of Excellence to combat attacker innovation with identity security innovation. CyberArk was named a Leader in The Forrester Wave™: Privileged Identity Management, Q4 2023,(2) receiving the top score in the ‘Current Offering’ category as well as the highest possible score in 16 criteria including: least privilege access, just-in-time access, development and DevOps support, threat detection and response, innovation and partner ecosystem. Business Outlook Based on information available as of November 2, 2023, CyberArk is issuing guidance for the fourth quarter and full year 2023 as indicated below. Fourth Quarter 2023: Total revenue is expected to be in the range of $206.5 million and $211.5 million, representing growth of 22 percent to 25 percent compared to the fourth quarter of 2022. Non-GAAP operating income is expected to be in the range of $19.0 million to $23.0 million. Non-GAAP net income per share is expected to be in the range of $0.41 to $0.50 per diluted share. Assumes 47.1 million weighted average diluted shares. Full Year 2023: Total revenue is expected to be in the range of $735.3 million to $740.3 million, representing growth of 24 percent to 25 percent compared to the full year 2022. Non-GAAP operating income is expected to be in the range of $17.7 million to $21.7 million. Non-GAAP net income per share is expected to be in the range of $0.72 to $0.80 per diluted share. Assumes 46.5 million weighted average diluted shares. ARR as of December 31, 2023 is expected to be in the range of $758 million to $768 million, representing growth of 33 percent to 35 percent from December 31, 2022. (1) Gartner® Magic Quadrant™ for Privileged Access Management, by Felix Gaehtgens, James Hoover, Michael Kelley, Brian Guthrie, Abhyuday Data, 5 September 2023 (2) The Forrester Wave™: Privileged Identity Management, Q4 2023 by Geoff Cairns, October 11, 2023 Conference Call Information In conjunction with this announcement, CyberArk will host a conference call on Thursday, November 2, 2023 at 8:30 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 intelligent privilege controls, CyberArk provides the most comprehensive security offering for any identity – human or machine – across business applications, distributed workforces, hybrid cloud environments 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 LinkedIn, Twitter, Facebook or YouTube. Copyright © 2023 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, self-hosted subscription 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 self-hosted subscription 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 self-hosted subscription contracts in effect at the end of the reported period. Recurring Revenue Recurring Revenue is defined as revenue derived from SaaS and self-hosted subscription 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, amortization of intangible assets related to acquisitions, and impairment of capitalized software development costs. Non-GAAP operating expense is calculated as GAAP operating expenses excluding share-based compensation expense, 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, impairment of capitalized software development 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, acquisition related expenses, amortization of intangible assets related to acquisitions, impairment of capitalized software development costs, amortization of debt discount and issuance costs, gain from investment in privately held companies, and the tax effect of non-GAAP adjustments. Free cash flow is calculated as net cash provided by operating activities less purchase of property and equipment. The Company believes that providing non-GAAP financial measures that are adjusted by, as applicable, share-based compensation expense, acquisition related expenses, amortization of intangible assets related to acquisitions, impairment of capitalized software development costs, non-cash interest expense related to the amortization of debt discount and issuance cost, gain from investment in privately held companies, and the tax effect of the non-GAAP adjustments and purchase of property and equipment allows for more meaningful comparisons of its period to period operating results. Share-based compensation expense has been, and will continue to be for the foreseeable future, a significant recurring expense in the Company’s business and an important part of the compensation provided to its employees. Share based compensation expense has varying available valuation methodologies, subjective assumptions and a variety of equity instruments that can impact a company’s non-cash expense. The Company believes that expenses related to its acquisitions, amortization of intangible assets related to acquisitions, 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; fluctuation in the Company’s quarterly results of operations due to sales cycles and multiple pricing and delivery models; the Company’s ability to sell into existing and new customers and industry verticals; an increase in competition within the Privileged Access Management and Identity Security markets; unanticipated product vulnerabilities or cybersecurity breaches of the Company’s, or the Company’s customers’ or partners’ systems; complications or risks in connection with the Company’s subscription model, including uncertainty regarding renewals from its existing customer base, and retaining sufficient subscription or maintenance and support service renewal rates; risks related to compliance with privacy and data protection laws and regulations; risks regarding potential negative economic conditions in the global economy or certain regions, including conditions resulting from financial and credit market fluctuations, rising interest rates, bank failures, inflation, and the potential for regional or global recessions; the Company’s ability to hire, train, retain and motivate qualified personnel; reliance on third-party cloud providers for the Company’s operations and SaaS solutions; the Company’s history of incurring net losses and its ability to achieve profitability in the future; risks related to the Company’s ongoing transition to a new Chief Executive Officer; risks related to sales made to government entities; the Company’s ability to find, complete, fully integrate or achieve the expected benefits of strategic acquisitions; the duration and scope of the COVID-19 pandemic and its resulting effect on the demand for the Company’s solutions and on its expected revenue growth rates and costs; the Company’s ability to expand its sales and marketing efforts and expand its channel partnerships across existing and new geographies; regulatory and geopolitical risks associated with global sales and operations, as well as the location of our principal executive offices, most of our research and development activities and other significant operations in Israel; 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. Gartner Disclaimers GARTNER is a registered trademark and service mark of Gartner and Magic Quadrant and Peer Insights are a registered trademark, of Gartner, Inc. and/or its affiliates in the U.S. and internationally and are used herein with permission. All rights reserved. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. Gartner Peer Insights content consists of the opinions of individual end users based on their own experiences with the vendors listed on the platform, should not be construed as statements of fact, nor do they represent the views of Gartner or its affiliates. Gartner does not endorse any vendor, product or service depicted in this content nor makes any warranties, expressed or implied, with respect to this content, about its accuracy or completeness, including any warranties of merchantability or fitness for a particular purpose. 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, 2022 2023 2022 2023 Revenues: Subscription $ 74,249 $ 122,879 $ 192,198 $ 321,766 Perpetual license 13,790 4,056 35,385 13,028 Maintenance and professional services 64,631 64,301 194,976 193,990 Total revenues 152,670 191,236 422,559 528,784 Cost of revenues: Subscription 12,214 21,281 32,487 54,859 Perpetual license 703 642 1,980 1,173 Maintenance and professional services 19,548 19,816 56,751 60,446 Total cost of revenues 32,465 41,739 91,218 116,478 Gross profit 120,205 149,497 331,341 412,306 Operating expenses: Research and development 48,437 51,733 138,844 157,653 Sales and marketing 90,298 98,859 254,536 299,376 General and administrative 20,738 24,642 60,342 67,038 Total operating expenses 159,473 175,234 453,722 524,067 Operating loss (39,268 ) (25,737 ) (122,381 ) (111,761 ) Financial income, net 3,641 12,424 6,269 33,912 Loss before taxes on income (35,627 ) (13,313 ) (116,112 ) (77,849 ) Tax benefit (taxes on income) 2,902 (1,296 ) 7,948 2,434 Net loss $ (32,725 ) $ (14,609 ) $ (108,164 ) $ (75,415 ) Basic loss per ordinary share $ (0.80 ) $ (0.35 ) $ (2.67 ) $ (1.82 ) Diluted loss per ordinary share $ (0.80 ) $ (0.35 ) $ (2.67 ) $ (1.82 ) Shares used in computing net loss per ordinary shares, basic 40,834,640 41,899,371 40,488,909 41,539,052 Shares used in computing net loss per ordinary shares, diluted 40,834,640 41,899,371 40,488,909 41,539,052 CYBERARK SOFTWARE LTD. Consolidated Balance Sheets U.S. dollars in thousands (Unaudited) December 31, September 30, 2022 2023 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 347,338 $ 372,196 Short-term bank deposits 305,843 284,461 Marketable securities 301,101 249,539 Trade receivables 120,817 118,983 Prepaid expenses and other current assets 22,482 26,308 Total current assets 1,097,581 1,051,487 LONG-TERM ASSETS: Marketable securities 227,748 322,026 Property and equipment, net 23,474 17,814 Intangible assets, net 27,508 22,050 Goodwill 153,241 153,241 Other long-term assets 217,040 213,243 Deferred tax asset 72,809 85,005 Total long-term assets 721,820 813,379 TOTAL ASSETS $ 1,819,401 $ 1,864,866 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 13,642 $ 12,624 Employees and payroll accruals 77,328 70,750 Accrued expenses and other current liabilities 33,584 33,022 Deferred revenues 327,918 357,282 Total current liabilities 452,472 473,678 LONG-TERM LIABILITIES: Convertible senior notes, net 569,344 571,590 Deferred revenues 80,524 65,773 Other long-term liabilities 38,917 33,376 Total long-term liabilities 688,785 670,739 TOTAL LIABILITIES 1,141,257 1,144,417 SHAREHOLDERS' EQUITY: Ordinary shares of NIS 0.01 par value 107 110 Additional paid-in capital 660,289 774,882 Accumulated other comprehensive income (loss) (15,560 ) (12,436 ) Retained earnings (accumulated deficit) 33,308 (42,107 ) Total shareholders' equity 678,144 720,449 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,819,401 $ 1,864,866 CYBERARK SOFTWARE LTD. Consolidated Statements of Cash Flows U.S. dollars in thousands (Unaudited) Nine Months Ended September 30, 2022 2023 Cash flows from operating activities: Net loss $ (108,164 ) $ (75,415 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 11,883 15,097 Amortization of premium and accretion of discount on marketable securities, net 3,976 (2,724 ) Share-based compensation 88,593 102,565 Deferred income taxes, net (14,267 ) (10,763 ) Decrease in trade receivables 23,865 1,834 Amortization of debt discount and issuance costs 2,234 2,245 Increase in prepaid expenses, other current and long-term assets and others (19,769 ) (22,564 ) Changes in operating lease right-of-use assets 2,781 5,495 Increase (decrease) in trade payables 509 (980 ) Increase in short-term and long-term deferred revenues 58,814 14,613 Decrease in employees and payroll accruals (16,285 ) (13,579 ) Increase in accrued expenses and other current and long-term liabilities 2,259 669 Changes in operating lease liabilities (7,218 ) (7,187 ) Net cash provided by operating activities 29,211 9,306 Cash flows from investing activities: Investment in short and long term deposits (320,320 ) (204,461 ) Proceeds from short and long term deposits 363,905 243,630 Investment in marketable securities and other (318,566 ) (322,049 ) Proceeds from sales and maturities of marketable securities and other 256,899 285,445 Purchase of property and equipment (8,778 ) (4,253 ) Payments for business acquisitions, net of cash acquired (41,285 ) - Net cash used in investing activities (68,145 ) (1,688 ) Cash flows from financing activities: Proceeds from (payment of) withholding tax related to employee stock plans (811 ) 3,210 Proceeds from exercise of stock options 1,729 4,209 Proceeds in connection with employees stock purchase plan 12,322 11,776 Payments of contingent consideration related to acquisitions (1,578 ) - Net cash provided by financing activities 11,662 19,195 Increase (decrease) in cash, cash equivalents (27,272 ) 26,813 Effect of exchange rate differences on cash, cash equivalents (5,045 ) (1,955 ) Cash and cash equivalents at the beginning of the period 356,850 347,338 Cash and cash equivalents at the end of the period $ 324,533 $ 372,196 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, 2022 2023 2022 2023 Net cash provided by operating activities $ 18,481 $ 14,353 $ 29,211 $ 9,306 Less: Purchase of property and equipment (4,618 ) (731 ) (8,778 ) (4,253 ) Free cash flow $ 13,863 $ 13,622 $ 20,433 $ 5,053 GAAP net cash used in investing activities (72,380 ) (42,788 ) (68,145 ) (1,688 ) GAAP net cash provided by (used in) financing activities (1,602 ) 5,510 11,662 19,195 Reconciliation of Gross Profit to Non-GAAP Gross Profit: Three Months Ended Nine Months Ended September 30, September 30, 2022 2023 2022 2023 Gross profit $ 120,205 $ 149,497 $ 331,341 $ 412,306 Plus: Share-based compensation (1) 4,030 4,780 10,962 13,112 Amortization of share-based compensation capitalized in software development costs (3) 88 103 264 309 Amortization of intangible assets (2) 1,639 1,704 4,339 5,113 Impairment of capitalized software development costs - 2,067 - 2,067 Non-GAAP gross profit $ 125,962 $ 158,151 $ 346,906 $ 432,907 Reconciliation of Operating Expenses to Non-GAAP Operating Expenses: Three Months Ended Nine Months Ended September 30, September 30, 2022 2023 2022 2023 Operating expenses $ 159,473 $ 175,234 $ 453,722 $ 524,067 Less: Share-based compensation (1) 27,712 33,821 77,631 89,454 Amortization of intangible assets (2) 154 139 458 410 Acquisition related expenses 1,653 - 2,244 - Non-GAAP operating expenses $ 129,954 $ 141,274 $ 373,389 $ 434,203 Reconciliation of Operating Loss to Non-GAAP Operating Income (Loss): Three Months Ended Nine Months Ended September 30, September 30, 2022 2023 2022 2023 Operating loss $ (39,268 ) $ (25,737 ) $ (122,381 ) $ (111,761 ) Plus: Share-based compensation (1) 31,742 38,601 88,593 102,566 Amortization of share-based compensation capitalized in software development costs (3) 88 103 264 309 Amortization of intangible assets (2) 1,793 1,843 4,797 5,523 Acquisition related expenses 1,653 - 2,244 - Impairment of capitalized software development costs 2,067 - 2,067 Non-GAAP operating income (loss) $ (3,992 ) $ 16,877 $ (26,483 ) $ (1,296 ) Reconciliation of Net Loss to Non-GAAP Net Income (loss): Three Months Ended Nine Months Ended September 30, September 30, 2022 2023 2022 2023 Net loss $ (32,725 ) $ (14,609 ) $ (108,164 ) $ (75,415 ) Plus: Share-based compensation (1) 31,742 38,601 88,593 102,566 Amortization of share-based compensation capitalized in software development costs (3) 88 103 264 309 Amortization of intangible assets (2) 1,793 1,843 4,797 5,523 Acquisition related expenses 1,653 - 2,244 - Amortization of debt discount and issuance costs 746 748 2,234 2,244 Unrealized Gain from investment in privately held companies (324 ) (250 ) (324 ) (544 ) Impairment of capitalized software development costs - 2,067 - 2,067 Taxes on income related to non-GAAP adjustments (5,307 ) (8,894 ) (14,629 ) (22,808 ) Non-GAAP net income (loss) $ (2,334 ) $ 19,609 $ (24,985 ) $ 13,942 Non-GAAP net income (loss) per share Basic $ (0.06 ) $ 0.47 $ (0.62 ) $ 0.34 Diluted $ (0.06 ) $ 0.42 $ (0.62 ) $ 0.30 Weighted average number of shares Basic 40,834,640 41,899,371 40,488,909 41,539,052 Diluted 40,834,640 46,641,527 40,488,909 46,134,041 (1) Share-based Compensation : Three Months Ended Nine Months Ended September 30, September 30, 2022 2023 2022 2023 Cost of revenues - Subscription $ 634 $ 1,149 $ 1,527 $ 2,959 Cost of revenues - Perpetual license 42 11 103 30 Cost of revenues - Maintenance and Professional services 3,354 3,620 9,332 10,123 Research and development 6,983 7,867 19,787 21,797 Sales and marketing 13,654 15,800 37,415 43,990 General and administrative 7,075 10,154 20,429 23,667 Total share-based compensation $ 31,742 $ 38,601 $ 88,593 $ 102,566 (2) Amortization of intangible assets : Three Months Ended Nine Months Ended September 30, September 30, 2022 2023 2022 2023 Cost of revenues - Subscription $ 1,598 $ 1,704 $ 4,231 $ 5,113 Cost of revenues - Perpetual license 41 - 108 - Sales and marketing 154 139 458 410 Total amortization of intangible assets $ 1,793 $ 1,843 $ 4,797 $ 5,523 (3) Classified as Cost of revenues - Subscription. 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Investor Contact: Erica Smith CyberArk Phone: +1-617-558-2132 ir@cyberark.com Media Contact: Liz Campbell CyberArk Phone: +1-617-558-2191 press@cyberark.com