CYBR CyberArk Software Ltd

Fourth quarter record total revenue of $80.4 million increased 25% year-over-year

Full year record total revenue of $261.7 million increased 21% year-over-year

Full year record cash flow from operations of $80.7 million increased 43% year-over-year

CyberArk, (NASDAQ: CYBR), the company that protects organizations from cyber attacks that have made their way inside the network perimeter, today announced financial results for the fourth quarter and year ended December 31, 2017.

“The fourth quarter represented a strong finish to 2017 and we were pleased to deliver record revenue and cash flow from operations with strong operating margins,” said Udi Mokady, CyberArk Chairman and CEO. “Our results demonstrate the healthy demand for our solutions across companies of all sizes and vertical markets. During the fourth quarter, we introduced enhancements to our Privileged Account Security solution that strengthened our leadership position as the most comprehensive solution across on-premises, hybrid and cloud environments as well as DevOps. As we look ahead, we remain focused on creating long term shareholder value by delivering sustainable, profitable growth.”

Financial Highlights for the Fourth Quarter Ended December 31, 2017

Revenue:

• Total revenue was $80.4 million, up 25% compared with the fourth quarter of 2016.
• License revenue was $48.6 million, up 19% compared with the fourth quarter of 2016.
• Maintenance and Professional Services revenue was $31.8 million, up 35% compared with the fourth quarter of 2016.

Operating Income:

• GAAP operating income was $11.6 million, compared to $13.2 million in the fourth quarter of 2016. Non-GAAP operating income was $19.7 million, compared to $19.4 million in the fourth quarter of 2016.

Net Income:

• GAAP net income was $3.6 million, or $0.10 per diluted share, compared to GAAP net income of $10.2 million, or $0.28 per diluted share, in the fourth quarter of 2016. Non-GAAP net income was $15.0 million, or $0.41 per diluted share, compared to $14.7 million, or $0.41 per diluted share, in the fourth quarter of 2016.

Financial Highlights for the Full Year Ended December 31, 2017

Revenue:

• Total revenue was $261.7 million, up 21% compared with 2016.
• License revenue was $147.6 million, up 12% compared with 2016.
• Maintenance and Professional Services revenue was $114.1 million, up 34% compared with 2016.

Operating Income:

• GAAP operating income was $20.3 million, compared to $36.0 million in 2016. Non-GAAP operating income was $51.9 million, compared to $58.0 million in 2016.

Net Income:

• GAAP net income $16.0 million, or $0.44 per diluted share, compared to GAAP net income of $28.1 million, or $0.78 per diluted share, in 2016. Non-GAAP net income was $41.9 million, or $1.16 per diluted share, compared to $45.2 million, or $1.26 per diluted share, in 2016.

The tables at the end of this press release include a reconciliation of GAAP to non-GAAP gross profit, operating income and net income for the three and twelve months ended December 31, 2017 and 2016. An explanation of these measures is also included below under the heading “Non-GAAP Financial measures.”

Balance Sheet and Cash Flow From Operations:

• As of December 31, 2017, CyberArk had $330.3 million in cash, cash equivalents, marketable securities and short-term deposits. This compares with $296.8 million in cash, cash equivalents, marketable securities and short-term deposits as of September 30, 2017 and $295.5 million as of December 31, 2016.
• As of December 31, 2017, total deferred revenue was $105.2 million, a 43% increase from $73.5 million at December 31, 2016.
• During 2017, the Company generated $80.7 million in cash flow from operations, a 43% increase compared to $56.3 million during in 2016.

Business Outlook

Based on information available as of February 15, 2018, CyberArk is issuing guidance for the first quarter and full year 2018 as indicated below.

First Quarter 2018:

• Total revenue is expected to be in the range of $68.25 million to $69.75 million, which represents 16% to 18% year-over-year growth.
• Non-GAAP operating income is expected to be in the range of $9.2 million to $10.4 million.
• Non-GAAP net income per share is expected to be in the range of $0.19 to $0.22 per share. This assumes 36.5 million weighted average diluted shares.

Full Year 2018:

• Total revenue is expected to be in the range of $312.0 million to $316.0 million which represents 19% to 21% year-over-year growth.
• Non-GAAP operating income is expected to be in the range of $54.5 million to $57.5 million.
• Non-GAAP net income per share is expected to be in the range of $1.18 to $1.24 per share. This assumes 36.7 million weighted average diluted shares.

Conference Call Information

In conjunction with this announcement, CyberArk will host a conference call on Thursday, February 15, 2018 at 8:30 a.m. Eastern Time (ET) to discuss the company’s fourth quarter and year end 2017 financial results and its business outlook. To access this call, dial +1 844-237-3590 (U.S.) or +1 484-747-6582 (international). The conference ID is 8986489. Additionally, a live webcast of the conference call will be available via the “Investor Relations” section of the company’s web site at www.cyberark.com.

Following the conference call, a replay will be available for one week at +1 855-859-2056 (U.S.) or +1 404-537-3406 (international). The replay pass code is 8986489. An archived webcast of the conference call will also be available in the “Investor Relations” section of the company’s web site at www.cyberark.com.

About CyberArk

CyberArk (NASDAQ: CYBR) is the global leader in privileged account security, a critical layer of IT security to protect data, infrastructure and assets across the enterprise, in the cloud and throughout the DevOps pipeline. CyberArk delivers the industry’s most complete solution to reduce risk created by privileged credentials and secrets. The company is trusted by the world’s leading organizations, including more than 50 percent of the Fortune 100, to protect against external attackers and malicious insiders. A global company, CyberArk is headquartered in Petach Tikva, Israel, with U.S. headquarters located in Newton, Mass. The company also has offices throughout the Americas, EMEA, Asia Pacific and Japan. To learn more about CyberArk, visit www.cyberark.com, read the CyberArk blogs or follow on Twitter via @CyberArk, LinkedIn or Facebook.

Copyright © 2018 CyberArk Software. All Rights Reserved. All other brand names, product names, or trademarks belong to their respective holders.

Non-GAAP Financial Measures

CyberArk believes that the use of non-GAAP gross profit, non-GAAP operating income and non-GAAP net income is helpful to our investors. These financial measures are not measures of the Company’s financial performance under U.S. GAAP and should not be considered as alternatives to operating income or net income or any other performance measures derived in accordance with GAAP.

• Non-GAAP gross profit is calculated as gross profit excluding share-based compensation expense and amortization of intangible assets related to acquisitions.
• Non-GAAP operating income is calculated as operating income excluding share-based compensation expense, acquisition related expenses, facility exit costs and amortization of intangible assets related to acquisitions.
• Non-GAAP net income is calculated as net income excluding share-based compensation expense, acquisition related expenses, facility exit costs, amortization of intangible assets related to acquisitions and the tax effect of the non-GAAP adjustments as well as the impact of a one-time adjustment to our deferred tax asset as a result of the US Tax Cuts and Jobs Act 2017.

The Company believes that providing non-GAAP financial measures that exclude share-based compensation acquisition related expenses, facility exit costs, amortization of intangible assets related to acquisitions and the one-time impact of the US Tax Cuts and Jobs Act of 2017 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 the variety of equity instruments that can impact a company’s non-cash expense. The Company believes that expenses related to its acquisitions, facility exit costs, amortization of intangible assets related to acquisitions and the one-time impact of the US Tax Cuts and Jobs Act of 2017, do not reflect the performance of its core business and impact period-to-period comparability.

Non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in the Company’s industry, as other companies in the industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. In addition, there are limitations in using non-GAAP financial measures as they exclude expenses that may have a material impact on the Company’s reported financial results. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with U.S. GAAP. CyberArk urges investors to review the reconciliation of its non-GAAP financial measures to the comparable U.S. GAAP financial measures included below, and not to rely on any single financial measures to evaluate its business.

Cautionary Language Concerning Forward-Looking Statements

This release may contain forward-looking statements, which express the current beliefs and expectations of CyberArk’s (the “Company”) management. In some cases, forward-looking statements may be identified by terminology such as “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential” or the negative of these terms or other similar expressions. Such statements involve a number of known and unknown risks and uncertainties that could cause the Company’s future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risks relating to: changes in the rapidly evolving cyber threat landscape; failure to effectively manage growth; near-term declines in our operating and net profit margins and our revenue growth rate; real or perceived shortcomings, defects or vulnerabilities in the Company’s solutions or internal network system, or the failure of the Company’s customers or channel partners to correctly implement the Company’s solutions; fluctuations in quarterly results of operations; the inability to acquire new customers or sell additional products and services to existing customers; competition from IT security vendors; the Company’s ability to successfully integrate recent and or future acquisitions; and other factors discussed under the heading “Risk Factors” in the Company’s most recent annual report on Form 20-F filed with the Securities and Exchange Commission. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

                            CYBERARK SOFTWARE LTD. Consolidated Statements of Operations U.S. dollars in thousands (except per share data) (Unaudited)   Three Months Ended Twelve Months Ended December 31, December 31,   2016     2017     2016     2017     Revenues: License $ 40,794 $ 48,552 $ 131,530 $ 147,640 Maintenance and professional services 23,564 31,816 85,083 114,061         Total revenues 64,358 80,368 216,613 261,701   Cost of revenues: License 1,085 2,259 4,726 7,911 Maintenance and professional services 7,675 9,360 25,425 33,937         Total cost of revenues 8,760 11,619 30,151 41,848         Gross profit 55,598 68,749 186,462 219,853         Operating expenses: Research and development 9,324 12,245 34,614 42,389 Sales and marketing 26,475 36,684 93,775 126,739 General and administrative 6,590 8,185 22,117 30,399         Total operating expenses 42,389 57,114 150,506 199,527         Operating income 13,209 11,635 35,956 20,326   Financial income (expenses), net   (96 )   1,612     245     4,103     Income before taxes on income 13,113 13,247 36,201 24,429   Taxes on income   (2,874 )   (9,695 )   (8,077 )   (8,414 )   Net income $ 10,239   $ 3,552   $ 28,124   $ 16,015       Basic net income per ordinary share $ 0.30   $ 0.10   $ 0.83   $ 0.46   Diluted net income per ordinary share $ 0.28   $ 0.10   $ 0.78   $ 0.44     Shares used in computing net income per ordinary shares, basic   34,158,580     35,182,870     33,741,359     34,824,312   Shares used in computing net income per ordinary shares, diluted   36,003,803     36,296,609     35,838,863     36,175,824           Share-based Compensation Expense:   Three Months Ended Twelve Months Ended December 31, December 31,   2016     2017     2016     2017       Cost of revenues $ 437 $ 631 $ 1,386 $ 2,289 Research and development 1,319 1,503 4,660 6,110 Sales and marketing 1,625 2,494 5,765 8,642 General and administrative   1,711     1,966     5,724     8,196     Total share-based compensation expense $ 5,092   $ 6,594   $ 17,535   $ 25,237               CYBERARK SOFTWARE LTD. Consolidated Balance Sheets U.S. dollars in thousands (Unaudited)   December 31, December 31, 2016 2017     ASSETS   CURRENT ASSETS: Cash and cash equivalents $ 172,957 $ 161,261 Short-term bank deposits 86,829 107,647 Marketable securities 15,246 34,025 Trade receivables 33,330 45,315 Prepaid expenses and other current assets   4,804     7,407   Total current assets   313,166     355,655   LONG-TERM ASSETS: Property and equipment, net 4,760 9,230 Intangible assets, net 14,035 15,664 Goodwill 35,145 69,217 Marketable securities 20,443 27,407 Severance pay fund 3,332 3,692 Prepaid expenses and other long-term assets 1,761 2,368 Deferred tax asset   10,389     19,343   Total long-term assets   89,865     146,921   TOTAL ASSETS $ 403,031   $ 502,576   LIABILITIES AND SHAREHOLDERS' EQUITY   CURRENT LIABILITIES: Trade payables $ 2,699 $ 1,960 Employees and payroll accruals 18,470 25,253 Accrued expenses and other current liabilities 6,876 10,209 Deferred revenues   50,111     66,986   Total current liabilities   78,156     104,408   LONG-TERM LIABILITIES: Deferred revenues 23,395 38,249 Other long-term liabilities 229 242 Accrued severance pay   5,035     5,712   Total long-term liabilities   28,659     44,203   TOTAL LIABILITIES   106,815     148,611   SHAREHOLDERS' EQUITY: Ordinary shares of NIS 0.01 par value 88 91 Additional paid-in capital 221,609 249,874 Accumulated other comprehensive income (loss) (175 ) 107 Retained earnings   74,694     103,893   Total shareholders' equity   296,216     353,965   TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 403,031   $ 502,576    

 

              CYBERARK SOFTWARE LTD. Consolidated Statements of Cash Flows U.S. dollars in thousands (Unaudited)   Twelve Months Ended December 31,   2016     2017     Cash flows from operating activities: Net income $ 28,124 $ 16,015 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and Amortization 6,488 7,856 Amortization of premium on marketable securities 275 382 Share-based compensation expenses 17,535 25,237 Tax benefit related to share-based compensation (1,466 ) - Deferred income taxes, net (1,130 ) 5,856 Increase in trade receivables (12,920 ) (11,631 ) Increase in prepaid expenses and other current and long-term assets (1,485 ) (3,278 ) Decrease in trade payables (177 ) (1,288 ) Increase in short term and long term deferred revenues 19,117 31,729 Increase in employees and payroll accruals 2,610 6,316 Increase (decrease) in accrued expenses and other current and long-term liabilities (927 ) 3,226 Increase in accrued severance pay, net   266     317     Net cash provided by operating activities   56,310     80,737     Cash flows from investing activities: Investment in short and long term deposits (82,940 ) (20,722 ) Investment in marketable securities (40,433 ) (43,604 ) Proceeds from maturities of marketable securities 4,307 17,355 Purchase of property and equipment (2,795 ) (6,757 ) Payments for business acquisitions, net of cash acquired   -     (41,329 )   Net cash used in investing activities   (121,861 )   (95,057 )   Cash flows from financing activities: Tax benefit related to share-based compensation 1,466 - Proceeds from exercise of stock options   2,503     2,624     Net cash provided by financing activities   3,969     2,624     Decrease in cash and cash equivalents (61,582 ) (11,696 )   Cash and cash equivalents at the beginning of the period   234,539     172,957     Cash and cash equivalents at the end of the period $ 172,957   $ 161,261                                 CYBERARK SOFTWARE LTD. Reconciliation of GAAP Measures to Non-GAAP Measures U.S. dollars in thousands (except per share data) (Unaudited)       Reconciliation of Gross Profit to Non-GAAP Gross Profit:   Three Months Ended Twelve Months Ended December 31, December 31, 2016 2017 2016 2017   Gross profit $ 55,598 $ 68,749 $ 186,462 $ 219,853 Plus: Share-based compensation - Maintenance & professional services 437 631 1,386 2,289 Amortization of intangible assets - License   355     1,183     1,420     4,213     Non-GAAP gross profit $ 56,390   $ 70,563   $ 189,268   $ 226,355             Reconciliation of Operating Income to Non-GAAP Operating Income:   Three Months Ended Twelve Months Ended December 31, December 31, 2016 2017 2016 2017     Operating income $ 13,209 $ 11,635 $ 35,956 $ 20,326 Plus: Share-based compensation 5,092 6,594 17,535 25,237 Amortization of intangible assets - Cost of revenues 355 1,183 1,420 4,213 Amortization of intangible assets - Research and development 479 - 1,913 - Amortization of intangible assets - Sales and marketing 287 262 1,190 1,046 Acquisition related expenses - - - 686 Facility exit costs   -     -     -     342     Non-GAAP operating income $ 19,422   $ 19,674   $ 58,014   $ 51,850       Reconciliation of Net Income to Non-GAAP Net Income:   Three Months Ended Twelve Months Ended December 31, December 31, 2016 2017 2016 2017       Net income $ 10,239 $ 3,552 $ 28,124 $ 16,015 Plus: Share-based compensation 5,092 6,594 17,535 25,237 Amortization of intangible assets - Cost of revenues 355 1,183 1,420 4,213 Amortization of intangible assets - Research and development 479 - 1,913 - Amortization of intangible assets - Sales and marketing 287 262 1,190 1,046 Acquisition related expenses - - - 686 Facility exit costs - - - 342 Taxes on income related to non-GAAP adjustments (1,782 ) (3,180 ) (4,937 ) (12,226 )

Change in the US federal tax rate

  -     6,582     -     6,582     Non-GAAP net income $ 14,670   $ 14,993   $ 45,245   $ 41,895     Non-GAAP net income per share Basic $ 0.43   $ 0.43   $ 1.34   $ 1.20   Diluted $ 0.41   $ 0.41   $ 1.26   $ 1.16     Weighted average number of shares Basic   34,158,580     35,182,870     33,741,359     34,824,312   Diluted   36,003,803     36,296,609     35,838,863     36,175,824        

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CyberArkInvestor Contact:Erica Smith, 617-558-2132ir@cyberark.comorMedia Contact:Liz Campbell, 617-558-2191press@cyberark.com