CyberArk Announces Record Fourth Quarter and Full Year 2018 Results

Fourth quarter total revenue of $109.1 million increases 36%
year-over-year

Fourth quarter GAAP operating income of $27.5 million and non-GAAP
operating income of $39.8 million

Full year total revenue of $343.2 million increases 31% year-over-year

Full year GAAP operating income of $47.3 million and non-GAAP
operating income of $90.5 million

Full year net cash provided by operating activities of $130.1 million
increases 61% year-over-year

NEWTON, Mass. & PETACH TIKVA, Israel–(BUSINESS WIRE)–CyberArk,
(NASDAQ: CYBR), the global leader in privileged
access security
, today announced record financial results for the
fourth quarter and year ended December 31, 2018.

“Our record fourth quarter results capped off a tremendous year for
CyberArk,” said Udi Mokady, CyberArk Chairman and CEO. “We delivered
record results across all operating metrics including revenue, GAAP and
Non-GAAP operating income and net income, as well as cash flow from
operations and new customer additions. We were pleased to accelerate
revenue growth across the Americas, EMEA and APJ, which demonstrates our
strong execution, commitment to innovation, and the robust market
fundamentals. As the recognized leader in privileged access security, we
enter 2019 with strong momentum and are well positioned to deliver
sustainable growth and profitability.”

Financial Highlights for the Fourth Quarter Ended December 31, 2018

Revenue:

  • Total revenue was $109.1 million, up 36% compared with the fourth
    quarter of 2017.
  • License revenue was $66.8 million, up 38% compared with the fourth
    quarter of 2017.
  • Maintenance and Professional Services revenue was $42.3 million, up
    33% compared with the fourth quarter of 2017.

Operating Income:

  • GAAP operating income was $27.5 million, compared to $11.6 million in
    the fourth quarter of 2017. Non-GAAP operating income was $39.8
    million, compared to $19.7 million in the fourth quarter of 2017.

Net Income:

  • GAAP net income was $24.2 million, or $0.64 per diluted share,
    compared to GAAP net income of $3.6 million, or $0.10 per diluted
    share, in the fourth quarter of 2017. Non-GAAP net income was $33.4
    million, or $0.89 per diluted share, compared to $15.0 million, or
    $0.41 per diluted share, in the fourth quarter of 2017.

Financial Highlights for the Full Year Ended December 31, 2018

Revenue:

  • Total revenue was $343.2 million, up 31% compared with 2017.
  • License revenue was $192.5 million, up 30% compared with 2017.
  • Maintenance and Professional Services revenue was $150.7 million, up
    32% compared with 2017.

Operating Income:

  • GAAP operating income was $47.3 million, compared to $20.3 million in
    2017. Non-GAAP operating income was $90.5 million, compared to $51.9
    million in 2017.

Net Income:

  • GAAP net income was $47.1 million, or $1.27 per diluted share,
    compared to GAAP net income of $16.0 million, or $0.44 per diluted
    share, in 2017. Non-GAAP net income was $76.5 million, or $2.06 per
    diluted share, compared to $41.9 million, or $1.16 per diluted share,
    in 2017.

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, 2018 and 2017. 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, 2018, CyberArk had $451.2 million in cash, cash
    equivalents, marketable securities and short-term deposits. This
    compares with $410.0 million in cash, cash equivalents, marketable
    securities and short-term deposits as of September 30, 2018 and $330.3
    million as of December 31, 2017.
  • As of December 31, 2018, total deferred revenue was $149.5 million, a
    42% increase from $105.2 million at December 31, 2017.
  • During 2018, the Company generated $130.1 million in net cash provided
    by operating activities, a 61% increase compared to $80.7 million in
    2017.

Business Outlook

Based on information available as of February 14, 2019, CyberArk is
issuing guidance for the first quarter and full year 2019 as indicated
below.

First Quarter 2019:

  • Total revenue is expected to be in the range of $91.0 million to $93.0
    million, which represents 27% to 30% year-over-year growth.
  • Non-GAAP operating income is expected to be in the range of $18.5
    million to $20.0 million.
  • Non-GAAP net income per share is expected to be in the range of $0.39
    to $0.42 per share. This assumes 38.2 million weighted average diluted
    shares.

Full Year 2019:

  • Total revenue is expected to be in the range of $411.0 million to
    $415.0 million, which represents 20% to 21% year-over-year growth.
  • Non-GAAP operating income is expected to be in the range of $92.5
    million to $95.5 million.
  • Non-GAAP net income per share is expected to be in the range of $1.94
    to $2.00 per share. This assumes 38.5 million weighted average diluted
    shares.

Conference Call Information

In conjunction with this announcement, CyberArk will host a conference
call on Thursday, February 14, 2019 at 8:30 a.m. Eastern Time (ET) to
discuss the company’s fourth quarter and year end financial results and
its business outlook. To access this call, dial +1 866-393-4306 (U.S.)
or +1 561-569-9206 (international). The conference ID is 1675647.
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 +1 855-859-2056 (U.S.) or +1 404-537-3406 (international). The replay
pass code is 1675647. 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 access 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 © 2019 CyberArk Software. All Rights Reserved. All
other brand names, product names, or trademarks belong to their
respective holders.

Non-GAAP Financial Measures

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

  • Non-GAAP gross profit is calculated as gross profit excluding
    share-based compensation expense and amortization of intangible assets
    related to acquisitions.
  • Non-GAAP operating income is calculated as operating income excluding
    share-based compensation expense, acquisition related expenses,
    facility exit and transitions costs and amortization of intangible
    assets related to acquisitions.
  • Non-GAAP net income is calculated as net income excluding share-based
    compensation expense, acquisition related expenses, facility exit and
    transitions costs, amortization of intangible assets related to
    acquisitions, intra-entity intellectual property transfer tax effects,
    changes in the US federal tax rate and the tax effect of the other
    non-GAAP adjustments.

The Company believes that providing non-GAAP financial measures that
exclude share-based compensation, acquisition related expenses,
amortization of intangible assets related to acquisitions, facility exit
and transitions costs, intra-entity intellectual property transfer tax
effects, changes in the US federal tax rate and the tax effect of the
non-GAAP adjustments allows for more meaningful comparisons of its
period to period operating results. Share-based compensation expense has
been and will continue to be for the foreseeable future, a significant
recurring expense in the Company’s business and an important part of the
compensation provided to its employees. Share based compensation expense
has varying available valuation methodologies, subjective assumptions
and a variety of equity instruments that can impact a company’s non-cash
expense. The Company believes that expenses related to its acquisitions
and amortization of intangible assets related to acquisitions, facility
exit and transitions costs, intra-entity intellectual property transfer
tax effects and changes in the US federal tax rate do not reflect the
performance of its core business and impact period-to-period
comparability.

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

Guidance for non-GAAP financial measures excludes, as applicable,
share-based compensation expense, acquisition related expenses, facility
exit and transitions costs, and amortization of intangible assets
related to acquisitions. A reconciliation of the non-GAAP financial
measures guidance to the corresponding GAAP measures is not available on
a forward-looking basis due to the uncertainty regarding, and the
potential variability and significance of, the amounts of share-based
compensation expense, amortization of intangible assets related to
acquisitions, and the non-recurring expenses that are excluded from the
guidance. Accordingly, a reconciliation of the non-GAAP financial
measures guidance to the corresponding GAAP measures for future periods
is not available without unreasonable effort.

Cautionary Language Concerning Forward-Looking Statements

This release contains forward-looking statements, which express the
current beliefs and expectations of CyberArk’s (the “Company”)
management. In some cases, forward-looking statements may be identified
by terminology such as “believe,” “may,” “estimate,” “continue,”
“anticipate,” “intend,” “should,” “plan,” “expect,” “predict,”
“potential” or the negative of these terms or other similar expressions.
Such statements involve a number of known and unknown risks and
uncertainties that could cause the Company’s future results, performance
or achievements to differ significantly from the results, performance or
achievements expressed or implied by such forward-looking statements.
Important factors that could cause or contribute to such differences
include risks relating to: changes in the rapidly evolving cyber threat
landscape; failure to effectively manage growth; 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,
 

2017

    2018     2017     2018  
 
Revenues:
License

$

48,552 $ 66,769 $ 147,640 $ 192,514
Maintenance and professional services 31,816 42,281 114,061 150,685
       
Total revenues 80,368 109,050 261,701 343,199
 
Cost of revenues:
License 2,259 3,005 7,911 10,526
Maintenance and professional services 9,360 10,316 33,937 37,935
       
Total cost of revenues 11,619 13,321 41,848 48,461
       
Gross profit 68,749 95,729 219,853 294,738
       
Operating expenses:
Research and development 12,245 15,340 42,389 57,112
Sales and marketing 36,684 40,307 126,739 148,290
General and administrative 8,185 12,561 30,399 42,044
       
Total operating expenses 57,114 68,208 199,527 247,446
       
Operating income 11,635 27,521 20,326 47,292
 
Financial income, net   1,612     1,078     4,103     4,551  
 
Income before taxes on income 13,247 28,599 24,429 51,843
 
Taxes on income   (9,695 )   (4,419 )   (8,414 )   (4,771 )
 
Net income $ 3,552   $ 24,180   $ 16,015   $ 47,072  
 
 
Basic net income per ordinary share $ 0.10   $ 0.66   $ 0.46   $ 1.30  
Diluted net income per ordinary share $ 0.10   $ 0.64   $ 0.44   $ 1.27  
 
Shares used in computing net income
per ordinary shares, basic   35,182,870     36,570,609     34,824,312     36,174,316  
Shares used in computing net income
per ordinary shares, diluted   36,296,609     37,607,625     36,175,824     37,065,727  
 
 
 
 
Share-based Compensation Expense:
 
Three Months Ended Twelve Months Ended
December 31, December 31,
  2017     2018     2017     2018  
 
 
Cost of revenues $ 631 $ 980 $ 2,289 $ 3,350
Research and development 1,503 2,174 6,110 7,922
Sales and marketing 2,494 3,647 8,642 12,708
General and administrative   1,966     3,493     8,196     11,984  
 
Total share-based compensation expense $ 6,594   $ 10,294   $ 25,237   $ 35,964  
 
       

CYBERARK SOFTWARE LTD.
Consolidated Balance Sheets
U.S.
dollars in thousands

(Unaudited)

 

December 31, December 31,
  2017   2018  
 
 
ASSETS
 
CURRENT ASSETS:
Cash and cash equivalents $ 161,261 $ 260,636
Short-term bank deposits 107,647 106,399
Marketable securities 34,025 59,948
Trade receivables 45,315 48,431
Prepaid expenses and other current assets   7,407   6,349  
 
Total current assets   355,655   481,763  
 
LONG-TERM ASSETS:
Property and equipment, net 9,230 15,120
Intangible assets, net 15,664 14,732
Goodwill 69,217 82,400
Marketable securities 27,407 24,261
Other long-term assets 6,060 31,863
Deferred tax asset   19,343   23,481  
 
Total long-term assets   146,921   191,857  
 
TOTAL ASSETS $ 502,576 $ 673,620  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
CURRENT LIABILITIES:
Trade payables $ 1,960 $ 4,924
Employees and payroll accruals 25,253 32,853
Accrued expenses and other current liabilities 10,209 13,271
Deferred revenues   66,986   92,375  
 
Total current liabilities   104,408   143,423  
 
LONG-TERM LIABILITIES:
Deferred revenues 38,249 57,159
Other long-term liabilities   5,954   6,268  
 
Total long-term liabilities   44,203   63,427  
 
TOTAL LIABILITIES   148,611   206,850  
 
SHAREHOLDERS’ EQUITY:
Ordinary shares of NIS 0.01 par value 91 95
Additional paid-in capital 249,874 303,900
Accumulated other comprehensive income (loss) 107 (939 )
Retained earnings   103,893   163,714  
 
Total shareholders’ equity   353,965   466,770  
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 502,576 $ 673,620  
 
 

 

 
       
 

CYBERARK SOFTWARE LTD.
Consolidated Statements of
Cash Flows

U.S. dollars in thousands
(Unaudited)

 
Twelve Months Ended
December 31,
  2017     2018  
 
Cash flows from operating activities:
Net income $ 16,015 $ 47,072
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 7,856 10,078
Amortization of premium, net of accretion of discount on marketable
securities
382 293
Share-based compensation expenses 25,237 35,964
Deferred income taxes, net 5,856 (7,056 )
Increase in trade receivables (11,631 ) (3,116 )
Increase in prepaid expenses and other current and long-term assets (3,638 ) (11,893 )
Increase (decrease) in trade payables (1,288 ) 1,955
Increase in short term and long term deferred revenues 31,729 47,818
Increase in employees and payroll accruals 6,316 6,896
Increase in accrued expenses and other
current and long-term liabilities   3,903     2,114  
 
Net cash provided by operating activities   80,737     130,125  
 
Cash flows from investing activities:
Proceeds (Investment) in short and long term deposits (20,661 ) 1,600
Investment in marketable securities (43,604 ) (61,118 )
Proceeds from maturities of marketable securities 17,355 37,838
Purchase of property and equipment (6,757 ) (8,613 )
Payments for business acquisitions, net of cash acquired   (41,329 )   (18,450 )
 
Net cash used in investing activities   (94,996 )   (48,743 )
 
Cash flows from financing activities:
Proceeds from exercise of stock options   2,624     17,980  
 
Net cash provided by financing activities   2,624     17,980  
 
Increase (decrease) in cash, cash equivalents and restricted cash (11,635 ) 99,362
 
Cash, cash equivalents and restricted cash at the beginning of the
period
$ 174,156   $ 162,521  
 
Cash, cash equivalents and restricted cash at the end of the period $ 162,521   $ 261,883  
 
 
 
 
 

 

 

 
             
 

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,
  2017     2018     2017     2018  
 
Gross profit $ 68,749 $ 95,729 $ 219,853 $ 294,738
Plus:
Share-based compensation – Maintenance & professional services 631 980 2,289 3,350
Amortization of intangible assets – License   1,183     1,445     4,213     5,563  
 
Non-GAAP gross profit $ 70,563   $ 98,154   $ 226,355   $ 303,651  
 
 
 
 
 
Reconciliation of Operating Income to Non-GAAP Operating Income:
 
Three Months Ended Twelve Months Ended
December 31, December 31,
  2017     2018     2017     2018  
 
 
Operating income $ 11,635 $ 27,521 $ 20,326 $ 47,292
Plus:
Share-based compensation 6,594 10,294 25,237 35,964
Amortization of intangible assets – Cost of revenues 1,183 1,445 4,213 5,563
Amortization of intangible assets – Sales and marketing 262 198 1,046 793
Acquisition related expenses 686 268
Facility exit and transitions costs       327     342     580  
 
Non-GAAP operating income $ 19,674   $ 39,785   $ 51,850   $ 90,460  
 
 
Reconciliation of Net Income to Non-GAAP Net Income:
 
Three Months Ended Twelve Months Ended
December 31, December 31,
  2017     2018     2017     2018  
 
 
Net income $ 3,552 $ 24,180 $ 16,015 $ 47,072
Plus:
Share-based compensation 6,594 10,294 25,237 35,964
Amortization of intangible assets – Cost of revenues 1,183 1,445 4,213 5,563
Amortization of intangible assets – Sales and marketing 262 198 1,046 793
Acquisition related expenses 686 268
Facility exit and transitions costs 327 342 580
Taxes on income related to non-GAAP adjustments (3,180 ) (2,528 ) (12,226 ) (15,485 )
Change in the US federal tax rate 6,582 6,582
Intra-entity IP transfer tax effect, net       (475 )       1,768  
 
Non-GAAP net income $ 14,993   $ 33,441   $ 41,895   $ 76,523  
 
Non-GAAP net income per share
Basic $ 0.43   $ 0.91   $ 1.20   $ 2.12  
Diluted $ 0.41   $ 0.89   $ 1.16   $ 2.06  
 
Weighted average number of shares
Basic   35,182,870     36,570,609     34,824,312     36,174,316  
Diluted   36,296,609     37,607,625     36,175,824     37,065,727  
 

Contacts

Investor Contact:
Erica Smith
CyberArk
617-558-2132
[email protected]

Media
Contact
:
Liz Campbell
CyberArk
617-558-2191
[email protected]

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