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CyberArk Announces Second Quarter 2017 Results
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Globalizes Sales Organization to Continue to Drive Growth

NEWTON, Mass. & PETACH TIKVA, Israel--(BUSINESS WIRE)--Aug. 8, 2017-- 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 second quarter ended June 30, 2017.

“While our results in the second quarter were primarily impacted by certain deals in EMEA that did not close by June 30, we continued to see strong demand for our solutions across on premises, cloud and hybrid environments,” said Udi Mokady, CyberArk Chairman and CEO. “Our global leadership position in the market, strong demand for our solutions and recent organizational changes position us well to deliver long term growth and capitalize on the tremendous opportunity for privileged account security.”

Financial Highlights for the Second Quarter Ended June 30, 2017

Revenue:

  • Total revenue was $57.5 million, an increase from $50.4 million compared to the second quarter of 2016.
  • License revenue was $30.3 million, compared to $30.0 million in the second quarter of 2016.
  • Maintenance and Professional Services revenue was $27.2 million, compared to $20.4 million in the second quarter of 2016.

Operating Income:

  • GAAP operating income was $1.0 million for the quarter, compared to $8.5 million in the second quarter of 2016.
  • Non-GAAP operating income was $8.8 million for the quarter, compared to $13.6 million in the second quarter of 2016.

Net Income:

  • GAAP net income was $3.2 million, or $0.09 per diluted share, compared to GAAP net income of $6.4 million, or $0.18 per diluted share, in the second quarter of 2016.
  • Non-GAAP net income was $7.7 million, or $0.21 per diluted share, compared to $10.5 million, or $0.29 per diluted share, in the second quarter of 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 months and six months ended June 30, 2017 and 2016. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Balance Sheet and Cash Flow:

  • As of June 30, 2017, CyberArk had $283.2 million in cash, cash equivalents, marketable securities and short-term deposits, which reflects the approximately $42 million in cash consideration for the acquisition of Conjur, Inc. in May 2017. This compares to $295.5 million as of December 31, 2016.
  • During the first six months of 2017, the Company generated $29.7 million in cash flow from operations, compared to $21.4 million in the first six months of 2016.

Globalization of Sales Team

  • Announced today that Ron Zoran, the Company’s Vice President of Sales, Americas, has been named Chief Revenue Officer and will be responsible for executing the company’s worldwide sales strategy across sales, sales engineering, and channels to drive revenue growth in all geographies.

Business Outlook

Based on information available as of August 8, 2017, CyberArk is issuing guidance for the third quarter and full year 2017 as indicated below.

Third Quarter 2017:

  • Total revenue is expected to be in the range of $62.0 million to $63.0 million, which represents 13% to 15% year-over-year growth.
  • Non-GAAP operating income is expected to be in the range of $8.2 million to $9.0 million.
  • Non-GAAP net income per share is expected to be in the range of $0.17 to $0.19 per diluted share. This assumes 36.4 million weighted average diluted shares.

Full Year 2017:

  • Total revenue is expected to be in the range of $253.0 million to $256.0 million, which represents 17% to 18% year-over-year growth.
  • Non-GAAP operating income is expected to be in the range of $46.4 million to $48.4 million.
  • Non-GAAP net income per share is expected to be in the range of $1.02 to $1.06 per diluted share. This assumes 36.3 million weighted average diluted shares.

Conference Call Information

CyberArk will discuss the company’s second quarter financial results and its business outlook today, August 8, 2017 at 4:30 p.m. Eastern Time (ET). To access this call, dial +1 844-237-3590 (U.S.) or +1 484-747-6582 (international). The conference ID is 44458128. 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 44458128. 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 is the only security company focused on eliminating the most advanced cyber threats; those that use insider privileges to attack the heart of the enterprise. Dedicated to stopping attacks before they stop business, CyberArk proactively secures against cyber threats before attacks can escalate and do irreparable damage. The company is trusted by the world’s leading companies – including more than 50 percent of the Fortune 100 – to protect their highest value information assets, infrastructure and applications. 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 blog, or follow on Twitter via @CyberArk, LinkedIn or Facebook.

Copyright © 2017 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.

  • For the three and six months ended June 30, 2017 and June 30, 2016, non-GAAP gross profit is calculated as gross profit excluding share-based compensation expense and amortization of intangible assets related to acquisitions.
  • For the three and six months ended June 30, 2017, non-GAAP operating income is calculated as operating income excluding share-based compensation expense, acquisition related expenses and amortization of intangible assets related to acquisitions. For the three and six months ended June 30, 2016, non-GAAP operating income is calculated as operating income excluding share-based compensation expense and amortization of intangible assets related to acquisitions.
  • For the three and six months ended June 30, 2017 non-GAAP net income is calculated as net income excluding share-based compensation expense, acquisition related expenses, amortization of intangible assets related to acquisitions and the tax effects related to the non-GAAP adjustment. For the three and six months ended June 30, 2016, non-GAAP net income is calculated as net income excluding share-based compensation expense, amortization of intangible assets related to acquisitions and the tax effects related to the non-GAAP adjustments.

Because of 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 providing non-GAAP financial measures that exclude share-based compensation, acquisition related expenses and amortization of intangible assets related to acquisitions 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. The Company believes that expenses related to its acquisitions and amortization of intangible assets related to acquisitions 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     Six Months Ended
June 30, June 30,
  2016       2017   2016       2017
 
Revenues:
License $ 29,965 $ 30,318 $ 57,479 $ 63,270
Maintenance and professional services 20,415 27,162 39,812 53,245
       
Total revenues 50,380 57,480 97,291 116,515
 
Cost of revenues:
License 1,283 1,907 2,557 3,491
Maintenance and professional services 5,628 8,093 10,788 15,776
       
Total cost of revenues 6,911 10,000 13,345 19,267
       
Gross profit 43,469 47,480 83,946 97,248
       
Operating expenses:
Research and development 8,165 9,561 16,098 18,775
Sales and marketing 21,837 29,500 43,500 57,178
General and administrative 5,016 7,409 9,686 14,287
       
Total operating expenses 35,018 46,470 69,284 90,240
       
Operating income 8,451 1,010 14,662 7,008
 
Financial income (expenses), net   (94 )   1,127   (27 )   1,675
 
Income before taxes on income 8,357 2,137 14,635 8,683
 
Tax benefit (taxes on income)   (1,908 )   1,109   (3,862 )   2,099
 
Net income $ 6,449   $ 3,246 $ 10,773   $ 10,782
 
 
Basic net income per ordinary share $ 0.19   $ 0.09 $ 0.32   $ 0.31
Diluted net income per ordinary share $ 0.18   $ 0.09 $ 0.30   $ 0.30
 

Shares used in computing net income per ordinary shares, basic

  33,547,975     34,729,119   33,457,149     34,563,040

Shares used in computing net income per ordinary shares, diluted

  35,787,574     36,194,471   35,740,107     36,147,712
 
 
 
 
Share-based Compensation Expense:
 
Three Months Ended Six Months Ended
June 30, June 30,
  2016     2017   2016     2017
 
 
Cost of revenues $ 285 $ 504 $ 526 $ 957
Research and development 998 1,523 1,938 2,832
Sales and marketing 1,371 2,018 2,596 3,689
General and administrative   1,325     2,197   2,292     3,963
 
Total share-based compensation expense $ 3,979   $ 6,242 $ 7,352   $ 11,441
 
 
CYBERARK SOFTWARE LTD.
Consolidated Balance Sheets
U.S. dollars in thousands
(Unaudited)
 
    December 31,     June 30,
  2016     2017
 
 
ASSETS
 
CURRENT ASSETS:
Cash and cash equivalents $ 172,957 $ 142,457
Short-term bank deposits 86,829 96,567
Marketable securities 15,246 21,804
Trade receivables 33,330 30,272
Prepaid expenses and other current assets   4,804     7,206
 
Total current assets   313,166     298,306
 
LONG-TERM ASSETS:
Property and equipment, net 4,760 5,266
Intangible assets, net 14,035 18,552
Goodwill 35,145 69,355
Marketable securities 20,443 22,376
Severance pay fund 3,332 3,703
Prepaid expenses and other long-term assets 1,761 1,866
Deferred tax asset   10,389     28,154
 
Total long-term assets   89,865     149,272
 
TOTAL ASSETS $ 403,031   $ 447,578
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
CURRENT LIABILITIES:
Trade payables $ 2,699 $ 1,762
Employees and payroll accruals 18,470 16,929
Accrued expenses and other current liabilities 6,876 5,627
Deferred revenues   50,111     57,258
 
Total current liabilities   78,156     81,576
 
LONG-TERM LIABILITIES:
Deferred revenues 23,395 25,587
Other long-term liabilities 229 222
Accrued severance pay   5,035     5,497
 
Total long-term liabilities   28,659     31,306
 
TOTAL LIABILITIES   106,815     112,882
 
SHAREHOLDERS' EQUITY:
Ordinary shares of NIS 0.01 par value 88 90
Additional paid-in capital 221,609 235,351
Accumulated other comprehensive income (loss) (175 ) 595
Retained earnings   74,694     98,660
 
Total shareholders' equity   296,216     334,696
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 403,031   $ 447,578
 
 
CYBERARK SOFTWARE LTD.

Consolidated Statements of Cash Flows

U.S. dollars in thousands
(Unaudited)
 
    Six Months Ended
June 30,
  2016         2017  
 
Cash flows from operating activities:
Net income $ 10,773 $ 10,782

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and Amortization 3,126 3,509
Amortization of premium on marketable securities 56 190
Share-based compensation expenses 7,352 11,441
Tax benefit related to share-based compensation (411 ) -
Deferred income taxes, net (189 ) (3,642 )
Decrease (increase) in trade receivables (394 ) 3,412

Increase in prepaid expenses and other current and long-term assets

(1,728 ) (1,257 )
Decrease in trade payables (179 ) (869 )
Increase in short term and long term deferred revenues 8,427 9,339
Decrease in employees and payroll accruals (2,161 ) (1,953 )

Decrease in accrued expenses and other current and long-term liabilities

(3,240 ) (1,391 )
Increase (decrease) in accrued severance pay, net   (23 )   91  
 
Net cash provided by operating activities   21,409     29,652  
 
Cash flows from investing activities:
Investment in short and long term deposits (42,149 ) (9,938 )
Investment in marketable securities (34,650 ) (17,760 )
Proceeds from maturities of marketable securities - 9,106
Purchase of property and equipment (1,777 ) (2,038 )
Payments for business acquisitions, net of cash acquired   -     (41,448 )
 
Net cash used in investing activities   (78,576 )   (62,078 )
 
Cash flows from financing activities:
Tax benefit related to share-based compensation 411 -
Proceeds from exercise of stock options   637     1,926  
 
Net cash provided by financing activities   1,048     1,926  
 
Decrease in cash and cash equivalents (56,119 ) (30,500 )
 
Cash and cash equivalents at the beginning of the period   234,539     172,957  
 
Cash and cash equivalents at the end of the period $ 178,420   $ 142,457  
 
 
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 Six Months Ended
June 30, June 30,
  2016     2017     2016     2017  
 
Gross profit $ 43,469 $ 47,480 $ 83,946 $ 97,248
Plus:
Share-based compensation - Maintenance & professional services 285 504 526 957
Amortization of intangible assets - License   355     992     710     1,835  
 
Non-GAAP gross profit $ 44,109   $ 48,976   $ 85,182   $ 100,040  
 
 
 
Reconciliation of Operating Income to Non-GAAP Operating Income:
 
Three Months Ended Six Months Ended
June 30, June 30,
  2016     2017     2016     2017  
 
 
Operating income $ 8,451 $ 1,010 $ 14,662 $ 7,008
Plus:
Share-based compensation 3,979 6,242 7,352 11,441
Amortization of intangible assets - Cost of revenues 355 992 710 1,835
Amortization of intangible assets - Research and development 478 - 956 -
Amortization of intangible assets - Sales and marketing 301 289 602 535
Acquisition related expenses   -     248     -     686  
 
Non-GAAP operating income $ 13,564   $ 8,781   $ 24,282   $ 21,505  
 
 
 
Reconciliation of Net Income to Non-GAAP Net Income:
 
Three Months Ended Six Months Ended
June 30, June 30,
  2016     2017     2016     2017  
 
 
Net income $ 6,449 $ 3,246 $ 10,773 $ 10,782
Plus:
Share-based compensation 3,979 6,242 7,352 11,441
Amortization of intangible assets - Cost of revenues 355 992 710 1,835
Amortization of intangible assets - Research and development 478 - 956 -
Amortization of intangible assets - Sales and marketing 301 289 602 535
Acquisition related expenses - 248 - 686
Taxes on income related to non-GAAP adjustments   (1,066 )   (3,274 )   (1,579 )   (7,289 )
 
Non-GAAP net income $ 10,496   $ 7,743   $ 18,814   $ 17,990  
 
Non-GAAP net income per share
Basic $ 0.31   $ 0.22   $ 0.56   $ 0.52  
Diluted $ 0.29   $ 0.21   $ 0.53   $ 0.50  
 
Weighted average number of shares
Basic   33,547,975     34,729,119     33,457,149     34,563,040  
Diluted   35,787,574     36,194,471     35,740,107     36,147,712  

Source: CyberArk

Investor Contact:
CyberArk
Erica Smith, 617-558-2132
ir@cyberark.com
or
Media Contact:
CyberArk
Christy Lynch, 617-796-3210
press@cyberark.com