CyberArk Announces Record Fourth Quarter and Full Year 2018 Results

February 14, 2019 7:08 AM

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.

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	�
																	�

View source version on businesswire.com: https://www.businesswire.com/news/home/20190214005432/en/

Investor Contact:

Erica Smith

CyberArk

617-558-2132

[email protected]

Media Contact:

Liz Campbell

CyberArk

617-558-2191

[email protected]

Source: CyberArk

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CyberArk Announces Record Fourth Quarter and Full Year 2018 Results

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