CyberArk Announces Record Fourth Quarter and Full Year 2020 Results

CyberArk, (NASDAQ: CYBR), the global leader in identity security, today announced record financial results for the fourth quarter and year ended December 31, 2020.

“Our record fourth quarter results demonstrate the strength of demand across our identity security platform that has a foundation in Privileged Access Management (PAM),” said Udi Mokady, CyberArk Chairman and CEO. “Digital transformation, cloud migration and work from anywhere are creating a heightened sense of urgency to implement our solutions across DevSecOps, PAM and Access. As organizations embrace the flexibility and agility of cloud and automation, we are empowering customers to confidently and securely drive their mission critical strategies forward.”

Continued Mokady, “Our fourth quarter results, including another record for SaaS and subscription bookings, put us in a great position as we begin actively transitioning our business to a recurring revenue model in the first quarter of 2021, shifting our sales from perpetual licenses to recurring subscriptions. As we look ahead, we continue to see strong industry tailwinds, including increasing awareness of privileged access as a primary attack vector. We are the clear market leader in PAM and have set the standard for innovation with our differentiated identity security portfolio. We are confident that our identity security strategy and our comprehensive subscription transformation program will deliver long-term growth and profitability, creating significant value for CyberArk, our customers, partners and shareholders.”

Financial Highlights for the Fourth Quarter Ended December 31, 2020

Revenue:

• Total revenue was $144.5 million.
• License revenue was $80.8 million.
• Maintenance and Professional Services revenue was $63.7 million.

Operating Income:

• GAAP operating income was $18.8 million, and non-GAAP operating income was $39.9 million.

Net Income:

• GAAP net income was $12.1 million, or $0.30 per diluted share, and non-GAAP net income was $32.6 million, or $0.82 per diluted share.

Financial Highlights for the Full Year Ended December 31, 2020

Revenue:

• Total revenue was $464.4 million.
• License revenue was $226.1 million.
• Maintenance and Professional Services revenue was $238.3 million.

Operating Income:

• GAAP operating income was $6.0 million, and non-GAAP operating income was $91.4 million.

Net Income (Loss):

• GAAP net loss was $(5.8) million, or $(0.15) per basic and diluted share, and non-GAAP net income was $81.1 million, or $2.05 per diluted share.

The tables at the end of this press release include a reconciliation of the following non-GAAP financial measures to their most directly comparable GAAP financial measures: non-GAAP gross profit, non-GAAP operating income, non-GAAP net income and free cash flow. 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, 2020, CyberArk had $1.2 billion in cash, cash equivalents, marketable securities and short-term deposits. This compares to $1.1 billion in cash, cash equivalents, marketable securities and short-term deposits as of December 31, 2019.
• As of December 31, 2020, total deferred revenue was $242.5 million, a 27% increase from $190.4 million at December 31, 2019.
• During 2020, the Company generated $106.8 million in net cash provided by operating activities compared to $141.7 million in 2019.

Annual Recurring Revenue (ARR):

• Annual Recurring Revenue (ARR) was $274 million, an increase of 43% from $192 million at December 31, 2019.

Business Outlook
Based on information available as of February 11, 2021, CyberArk is issuing guidance for the first quarter and full year 2021 as indicated below.

First Quarter 2021:

• Total revenue is expected to be in the range of $106.0 million to $112.0 million.
• Non-GAAP operating income (loss) is expected to be in the range of an operating loss of $(2.5) million to operating income of $2.5 million.
• Non-GAAP net income (loss) per share is expected to be in the range of a net loss of $(0.03) per basic and diluted share to net income of $0.07 per diluted share.
  • Assumes 39.2 million weighted average basic and diluted shares and 40.7 million weighted average diluted shares.

Full Year 2021:

• Total revenue is expected to be in the range of $484.0 million to $496.0 million.
• Non-GAAP operating income is expected to be in the range of $20.0 million to $30.0 million.
• Non-GAAP net income per share is expected to be in the range of $0.45 to $0.64 per diluted share.
  • Assumes 40.8 million weighted average diluted shares.

Conference Call Information
In conjunction with this announcement, CyberArk will host a conference call today, February 11, 2021, 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 (833) 968-2251 (U.S.) or +1 (778) 560-2670 (international). The conference ID is 6893829. 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) 585-8367 (U.S.) or (416) 621-4642 (international). The replay pass code is 6893829. 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 privileged access management, CyberArk provides the most comprehensive security offering for any identity – human or machine – across business applications, distributed workforces, hybrid cloud workloads, 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 www.cyberark.com.

Copyright © 2021 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, subscription or term-based license and maintenance contracts related to perpetual licenses in effect at the end of the reported period.

Non-GAAP Financial Measures
CyberArk believes that the use of non-GAAP gross profit, non-GAAP operating income, non-GAAP net income 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 income, net income (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, acquisition related expenses and amortization of intangible assets related to acquisitions.
• Non-GAAP operating income is calculated as GAAP operating income excluding share-based compensation expense, acquisition related expenses, facility exit and transition costs and amortization of intangible assets related to acquisitions.
• Non-GAAP net income is calculated as GAAP net income (loss) excluding share-based compensation expense, acquisition related expenses, amortization of intangible assets related to acquisitions, facility exit and transition costs, amortization of debt discount and issuance costs, intra-entity IP transfer tax effect, net 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, facility exit and transition costs, non-cash interest expense related to the amortization of debt discount and issuance costs, intra-entity IP transfer tax effect, net 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, facility exit and transition costs, intra-entity IP transfer tax effect, net 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, facility exit and transition costs, non-cash interest expense related to the amortization of debt discount and issuance costs, intra-entity IP transfer tax effect, net 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, 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: the duration and scope of the COVID-19 pandemic and the impact of the pandemic and actions taken in response, on global and regional economies and economic activity and the resulting impact on the demand for the Company’s solutions and on its expected revenue growth rates and costs; the Company’s ability to adjust its operations in response to impacts from the COVID-19 pandemic; difficulties predicting future financial results, including due to impacts from the COVID-19 pandemic; the Company’s plan to begin actively transitioning its business to a recurring revenue model in 2021; changes to the drivers of the Company’s growth; the Company’s ability to sell into existing and new industry verticals; the Company’s sales cycles and multiple licensing models may cause results to fluctuate; the Company’s ability to sell into existing customers; potential changes in the Company’s operating and net profit margins and the Company’s revenue growth rate; the Company’s ability to successfully find, complete, fully integrate and achieve the expected benefits of future acquisitions, including the Company’s ability to integrate and achieve the expected benefits of Idaptive; real or perceived shortcomings, defects or vulnerabilities in the Company’s solutions or internal network systems; the Company’s ability to hire qualified personnel; the Company’s ability to expand its channel partnerships across existing and new geographies; the Company’s ability to further diversify its product deployments and licensing options; 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.

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