CyberArk Announces Strong Second Quarter 2015 Results

Second quarter total revenue of $36.4 million increases 70% year-over-year. Second quarter license revenue of $22.3 million increases 100% year-over-year

NEWTON, Mass. & PETACH TIKVAH, Israel – Aug. 11, 2015 – 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, 2015.

“CyberArk had a strong second quarter and delivered results that again exceeded our guidance across all financial metrics,” said Udi Mokady, CyberArk CEO. “Our business continues to be driven by the shift from tactical, compliance-driven projects to strategic approaches to implementing enterprise-wide privileged account security as privileged accounts remain at the epicenter of cyber attacks. This shift is enabling us to capitalize on expanding cyber security budgets, participate in larger opportunities, and position ourselves as a strategic, trusted partner.”

Financial Highlights for the Second Quarter Ended June 30, 2015

Revenue:

  • Total revenue was $36.4 million, up 70% year-over-year compared with the second quarter of 2014.
  • License revenue was $22.3 million, up 100% compared with the second quarter of 2014.
  • Maintenance and Professional Services revenue was $14.1 million, up 38% from the second quarter of 2014.

Operating Income:

  • GAAP operating income was $6.5 million for the quarter, up from $3.1 million in the second quarter of 2014.
  • Non-GAAP operating income was $8.2 million for the quarter, up from $3.3 million in the second quarter of 2014.

Net Income:

  • GAAP net income was $4.9 million, up from $1.2 million in the second quarter of 2014.
  • GAAP net income per share was $0.14, compared to a GAAP net loss per share of $(0.01) in the second quarter of 2014, based on 35.0 and 7.1 million weighted average diluted shares, respectively.
  • Non-GAAP net income was $6.6 million, up from $2.4 million in the second quarter of 2014.
  • Non-GAAP net income per share was $0.19, compared to non-GAAP net income per share of $0.09 in the second quarter of 2014, based on 35.0 and 27.4 million weighted average diluted shares, respectively.

The tables at the end of this press release include a reconciliation of GAAP to non-GAAP operating income and net income for the three months and six months ended June 30, 2015 and 2014. 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, 2015, CyberArk had $283.8 million in cash and cash equivalents and short-term deposits inclusive of$52.7 million raised in the Company’s public offering that closed on June 16, 2015. This compares with $191.7 millionin cash and cash equivalents and short-term deposits as of March 31, 2015 and $177.2 million as of December 31, 2014.
  • During the first six months of 2015, the Company generated $36.3 million in cash flow from operations, an increase compared to $12.7 million in the first six months of 2014.

Announces acquisition of Cybertinel Ltd.
CyberArk today announced that it has acquired Cybertinel Ltd. an approximately 20 person Israel-based cyber security company. Cybertinel Ltd. specializes in cyber threat detection technology that will enhance CyberArk’s ability to detect credential threats at the beginning stages of the attack cycle. The terms of the acquisition were not disclosed. The acquisition is not expected to have a material impact on the Company’s third quarter and full year 2015 financial results.

Business Outlook
Based on information available as of August 11, 2015, CyberArk is issuing guidance for the third quarter and full year 2015 as indicated below.

Third Quarter 2015:

  • Total revenue is expected to be in the range of $36.0 million to $37.0 million which represents 29% to 32% year-over-year growth.
  • Non-GAAP operating income is expected to be in the range of $5.0 million to $5.9 million.
  • Non-GAAP net income per share is expected to be in the range of $0.11 to $0.13. This assumes 35.5 million weighted average diluted shares.

Full Year 2015:

  • Total revenue is expected to be in the range of $145.0 million to $147.0 million which represents 41% to 43% year-over-year growth.
  • Non-GAAP operating income is expected to be in the range of $28.8 million to $30.5 million.
  • Non-GAAP net income per share is expected to be in the range of $0.62 to $0.65. This assumes 35.4 million weighted average diluted shares.

Conference Call Information
CyberArk will host a conference call on Tuesday, August 11, 2015 at 5:00 p.m. Eastern Time (ET) to discuss the company’s second quarter financial results and business outlook. To access this call, dial 888-329-8893 (domestic) or 719-325-2469 (international). The conference ID is 7135521. Additionally, a live webcast of the conference call will be available in 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 877-870-5176 (U.S.) or 858-384-5517 (international). The replay pass code is 7135521. An archived webcast of this conference call will also be available in the “Investor Relations” section of the Company’s web site at www.cyberark.com.

 

Non-GAAP Financial Measures
CyberArk believes that the use of 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, 2015 non-GAAP operating income is calculated as operating income excluding stock-based compensation expense and secondary offering related expenses. For the three and six months ended June 30, 2014, non-GAAP operating income is calculated as operating income excluding stock-based compensation expense.
  • For the three and six months ended June 30, 2015, non-GAAP net income is calculated as net income excluding stock-based compensation expense and secondary offering related expenses and for the three and six months ended June 30, 2014, non-GAAP net income is calculated as net income excluding (i) stock-based compensation expense and (ii) financial expenses resulting from the revaluation of warrants to purchase preferred shares.

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 stock-based compensation and secondary offering related expenses allow for more meaningful comparisons of its period to period operating results. Stock-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. In addition, the Company believes that excluding financial expenses with respect to revaluation of warrants to purchase preferred shares allows for more meaningful comparison between its net income from period to period, especially since upon the closing of the IPO, the warrants were exercised for ordinary shares, and as a result, are no longer evaluated at each balance sheet date. The Company believes that expenses related to its recent secondary offering do not reflect the performance of its core business and would 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.

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 45 percent of the Fortune 100 – to protect their highest value information assets, infrastructure and applications. A global company, CyberArk is headquartered in Petach Tikvah, Israel, with U.S. headquarters located in Newton, Mass. The company also has offices throughout EMEA and Asia Pacific and Japan. To learn more about CyberArk, visit www.cyberark.com, read the company blog, http://www.cyberark.com/blog/, follow on Twitter @CyberArk or Facebook at https://www.facebook.com/CyberArk.

Future Looking Statements
This release may contain forward-looking statements, which express the current beliefs and expectations of CyberArk’s management. 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 new and rapidly evolving cyber threat landscape; failure to effectively manage growth; fluctuations in quarterly results of operations; real or perceived shortcomings, defects or vulnerabilities in the Company’s solution or the failure of the solution to meet customers’ needs; the inability to acquire new customers or sell additional products and services to existing customers; competition from IT security vendors 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)
Three Months Ended Six Months Ended
June 30, June 30,
2014 2015 2014 2015
(unaudited) (unaudited)
Revenues:
License $ 11,129 $ 22,278 $ 20,249 $ 42,256
Maintenance and professional services 10,209 14,097 18,484 27,034
Total revenues 21,338 36,375 38,733 69,290
Cost of revenues:
License 733 1,831 1,361 2,381
Maintenance and professional services 2,875 4,243 5,300 7,950
Total cost of revenues 3,608 6,074 6,661 10,331
Gross profit 17,730 30,301 32,072 58,959
Operating expenses:
Research and development 3,342 4,263 6,579 8,380
Sales and marketing 9,682 15,449 19,115 28,909
General and administrative 1,637 4,058 3,118 7,636
Total operating expenses 14,661 23,770 28,812 44,925
Operating income 3,069 6,531 3,260 14,034
Financial income (expenses), net (1,126 ) 327 (2,482 ) (1,304 )
Income before taxes on income 1,943 6,858 778 12,730
Taxes on income (713 ) (1,936 ) (796 ) (3,642 )
Net income (loss) $ 1,230 $ 4,922 $ (18 ) $ 9,088
Basic net income (loss) per ordinary share $ (0.01 ) $ 0.16 $ (0.36 ) $ 0.29
Diluted net income (loss) per ordinary share $ (0.01 ) $ 0.14 $ (0.36 ) $ 0.26
Shares used in computing net income (loss)
per ordinary shares, basic 7,141,658 31,530,242 7,107,896 31,049,379
Shares used in computing net income (loss)
per ordinary shares, diluted 7,141,658 35,001,262 7,107,896 34,896,092
Share-based Compensation Expense:
Three Months Ended Six Months Ended
June 30, June 30,
2014 2015 2014 2015
(unaudited) (unaudited)
Cost of revenues $ 25 $ 84 $ 45 $ 147
Research and development 36 85 66 167
Sales and marketing 56 177 98 316
General and administrative 67 797 131 978
Total share-based compensation expense $ 184 $ 1,143 $ 340 $ 1,608
CYBERARK SOFTWARE LTD.
Consolidated Balance Sheets
U.S. dollars in thousands
December 31, June 30,
2014 2015
(audited) (unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 124,184 $ 270,119
Short-term bank deposits 52,997 13,699
Trade receivables 19,263 14,298
Prepaid expenses and other current assets 2,078 3,600
Short-term deferred tax asset 3,788 4,189
Total current assets 202,310 305,905
LONG-TERM ASSETS:
Property and equipment, net 2,148 2,543
Severance pay fund 3,060 3,257
Prepaid expenses and other long-term assets 1,021 1,037
Long-term deferred tax asset 2,013 2,630
Total long-term assets 8,242 9,467
TOTAL ASSETS $ 210,552 $ 315,372
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade payables $ 1,835 $ 1,892
Employees and payroll accruals 10,322 26,465
Deferred revenues 22,594 39,586
Accrued expenses and other current liabilities 6,942 7,061
Total current liabilities 41,693 75,004
LONG-TERM LIABILITIES:
Deferred revenues 9,566 13,680
Other long-term liabilities 184 238
Accrued severance pay 4,101 4,483
Total long-term liabilities 13,851 18,401
TOTAL LIABILITIES 55,544 93,405
SHAREHOLDERS’ EQUITY:
Ordinary shares of NIS 0.01 par value 79 85
Additional paid-in capital 134,486 191,735
Accumulated other comprehensive income (loss) (333) 283
Retained earnings 20,776 29,864
Total shareholders’ equity 155,008 221,967
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 210,552 $ 315,372
CYBERARK SOFTWARE LTD.
Consolidated Statements of Cash Flows
U.S. dollars in thousands
Six Months Ended
June 30,
2014 2015
(unaudited)
Cash flows from operating activities:
Net income (loss) $ (18 ) $ 9,088
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation 390 459
Share based compensation expenses 340 1,608
Tax benefit related to exercise of share options 1,176
Deferred income taxes, net 139 (731 )
Decrease in trade receivables 4,097 4,965
Decrease (increase) in prepaid expenses and other
current and long-term assets 172 (1,175 )
Increase (decrease) in trade payables (631 ) 263
Changes in fair value of warrants to purchase preferred
shares 2,430
Increase in short term and long term deferred revenues 7,459 21,106
Decrease in employees and payroll accruals (1,050 ) (1,153 )
Increase (decrease) in accrued expenses and other
current and long-term liabilities (672 ) 410
Increase in accrued severance pay, net 23 280
Net cash provided by operating activities 12,679 36,296
Cash flows from investing activities:
Proceeds from short and long term deposits 3,093 39,289
Investment in short term deposit (1,057 )
Purchase of property and equipment (946 ) (1,060 )
Net cash provided by investing activities 1,090 38,229
Cash flows from financing activities:
Issuance of shares, net (962 ) 52,685
Withholding proceeds related to exercise of options 17,201
Proceeds from exercise of options 75 1,524
Net cash provided by (used in) financing activities (887 ) 71,410
Increase in cash and cash equivalents 12,882 145,935
Cash and cash equivalents at the beginning of the period 62,379 124,184
Cash and cash equivalents at the end of the period $ 75,261 $ 270,119
CYBERARK SOFTWARE LTD.
Reconciliation of GAAP Measures to Non-GAAP Measures
U.S. dollars in thousands (except per share data)
Reconciliation of Operating Income to Non-GAAP Operating Income:
Three Months Ended Six Months Ended
June 30, June 30,
2014 2015 2014 2015
(unaudited) (unaudited)
Operating income $ 3,069 $ 6,531 $ 3,260 $ 14,034
Secondary offering related expenses 487 1,568
Share-based compensation 184 1,143 340 1,608
Non-GAAP operating income $ 3,253 $ 8,161 $ 3,600 $ 17,210
Reconciliation of Net Income (Loss) to Non-GAAP Net Income:
Three Months Ended Six Months Ended
June 30, June 30,
2014 2015 2014 2015
(unaudited) (unaudited)
Net income (loss) $ 1,230 $ 4,922 $ (18 ) $ 9,088
Secondary offering related expenses 487 1,568
Share-based compensation 184 1,143 340 1,608
Warrant adjustment 1,034 2,430
Non-GAAP net income $ 2,448 $ 6,552 $ 2,752 $ 12,264
Non-GAAP net income per share
Basic $ 0.16 $ 0.21 $ 0.03 $ 0.39
Diluted $ 0.09 $ 0.19 $ 0.02 $ 0.35
Weighted average number of shares
Basic 7,141,658 31,530,242 7,107,896 31,049,379
Diluted 27,366,264 35,001,262 10,759,154 34,896,092

Source: CyberArk

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