CyberArk Software (CYBR) 6-K CyberArk Announces Second Quarter 2020 Results

Exhibit 99.1

CyberArk Announces Second Quarter 2020 Results

Total revenue of $106.5 million

 GAAP operating loss of $(4.9) million and Non-GAAP operating income of $16.9 million

Deferred revenue grew 30 percent year over year

Newton, Mass. and Petach Tikva, Israel – August 4, 2020 – CyberArk, (NASDAQ: CYBR), the global leader in privileged access management, today announced financial results for the second quarter ended June 30, 2020.

“We were pleased to deliver results ahead of all guided metrics for the second quarter,” said Udi Mokady, CyberArk Chairman and CEO.  “The integration of our Idaptive acquisition is progressing well and the feedback from customers and partners has been positive.  Our SaaS solutions are gaining momentum resulting in record SaaS bookings in the second quarter, contributing to our strong 30 percent deferred revenue growth.  While SaaS acceleration results in a short-term revenue headwind, the recurring revenue base creates significant longer-term value for both our customers and CyberArk.  It was a very active quarter overall with the impact from the global pandemic confined to new business progression, which was in line with our expectations.  Cybersecurity market fundamentals remain strong, identity security is at the top of customers’ priority lists, and our pipeline growth is robust.  We are confident that we are positioned to accelerate growth as the overall business environment stabilizes.” 

Financial Highlights for the Second Quarter Ended June 30, 2020

Revenue:

• Total revenue was $106.5 million, compared to $100.2 million in the second quarter of 2019.

• License revenue was $47.9 million, compared to $52.2 million in the second quarter of 2019.

• Maintenance and professional services revenue was $58.6 million, compared to $48.0 million in the second quarter of 2019.

Operating Income (Loss):

• GAAP operating loss was $(4.9) million, compared to operating income of $13.0 million in the second quarter of 2019.  Non-GAAP operating income was $16.9 million, compared to $26.5 million in the second quarter of 2019.

Net Income (Loss):

• GAAP net loss was $(4.3) million, or $(0.11) per basic and diluted share, compared to GAAP net income of $13.4 million, or $0.34 per diluted share, in the second quarter of 2019.   Non-GAAP net income was $16.7 million, or $0.42 per diluted share, compared to $23.0 million, or $0.59 per diluted share, in the second quarter of 2019.

The tables at the end of this press release include a reconciliation of GAAP to non-GAAP gross profit, operating income (loss) and net income (loss) for the three months and six months ended June 30, 2020 and 2019. 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, 2020, CyberArk had $1.1 billion in cash, cash equivalents, marketable securities and short-term deposits. This compares to $537.9 million at June 30, 2019.

• As of June 30, 2020, total deferred revenue was $225.7 million, a 30% increase from $174.2 million at June 30, 2019.

• During the six months ended June 30, 2020, the company generated $53.3 million in net cash provided by operating activities, compared to $67.3 million in the first six months of 2019.

Business Outlook

Based on information available as of August 4, 2020, CyberArk is issuing guidance for the third quarter of 2020 as indicated below.

Third Quarter 2020:

• Total revenue between $107.0 million and $115.0 million.

• Non-GAAP operating income between $8.0 million and $15.0 million.

• Non-GAAP net income per share between $0.19 and $0.33 per diluted share.

o Assumes 39.8 million weighted average diluted shares.

Conference Call Information

In conjunction with this announcement, CyberArk will host a conference call on Tuesday, August 4, 2020 at 8:30 a.m. Eastern Time (ET) to discuss the company’s second quarter 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 3597059. 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 3597059. 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 privileged access management, a critical layer of IT security to protect data, infrastructure and assets across cloud and hybrid environments, 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 500, 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 ^© 2020 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 (loss) or net income (loss) 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 (loss) excluding share-based compensation expense, acquisition related expenses 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, amortization of debt discount and issuance costs and the tax effect of non-GAAP adjustments.

The Company believes that providing non-GAAP financial measures that exclude, as applicable, share-based compensation expense, acquisition related expenses, amortization of intangible assets related to acquisitions, non-cash interest expense related to the amortization of debt discount and issuance costs 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, amortization of intangible assets related to acquisitions 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.

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, non-cash interest expense related to the amortization of debt discount and issuance costs 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; 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 system; 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.

###

Investor Relations Contact:

Erica Smith

CyberArk

617-558-2132

ir@cyberark.com

Media Contact:

Liz Campbell

CyberArk

617-558-2191

press@cyberark.com

 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,
	2019			2020			2019			2020
Revenues:
License	$	52,201		$	47,864		$	103,485		$	99,520
Maintenance and professional services		47,980			58,633			92,631			113,803
Total revenues		100,181			106,497			196,116			213,323
Cost of revenues:
License		2,906			5,223			5,494			7,458
Maintenance and professional services		12,305			15,167			23,284			30,017
Total cost of revenues		15,211			20,390			28,778			37,475
Gross profit		84,970			86,107			167,338			175,848
Operating expenses:
Research and development		16,995			22,873			33,326			44,158
Sales and marketing		43,573			52,347			85,078			103,543
General and administrative		11,426			15,766			22,331			30,455
Total operating expenses		71,994			90,986			140,735			178,156
Operating income (loss)		12,976			(4,879	)		26,603			(2,308	)
Financial income (expenses), net		2,485			(1,473	)		3,906			(2,209	)
Income (loss) before taxes on income		15,461			(6,352	)		30,509			(4,517	)
Tax benefit (taxes on income)		(2,058	)		2,036			(3,429	)		2,587
Net income (loss)	$	13,403		$	(4,316	)	$	27,080		$	(1,930	)
Basic net income (loss) per ordinary share	$	0.36		$	(0.11	)	$	0.73		$	(0.05	)
Diluted net income (loss) per ordinary share	$	0.34		$	(0.11	)	$	0.70		$	(0.05	)
Shares used in computing net income (loss)
per ordinary shares, basic		37,522,410			38,565,175			37,285,788			38,393,938
Shares used in computing net income (loss)
per ordinary shares, diluted		38,993,170			38,565,175			38,735,078			38,393,938
Share-based Compensation Expense:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
		2019		2020		2019		2020
Cost of revenues	$	1,251	$	1,949	$	2,208	$	3,752
Research and development		2,394		3,362		4,701		6,383
Sales and marketing		4,878		6,753		8,563		13,153
General and administrative		3,373		4,687		6,676		9,771
Total share-based compensation expense	$	11,896	$	16,751	$	22,148	$	33,059

CYBERARK SOFTWARE LTD.

Consolidated Balance Sheets

U.S. dollars in thousands

(Unaudited)

	December 31,		June 30,
	2019		2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	792,363	$	551,706
Short-term bank deposits		140,067		247,965
Marketable securities		132,412		120,050
Trade receivables		72,953		60,136
Prepaid expenses and other current assets		8,406		13,762
Total current assets		1,146,201		993,619
LONG-TERM ASSETS:
Marketable securities		54,408		190,134
Property and equipment, net		16,472		16,865
Intangible assets, net		9,143		29,102
Goodwill		82,400		133,280
Other long-term assets		72,091		87,098
Deferred tax asset		24,451		27,555
Total long-term assets		258,965		484,034
TOTAL ASSETS	$	1,405,166	$	1,477,653
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables	$	5,675	$	8,946
Employees and payroll accruals		41,345		34,933
Accrued expenses and other current liabilities		27,132		20,272
Deferred revenues		118,519		145,526
Total current liabilities		192,671		209,677
LONG-TERM LIABILITIES:
Convertible senior notes, net		485,119		493,636
Deferred revenues		71,836		80,212
Other long-term liabilities		31,408		30,007
Total long-term liabilities		588,363		603,855
TOTAL LIABILITIES		781,034		813,532
SHAREHOLDERS' EQUITY:
Ordinary shares of NIS 0.01 par value		99		101
Additional paid-in capital		396,437		435,769
Accumulated other comprehensive income		818		3,403
Retained earnings		226,778		224,848
Total shareholders' equity		624,132		664,121
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,405,166	$	1,477,653

CYBERARK SOFTWARE LTD.

Consolidated Statements of Cash Flows

U.S. dollars in thousands

(Unaudited)

	Six Months Ended
	June 30,
	2019			2020
Cash flows from operating activities:
Net income (loss)	$	27,080		$	(1,930	)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		5,551			6,911
Amortization of premium and accretion of discount on marketable securities, net		(42	)		222
Share-based compensation		22,148			33,059
Deferred income taxes, net		(1,857	)		(3,766	)
Decrease in trade receivables		3,156			15,677
Amortization of debt discount and issuance costs		-			8,517
Increase in prepaid expenses and other current and long-term assets		(9,656	)		(13,850	)
Increase (decrease) in trade payables		(123	)		477
Increase in short-term and long-term deferred revenues		24,655			28,627
Decrease in employees and payroll accruals		(7,595	)		(8,116	)
Increase (decrease) in accrued expenses and other
current and long-term liabilities		4,029			(12,540	)
Net cash provided by operating activities		67,346			53,288
Cash flows from investing activities:
Proceeds from (investment in) short and long term deposits		8,948			(108,138	)
Investment in marketable securities		(50,464	)		(223,733	)
Proceeds from maturities of marketable securities		36,653			102,239
Purchase of property and equipment		(3,231	)		(2,874	)
Payments for business acquisitions, net of cash acquired		-			(66,964	)
Net cash used in investing activities		(8,094	)		(299,470	)
Cash flows from financing activities:
Proceeds from (payment of) withholding tax related to employee stock plans		5,319			(603	)
Proceeds from exercise of stock options		16,572			6,125
Net cash provided by financing activities		21,891			5,522
Increase (decrease) in cash, cash equivalents and restricted cash		81,143			(240,660	)
Cash, cash equivalents and restricted cash at the beginning of the period		261,883			792,413
Cash, cash equivalents and restricted cash at the end of the period	$	343,026		$	551,753

 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,
	2019			2020			2019			2020
Gross profit	$	84,970		$	86,107		$	167,338		$	175,848
Plus:
Share-based compensation - License, Maintenance & professional services		1,251			1,949			2,208			3,752
Amortization of intangible assets - License		1,444			2,239			2,888			3,175
Acquisition related expenses		-			400			-			400
Non-GAAP gross profit	$	87,665		$	90,695		$	172,434		$	183,175
Reconciliation of Operating Income (Loss) to Non-GAAP Operating Income:
	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2019			2020			2019			2020
Operating income (loss)	$	12,976		$	(4,879	)	$	26,603		$	(2,308	)
Plus:
Share-based compensation		11,896			16,751			22,148			33,059
Amortization of intangible assets - Cost of revenues		1,444			2,239			2,888			3,175
Amortization of intangible assets -  Sales and marketing		144			160			288			273
Acquisition related expenses		-			2,646			-			4,256
Non-GAAP operating income	$	26,460		$	16,917		$	51,927		$	38,455
Reconciliation of Net Income (Loss) to Non-GAAP Net Income:
	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2019			2020			2019			2020
Net income (loss)	$	13,403		$	(4,316	)	$	27,080		$	(1,930	)
Plus:
Share-based compensation		11,896			16,751			22,148			33,059
Amortization of intangible assets - Cost of revenues		1,444			2,239			2,888			3,175
Amortization of intangible assets -  Sales and marketing		144			160			288			273
Acquisition related expenses		-			2,646			-			4,256
Amortization of debt discount and issuance costs		-			4,277			-			8,517
Taxes on income related to non-GAAP adjustments		(3,846	)		(5,066	)		(7,892	)		(11,078	)
Non-GAAP net income	$	23,041		$	16,691		$	44,512		$	36,272
Non-GAAP net income per share
Basic	$	0.61		$	0.43		$	1.19		$	0.94
Diluted	$	0.59		$	0.42		$	1.15		$	0.92
Weighted average number of shares
Basic		37,522,410			38,565,175			37,285,788			38,393,938
Diluted		38,993,170			39,320,124			38,735,078			39,301,975