CYBR - Earnings call 3 2023 | CyberArk Software Ltd.

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Operator

Hello, and welcome to the CyberArk Earnings Conference Call. [Operator Instructions] I will now turn the conference over to Erica Smith, SVP, Investor Relations and ESG. Please go ahead.

Erica Smith

Thank you, Jay. Good morning. us review joining XXXX Third for Results. Financial you today CyberArk's to Quarter Thank the are Financial call Chief on me With today and Siegel, Executive Matt Josh our Chief Officer. Officer; our Cohen, will open After prepared remarks, the up question-and-answer to call session. a we

let judgment begin, that you beliefs available specifically for I based call on remind on statements, which to certain considered refer of and may currently beyond. regarding be full me results forward-looking made our the reflect the of we fourth Before the statements today year projected management's expectations discussion and best XXXX our information. operations quarter

report Our might with the Form Securities results to to in your release XX-F and those projected U.S. attention those posted and are Exchange press these CyberArk's annual forward-looking the today's risk actual website. in referenced on materially I that contained in direct differ filed statements. factors Commission from company's the

updates expressly disclaims to application to statements or any undertaking CyberArk publicly any today. or forward-looking revisions made any release

Additionally, this discussion presentation A the is conference an available of well investor be in section. today's financial the GAAP outlines on press available call. discussed call. website are in measures as on non-GAAP directly Investor comparable our to release Relations most updated Reconciliations in as call will today's the that financial financial measures webcast also today's in

turn like call to Matt over to I'd the With Matt? that, our CEO, Cohen.

Matthew Cohen

incredibly we acts. team health and are today. Global in the this for horrific go and everyone, atrocities call safety Thanks, The to they be and Israel joining condemn thanks, top our continues want as our as to Hamas time. our priority. difficult organization, navigate Israeli The by an of by the Erica, barbaric these hearts Israel start committed and I out to community through off saying

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quarter. in the best history. up our X the quarters platform. demand step We into in company's for a saw We significant Moving the of had

to that our identity accelerated security remains served the guidance board. Our third Demand continue global platform, priority our total growth go-to-market beat CISOs. deliver across framework. guidance for teams bookings resulting top our the and quarter, outpaced significantly a across stellar bookings and results in our In

million, million, a reaching with reached EPS, ARR $XXX exceeded accelerating ARR robust added Subscription $XXX operating revenue, growing net million. to XX% ARR revenue new total $XXX growing range $XX year-over-year. XX% million our and XX%. We in income we reached Total across guidance growth, and

of our earnings have navigated macroeconomic share Non-GAAP operating income at came $X.XX. well. million, generated team approximately and we excellence $XX the personified execution, landscape Throughout in per the has year, non-GAAP in and we exceptionally

quarters. uncertainty quarter, macro the While compared the of a firming to experienced in we few the last persisted third environment

step-up significant and as Our execution the line our full seen in stronger our and year in meaningful guidance the was outperformance top even QX ARR in bottom XXXX. for

we and improved had rates conversion of close Our our record pipeline. strong

solutions. are didn't cybersecurity budgets quarter, healthy their ACV our of any willing third a increase we portions the more outside significant in as was in allocate While there contracts see X-figure to customers to deals mission-critical than

cloud the migration threat to teams, we robust addition and across from to our product of even are momentum all identities, exponential stronger. and benefit are tailwinds that our development contributing go-to-market elevated The growth execution continue In in landscape strong to secular becoming the business.

and move MGM lead of incident identity. recent organization. of of how identity damage, privilege to including being in inflict shutdown the The roads attackers All to complete regardless an chain incidents. can examples access cybersecurity and environment of a the leveraged in constant remains X thing devastating is One attack most laterally

As the powerful, identities need secure leaders cybersecurity privileged become the all to right be that recognize controls. enterprise more identities across level of

Organizations to each the right security the how right with access and time. provide grappling assign level of are provision identity privileges with also at to

with are and We flexibility on that type offer do environments. differentiates What identity platform an security this the provide even to access. they standing cloud-native the hybrid the of we further is access, privileges, platform can of nature across only access to company or X customers our can that and standing need just-in-time targets the identity our depending the

areas. solutions at traction our This on it's being despite gain that Based accelerated differentiated PAM, customers all includes adopted approach. driving much our motion fastest-growing understand with our are down to continues need not growth. base, endpoint customers which manager endpoint EDR pace, having Equally to privileged and an enough the still X capabilities, and truly lock today of privilege exciting, least every by selling they a our is bigger platform strong

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making lineup portfolio. our We have an all-star up

journeys the their of the without us is these environments getting achieve across all communities they securing truly We sets and digital identity to the throughout us Ensuring empowering applications workforce cloud and innovation. and by building, apart is access are results. helping are secure every developer protecting strong our in their customers their transformation way

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our mindset value time as our XX% I seeing the with at represented with solutions success the $XXX,XXX new to One is annual end home to increase customers existing customers. motion customers as customers our on by and picking within faster $XXX,XXX in expanding need over identities brought secure The security growth business Cloud, in coming Recognizing our both and with well our revenue broadly of in want expand from is velocity land is web that the solutions. the business even workforce customers built board as expansion our more TAM and QX. of its model We're CyberArk ARR. password of recurring thing first identity, The larger up SaaS they into Privilege than adopting sessions. holistically, look at X,XXX to to cohort drive achieve is faster manager is

its CyberArk a security customer expansion broader of in needed deals additional layer services, financial PAM workforce. an long-term include A examples for few of

financial Fortune Workforce capabilities a first into In secure quarter, XXXX identity, of added secrets services deeper company who a as web the added X-figure for Password SaaS and ACV go XXX our end globally. enterprise. first the they great to the now already of platform. is deploying discussions a Manager, taking CyberArk example the data Secrets deal, centers a step serving across secrets provider We de as all sessions This quarter for for facto time business. CyberArk another for with the the backbone is management our for at had This CyberArk underway subsidiary the its management

breach uptick and adoption. EPM X-figure the recent to retailer looking all measurable remains lease a enterprise. this existing Fortune privilege workstations endpoint across its deploy Adding With must-have. EPM local the Removing XXX its risk and to CyberArk was delivered servers, rights a in in allowing policy activity, consistent high-profile deal, add-on admin the across portfolio at running reduction ACV in

partnerships access alignment number of the momentum that We depth more us new up. our of secrets growth of continue are to management. our to unique segments. footprint across and extend our to and big The a are healthy partners and is see valuable The continuing market while allow relationships. our percentage business even with continue still providing a to partners thrilled in PAM, customer routes today, MSPs and show and And channel certifications community momentum pick growth, part small of is we the new effectively great certified reach and to partner

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environments services the in friction These experience. added with multi-cloud no run to user

analysts, other vendors We including cloud, major PAM Forrester excited for visibility controls once the industry to the named no for CyberArk a cloud can. in focus Wave privileged were X like can Management. by Privileged Identity on the in vendor many to While other be leader again bring

platform partner a highest Security and lease and including DevOps Identity XX current ecosystem. and offering innovation top just-in-time response, development access, in access, possible and criteria privilege detection received score the score category the threat in Our support,

but have identity to services integrated while dramatically quickly, are cyber market to live evolving you the down threat solutions. well our around securing world ability security now, heard our we rate, a from security our the development. cost an customers innovation bring overall As is and at of driving investment constant with in increased of The platform faster new and landscape has our to our mission positioned first us against while for innovate even threats

profitability. phase. Switching transition effects subscription are gears to of our entering its final The

the accelerating shows business. Our in QX our top inherent in line is operating leverage and growth outperformance our

We are a of company marching returning XX beyond. rule to of goal towards even our or

between in the are We right growth investing innovation striking and profitability. balance and driving

of transition piece expand which targets final XXXX. quarter, long-term the I confident we in cash the the the year. in addition, performance in outlined expect earlier stellar to remain we With flow, very the is in our In

must-have add-on discussion business. sum differentiated industry-leading the posted we our my our of a market. We business stellar platform and is a accelerating, To quarter with strong drove security that offer truly in up new layer today,

has position in been you our the are seeing stronger, momentum and competitive never Our business.

the identity controls over level platform, any are full a market environment. in right only that who the today apply We one can identity of of regardless security has vendor the

discuss and in income turn revenue, confidence significant the environment. I'll now demonstrates ARR execution year will and who to our how increase durability the our Josh, the in guidance of call Josh? detail in more our full over the demand outperformance the and operating

Joshua Siegel

Thanks, Matt. across We posted and metrics. outstanding results all guidance quarter beat our in the third

$XXX.X subscription in strength with higher coming the our than in framework guidance pleased guidance quarter our of impressive the top even our third line XX% because booking bookings third Our resulted a more outperformance quarter than framework our mix record We for of growth the results in were was particularly XX% million. revenue was accelerating that's that to outperformance. top evidence compared line at to XX% bookings the

identity to security continues upsell, and bigger cross-sell Our business our piece a new logos, with landing driven of be by platform.

demand just ARR September for ARR XX% capture new increasingly and strong million demonstrates to subscription in protect our resulting The subscription over step-up XX. September all ARR compared renewal $XXX $XXX portion persisted as flat to growing and XX%. The customers business net at in at our momentum third in rates maintenance we the relatively of was shows a XX, and portion the $XX the million platform identities Strong $XXX price reached million. ARR quarter. reached identity increased quarter, The privileged security in million were increases to maintenance the controls. second with able intelligent in move

a year-on-year growth. conversion activity ARR represents percent Like-for-like still of only our single-digit

into revenue quarter. $XXX.X third revenue at $X.X growth lines revenue Subscription the Moving representing for in third with in million. of the of details XX% revenue came XX% and million accelerating the license the total to year-on-year quarter. Perpetual reached

from $XX.X and Of maintenance million. services professional revenue maintenance. million came that, Our was $XX.X recurring

reached was critical and revenue software, rates $XX.X in The engine growth in and services XX% consistent the third year, we uplift demonstrating the capturing is professional mission, for revenue third now are million XX% and strong accelerated last to maintenance total to our revenue XX% services million our revenue have professional the prices built. is because renewal quarter. the subscription of Recurring in year-on-year. compared quarter $XXX.X Recurring revenue we of

a in our major a the business non-GAAP reached million, every will items note our X see revenue basis. release. APJ Americas of subscription is press $XXX.X had to $XX.X XX% GAAP the continues All EMEA and non-GAAP Please to One be grew discussed diversified. of over revenue. territories thing grew to $XX.X full million XX%. by be tables year-on-year. of of XX% P&L reconciliation the to the XX% by mix year-on-year line in on that The million Geographically, well to growing

Our third year. was XX% last or margin, quarter gross million gross profit third with the $XXX.X quarter consistent

our end Our operating income top of the of $XX.X million far exceeded guidance.

that our XXXX, the of profitability commitment of quarter Conference. the our Impact and because pleased declined paying from are operating our Sequentially, We is leverage expenses to now second primarily Customer off.

of fell we affecting event the comparison That's in in our reminder, the the year-on-year the second Impact this quarter it a in sequential. XXXX hosted quarter third customer As in and to addition year.

$X.XX also income Net or million significantly per $XX.X came diluted guidance. our in at share, outperforming

first was with sales XXXX, ended margin. free flow in employees For free the $X.X including or X,XXX months flow of marketing. We and X% approximately cash cash September million worldwide, X X,XXX

Turning to our guidance.

uncertainty still the For our full fourth demand, year XXXX, the against the execution our environment. and reflects broader durable balanced quarter guidance while strong continued the and in

to at expect revenue the For the total fourth quarter of which million, XXXX, represents we midpoint. growth XX% million of year-on-year $XXX.X $XXX.X

for We non-GAAP and range mix to we $X.XX share. $X.XX range expect non-GAAP about the per to be to million from subscription our and $XX we $XX XX%, of expect the quarter, fourth million operating diluted income expect to the EPS in

assumes $XX.X Our and average weighted guidance shares also about taxes. million in diluted XX.X million

XXXX. the representing from to year XXXX, the at of to guidance full in the year-on-year be the of midpoint $XXX of in range XX% total we an raising revenue million are million $XXX that's For acceleration our the and and for range growth XX%

raising million. range our million year expect the of profitability $XX.X significantly outlook are full to to income be operating our $XX.X in We now and

EPS to and expect be share, weighted $X.XX We our average year XXXX. the about taxes for $X.XX million expect diluted to in diluted per about we XX.X full and $XX range of shares million

the Now that the quarter, $XX million we $XX full a rails, to to million which range for are XXXX. the wanted cash to in flow up frame translates of guide we fourth year

recurring at of significantly about to revenue between year-on-year now are by for the December XXXX, million about and $XXX raising XX% We this our range. XX, in the $XXX the be million also midpoint guidance million growth annual $XX or

see revenue demand At demand now solutions driving is significantly in and its quarter and another momentum of are and and our the share quarter Overall, for for our our that leverage business our strong Recurring execution we time, step-up with platform of platform. model, lion's in a is this acceleration our demonstrates and building. same improved in flow. cash the were we profitability resulting thrilled

a we moment take fully horrific affected on supporting everyone want and Israel. echo I sentiment math attacks the Now to by and are that

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will I Q&A. the operator to Operator? the call turn now over for

Operator

question of line Your Kalia Barclays. first Instructions] Saket comes the from of [Operator

Saket Kalia

Okay. echo Great. in the Josh, to also well. wanted there, see to Great employees to as your Israel all thoughts and momentum those

Joshua Siegel

you, Saket. you. Thank Thank

Matthew Cohen

you. Thank

Saket Kalia

For start touch of maybe sure. the Matt, lot maybe space recent maybe broadly. you. of about. to just But stuff events can to talk some identity we the in great on with A

interest love breach in on the CyberArk's are you players driving identity other to for that is sense? make broader driving whether the think MGM Does vulnerabilities broadly? some of touch maybe you platform. PAM what identity do in I'd maybe Specifically, Caesars interest And additional think

Matthew Cohen

to they begin continued any of Like and identity. the the it's maybe you occurring in to able it's lateral be our or pathways then the talk that new see account dissect not organization. a breaches, remarks, results. start to is not a with, within the and landscape attack fatigue, think enough. it of When then major kind ultimately, and generally privileged of When help decade, back we I and out you some lead protect a is digest maybe account kind of controls an movement to ability said data authentication track that a infiltration towards the see age. And security the really does. and at privileged all goes you MFA, be the with MFA see need are breaches ultimately, comes this quickly after continued that in which about track profiling When organizations able tricking understanding this that the privilege think it to and breach stop And roads identity actually within these it a not phishing last in employee, quite exploited, to and start allows apply level the themselves, the It every of organization, threat news. we prepared actually, weakness element, when of performance key we'll or our all multifactor today, to it's to that an organizations And are desk. being you human controls and these to day you recap in an right secure basic just start nonhuman

I from And you getting C-suite for you results, support understood years, so see their their our understood CISOs because have a recent breach, this at of more but not think from look Boards. when who it

As strategy. the identity they of implementing security a dire consequences broader not understand

have company customer the that privilege foundation, the make the throughout obviously have in we trust there to can security-first we're bring which think placed story the offerings CyberArk able all to trust they We are understand breaches And to our to they see be out security the identities. against to it that in I and able industry, occurred it controls industry, a that sure similar that's identity consolidate platform. actually all their is Now need see on only the we breaches. identity customers that

Saket Kalia

these It's That I makes strong it. out maybe error retention the -- sense. you Josh, follow-up or you way? how is, lot do SaaS when think forward, Got with maintenance mean hold of start a do but strategically, see The about going you increases for you. tactically, bigger to question called to for convert my in in customers and think subscription as price also maybe a to just maintenance great ARR well.

Joshua Siegel

Yes. Saket. Thanks,

think decline and a the mandate mid-single think decline think now, million in So as see SaaS $XX range the playing we're QX, just give mean, just right or think see when looking year probably ARR, that I -- subscription. in XX%, of -- going in -- we terms about the would that a type for at QX, and kind I -- of XX-plus it of we probably XX-month a as digits about kind out the above I last and XXXX, in kind of us in year the of into we're -- already over the period. for we the full And this about we'll

it year, be next already above that. So will

really, perpetual the is next year. business for So evaporating really

strategy would of we call, what's expect So for what's I really customer the should kind a doing number. customer. and for best the larger decline and focused compared a not to digits this falloff right think I just the see, the right on double low we're but continuing year, to to the is And increase

over are program. update also there, as And we'll to we're perpetual are and more -- move be there journey current And for And so anticipate environment, we're cloud that the of But but to be their for SaaS is we then not customer will and necessarily their a more change and time, hosted do business cloud, PAM we wants moving to the customers security evaporating. we because part it. upgrade customers as their identity part absolutely forcing environment, clearly, of the the and to the growing that. moving it are

Operator

Rob Piper line the Owens Sandler. from of Your next question comes of

Robbie Owens

free to from just like a down, drill people cash to free little previous relative of margin it flow the question guidance and realize net echo takes X tough hold. guide. our the income looks situation. aren't and with relative your into Israel, that around of there to of some guide flow and bit contracts. cash of going thoughts that to to Josh, previous spread we'd maintenance like me But puts necessarily employees I Wanted duration that was You

us unpack year us then And in So get thoughts that terms can an that spread? to any might where for this flow it's year help cash in? to that a and how relative of of understanding next and you coming free accelerate for

Joshua Siegel

Yes. Thanks, Rob.

see one contract, down contract from or being dropping going And about transition, and paid subscription we're going think flow, I because looked sale, actually, with it's we either when kind in with the coming started hit of think So in flow as going SaaS when transition. of quarter, we a the which really we thinking year income, -- -- to we'll a and and multiple a when perpetual puzzle We really that's remarks, on operating it of more alluded piece revenue we a the year prepared it's next expansion at cash flow, moved, line contract typically And third the upfront. now expectations. and maintenance, Matt year. that this in last the the our when see in out was And to his or is during subscription. basically we're which cash it first piece at the think that SaaS into the free about transition is you also perpetual about X-year comes third to a from acceleration then into upfront, paid the of cash all

numbers beginning but the real -- are this really the and instead go and So play to our inflection starting confident of year, we able subscription in we start and it see to we've strong the next we the to targets. of out we see set in 'XX without and long-term we'll enjoy started through SaaS pieces as 'XX go renewals, the perpetual, full the the to compare are about we year see that

Matthew Cohen

of which I just it with see we that net and where flow guidance, basically, guardrails cash we is income out. in kind line emphasize, think set just then is our And in to came margin playing our out

confident an there what Nothing's end the those year. that changed put lower the year, on and we inflection cash see targets the So guardrails, the rest point to is but want for we're I Josh which of within long-range model for of next And XXXX. XXXX guardrails going we flow said, extremely reiterate into just out then there. in the and for this

Operator

Your comes Roger next UBS. Boyd of question of line from the

Roger Boyd

thoughts wonder the your in about I on you logos. Israel. could if employees Great. everybody and Congrats echo on new again, quarter talk and

I the if -- that, logo fact for but the disclosure, new I contribution I landing few the but customers XQ, you are how platform. next for love a apologize about talked thinking logo bigger sounds think on I any I around in think the the missed. was I that about the think I but new with case It clearly like is you're environment maybe tougher that the don't thoughts into corner you've year? it's of quarters, a heard past that

Matthew Cohen

Yes, sure.

been actually the mention new the think primarily it, think able land we've land customers. to again, that in or the talked continuing about we motion. or We've remember, to customers is we've number. I our our excited able to basically X quarter and successfully really to PAM, expand see with as than we us increasingly more. end access, feeder for and did with upper That which logos giving about, continue flat for And with did XXX system of enterprise either we're a I'll growth, with land We're EPM and landed is we And be future mid-market. year-over-year. X I new great customers that serving as this It's but pretty by more product, business the mention So quarter. we're

deal to we emphasize size also logos the call, and those overall we terms growth think the dramatically. you from continue the well it increasing in contribution in of a will I is rate I our new are actually logos at of of up perspective. that size our new hinted above see the of And booking

by we the because does So we're have close think quarter the of performance a environment. healthy in new excited a this bit Certainly, the this logo macros, of slower little rate queue. in is a it but

Operator

next of question the Morgan from of line Your Stanley. Fodderwala Hamza comes

Hamza Fodderwala

want to next to also see you I'll Josh, family's I friends my in there your extend support to year. all Israel. And hope

Joshua Siegel

Look forward to it.

Hamza Fodderwala

maybe Yes. you threat you've a lot high on next rising are more for CISOs question got level. environment. a going year, Matt, with into a dealing a

these got rules. new SEC You've

Now I'm right hearing liable next broadly? them? the be just budgets and concerns what customers curious, for what is for now, personally they think it their CISOs security more are level held year, or can main whether breaches. What you the from be priority about identity are as related for to

Matthew Cohen

Hamzah. Yes,

captured you well. a And they're counter of that environment with my regulations. lot it an out as the you job. think figure belief from how beyond them. is of the try they described, I time stressed, and both the to to impressed the factors from not of all threat CISO a I job spend easy

and to have trying could to I think of things. we're again, always, what genuine, going do having, on they XXX understand, talk, they're when we conversations, the that are are as amount And risk. the really priorities transparent impact most

their that programs year the but this more and boil that make do risk reduced could everything could you they it so sure down year they're have than and that can projects on. answer to are they to why the Board to before they imagine, So to going

do to And inherently they really that concept they that, look lead roads this when at understand all identity.

identity, is identity so they're And overall about locking thinking about security. posture their down everything around

is year those budget budgets their for detect that their which ahead. respond for spend into CECLs really the and able projects, be from EDR make see map, have when It's what identity can what But impact, year's road budget them customers. they're to next we that's overall and years or obviously our about things And prioritized. plan, reduce priority but the as the coming our with do risk in started, about and the a still most. that look to outside, have why are to why, we're endpoint ourselves and their not talking can we CISOs towards for you're quarter in, they're prioritizing can you conversations thinking for we're the just already their and on the Now our X biggest sure

identities and both and down identities, lock cover to in human on-prem the journey nonhuman all cloud. a is it and to And cover

XX-month that work these map to so we help them. them road allows us protect secure and period a And customers an continually to materializes that over see XX, with

top feel And we having, it conversation is we're actually we're so bidirectional at the that of and a the list. like great

Operator

comes Your line Ittai the Oppenheimer. question next Kidron of of from

Ittai Kidron

comments, our you. Matt, [indiscernible] And questions, everyone's Josh thoughts a are to Matt, with you. couple had of

had big go-to-market financial your you, Saket's to of shift you And priority? want is done priority where and you've new the now? expansion the right the are maintenance But given another the good to But in salespeople given back we're massive X-year what would real have keeping -- to the growth around. your in customers want helping. offer Clearly, right, would sales Clearly, mark getting after is portfolio customers. comments. on reorienting the running What Josh, a what you price very into, subscription. side, increases going go for force in up with to have, I side, clearly or On and existing now XXX job the how have have right now, everyone the are you

that the just thinking that step-downs? understand the question. creates a have step-downs rather in with shifted kind -- another. but in they wondering there that keep X-year there customers Sorry that I'm transition. there that shift down for X renewal, Why of me a maintenance a coming risk or we is they contracts if long cohort so keep -- are maintenance is big even for to as you And slowly that now cloud a of than they possibility way a will from not Help there's gliding should perhaps that X were on risk, on large significant tool

Matthew Cohen

again, it's the thanks good no, questions. support. for No, And

the answer On side, a think go-to-market the both, that now me is I bit. little and into let dig

So we do equipped incredibly well that the believe and motion. cross-sell team sales the upsell to

customers. have relationships deep We with our

the have the conversations describing that in I answer. was We prior

the programs, the calling. ramp sales ability of up who the cross-sell motion. gen invested marketing outbound of the the And both development to the our cold able calling in we've motion At sales brand are and doing to organization upsell be more demand really their in campaigns, empowered team some feet the reps heavily so our focus to is SDRs, and to time, same street most on

up engine the before team to force. them sales new All involved marketing the meetings, of it the help we get to sales set they get over Then hand through actually allows generate a pipe. qualified use us the and that actually to go can them logos the we and obviously, in participate moving

sure be role, logos, knows the of So pipeline their successful. focused future, strong this XXXX to where really is for making marketing XXXX drive incredibly we've on up set new and making building primarily are kind we everybody going the sure engine

and the out us go-to-market to mirrors upsell perspective, leveraging there cross-sell. a our respect. drive dynamic that relationships is organization, is here which And on then third the And in partner which there's team sales their

our we years not by said entire driving the street our firms only PAM, And with drive MSP motion. identity ago, to the with so advisory out up would we relationships market, there what exponential traditional security have with that, by which go-to-market in get the partners, providers, is who feet helping they're can our the on push X And reselling story. but

And so really all how together of that focused. we're is

We continue enough have to capacity in direct sure we capacity. to make layer sales

we spend in We investment up go-to-market partners, in what's money ramping that's layer And engine certification continue together, in itself. our and marketing. to driving and

Joshua Siegel

to And again Ittai, maintenance. it relates as the

only are of growth. that like today ARR to percentage single-digit seen a XXXX. absolutely, talked we're down. prepared remarks, there's be a as So think will earlier conversion going larger huge it's we step in believe XXXX we still we And than the only not reduction what our seeing in in be because number But we've a still about

and the yes, also have X certainly less going quarters. we have, for our that, on good conversions next for perpetual. And conversions, next We in we to more and a going are feel the obviously, pipeline we have where -- X to view are

we're about it's a we large lot a increase is that long to But CyberArk, why -- good the have we for lot are do of actually you've XXXX. not We it's us to the that's of over necessarily off but actually business. that the moving verticals, dropping extent the world, very result the maintenance. see and as it's across across on for and sizes by going company. a time diversified still been we a of following large to good a way, it's transactions, news the So don't deal SaaS, floor across so type And deal dependent

as So be SaaS direction. even SaaS deployments would and excellent the more and for in that more it moves dollars business

at for we're on with we'll XXXX. an point, it with annual of in along February on think come with seen basis kind I XXXX. this of increase where we seeing view a So a overall, site tighter continued lines see we've But XXXX maybe what back the in a

Matthew Cohen

accurate base it, said, maintenance just X actually what mentioned add uplift, on they're is them, and more Josh paying are is Josh of we footprint was we do Xx great, idea expanding stuff. this And what for going top which of this me And when of with get and to really convert their customers. nice which uplift was strong and buying we they're this

migration PAM solution who point don't SaaS buying on a if force really it forced want they're those important in on are don't I But to sitting them out really ready uplift. because solutions want is customers are perpetual motion. their I through assets that still really second So a miss for newer our to not

those solutions, base products, happen a But wasn't happy they're we that and to the since them still cross-sell our SaaS to So case, I'm into upsell if expanding can it's that their not footprint leave little greatest with with customers move. from them probably stopping SaaS ready there bit the until CyberArk harder. with pushed

Operator

JPMorgan. from of of Essex the Brian next Your comes question Morgan line

Brian Essex

be see ARR momentum. I'd colleagues follow question up large a mix well a to And as subscription in as like for my with ability strategically, continue touch on market gain ARR. enterprise was as seeing great deal then asked. towards But goals, the support progress opportunity the traction to of on Israel. easier SaaS new Could to I you to is just your are calendar cost-effective on the 'XX be platform? growth your as traction Or of drive echo also more we in maybe your you and to SaaS larger down that It's -- bit to adoption? friends your a in strong and net term track more guess, going a, continues opportunity to

Matthew Cohen

Thanks, and the support. for Yes. Brian, thanks

X/X, when term-based license about subscription think or X/X, about the kind held throughout transition. to be SaaS of and mix, we up think I that's it continues the

it's in moment. purposes. shift of modeling as the product pure good major sell, X/X a new is at up, will X/X, and see the we number SaaS for that think don't more but Obviously, more the tick I So

down terms sell. is it's market, In that go we a ability down to when of market, our go SaaS very clear

than be over the when we're down actually fact, mix selling little on probably offering SaaS SaaS there looking In would well XX% market. higher a that

quick down adoption time. billion market, it's $XXX want So to and what we lead solutions. $X.X they're call which SaaS market, expand are to our over them that we're And with only a going and adopting annual down SaaS, in we it is because revenue. be about into when customers million ability that customers love our corporate we market That's able then for to SaaS a quick

Operator

the Your Guggenheim. next of of question from line comes DiFucci John

Unknown Analyst

Guys, I else but everyone McDonagh. normally what is I'm to Diffuse This continue in put in saying, Josh, prayers the express and to top segment. even important our most an people. don't John and up bottom it's And really for sorry. just line impressive employees would, to momentum repeat appreciate discipline. thoughts At frankly, Ray we the and the with Security try line is you environment aren't your

noting 'XX. getting question half security of hearing any trends throughout all? needs? good of 'XX. from hearing you deals And any at year? this For reason the following Are because current instance, have a getting the on It's you seeing 'XX people so, out lot at very security have pushed are pulled end be into to might satisfy spent for not you that budget Ittai's into there 'XX the second 'XX the end go-to-market. question year? Or is if And But on we're something it's I general up of about budgets exhausted sort this might of into over. worth much control have generally a coming Are security

Matthew Cohen

for support. appreciate do really Thanks. We And again, thanks the it.

see -- to whole ability actually able strong even throughout we QX, a listen, at to environment, mention we think execute environment about us. for our for heard become saw to So be in year. strengthening. me that when I we And the execute our look we've us it better go-to-market talked you to And continue

talk executing their spend it is about I customers. budgets customers the -- think we of willing of terms lights. in for effectively team and even better in with our more in better the for within more One to is terms are us us efficiently, X more

see say opposite would of the see We of I bit you're describing. we firming up. what kind of budgets little actually a

look We budgets, have the to at into year how about line those we which of how we frankly, year. goes sight good and think next

down. We saw close up. not also going staying going flat, rates We going up, even increasing, deal but see sizes not

But our in XXXX, with might So what it confidence want that we talk budget what's fact them think market overall is not of overall pipeline decision. the to where that driving money you of saw our out to market goes I the our up. CISO, again we're playing any -- stressed that security lot drives optional at is you word. in But when see forward. quarter we be will not spend we're QX money at another so drives the right and success, so in, have and going think It's is look We stressed realization in to here. amazing the productivity build. pipeline A I the all. come we environment, a outlook if working it around And our itself. that identity in

Operator

Boolani question comes Fatima of Citi. line of next from the Your

Fatima Boolani

sense executing Either question strongly the activity a a one. Josh, within feel this free And spirit really, more Sending my jump the new get I trends of much the CyberArk expansion to to all for on. and the you've Matt sales cycle portfolio. entire you wishes and family. got you're well of is to very that logo or expanded wanted

a So that the sale typically managing with you come broader how portfolio. of extension of are cycles sales the

Matthew Cohen

Yes. support. Thank for the you, thanks and

a always a to we sale. just how it enterprise it think even sales have were always big is PAM we significant selling program, We've grade it, cycles. when sell I had had I and describe was quarters multiple because was over

And sales think as pretty so selling platform we're motion, moved used longer portfolio. a we cycles to broader to I

sales elongation We any cycle. overall haven't our real in seen

it bring side, seen which of lines, though haven't kind traditionally its either some might the to a dramatically even cycles flip come time moved sales sale, of we've down those On we really in SaaS in.

we're is sales expansion So I what cycles are which think shorter. we've always operating consistently done, with

talked take up longer. QX, over a cycles sales were a New especially the little of our the little logo as We've more time about, sales cycles ability to continued part bit bit to time. we in the for year, In early new here. firm that logos see

it's And a near to a say but so I dear and again, firming up And heart. I know think as when environment. my whole, they're we look QX I with this lot, a consistent performance at the

able Our go-to-market deals bring to in. team the to they deals they're in make rates when be that bring phenomenal the say continues to sure going to just they at execute

Operator

Securities. of Your next comes question Truist Junaid of from Siddiqui line the

Junaid Siddiqui

that new access products they're been Browser. you a just in some curious highlighted You cloud like customers by being was terms surprise secure adopted that and growth? that impact just other launched recently. launched I positive What's of you about quickly how to of the you to Secure contributing

Matthew Cohen

Sure.

will come towards general availability here. for we Secure end this on the out that Browser, So released have not yet year of that

strong against and comment is the security customers front-end secure in and some of market. see really way, into more in way it, our out it's -- not offer too protects the of would accelerating hijacking. recent really, we list that's user of platform attack risky new we And on the terms interface also both the conversations out -- the session browsing the identity way the yet. of cookie say the early has market session in a have browsing to for most by you to X with of for I allows front, that main which about continue browser market breaches, notion But hijacking as in even methods the Browser, and it We Secure really see that a

X uniquely developer, can want applied platform to for have about do about We're we it to still is AWS the console. to lock unique that in to many cloud And the recording. It's make talk about unbridled of that? privilege discovery. of And session everybody about we time, access, in of here. best I good why visibility. the posture cloud we to and done brand-new cloud account the do innovate, their controls with We isolation these security cloud As the going is Because so what's to can really sure space the They It's being in it's management, account people there's as about of to that West want extra developers over has in best the market we we're Federated on. but kind that able talking step, when the session it. because actual controls, And they doing example, developers all down AWS enthusiasm focusing Wild account, itself. is is secure not privilege need have take discovery, it's access these bringing of this what's the who understand area. unfettered security they're it's privileges, of companies Microsoft, What gotten that build. privileges, that. the market can still so do around that most in of And of thousands of is control really, cloud. have services, bringing privileged a that users population. want of still overall a around no strong troubleshoot, lot that's can understand first all standing idea the cloud or the that that idea Other what want and get are concerned and those management, we visibility in be around It's PAM, they to people a the

just So they into that's when it's it's sitting side, log privileges are there When the applied to secure. on when console, time. the in go the

as immediately and execute soon time-bound removed access. it's as it's log out, and controlled they to workflows then with work able their with They're

us on bring love Now that access because to to little I deeper for opportunity went there understand population secured. a I arises entire there privileged that little a that but down locking is which do thinks best, us for controls, as about went the security, be also we I needs what the to question, everybody to people deeper cloud for this

of really very an for some our We business. our the me It's exciting still great in actually but quarter. around describing hear I'm piece us. you And tiny this so motion unique only business optimism that's the had approach. X or wins in, for can as X quarters

Operator

of question Stifel. Borg line next comes from Adam of Your the

Adam Borg

again, the And come thoughts his the team broadly. Real of Awesome. the my government opportunity. and Israeli about entire community [indiscernible] I'll on quickly

government think bit a of the it little So quarter. X% quarter more how months? mix talk in about the was broadly over next just out how in the ARR played federal Maybe XX and you more about

Matthew Cohen

] year-end more across throughout local and kind identity falls think we get need in. be with spread allows more talking be were we've budget because the -- lot and in past, to place to I lot when momentum invest Listen, able this coming the ability the them [ to with where we the happy agencies our be we our us the plans up it's these a process is for flush, support. into ramp for budget at here, us in the healthy criticality year our able the that global within very population, investment our position able to SLED business. around. even much Thanks, business customer cloud of in deployment our That of is And here, our much time a of we've to conjunction allows of in footprint government us U.S., while state here What are beyond government global including and be the solutions strong the to thriving out security government the lot the PAM about actually to of whereas exciting over into bring that point getting year. And a EPM purchases government little and been see it actual actually Adam, of actual to seen expand and It and the and right? for thanks a board see to Fed purchases ability in federal that of in have a We're accounts. new into and place. a all they're in identity bring to the

when we is highlighted the see and government, we continues solutions outside look identity And exponentially government account actually But them in expanding for their even on U.S. a on. look the actually some the the private so we need at when of in that proper government, fact, more at sector. recognition threat the script security than of we of landscape

sector. a So really happy of long we results that growth with runway think we're our there's government the from perspective. within And

Operator

Brian Stephens. line Colley from next the Your of question of comes

Brian Colley

they cybersecurity certainly said between if quarter to heard curious in and the business. in [indiscernible]. mid-market demand some the started team mid-market. saw any And this in I'm some the other echo of and you the divergence Israel well the like We've my for trends seeing segments and your softness companies enterprise quarter more as people support third

you I'm in if wondering way. any something saw that's So materialize

Matthew Cohen

So we see any environment. that change in didn't

I mid-market space. seen that we any that is haven't that the enterprise about we've idea perspective. or -- But macros more change by from change real the talked than affected any the diversion think in

couple mid-market said call in we of it account is know other we really $X.X playing cybersecurity everybody the mid-market. be again, a to and for are end reminding different than mid-market, I'll things X think it keep corporate of we're some what the of I CyberArk a $XXX that minutes low not our I have but would I the peers say that million billion. to customers CyberArk. around ago, our of it's And

the quarter. in their behaviors, upper And on there of and end space, the the mirror think continues the organizations, what we're in that kind especially in in seeing I enterprise third so those ones

Operator

Your the next from of Needham. comes question line Alex Henderson of

Alex Henderson

mid-summer was of existing a little Much about rarely adoption hear off customers the of talk Great. that hoping driven about the of an pipeline visibility? helping "amazing off new that, plus assume of cycle. from reaction driven might product And the I platform announced that. that trade the the with show is be mid-summer. I question bit like. composite just talk broader and X-months I and your were the that is I'm that is, technologies ask build of obviously, recent the How much the you the and somebody simply sales And reason the could of build".

Matthew Cohen

Sure, sure.

see that PAM the in continues a to to results access this grow in outside really of they're growing nice our So solutions while business bit portfolio. check, the little And about pipeline quarter, we grow. our pipeline and listen, much we of ability think the check, saw we a it's PAM, think see our be continue way, all our faster fact, broader able you when in above. see sell the pipeline, to We I by being at rate. a a to check, of affected

to continue grow. secrets business Our

we EPM mentioned, for pipeline be I As around our spot Secure see Access, nice bright a build to some continues us. Cloud

play So I'm just And whenever pipeline. we portfolio about the definitely always pipeline, coming year-over-year rate about talking absolute the to see mix help number. growth, of build the to growth year-over-year of kind talking not in I'm an

channel-generated see of build, engine. our addition healthy start you pipe, manner. gear go-to-market broadens -- that, ability a in rewind from we much kick to the to to all also couple have sales. be of came what's pipe pipeline if we all our Now high and Meaning, years of a actually marketing-generated routes pipeline starting into we better built a getting now pipeline to that see those that what's ago, more in see way rewound to the And

didn't portfolio that in last you when they And been been story and pipeline the broader quarters why track where with And identity wonderful, that we by a customers, should important traveling events so doing spring. in The put a a really the that's we've in countries We've the together And about each company we've we a we've so a pipeline, the in routes CyberArk, to. is us much. it tell talk all world had for 'XX, so we why is at quarter resonate at way, who goes security market that where tour help to with end choose. really understand we can that that to broader could just situation event seems talked rate. the the combine X been and [indiscernible] strong because and our up put to healthy how around a a you actually are 'XX, building as several great to whatever that on customers of kind do helps build us position

ahead. we towards to towards able guidance with for look we of go with sure, with strong a put our XXXX look targets forward and year degree the we confidence able optimism. out to be And guide were to ability and next We XXXX there, our in

Operator

time We've for of questions. out run

over remarks. So for closing Cohen Matt call I the turn CEO, will to now

Matthew Cohen

And thanks working such everybody's I proud want us personally. people. of our finish world and employees, by health, of the with to tremendous #X and under for be where challenging company I saying everybody, priority It to support such their their is Thanks, a to work by started our amazing means really part done this again these proud well-being. conditions. I'm job They've

that on out make against threats talk securing together there. soon. them focus We and Thanks, the sure continue together and customers are our to we cyber all

Operator

conference This concludes today's call.

You now may disconnect.

CyberArk Software (CYBR) 2 Nov 232023 Q3 Earnings call transcript