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 first quarter ended March 31, 2016.

"Our top and bottom line outperformance in the first quarter was driven by solid execution and strong demand for privileged account security," said Udi Mokady, CyberArk CEO. "The breadth of customers and partners turning to CyberArk to protect privileged accounts and credentials demonstrates that every organization regardless of size or vertical needs this critical new layer of security. We believe our disciplined investments will enable us to continue to extend our leadership position, capture share in this greenfield market and deliver profitable growth."

Financial Highlights for the First Quarter Ended March 31, 2016

Revenue:
  • Total revenue was $46.9 million, up 43% compared with the first quarter of 2015.
  • License revenue was $27.5 million, up 38% compared with the first quarter of 2015.
  • Maintenance and Professional Services revenue was $19.4 million, up 50% compared with the first quarter of 2015.

Operating Income:
  • GAAP operating income was $6.2 million, compared to $7.5 million in the first quarter of 2015. Non-GAAP operating income was $10.7 million, an increase from $9.0 million in the first quarter of 2015.

Net Income:
  • GAAP net income was $4.3 million, or $0.12 per diluted share, compared to GAAP net income of $4.2 million, or $0.12 per diluted share, in the first quarter of 2015. Non-GAAP net income was $8.3 million, or $0.23 per diluted share, compared to $5.7 million, or $0.16 per diluted share, in the first quarter of 2015.

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 ended March 31, 2016 and 2015. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

Balance Sheet and Cash Flow:

  • As of March 31, 2016, CyberArk had $254.3 million in cash, cash equivalents, marketable securities and short-term deposits, compared to $238.3 million as of December 31, 2015.
  • During the first quarter of 2016, the Company generated $16.5 million in cash flow from operations, an increase compared to $14.3 million in the first quarter of 2015.

Business Outlook

Based on information available as of May 5, 2016, CyberArk is issuing guidance for the second quarter and full year 2016 as indicated below.

Second Quarter 2016:
  • Total revenue is expected to be in the range of $47.5 million to $48.5 million, which represents 31% to 33% year-over-year growth.
  • Non-GAAP operating income is expected to be in the range of $8.6 million to $9.5 million.
  • Non-GAAP net income per share is expected to be in the range of $0.18 to $0.20 per diluted share. This assumes 35.9 million weighted average diluted shares.

Full Year 2016:
  • Total revenue is expected to be in the range of $209.0 million to $211.0 million, which represents 30% to 31% year-over-year growth.
  • Non-GAAP operating income is expected to be in the range of $41.7 million to $43.3 million.
  • Non-GAAP net income per share is expected to be in the range of $0.87 to $0.91 per diluted share. This assumes 36.3 million weighted average diluted shares.

Conference Call Information

CyberArk will host a conference call on Thursday, May 5, 2016 at 4:30 p.m. Eastern Time (ET) to discuss the company's first quarter financial results and business outlook. To access this call, dial 844-237-3590 (domestic) or +1 484-747-6582 (international). The conference ID is 85665234. 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 855 859-2056 (U.S.) or +1 404-537-3406 (international). The replay pass code is 85665234. 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.

About CyberArk

CyberArk (NASDAQ: CYBR) 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 more than 40 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, MA. The company also has offices throughout EMEA and Asia-Pacific. To learn more about CyberArk, visit www.cyberark.com.

Copyright © 2016 CyberArk Software. All Rights Reserved. All other brand names, product names, or trademarks belong to their respective holders.

Non-GAAP Financial MeasuresCyberArk 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 months ended March 31, 2016, non-GAAP operating income is calculated as operating income excluding share-based compensation expense and amortization of intangible assets related to acquisitions. For the three months ended March 31, 2015, non-GAAP operating income is calculated as operating income excluding public offering related expenses and share-based compensation expense.
  • For the three months ended March 31, 2016, non-GAAP net income is calculated as net income excluding share-based compensation expense, amortization of intangible assets related to acquisitions and the tax effects related to the non-GAAP adjustments and for the three months ended March 31, 2015, non-GAAP net income is calculated as net income excluding public offering related expenses and share-based compensation expense.

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 share-based compensation, public offering related expenses and amortization of intangible assets related to acquisitions 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. The Company believes that expenses related to its public offerings and amortization of intangible assets related to acquisitions 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 measures to evaluate its business.

Cautionary Language Concerning Forward-Looking Statements

This release may contain forward-looking statements, which express the current beliefs and expectations of CyberArk's (the "Company") management. In some cases, forward-looking statements may be identified by terminology such as "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "predict," "potential" or the negative of these terms or other similar expressions. Such statements involve a number of known and unknown risks and uncertainties that could cause the Company's future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risks relating to: changes in the rapidly evolving cyber threat landscape; failure to effectively manage growth; near-term declines in our operating and net profit margins and our revenue growth rate; real or perceived shortcomings, defects or vulnerabilities in the Company's solutions or internal network system, or the failure of the Company's customers or channel partners to correctly implement the Company's solutions; fluctuations in quarterly results of operations; the inability to acquire new customers or sell additional products and services to existing customers; competition from IT security vendors; the Company's ability to successfully integrate recent and or future acquisitions; and other factors discussed under the heading "Risk Factors" in the Company's most recent annual report on Form 20-F filed with the Securities and Exchange Commission. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
     
CYBERARK SOFTWARE LTD.
Consolidated Statements of Operations
U.S. dollars in thousands (except per share data)
(Unaudited)
 
Three Months Ended
March 31,
  2015     2016  
 
Revenues:
License $ 19,978 $ 27,514
Maintenance and professional services 12,937 19,397
   
Total revenues 32,915 46,911
 
Cost of revenues:
License 550 1,274
Maintenance and professional services 3,707 5,160
   
Total cost of revenues 4,257 6,434
   
Gross profit 28,658 40,477
   
Operating expenses:
Research and development 4,117 7,933
Sales and marketing 13,460 21,663
General and administrative 3,578 4,670
   
Total operating expenses 21,155 34,266
   
Operating income 7,503 6,211
 
Financial income (expenses), net   (1,631 )   67  
 
Income before taxes on income 5,872 6,278
 
Taxes on income   (1,706 )   (1,954 )
 
Net income $ 4,166   $ 4,324  
 
 
Basic net income per ordinary share $ 0.14   $ 0.13  
Diluted net income per ordinary share $ 0.12   $ 0.12  
 
Shares used in computing net income
per ordinary shares, basic   30,563,888     33,366,332  
Shares used in computing net income
per ordinary shares, diluted   34,786,581     35,707,977  
 
 
 
 
Share-based Compensation Expense:
 
Three Months Ended
March 31,
2015 2016
 
 
Cost of revenues $ 63 $ 241
Research and development 82 940
Sales and marketing 139 1,225
General and administrative   181     967  
 
Total share-based compensation expense $ 465   $ 3,373  
 
       
CYBERARK SOFTWARE LTD.
Consolidated Balance Sheets
U.S. dollars in thousands
(Unaudited)
 
December 31, March 31,
2015 2016
 
 
ASSETS
 
CURRENT ASSETS:
Cash and cash equivalents $ 234,539 $ 238,202
Short-term bank deposits 3,713 8,680
Marketable securities - 597
Trade receivables 20,410 15,819
Prepaid expenses and other current assets   3,293     4,770
 
Total current assets   261,955     268,068
 
LONG-TERM ASSETS:
Property and equipment, net 3,584 4,023
Intangible assets, net 18,558 17,424
Goodwill 35,145 35,145
Marketable securities - 6,857
Severance pay fund 3,230 3,361
Prepaid expenses and other long-term assets 1,954 2,050
Deferred tax asset   9,998     10,431
 
Total long-term assets   72,469     79,291
 
TOTAL ASSETS $ 334,424   $ 347,359
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
CURRENT LIABILITIES:
Trade payables $ 2,530 $ 2,222
Employees and payroll accruals 15,860 12,350
Deferred revenues 37,104 43,746
Accrued expenses and other current liabilities   9,366     7,888
 
Total current liabilities   64,860     66,206
 
LONG-TERM LIABILITIES:
Deferred revenues 17,285 19,862
Other long-term liabilities 188 236
Accrued severance pay 4,667 5,043
Deferred tax liabilities   754     652
 
Total long-term liabilities   22,894     25,793
 
TOTAL LIABILITIES   87,754     91,999
 
SHAREHOLDERS' EQUITY:
Ordinary shares of NIS 0.01 par value 86 86
Additional paid-in capital 200,107 203,969
Accumulated other comprehensive income (loss) (93 ) 411
Retained earnings   46,570     50,894
 
Total shareholders' equity   246,670     255,360
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 334,424   $ 347,359
         
CYBERARK SOFTWARE LTD.
Consolidated Statements of Cash Flows
U.S. dollars in thousands
(Unaudited)
 
Three Months Ended
March 31,
2015 2016
 
Cash flows from operating activities:
Net income $ 4,166 $ 4,324
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and Amortization 222 1,518
Share-based compensation expenses 465 3,373
Tax benefit related to share-based compensation (529 ) (217 )
Deferred income taxes, net (245 ) (598 )
Decrease in trade receivables 4,351 4,591
Increase in prepaid expenses and other
current and long-term assets (932 ) (1,008 )
Increase (decrease) in trade payables 871 (200 )
Increase in short term and long term deferred revenues 9,171 9,219
Decrease in employees and payroll accruals (3,183 ) (3,510 )
Decrease in accrued expenses and other
current and long-term liabilities (242 ) (1,200 )
Increase in accrued severance pay, net   225     245  
 
Net cash provided by operating activities   14,340     16,537  
 
Cash flows from investing activities:
Proceeds from short and long term deposits 24,279 -
Investment in short and long term deposits - (4,998 )
Investment in marketable securities - (7,435 )
Purchase of property and equipment   (620 )   (930 )
 
Net cash provided by (used in) investing activities   23,659     (13,363 )
 
Cash flows from financing activities:
Tax benefit related to share-based compensation 529 217
Proceeds from exercise of options   234     272  
 
Net cash provided by financing activities   763     489  
 
Increase in cash and cash equivalents 38,762 3,663
 
Cash and cash equivalents at the beginning of the period   124,184     234,539  
 
Cash and cash equivalents at the end of the period $ 162,946   $ 238,202  
 
CYBERARK SOFTWARE LTD.
Reconciliation of GAAP Measures to Non-GAAP Measures
U.S. dollars in thousands (except per share data)
(Unaudited)
       
 
Reconciliation of Operating Income to Non-GAAP Operating Income:
 
Three Months Ended
March 31,
2015 2016
 
 
Operating income $ 7,503 $ 6,211
Public offering related expenses 1,081 -
Share-based compensation 465 3,373
Amortization of intangible assets - Cost of revenues - 355
Amortization of intangible assets - Research and development - 478
Amortization of intangible assets - Sales and marketing   -   301  
 
Non-GAAP operating income $ 9,049 $ 10,718  
 
 
Reconciliation of Net Income to Non-GAAP Net Income:
 
Three Months Ended
March 31,
2015 2016
 
 
Net income $ 4,166 $ 4,324
Public offering related expenses 1,081 -
Share-based compensation 465 3,373
Amortization of intangible assets - Cost of revenues - 355
Amortization of intangible assets - Research and development - 478
Amortization of intangible assets - Sales and marketing - 301
Taxes on income related to non-GAAP adjustments   -   (513 )
 
Non-GAAP net income $ 5,712 $ 8,318  
 
Non-GAAP net income per share
Basic $ 0.19 $ 0.25  
Diluted $ 0.16 $ 0.23  
 
Weighted average number of shares
Basic   30,563,888   33,366,332  
Diluted   34,786,581   35,707,977  

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