CyberArk Announces Strong Fourth Quarter and Full Year 2023 Results
CyberArk (NASDAQ: CYBR), the identity security company, today announced strong financial results for the fourth quarter and full year ended December 31, 2023. “2023 was a momentous year for CyberArk...
Company Exceeds Expectations Across all Guided Metrics
Subscription Portion of Annual Recurring Revenue (ARR) of $582 million; Growth of 60% Year-over-Year
Total ARR of $774 million; Growth of 36% Year-over-Year
Subscription Revenue of $472.0 million for Full Year 2023; Growth of 68% Year-Over-Year
Record Total Revenue of $751.9 million for Full Year 2023; Growth Accelerates to 27% Year-Over-Year
Net Cash Provided by Operating Activities of $56.2 million for the Full Year 2023
NEWTON, Mass. & PETACH TIKVA, Israel: CyberArk (NASDAQ: CYBR), the identity security company, today announced strong financial results for the fourth quarter and full year ended December 31, 2023.
“2023 was a momentous year for CyberArk and with our excellence in execution, we solidified our position as the leader in identity security,” said Matt Cohen, CyberArk's Chief Executive Officer. “Throughout the year, we consistently delivered strong results, including in the fourth quarter where top line growth accelerated, operating income and cash flow increased, and we again beat expectations across all guided metrics. Record demand for our SaaS solutions drove our subscription bookings mix to 95 percent in 2023 and recurring revenue reached 90 percent of our total revenue – we are now a fully recurring revenue company. The momentum in our business and our platform selling motion is demonstrated by our ARR reaching $774 million and growing 36 percent as well as our Subscription ARR reaching $582 million, growing 60 percent, with a record for net new Subscription ARR of $78 million in the fourth quarter. Our identity security platform is applying the right level of controls across all identities, human or machine, regardless of environment. In today’s threat landscape, our platform and security first approach are a business imperative, resulting in customers consolidating on our identity platform. With our execution in 2023, we enter 2024 in a position of strength, poised to continue to deliver durable growth, profitability, and cash flow.”
Financial Summary for the Fourth Quarter Ended December 31, 2023
- Subscription revenue was $150.3 million in the fourth quarter of 2023, an increase of 70 percent from $88.5 million in the fourth quarter of 2022.
- Maintenance and professional services revenue was $64.8 million in the fourth quarter of 2023, compared to $66.1 million in the fourth quarter of 2022.
- Perpetual license revenue was $8.0 million in the fourth quarter of 2023, compared to $14.6 million in the fourth quarter of 2022.
- Total revenue was $223.1 million in the fourth quarter of 2023, up 32 percent from $169.2 million in the fourth quarter of 2022, outperforming guidance.
- GAAP operating loss was $(4.7) million, and non-GAAP operating income was $34.7 million in the fourth quarter of 2023, outperforming guidance.
- GAAP net income was $8.9 million, or $0.20 per diluted share, in the fourth quarter of 2023. Non-GAAP net income was $38.1 million, or $0.81 per diluted share, in the fourth quarter of 2023, outperforming guidance.
Financial Summary for the Full Year Ended December 31, 2023
- Subscription revenue was $472.0 million in the full year 2023, an increase of 68 percent from $280.6 million in the full year 2022.
- Maintenance and professional services revenue was $258.8 million in the full year 2023, compared to $261.1 million in the full year 2022.
- Perpetual license revenue was $21.0 million in the full year 2023, compared to $50.0 million in the full year 2022.
- Total revenue was $751.9 million in the full year 2023, accelerating to 27 percent year over year growth from $591.7 million.
- GAAP operating loss was $(116.5) million, and non-GAAP operating income was $33.5 million in the full year 2023.
- GAAP net loss was $(66.5) million, or $(1.60) per basic and diluted share, in the full year 2023. Non-GAAP net income was $52.0 million, or $1.12 per diluted share, in the full year 2023.
Balance Sheet and Net Cash Provided by Operating Activities
- As of December 31, 2023, CyberArk had $1.3 billion in cash, cash equivalents, marketable securities, and short-term deposits.
- During the full year, 2023, the Company’s net cash provided by operating activities was $56.2 million.
- As of December 31, 2023, total deferred revenue was $480.6 million, an 18 percent increase from $408.4 million at December 31, 2022.
Key Business Highlights
- Annual Recurring Revenue (ARR) was $774 million, an increase of 36 percent from $570 million at December 31, 2022.
- The Subscription portion of ARR was $582 million, or 75 percent of total ARR at December 31, 2023. This represents an increase of 60 percent from $364 million, or 64 percent of total ARR, at December 31, 2022.
- The Maintenance portion of ARR was $192 million at December 31, 2023, compared to $206 million at December 31, 2022.
- Recurring revenue in the fourth quarter was $201.5 million, an increase of 41 percent from $142.6 million for the fourth quarter of 2022. For the full year 2023, recurring revenue was $679.6 million, an increase of 36 percent from $498.3 million for the full year 2022.
Recent Developments
- CyberArk was named an Overall Leader in the KuppingerCole Analysts AG 2023 “Leadership Compass: Cloud Infrastructure Entitlement Management (CIEM)”(1) report. The company’s leadership is based on the strength of the CyberArk Identity Security Platform and its innovative cloud security solutions.
- CyberArk was named an Overall Leader in the KuppingerCole Analysts AG 2023 “Leadership Compass: Access Management”(2) report. The company’s overall leadership position is based on the strength of its CyberArk Identity offering across the report’s product, innovation and market categories.
- CyberArk Elevates Passwordless Experience with new Passkeys Authentication for CyberArk Identity customers, furthering its commitment to help customers reduce credential theft and improve productivity.
- CyberArk joined the Microsoft Security Copilot Partner Private Preview.
Business Outlook
Based on information available as of February 8, 2024, CyberArk is issuing guidance for the first quarter and full year 2024 as indicated below.
First Quarter 2024:
- Total revenue is expected to be in the range of $209.0 million and $215.0 million, representing growth of 29 percent to 33 percent compared to the first quarter of 2023.
- Non-GAAP operating income is expected to be in the range of $7.5 million to $12.5 million.
- Non-GAAP net income per share is expected to be in the range of $0.21 to $0.31 per diluted share.
- Assumes 47.8 million weighted average diluted shares.
Full Year 2024:
- Total revenue is expected to be in the range of $920.0 million to $930.0 million, representing growth of 22 percent to 24 percent compared to the full year 2023.
- Non-GAAP operating income is expected to be in the range of $75.5 million to $84.5 million.
- Non-GAAP net income per share is expected to be in the range of $1.63 to $1.81 per diluted share.
- Assumes 48.0 million weighted average diluted shares.
- ARR as of December 31, 2024 is expected to be in the range of $968.0 million to $983.0 million, representing growth of 25 percent to 27 percent from December 31, 2023.
- Non-GAAP free cash flow is expected to be in the range of $85.0 million to $95.0 million for the full year 2024.
(1) KuppingerCole Analysts AG “Leadership Compass: Cloud Infrastructure Entitlement Management (CIEM),” November 8, 2023, Paul Fisher
(2) KuppingerCole Analysts AG “Leadership Compass: Access Management,” August 16, 2023 by Alejandro Leal
Conference Call Information
In conjunction with this announcement, CyberArk will host a conference call on Thursday, February 8, 2024 at 8:30 a.m. Eastern Time (ET) to discuss the Company’s fourth quarter and full year financial results and its business outlook. To access this call, dial +1 (888) 330-2455 (U.S.) or +1 (240) 789-2717 (international). The conference ID is 6515982. 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) 770-2030 (U.S.) or +1 (647) 362-9199 (international). The replay pass code is 6515982. An archived webcast of the conference call will also be available in the “Investor Relations” section of the company’s website at www.cyberark.com.
About CyberArk
CyberArk (NASDAQ: CYBR) is the global leader in identity security. Centered on intelligent privilege controls, CyberArk provides the most comprehensive security offering for any identity – human or machine – across business applications, distributed workforces, hybrid cloud environments and throughout the DevOps lifecycle. The world’s leading organizations trust CyberArk to help secure their most critical assets. To learn more about CyberArk, visit https://www.cyberark.com, read the CyberArk blogs or follow on LinkedIn, Twitter, Facebook or YouTube.
Copyright © 2024 CyberArk Software. All Rights Reserved. All other brand names, product names, or trademarks belong to their respective holders.
Key Performance Indicators and Non-GAAP Financial Measures
Annual Recurring Revenue (ARR)
- Annual Recurring Revenue (ARR) is a performance indicator that provides more visibility into the growth of our recurring business in the upcoming year. ARR is defined as the annualized value of active SaaS, self-hosted subscriptions and their associated M&S, and maintenance contracts related to the perpetual licenses in effect at the end of the reported period. ARR should be viewed independently of revenues and total deferred revenue as it is an operating measure and is not intended to be combined with or to replace either of those measures. ARR is not a forecast of future revenues and can be impacted by contract start and end dates and renewal rates. This visibility allows us to make informed decisions about our capital allocation and level of investment.
Subscription Portion of Annual Recurring Revenue
- Subscription portion of ARR is defined as the annualized value of active SaaS and self-hosted subscriptions contracts in effect at the end of the reported period. The subscription portion of ARR excludes maintenance contracts related to perpetual licenses.
Maintenance Portion of Annual Recurring Revenue
- Maintenance portion of ARR is defined as the annualized value of active maintenance contracts related to perpetual licenses. The Maintenance portion of ARR excludes SaaS and self-hosted subscriptions contracts in effect at the end of the reported period.
Recurring Revenue
- Recurring Revenue is defined as revenue derived from SaaS and self-hosted subscription contracts, and maintenance contracts related to perpetual licenses during the reported period.
Non-GAAP Financial Measures
CyberArk believes that the use of non-GAAP gross profit, non-GAAP operating expense, non-GAAP operating income (loss), non-GAAP net income (loss) and free cash flow is helpful to our investors. These financial measures are not measures of the Company’s financial performance under U.S. GAAP and should not be considered as alternatives to gross profit, operating loss, net income (loss) or net cash provided by operating activities or any other performance measures derived in accordance with GAAP.
- Non-GAAP gross profit is calculated as GAAP gross profit excluding share-based compensation expense, amortization of intangible assets related to acquisitions, and impairment of capitalized software development costs.
- Non-GAAP operating expense is calculated as GAAP operating expenses excluding share-based compensation expense, acquisition related expenses and amortization of intangible assets related to acquisitions.
- Non-GAAP operating income (loss) is calculated as GAAP operating loss excluding share-based compensation expense, impairment of capitalized software development costs, acquisition related expenses and amortization of intangible assets related to acquisitions.
- Non-GAAP net income (loss) is calculated as GAAP net income (loss) excluding share-based compensation expense, acquisition related expenses, amortization of intangible assets related to acquisitions, impairment of capitalized software development costs, amortization of debt discount and issuance costs, gain from investment in privately held companies, and the tax effect of non-GAAP adjustments.
- Free cash flow is calculated as net cash provided by operating activities less purchase of property and equipment.
The Company believes that providing non-GAAP financial measures that are adjusted by, as applicable, share-based compensation expense, acquisition related expenses, amortization of intangible assets related to acquisitions, impairment of capitalized software development costs, non-cash interest expense related to the amortization of debt discount and issuance cost, gain from investment in privately held companies, and the tax effect of the non-GAAP adjustments and purchase of property and equipment allows for more meaningful comparisons of its period to period operating results. Share-based compensation expense has been, and will continue to be for the foreseeable future, a significant recurring expense in the Company’s business and an important part of the compensation provided to its employees. Share based compensation expense has varying available valuation methodologies, subjective assumptions and a variety of equity instruments that can impact a company’s non-cash expense. The Company believes that expenses related to its acquisitions, amortization of intangible assets related to acquisitions, and non-cash interest expense related to the amortization of debt discount and issuance costs do not reflect the performance of its core business and impact period-to-period comparability. The Company believes free cash flow is a liquidity measure that, after the purchase of property and equipment, provides useful information about the amount of cash generated by the business.
Non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in the Company’s industry, as other companies in the industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. In addition, there are limitations in using non-GAAP financial measures as they exclude expenses that may have a material impact on the Company’s reported financial results. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with U.S. GAAP. CyberArk urges investors to review the reconciliation of its non-GAAP financial measures to the comparable U.S. GAAP financial measures included below, and not to rely on any single financial measure to evaluate its business.
Guidance for non-GAAP financial measures excludes, as applicable, share-based compensation expense, acquisition related expenses, amortization of intangible assets related to acquisitions, non-cash interest expense related to the amortization of debt discount and issuance costs, the tax effect of the non-GAAP adjustments, and purchase of property and equipment. 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 as well as changes in interest rates and foreign exchange rates, which impact other GAAP performance metrics. 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, levels of activity, performance or achievements to differ materially from the results, levels of activity, 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 to the drivers of the Company’s growth and its ability to adapt its solutions to IT security market demands; fluctuation in the Company’s quarterly results of operations due to sales cycles and multiple pricing and delivery models; the Company’s ability to sell into existing and new customers and industry verticals; an increase in competition within the Privileged Access Management and Identity Security markets; unanticipated product vulnerabilities or cybersecurity breaches of the Company’s, or the Company’s customers’ or partners’ systems; complications or risks in connection with the Company’s subscription model, including uncertainty regarding renewals from its existing customer base, and retaining sufficient subscription or maintenance and support service renewal rates; risks related to compliance with privacy and data protection laws and regulations; regulatory and geopolitical risks associated with global sales and operations, as well as impacts from the ongoing war between Israel and Hamas and other conflicts in the region, as our principal executive offices, most of our research and development activities and other significant operations are located in Israel; risks regarding potential negative economic conditions in the global economy or certain regions, including conditions resulting from financial and credit market fluctuations, rising interest rates, bank failures, inflation, and the potential for regional or global recessions; the Company’s ability to hire, train, retain and motivate qualified personnel; reliance on third-party cloud providers for the Company’s operations and SaaS solutions; the Company’s history of incurring net losses and its ability to achieve profitability in the future; risks related to the Company’s ongoing transition to a new Chief Executive Officer; risks related to sales made to government entities; the Company’s ability to find, complete, fully integrate or achieve the expected benefits of strategic acquisitions; the Company’s ability to expand its sales and marketing efforts and expand its channel partnerships across existing and new geographies; changes in regulatory requirements or fluctuations in currency exchange rates; the ability of the Company’s products to help customers achieve and maintain compliance with government regulations or industry standards; risks related to intellectual property claims or the Company’s ability to protect its proprietary technology and intellectual property rights; 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 U.S. 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 | Twelve Months Ended | |||||||||||||||||
| December 31, | December 31, | |||||||||||||||||
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
| |||||||
| Revenues: | ||||||||||||||||||
| Subscription | $ | 88,451 |
| $ | 150,257 |
| $ | 280,649 |
| $ | 472,023 |
| ||||||
| Perpetual license |
| 14,579 |
|
| 8,009 |
|
| 49,964 |
|
| 21,037 |
| ||||||
| Maintenance and professional services |
| 66,121 |
|
| 64,838 |
|
| 261,097 |
|
| 258,828 |
| ||||||
| Total revenues |
| 169,151 |
|
| 223,104 |
|
| 591,710 |
|
| 751,888 |
| ||||||
| Cost of revenues: | ||||||||||||||||||
| Subscription |
| 13,762 |
|
| 19,764 |
|
| 46,249 |
|
| 74,623 |
| ||||||
| Perpetual license |
| 913 |
|
| 700 |
|
| 2,893 |
|
| 1,873 |
| ||||||
| Maintenance and professional services |
| 20,153 |
|
| 19,189 |
|
| 76,904 |
|
| 79,635 |
| ||||||
| Total cost of revenues |
| 34,828 |
|
| 39,653 |
|
| 126,046 |
|
| 156,131 |
| ||||||
| Gross profit |
| 134,323 |
|
| 183,451 |
|
| 465,664 |
|
| 595,757 |
| ||||||
| Operating expenses: | ||||||||||||||||||
| Research and development |
| 51,477 |
|
| 53,792 |
|
| 190,321 |
|
| 211,445 |
| ||||||
| Sales and marketing |
| 90,737 |
|
| 106,607 |
|
| 345,273 |
|
| 405,983 |
| ||||||
| General and administrative |
| 22,178 |
|
| 27,763 |
|
| 82,520 |
|
| 94,801 |
| ||||||
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