Total ARR Reaches $1.169 billion; Surpasses $1 billion ARR Organically

Subscription Portion of Annual Recurring Revenue (ARR) Reaches $977 million

Record Total Revenue of $1.001 billion for the Full Year 2024

Non-GAAP Operating Income of $151 million, or 15% operating margin, for the Full Year 2024

Record Free Cash Flow of $221 million, or a 22% FCF margin, for the Full Year 2024

Returns to Rule of 40 for the Full Year 2024; A Year Ahead of Target

CyberArk (NASDAQ: CYBR), the global leader in identity security, today announced strong financial results for the fourth quarter and full year ended December 31, 2024.

"2024 was a milestone year for CyberArk. Our record performance in the fourth quarter and the year reflects the strength of demand for our identity security solutions and the consistent execution of our strategy," said Matt Cohen, CyberArk's Chief Executive Officer. "Total ARR reached $1.169 billion, driven by organic ARR crossing $1 billion and the outperformance from Venafi. With our strong revenue growth and free cash flow margin, we returned to Rule of 40 on a full year basis – beating our long-term guidance framework by a full year. With our leading identity security platform, innovation engine, and persona-based solutions uniquely differentiated with best-in-class security controls, we are well positioned to go after our massive market opportunity. We enter 2025 in a position of strength and we are set up to deliver durable growth."

Financial Summary for the Fourth Quarter Ended December 31, 2024

The financial results for the fourth quarter of 2024 include the financial contributions from the acquisition of Venafi, which closed on October 1, 2024.

Total revenue was $314.4 million in the fourth quarter of 2024, up 41 percent from $223.1 million in the fourth quarter of 2023.
Subscription revenue was $243.0 million in the fourth quarter of 2024, an increase of 62 percent from $150.3 million in the fourth quarter of 2023.
Maintenance and professional services revenue was $66.4 million in the fourth quarter of 2024, compared to $64.8 million in the fourth quarter of 2023.
Perpetual license revenue was $5.0 million in the fourth quarter of 2024, compared to $8.0 million in the fourth quarter of 2023.
GAAP operating loss was $(31.4) million compared to GAAP operating loss of $(4.7) million in the same period last year. Non-GAAP operating income was $58.7 million, or 19 percent margin, compared to non-GAAP operating income of $34.7 million, or 16 percent margin, in the same period last year.
GAAP net loss was $(97.1) million, or $(2.02) per basic and diluted share, compared to GAAP net income of $8.9 million, or $0.20 per diluted share, in the same period last year. Non-GAAP net income was $40.4 million, or $0.80 per diluted share, compared to non-GAAP net income of $38.1 million, or $0.81 per diluted share, in the same period last year.

Financial Summary for the Full Year Ended December 31, 2024

The financial results for the full year 2024 include financial contribution in the fourth quarter from the acquisition of Venafi, which closed on October 1, 2024.

Total revenue was $1.001 billion in the full year 2024, growing 33 percent year-over-year from $751.9 million in the full year 2023.
Subscription revenue was $733.3 million in the full year 2024, an increase of 55 percent from $472.0 million in the full year 2023.
Maintenance and professional services revenue was $253.0 million in the full year 2024, compared to $258.8 million in the full year 2023.
Perpetual license revenue was $14.4 million in the full year 2024, compared to $21.0 million in the full year 2023.
GAAP operating loss was $(72.8) million, and non-GAAP operating income was $150.9 million in the full year 2024, or a margin of 15 percent, compared to $33.5 million, or a margin of 4 percent, in the full year 2023.
GAAP net loss was $(93.5) million, or $(2.12) per basic and diluted share, in the full year 2024. Non-GAAP net income was $147.5 million, or $3.03 per diluted share, in the full year 2024, compared to $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, 2024, cash, cash equivalents, short-term deposits, and marketable securities were $841.1 million. The changes in CyberArk's cash balance reflect the approximately $1 billion in cash as part of the consideration paid for the acquisition of Venafi.
On November 15, 2024, the Company settled $535 million of outstanding senior convertible notes with our ordinary shares, consistent with the terms of the senior convertible notes.
During the full year 2024, the Company's net cash provided by operating activities was $231.9 million, compared to $56.2 million in the year ended December 31, 2023.

Key Business Highlights

Annual Recurring Revenue (ARR) was $1.169 billion, an increase of 51 percent from $774 million at December 31, 2023. On a CyberArk standalone basis, ARR grew 30 percent year-over-year.
- The Subscription portion of ARR was $977 million, or 84 percent of total ARR at December 31, 2024. This represents an increase of 68 percent from $582 million, or 75 percent of total ARR, at December 31, 2023.
- The Maintenance portion of ARR was $192 million at December 31, 2024, compared to $192 million at December 31, 2023.
Recurring revenue in the fourth quarter was $292.2 million, an increase of 45 percent from $201.5 million for the fourth quarter of 2023. For the full year 2024, recurring revenue was $930.3 million, an increase of 37 percent from $679.6 million in the full year 2023.

Recent Developments

CyberArk announced a New Integration with SentinelOne^®, bringing together SentinelOne's market-leading Singularity^™ Endpoint solution and CyberArk Endpoint Privilege Manager.
CyberArk announced a New Integration between CyberArk Privileged Access Manager (PAM) and Microsoft Defender for Identity.
CyberArk Announced the Launch of FuzzyAI, a breakthrough open-source tool that helps organizations safeguard against AI model jailbreaks.
CyberArk announced that CyberArk Workforce Identity Achieved FIDO2 certification from the FIDO Alliance.

Zilla Security Acquisition

In a separate announcement, CyberArk announced it has completed the acquisition of Zilla Security, a leader in modern Identity Governance and Administration (IGA), for an enterprise value of $165 million in cash and a $10 million earn-out tied to the achievement of certain milestones.

Zilla's innovative, AI-powered IGA capabilities will expand CyberArk's industry-leading Identity Security Platform with scalable automation that enables accelerated identity compliance and provisioning across digital environments, while maximizing security and operational efficiency. This acquisition further advances CyberArk's strategy to deliver the industry's most powerful, comprehensive identity security platform to secure every identity – human and machine – with the right level of privilege controls.

Business Outlook

Based on information available as of February 13, 2025, CyberArk is issuing guidance for the first quarter and full year 2025 as indicated below. Venafi contributed to CyberArk's results in the fourth quarter of 2024 and did not contribute to the first, second and third quarter periods. The guidance for the first quarter and full year 2025 includes the expected contribution from the acquisition of Zilla Security, which closed on February 12, 2025.

First Quarter 2025:

Total revenue is expected to be in the range of $301.0 million and $307.0 million, representing growth of 36 percent to 39 percent compared to the first quarter of 2024.
Non-GAAP operating income is expected to be in the range of $42.5 million to $47.5 million.
Non-GAAP net income per share is expected to be in the range of $0.74 to $0.81 per diluted share.
- Assumes 51.3 million weighted average diluted shares.

Full Year 2025:

Total revenue is expected to be in the range of $1.308 billion to $1.318 billion, representing growth of 31 percent to 32 percent compared to the full year 2024.
Non-GAAP operating income is expected to be in the range of $215.0 million to $225.0 million.
Non-GAAP net income per share is expected to be in the range of $3.55 to $3.70 per diluted share.
- Assumes 51.5 million weighted average diluted shares.
ARR as of December 31, 2025 is expected to be in the range of $1.410 billion to $1.420 billion, representing growth of 21 percent from December 31, 2024.
Adjusted free cash flow is expected to be in the range of $300.0 million to $310.0 million for the full year 2025. Adjusted free cash flow guidance normalizes for a one-time payment of $70 million as discussed below.

Tax Payment Related to Transfer of Venafi IP

CyberArk's forward-looking guidance for adjusted free cash flow for the full year 2025 excludes the estimated impact of an approximately $70 million one-time tax payment related to the capital gain associated with the intercompany migration of intellectual property related to the Venafi acquisition. We expect this to occur in the first half of 2025.

Conference Call Information

In conjunction with this announcement, CyberArk will host a conference call on Thursday, February 13, 2025 at 8:30 a.m. Eastern Time (ET) to discuss the Company's fourth quarter and full year 2024 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 (609) 800-9909 (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, trusted by organizations around the world to secure human and machine identities in the modern enterprise. CyberArk's AI-powered Identity Security Platform applies intelligent privilege controls to every identity with continuous threat prevention, detection and response across the identity lifecycle. With CyberArk, organizations can reduce operational and security risks by enabling zero trust and least privilege with complete visibility, empowering all users and identities, including workforce, IT, developers and machines, to securely access any resource, located anywhere, from everywhere. Learn more at cyberark.com.

Key Performance Indicators and Non-GAAP Financial Measures

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.

Annual Recurring Revenue (ARR)

ARR is defined as the annualized value of active SaaS, self-hosted subscriptions and their associated maintenance and support services, and maintenance contracts related to the perpetual licenses in effect at the end of the reported period.

Subscription Portion of Annual Recurring Revenue

Subscription portion of ARR is defined as the annualized value of active SaaS and self-hosted subscription 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 subscription contracts in effect at the end of the reported period.

Net New ARR

Net new ARR refers to the difference between ARR as of December 31, 2024 and ARR as of September 30, 2024.

Annual Recurring Revenue (ARR), Subscription portion of ARR and Maintenance portion of ARR are performance indicators that provide more visibility into the growth of our recurring business in the upcoming year. This visibility allows us to make informed decisions about our capital allocation and level of investment. Each of these measures should be viewed independently of revenues and total deferred revenue as each is an operating measure and is not intended to be combined with or to replace either of those measures. ARR, Subscription portion of ARR and Maintenance portion of ARR are not forecasts of future revenues and can be impacted by contract start and end dates and renewal rates.

Non-GAAP Financial Measures

CyberArk believes that the use of non-GAAP gross profit, non-GAAP operating expense, non-GAAP operating income, non-GAAP net income, free cash flow and adjusted 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 is calculated as GAAP operating loss excluding share-based compensation expense, acquisition related expenses, amortization of intangible assets related to acquisitions, and impairment of capitalized software development costs.
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, change in fair value of derivative assets, impairment of capitalized software development costs, gain from investment in privately held companies, the tax effect of non-GAAP adjustments, the establishment of valuation allowance on deferred tax assets and the tax impact of intra-entity transactions.
Free cash flow is calculated as net cash provided by operating activities less purchase of property and equipment and other assets.
Adjusted free cash flow is calculated as free cash flow plus one-time tax payment on the capital gain from the intercompany migration of intellectual property (IP) related to the Venafi acquisition.

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, non-cash interest expense related to the amortization of debt discount and issuance cost, change in fair value of derivative assets, impairment of capitalized software development costs, gain from investment in privately held companies, the tax effect of the non-GAAP adjustments, the establishment of valuation allowance on deferred tax assets and the tax impact of intra-entity transactions, purchase of property and equipment and other assets, and one-time tax payment on the capital gain from the intercompany migration of intellectual property 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, impairment of capitalized software development costs, change in fair value of derivative assets, gain from investment in privately held companies, 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 and adjusted free cash flow are liquidity measures that, after the purchase of property and equipment and other assets, and one-time tax payment on the capital gain from the intercompany migration of intellectual property provide 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 other tax adjustments, the establishment of valuation allowance on deferred tax assets and the tax impact of intra-entity transactions, purchase of property and equipment and other assets, and one-time tax payment on the capital gain from the intercompany migration of intellectual property. 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 or liquidity measures. 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, but are not limited to: risks related to the Company's acquisitions of Venafi Holdings, Inc. ("Venafi") and Zilla Security Inc. ("Zilla"), including potential impacts on operating results; challenges in retaining and hiring key personnel and maintaining business; risks related to the successful integration of Venafi's or Zilla's operations and the ability to realize anticipated benefits of the combined operations; disruption of the current plans and operations of the Company and/or Zilla as a result of the announcement of the transaction, including risks of cyberattacks; changes to the drivers of the Company's growth and the Company's ability to adapt its solutions to the information security market changes and demands, including artificial intelligence ("AI"); the Company's ability to acquire new customers and maintain and expand the Company's revenues from existing customers; intense competition within the information security market; real or perceived security vulnerabilities, gaps, or cybersecurity breaches of the Company, or the Company's customers' or partners' systems, solutions or services; risks related to the Company's compliance with privacy, data protection and AI laws and regulations; the Company's ability to successfully operate its business as a subscription company and fluctuation in its quarterly results of operations; the Company's reliance on third-party cloud providers for its operations and software-as-a-service ("SaaS") solutions; the Company's ability to hire, train, retain and motivate qualified personnel; the Company's ability to effectively execute its sales and marketing strategies; the Company's ability to find, complete, fully integrate or achieve the expected benefits of additional strategic acquisitions; the Company's ability to maintain successful relationships with channel partners, or if the Company's channel partners fail to perform; risks related to sales made to government entities; prolonged economic uncertainties or downturns; the Company's history of incurring net losses, the Company's ability to generate sufficient revenue to achieve and sustain profitability and the Company's ability to generate cash flow from operating activities; regulatory and geopolitical risks associated with the Company's global sales and operations; risks related to intellectual property claims; 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; the Company's ability to protect its proprietary technology and intellectual property rights; risks related to using third-party software, such as open-source software; risks related to stock price volatility or activist shareholders; any failure to retain the Company's "foreign private issuer" status or the risk that the Company may be classified, for U.S. federal income tax purposes, as a "passive foreign investment company"; changes in tax laws; the Company's expectation to not pay dividends on the Company's ordinary shares for the foreseeable future; risks related to the Company's incorporation and location in Israel, including wars and other hostilities in the Middle East; 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, except as required by applicable law.

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,
	2023			2024			2023			2024

Revenues:
Subscription	$	150,257		$	243,045		$	472,023		$	733,275
Perpetual license		8,009			4,965			21,037			14,449
Maintenance and professional services		64,838			66,374			258,828			253,018

Total revenues		223,104			314,384			751,888			1,000,742

Cost of revenues:
Subscription		19,764			47,720			74,623			115,852
Perpetual license		700			346			1,873			1,594
Maintenance and professional services		19,189			25,700			79,635			90,931

Total cost of revenues		39,653			73,766			156,131			208,377

Gross profit		183,451			240,618			595,757			792,365

Operating expenses:
Research and development		53,792			73,282			211,445			243,058
Sales and marketing		106,607			146,984			405,983			480,977
General and administrative		27,763			51,712			94,801			141,134

Total operating expenses		188,162			271,978			712,229			865,169

Operating loss		(4,711	)		(31,360	)		(116,472	)		(72,804	)

Financial income, net		19,302			5,997			53,214			56,838

Income (loss) before taxes on income		14,591			(25,363	)		(63,258	)		(15,966	)

Taxes on income		(5,680	)		(71,755	)		(3,246	)		(77,495	)

Net income (loss)	$	8,911		$	(97,118	)	$	(66,504	)	$	(93,461	)


Basic income (loss) per ordinary share	$	0.21		$	(2.02	)	$	(1.60	)	$	(2.12	)
Diluted income (loss) per ordinary share	$	0.20		$	(2.02	)	$	(1.60	)	$	(2.12	)

Shares used in computing net income (loss)
per ordinary shares, basic		42,069,678			48,116,242			41,658,424			44,182,071
Shares used in computing net income (loss)
per ordinary shares, diluted		47,107,294			48,116,242			41,658,424			44,182,071

CYBERARK SOFTWARE LTD.
Consolidated Balance Sheets
U.S. dollars in thousands
(Unaudited)

	December 31,			December 31,
	2023			2024

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	355,933		$	526,467
Short-term bank deposits		354,472			256,953
Marketable securities		283,016			36,356
Trade receivables		186,472			328,465
Prepaid expenses and other current assets		31,550			45,292

Total current assets		1,211,443			1,193,533

LONG-TERM ASSETS:
Marketable securities		324,548			21,345
Property and equipment, net		16,494			19,581
Intangible assets, net		20,202			534,726
Goodwill		153,241			1,317,374
Other long-term assets		214,816			258,531
Deferred tax asset		81,464			3,305

Total long-term assets		810,765			2,154,862

TOTAL ASSETS	$	2,022,208		$	3,348,395

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Trade payables	$	10,971		$	23,671
Employees and payroll accruals		95,538			133,400
Accrued expenses and other current liabilities		36,562			53,486
Convertible senior notes, net		572,340			-
Deferred revenues		409,219			596,874

Total current liabilities		1,124,630			807,431

LONG-TERM LIABILITIES:
Deferred revenues		71,413			95,190
Other long-term liabilities		33,839			75,970

Total long-term liabilities		105,252			171,160

TOTAL LIABILITIES		1,229,882			978,591

SHAREHOLDERS' EQUITY:
Ordinary shares of NIS 0.01 par value		111			130
Additional paid-in capital		827,260			2,494,158
Accumulated other comprehensive income (loss)		(1,849	)		2,173
Accumulated deficit		(33,196	)		(126,657	)

Total shareholders' equity		792,326			2,369,804

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	2,022,208		$	3,348,395

CYBERARK SOFTWARE LTD.
Consolidated Statements of Cash Flows
U.S. dollars in thousands
(Unaudited)

	Twelve Months Ended
	December 31,
	2023			2024

Cash flows from operating activities:
Net loss	$	(66,504	)	$	(93,461	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		19,250			41,983
Amortization of premium and accretion of discount on marketable securities, net and other		(4,570	)		(3,537	)
Share-based compensation		140,101			168,766
Deferred income taxes, net		(7,879	)		66,293
Increase in trade receivables		(65,655	)		(93,303	)
Amortization of debt discount and issuance costs		2,996			2,660
Change in fair value of derivative assets		-			(4,618	)
Increase in prepaid expenses, other current and long-term assets and others		(45,016	)		(47,456	)
Changes in operating lease right-of-use assets		6,566			8,544
Increase (decrease) in trade payables		(2,669	)		11,000
Increase in short-term and long-term deferred revenues		72,190			150,780
Increase in employees and payroll accruals		6,981			22,001
Increase in accrued expenses and other current and long-term liabilities		7,507			10,965
Changes in operating lease liabilities		(7,094	)		(8,730	)

Net cash provided by operating activities		56,204			231,887

Cash flows from investing activities:
Investment in short and long term deposits		(337,835	)		(368,577	)
Proceeds from short and long term deposits		319,542			460,077
Investment in marketable securities and other		(406,633	)		(143,391	)
Proceeds from maturities of marketable securities		340,657			218,061
Proceeds from sales of marketable securities and other		3,389			483,296
Purchase of property and equipment and other assets		(4,948	)		(11,059	)
Payments for business acquisitions, net of cash acquired		-			(984,669	)

Net cash used in investing activities		(85,828	)		(346,262	)

Cash flows from financing activities:
Payment of equity issuance costs		-			(190	)
Proceeds from withholding tax related to employee stock plans		11,188			273
Proceeds from exercise of stock options		11,065			8,309
Proceeds in connection with employees stock purchase plan		15,831			19,598
Payment of convertible notes		-			(542	)
Proceeds from settlement of capped call transactions		-			261,358

Net cash provided by financing activities		38,084			288,806

Increase in cash and cash equivalents		8,460			174,431

Effect of exchange rate differences on cash and cash equivalents		135			(3,897	)

Cash and cash equivalents at the beginning of the period		347,338			355,933

Cash and cash equivalents at the end of the period	$	355,933		$	526,467

CYBERARK SOFTWARE LTD.
Reconciliation of GAAP Measures to Non-GAAP Measures
U.S. dollars in thousands (except per share data)
(Unaudited)

Reconciliation of Net cash provided by operating activities to Free cash flow:

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2023			2024			2023			2024

Net cash provided by operating activities	$	46,898		$	64,736		$	56,204		$	231,887
Less:
Purchase of property and equipment and other assets		(695	)		(3,969	)		(4,948	)		(11,059	)

Free cash flow	$	46,203		$	60,767		$	51,256		$	220,828

GAAP net cash used in investing activities		(84,140	)		(1,050,560	)		(85,828	)		(346,262	)
GAAP net cash provided by financing activities		18,889			276,355			38,084			288,806

Reconciliation of Gross Profit to Non-GAAP Gross Profit:

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2023			2024			2023			2024

Gross profit	$	183,451		$	240,618		$	595,757		$	792,365
Plus:
Share-based compensation (1)		4,500			5,867			17,612			21,724
Amortization of share-based compensation capitalized in software development costs (3)		84			94			393			328
Amortization of intangible assets (2)		1,704			20,563			6,817			25,676
Impairment of capitalized software development costs		-			-			2,067			-

Non-GAAP gross profit	$	189,739		$	267,142		$	622,646		$	840,093

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses:

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2023			2024			2023			2024

Operating expenses	$	188,162		$	271,978		$	712,229		$	865,169
Less:
Share-based compensation (1)		33,035			41,478			122,489			147,042
Amortization of intangible assets (2)		137			6,725			547			7,101
Acquisition related expenses		-			15,375			-			21,800

Non-GAAP operating expenses	$	154,990		$	208,400		$	589,193		$	689,226

Reconciliation of Operating Loss to Non-GAAP Operating Income:

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2023			2024			2023			2024

Operating loss	$	(4,711	)	$	(31,360	)	$	(116,472	)	$	(72,804	)
Plus:
Share-based compensation (1)		37,535			47,345			140,101			168,766
Amortization of share-based compensation capitalized in software development costs (3)		84			94			393			328
Amortization of intangible assets (2)		1,841			27,288			7,364			32,777
Acquisition related expenses		-			15,375			-			21,800
Impairment of capitalized software development costs		-			-			2,067			-

Non-GAAP operating income	$	34,749		$	58,742		$	33,453		$	150,867

Reconciliation of Net Income (Loss) to Non-GAAP Net Income:

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2023			2024			2023			2024

Net income (loss)	$	8,911		$	(97,118	)	$	(66,504	)	$	(93,461	)
Plus:
Share-based compensation (1)		37,535			47,345			140,101			168,766
Amortization of share-based compensation capitalized in software development costs (3)		84			94			393			328
Amortization of intangible assets (2)		1,841			27,288			7,364			32,777
Acquisition related expenses		-			15,375			-			21,800
Amortization of debt discount and issuance costs		752			403			2,996			2,660
Change in fair value of derivative assets		-			(2,027	)		-			(4,618	)
Gain from investment in privately held companies		(2,213	)		-			(2,757	)		-
Impairment of capitalized software development costs		-			-			2,067			-
Taxes on income related to non-GAAP adjustments and other tax adjustments (4)		(8,848	)		49,084			(31,656	)		19,297

Non-GAAP net income	$	38,062		$	40,444		$	52,004		$	147,549

Non-GAAP net income per share
Basic	$	0.90		$	0.84		$	1.25		$	3.34
Diluted	$	0.81		$	0.80		$	1.12		$	3.03

Weighted average number of shares
Basic		42,069,678			48,116,242			41,658,424			44,182,071
Diluted		47,107,294			50,853,179			46,375,198			48,641,292

(1) Share-based Compensation :
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2023			2024			2023			2024

Cost of revenues - Subscription	$	1,219		$	1,794		$	4,178		$	6,525
Cost of revenues - Perpetual license		15			5			45			22
Cost of revenues - Maintenance and Professional services		3,266			4,068			13,389			15,177
Research and development		7,661			10,695			29,458			34,953
Sales and marketing		14,800			18,647			58,790			67,924
General and administrative		10,574			12,136			34,241			44,165

Total share-based compensation	$	37,535		$	47,345		$	140,101		$	168,766
(2) Amortization of intangible assets :
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2023			2024			2023			2024

Cost of revenues - Subscription	$	1,704		$	20,563		$	6,817		$	25,676
Sales and marketing		137			6,725			547			7,101

Total amortization of intangible assets	$	1,841		$	27,288		$	7,364		$	32,777

(3) Classified as Cost of revenues - Subscription.

(4) Includes income tax adjustments related to non-GAAP items. For the three and twelve months ended December 31, 2024, includes the establishment of a valuation allowance on deferred tax assets, primarily for CyberArk Software Ltd., and the tax impact of intra-entity transactions related to the Venafi acquisition.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250213398855/en/

Investor Relations:

Srinivas Anantha, CFA

CyberArk

617-558-2132

ir@cyberark.com

Media:

Rachel Gardner

CyberArk

603-531-7229

press@cyberark.com