CyberArk Software Ltd. Q2 FY2023 earnings call

• Momentum continues with strong second quarter performance driven by Identity Security platform, non-negotiable need for identity security, and execution of strategic imperatives. - Growth drivers include Identity Security being critical in hybrid/cloud environments, consolidation of trust with CyberArk, and innovation like AI-powered automation and new products. - Innovation includes Secure Cloud Access, Secrets Hub for Azure, and Secure Browser. - Progress towards Rule of 40 goal with operating leverage from revenue growth outpacing operating expense growth.

Subscription ARR reached $451 million, growing 77% year-over-year. Total ARR was $653 million, growing 40%. Subscription revenue reached $106.2 million, growing 61% year-on-year and representing 60% of total revenue in the second quarter. Maintenance and professional services revenue was $64.6 million, with $51.6 million from recurring maintenance. Geographically, Americas revenue grew 28% YOY to $107.1 million, APJ grew 24% to $18.3 million, and EMEA grew 15% YOY to $50.4 million. The EMEA region saw a significant increase in subscription bookings mix.

• Third quarter 2023: Total revenue expected $181.5M - $186.5M (21% YOY midpoint), non-GAAP operating income $4M - $8M, EPS $0.19 - $0.27. - Full year 2023: Total revenue $726M - $736M (24% YOY midpoint), non-GAAP operating income breakeven to $9M, EPS $0.44 - $0.63, ARR $743M - $753M.

• Forward-looking statements may differ materially from actual results. - Risk factors in annual report and press release. - Macroeconomic uncertainty impacting spending decisions.

Q: Why is the identity/PAM space performing better than other security areas?

A: Matt Cohen attributes it to the market focus on identities as the centerpiece of cybersecurity strategies, CyberArk's differentiated Identity Security platform, and strong execution adjusting to macro environment.

Q: Thoughts on bundling and multiple product purchases?

A: Matt Cohen says over 50% of new logos buy multiple solutions, with customers prioritizing core PAM then expanding to other products like EPM, secret management, etc.

Q: Free cash flow outlook?

A: Joshua Siegel notes it's a transition year with factors like self-hosted duration and maintenance impact, but expects free cash flow to improve in 2024 and accelerate in later years.