Subscription Revenue

Perpetual License Revenue

Maintenance and Professional Services Revenue

Total Revenue

171a17b1c8c45ec0f507e49933786e66b41582c134b701df9b834382c58833a9

1. With Venafi's ARR growth at approximately 10% and a SaaS mix of only around 12%, how do you plan to accelerate Venafi's growth and transition their customer base to a SaaS model in line with CyberArk's strong SaaS momentum?

2. Given that the penetration rate of your Workforce Solutions is still low, with only around 1,000 customers out of over 9,000 using them, what specific strategies are you employing to increase adoption and compete against commoditized SSO/MFA solutions from larger providers like Microsoft?

3. As you integrate Venafi's machine identity solutions into your platform, how do you intend to simplify and align the differing pricing models between human identity (based on seats) and machine identity (based on certificates or instances) to make it easier for customers to adopt your combined offerings?

4. Considering that the full technological integration of Venafi's solutions into your platform is expected to take until 2025 and beyond, how will you manage customer expectations in the interim, and could this impact your ability to deliver on the promised synergies and growth from the acquisition?

5. With maintenance ARR declining due to the shift away from perpetual licenses, and like-for-like conversions contributing only a single-digit percentage to year-over-year ARR growth, how do you plan to offset this headwind and sustain your overall ARR growth trajectory?

2813f460b0dd0d1317f61d7e12333a4d156ee210dd90900eb62b9ad1bb8c6142

| Name            | Position                  | Start Date       | Short Bio                                                                                                                                                                                                 |
|-----------------|---------------------------|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Ehud (Udi) Mokady | Executive Chairman of the Board | April 2023       | Founder of CyberArk, served as CEO from 2005 to March 2023, and has been a board member since November 2004. Holds an LL.B. from Hebrew University and an MSM from Boston University  **[0001178913-24-000937_zk2431095.htm:108]** **[0001178913-23-002041_exhibit_99-1.htm:26]** **[0001178913-24-000937_zk2431095.htm:123]** .            |
| Matthew Cohen   | Chief Executive Officer   | April 2023       | Served as COO from December 2020 to March 2023 and CRO from December 2019 to November 2020. Previously held leadership roles at PTC Inc. Holds a BA in Psychology from Harvard University  **[0001178913-24-001809_exhibit_99-1.htm:24]** **[0001178913-24-000937_zk2431095.htm:108]** **[0001178913-23-002041_exhibit_99-1.htm:26]** .      |
| Joshua Siegel   | Chief Financial Officer   | May 2011         | CFO of CyberArk since May 2011. Previously CFO at Voltaire Ltd. Holds a BA in economics and an MBA from the University of Michigan  **[0001178913-24-000937_zk2431095.htm:108]** **[0001178913-23-000828_zk2329296.htm:97]** .                                                               |
| Eduarda Camacho | Chief Operating Officer   | January 2024     | Over 25 years of experience in SaaS and enterprise software. Previously Chief Customer Officer at BMC Software and held leadership roles at PTC Inc.  **[0001178913-24-000166_exhibit_99-1.htm:0]** **[CYBR_3410611_2]** .                                              |
| Donna Rahav     | Chief Legal Officer       | December 2021    | Served as General Counsel and Compliance Officer since March 2014. Previously Deputy General Counsel at Allot Communications Ltd. Holds an LL.B. and LL.M. from Tel Aviv University  **[0001178913-24-000937_zk2431095.htm:109]** **[0001178913-23-000828_zk2329296.htm:98]** .              |
| Omer Grossman   | Chief Information Officer | December 2022    | Former Head of IDF's Cyber Defense Operations Center. Holds a BSc in physics and electrical engineering from Tel Aviv University and an MSc from National Defense University  **[0001178913-24-000937_zk2431095.htm:109]** .                         |
| Peretz Regev    | Chief Product Officer     | September 2022   | Former VP of Global Data Science and Engineering at PayPal. Holds a BSc in Computer Sciences from Reichman University and an MBA from the College of Management Academic Studies in Israel  **[0001178913-24-000937_zk2431095.htm:109]** **[0001178913-23-000828_zk2329296.htm:98]** .        |

0bc4fcfb1c7b446f8206d044d8b3f539b4d0412cf6b6e03fd73bd410409210e4

CyberArk Software Ltd. (NASDAQ: CYBR) is a company specializing in identity security, focusing on securing identities across IT, developers, workforce, and machines. The company offers a range of solutions designed to protect against cyber threats by securing privileged access and managing identities. CyberArk's offerings include subscription services, perpetual licenses, and maintenance and professional services, reflecting its strategic shift towards a subscription-based model.

1. **Subscription** - Provides SaaS and self-hosted subscription solutions for identity security, including Privileged Access Manager, Endpoint Privilege Manager, Secrets Manager, Vendor Privileged Access Manager, Workforce and Customer Access, Secure Cloud Access, and Identity Management  **[0001178913-24-003921_exhibit_99-2.htm:7]** .
2. **Maintenance and Professional Services** - Offers maintenance contracts and professional services such as consulting, deployment, and training to support and enhance the use of its products  **[0001178913-24-003921_exhibit_99-2.htm:7]** .
3. **Perpetual License** - Sells perpetual licenses primarily for its Privileged Access Manager, with revenue recognized upfront  **[0001178913-24-003921_exhibit_99-2.htm:7]** .

19b968e8909a42925c8ad53b603a54a31c434d2879ba79d95b603cb8d98122db

Americas

EMEA

570b94e3fd202c3cc54d33f64682d590fc7ad2ce0a8fb86558671a9f5a8c8ba8

- CyberArk reported **annual recurring revenue (ARR) of $811 million, growing 34% year-over-year**, demonstrating strong demand for its identity security solutions and leading to management **raising full-year guidance across all metrics** due to a robust pipeline and confidence in capturing market opportunities.  **[CYBR_3382123_8]** **[CYBR_3382123_14]**
- The company is leveraging its competitive advantage with a **differentiated identity security platform**, covering a broad spectrum of identities, setting it **"heads and shoulders above" competitors**, and is well-positioned to benefit from IBM's acquisition of HashiCorp by capturing market share in secrets management.  **[CYBR_3382123_7]**
- CyberArk is investing in growth opportunities, including the **Endpoint Privilege Manager (EPM)** business, which has reached **$100 million in ARR**, expansion into the U.S. federal market with **FedRAMP High authorization**, and new routes to market like managed service providers (MSPs) and cloud marketplaces, positioning the company for sustained growth.  **[CYBR_3382123_17]** **[CYBR_3382123_10]**

9ea350aa39e45f83017d193007e46ef32699bcf6c3d2cd52e4cfded5cd9491a2

- **CyberArk is not disclosing Net Retention Rate (NRR) metrics**, which may indicate potential concerns about transparency.  **[CYBR_3397429_12]**
- **The company anticipates lower free cash flow margins in the second half of the year**, due to the Venafi acquisition costs, potential interest rate cuts, and increased tax obligations.  **[CYBR_3397429_14]**
- **Sales cycles remain back-end loaded ("hockey stick" effect)**, and the company has not yet resolved this issue.  **[CYBR_3397429_15]**

1e21cd1647cb22a4b84ac5114a47a20d22844ec00cce4995b88ed2c6e643f9eb

- **Net new subscription Annual Recurring Revenue (ARR) was flat year-over-year**, indicating potential slowing growth in subscription revenue.  **[CYBR_3382123_11]**
- **Approximately $2 million in renewals did not close in the quarter due to holidays**, impacting net new ARR growth.  **[CYBR_3382123_11]**
- **The full-year guidance raise was modestly less than the first-quarter beat**, suggesting possible cautiousness in forward outlook.  **[CYBR_3382123_13]**

8c2d09fc07a5890996c35a4ba006982e4131397abe23ecd0206e42d8f5e623f7

1. **Venafi's Growth Expectations**  
   **Q:** How will Venafi's growth compare to CyberArk's ARR growth?  
   **A:** Joshua Siegel and Matthew Cohen expect Venafi to contribute significantly, with **higher growth rates** than CyberArk ( **[CYBR_3408351_12]** ). They anticipate a shift towards **SaaS bookings**, forecasting that the majority of Venafi's bookings will be in SaaS next year, moving away from their traditional on-premises model ( **[CYBR_3408351_12]** ).

2. **Machine Identity Opportunity**  
   **Q:** What is the potential impact of cross-selling Venafi's machine identity solutions?  
   **A:** Matthew Cohen explained that machine identity is priced based on secured assets—**applications** for secrets and **certificates** (instances) for Venafi ( **[CYBR_3408351_14]** ). He highlighted that combining secrets with certificates could result in deal sizes up to **2x larger** than Privileged Access Management deployments, representing a **high-growth business** ( **[CYBR_3408351_14]** ).

3. **ARR Growth and Maintenance Revenue**  
   **Q:** What are the expectations for maintenance renewals and ARR in Q4?  
   **A:** Erica Smith noted strong renewal rates but mentioned that Q4 is significant for maintenance revenue. Their guidance includes an **$8 million to $10 million decline** in maintenance ARR sequentially, which should be considered when modeling fourth-quarter ARR ( **[CYBR_3408351_22]** ).

4. **Go-to-Market Strategy with Venafi**  
   **Q:** How is CyberArk preparing its sales force to drive Venafi's growth?  
   **A:** Matthew Cohen stated they began training their sales team immediately and are already building a pipeline for next year ( **[CYBR_3408351_17]** ). Partner engagement exceeded expectations with high demand for training. They anticipate seeing the impact of these efforts **next year and into the back half of the year**, confident that Venafi will grow at or above CyberArk's growth rates ( **[CYBR_3408351_17]** ).

5. **Margin Outperformance**  
   **Q:** What drove the exceptional profitability this quarter?  
   **A:** Joshua Siegel attributed the margin outperformance to a **top-line revenue beat**, some expenses shifting to Q4 that were planned for Q3, and overall operational efficiency ( **[CYBR_3408351_20]** ).

6. **Post-Quantum Security Impact**  
   **Q:** Are customers beginning to adopt post-quantum security tools, and how significant could this be next year?  
   **A:** Matthew Cohen acknowledged that discussions about **post-quantum plans** are part of every conversation with Venafi customers ( **[CYBR_3408351_16]** ). While implementation is still years away, it's increasing awareness of their machine identity solutions. They assist customers in preparing for the post-quantum world and emphasize the importance of lifecycle management ( **[CYBR_3408351_16]** ).

7. **Impact of U.S. Election**  
   **Q:** Has the U.S. election influenced your business, and what is the expected impact going forward?  
   **A:** Matthew Cohen stated they didn't see any material impact from the election this quarter and do not anticipate significant changes. The macro environment remains challenging, but they continue to perform well, with security being a top priority for customers ( **[CYBR_3408351_26]** ).

b3f31a6a3f073f9987b58d6ade5fd498e9eb77c40936f5e3b55c425920f6e498

- **CyberArk is uniquely expanding its Identity Security platform to include governance, access, and privileged controls, differentiating itself in the market and addressing critical customer needs**.  **[CYBR_3372424_15]**
- **The company is effectively executing a land-and-expand strategy, with customers expanding purchases more rapidly, contributing to revenue growth and demonstrating strong demand for CyberArk's solutions**.  **[CYBR_3372424_14]**
- **Despite macroeconomic challenges, CyberArk's mission-critical solutions and adapted execution strategy have maintained strong sales efficiency without experiencing elongated sales cycles**.  **[CYBR_3372424_12]**

c713530c3f61fd6170aa4cb740c236986dc4b5a28f455c3e3ec91c979a599e9d

- **The departure of long-serving CFO Josh Siegel may raise concerns about financial leadership continuity**.  **[CYBR_3408351_4]**
- **Q3 operating margin outperformance was partly due to expenses shifting to Q4, potentially pressuring future profitability**.  **[CYBR_3408351_20]**
- **The Venafi acquisition adds a business growing at only about 10% with a low SaaS mix (10-12%), which could dilute CyberArk's overall growth rate and slow its SaaS transition**.  **[CYBR_3408351_16]**

7c7414f0ad6cbff4c13579228c8d049ecb8c1365e8e737a9d56aeb4fd28f2f60

- **Limited ARR growth from conversions:** CyberArk's conversions from prior perpetual maintenance customers contribute only **mid-single digits** to ARR growth, and this trend is expected to remain the same in 2024. This may limit growth opportunities from the existing customer base.  **[CYBR_3372424_14]**
- **Reliance on upselling existing customers:** The company acknowledges that a significant portion of growth comes from upselling to existing customers rather than acquiring new logos. If expansion within the installed base slows, future growth may be impacted.  **[CYBR_3372424_19]** **[CYBR_3372424_13]**
- **Macro-economic uncertainties:** Despite management expressing confidence, the tough macroeconomic environment could pose challenges. There is concern about the sustainability of growth if cybersecurity spending priorities shift or budgets tighten.  **[CYBR_3372424_12]**

84e45c71d4ffaeebce9da07bf22cc486f90b9d70c44884aadedeb16b3d4f3fa9

- **Strong profitability and margin expansion**: CyberArk delivered a **15% non-GAAP operating margin** in Q3 2024, up from a 9% margin in the year-ago period, highlighting the **operating leverage in their business model** as they come out of the subscription transition.  **[CYBR_3408351_20]**  This was driven by a **revenue beat** and **operational efficiency**, indicating strong financial management.  **[CYBR_3408351_20]**
- **Strategic acquisition of Venafi enhancing market leadership**: The acquisition of Venafi adds approximately **$160 million** of ARR, expanding CyberArk's leadership in **Identity Security** and entering the **Machine Identity Security** market.  **[CYBR_3408351_16]**  The shift to SaaS is leading the way, with the **majority of the pipeline being SaaS-led**, which is expected to drive growth.  **[CYBR_3408351_16]**
- **Rapid growth in Workforce business with significant opportunity**: CyberArk's Workforce business surpassed **$100 million ARR** this quarter, growing **faster than their core business**.  **[CYBR_3408351_15]**  With over **9,000 customers** and only around **1,000 using Workforce Solutions**, there is **significant room for expansion** and cross-selling within their existing customer base.  **[CYBR_3408351_15]**

2aab87c7923e6639cd0c299b6bdaa79c6ac78f3ee553f5de6eb3c00de9f810c5

- **Strong customer growth and expansion**: CyberArk added **245 new logos** in Q2, with approximately **half of these new customers landing with two or more solutions**, demonstrating robust demand and successful solution selling even in a challenging IT spending environment.  **[CYBR_3397429_12]**
- **Identity security is a top priority**: Customers are prioritizing identity security due to increasing cyber threats, regulatory pressures, and cyber insurance requirements. CyberArk is considered a top priority for CISOs and security teams, leading to strong customer urgency and consolidation of spend with the company.  **[CYBR_3397429_16]** ,  **[CYBR_3397429_13]**
- **Solid financial performance with growing free cash flow**: CyberArk reported **significant free cash flow generation**, with **$41.7 million** in Q2 and **$108 million** in the first half of the year. The company expects continued operating leverage and increasing cash flow margins, highlighting the strength and efficiency of its subscription model.  **[CYBR_3397429_14]** ,  **[CYBR_3397429_11]**

d3fcb975fa044fcdc0dd5c16d925554c3c25b22b2c944ae1dc87581ffc6b6c2a

Cyberark Software Ltd (CYBR)

Financials