CyberArk Software Ltd.

Ladies and gentlemen, thank you for standing by and welcome to CyberArk first quarter 2022 earnings call. At this time, all attendees are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. And to ask a question during the session, you will need to press star 1 on your telephone. Please be advised that this call is being recorded. If you require any further assistance, please press star 0. Thank you. Now I would like to welcome Ms. Erica Smith. Ma'am, please go ahead.

Thank you. Good morning. Thank you for joining us today to review CYBORG's first quarter 2022 financial results. With me on the call today are Udi Mulkati, Chairman and Chief Executive Officer, and Josh Siegel, Chief Financial Officer. After prepared remarks, we will open the call up to a question and answer session. Before we begin, let me remind you that certain statements made on the call today may be considered forward-looking statements, which reflect management's best judgment based on currently available information. I refer specifically to the discussion of our expectations and beliefs regarding our projected results of operations for the second quarter and the full year 2022. Our results might differ materially from those projected in these forward-looking statements. I would direct your attention to the risk factors contained in the company's annual report on Form 20F filed with the U.S. Securities and Exchange Commission. and those referenced in today's press release that are posted to CyberArk's website, as well as the duration and scope of the COVID-19 pandemic, its related impact on global economies, and our ability to adjust in response to the pandemic. CyberArk expressly disclaims any application or undertaking to release publicly any updates or revisions to any forward-looking statements made herein. Additionally, non-GAAP financial measures will be discussed on this conference call. Reconciliations to the most directly comparable GAAP financial measures are also available in today's press release, as well as an updated investor presentation that outlines the financial discussion in today's call. We also want to remind you that we provide the calculated revenue headwind for additional color on the impact of our subscription bookings mix, but it should not be viewed as comparable to or a substitute for reported GAAP revenues or other GAAP metrics. A webcast of today's call is also available on our website in the investor relations section. With that, I'd like to turn the call over to our chairman and chief executive officer, Uri Mokari. Uri?

Thanks, Erica, and thanks everyone for joining the call. We had a fantastic start to 2022. The business once again accelerated. Momentum picked up additional speed with our bookings growth rate accelerating off the record fourth quarter, a testament to our execution and the strong market fundamentals. ARR continues to be the best metric to evaluate the health of the business. In Q1, subscription ARR reached $219 million and growth accelerated to 149% year over year. Total ARR reached $427 million and growth accelerated once again to 48%. And we have the best sequential increase in subscription ARR and total ARR outside of fourth quarter, outpacing our record-setting third quarter 2021 performance. Josh will talk about it later, but given our incredible results, we are raising our ARR guidance for the full year. We also achieved an important milestone, with the subscription booking mix reaching 86%, surpassing the transition target of 85%. That achievement, paired with our great bookings in the quarter, demonstrate that our go-to-market organization has transformed into a subscription engine. We were thrilled to complete the transition in just five quarters, well ahead of our initial plan for an eight to ten quarter transition. Our strong bookings in the first quarter exceeded our guidance framework, so even with our significantly higher subscription mix, total revenue came in at $128 million, creating a revenue headwind of about $21 million in the first quarter. Normalizing the mix of bookings to the first quarter of last year our total revenue line would have grown by about 32% in the first quarter, with the license lines growing much faster. Our results clearly demonstrate, first and foremost, identity security is more critical than ever, particularly given the significantly heightened threat landscape and geopolitical tensions. Second, demand for identity security platforms centered on privilege access continues to accelerate. And third, we are well positioned to execute against a multi-year, durable growth opportunity. I will frame today around the pillars of growth, subscription transition, and innovation, starting with growth. Secular tailwinds of digital transformation, the adoption of zero trust, and attacker innovation continue to push identity security to the center of every customer discussion. Geopolitical tensions and Russia's invasion into Ukraine have further heightened the incredibly severe threat landscape. A recent identity security threat landscape survey identified that the race to digitize created an explosion of human and machine identities and an acute cybersecurity debt. Unmanaged and unprotected identities are exposing organizations to significant risk, which could have crippling effects. Less than half of our respondents have identity security controls in place to protect their business' critical applications. Another key statistic, over 70% of organizations surveyed experienced ransomware attacks in the past year, two each on average. Our survey results reinforced the durability of demand for identity security. All of these factors came into play with customers and prospects in the first quarter. Privilege Cloud, Endpoint Privilege Manager, and Access, all SaaS solutions more than doubled again. Momentum continued to build for CyberArk Identity with even more pickup in new logos, cross-sell, and add-on deals in the first quarter. In Secrets Management, we are increasingly securing across customers' application estate from DevOps, commercial off-the-shelf, self-hosted, as well as Kubernetes and large-scale container environments. Geographically, we have strong contributions from all our regions, with each exceeding our transition expectations. New business doubled year over year. It was a great quarter. We signed nearly 250 new logos across customer sizes and verticals, from airlines, cruise ships, schools, and hospitals, to board in the cloud software, identity security is becoming a universal requirement. There were many great new business wins, but I want to highlight a few. In a seven-figure ACV deal, a major local government landed with Privileged Cloud and Endpoint Privileged Manager as part of its digital transformation to secure its Azure consoles, Office 365, all network devices, and much more. Scalability and protecting against ransomware attacks were key in this deal. A travel and leisure company, still grappling from the impact from the global pandemic, picked up CyberArk because of our multiple deployment options, including remote access for both self-hosted PAN and Privileged Cloud. After trying to secure Privileged with a homegrown solution, a born-in-the-cloud cryptocurrency company landed with CyberArk to meet the increased compliance requirements in its industry. Superior security, custom integrations, and scalability were the deciding factors. Cyber insurance continues to be a driver for our business. In one highly competitive access deal, a leading retail technology vendor picked Cybark Identity to meet its stringent cyber insurance requirements and aggressive Office 365 migration timeline. We saw concrete examples of the heightened threat landscape and geopolitical tensions increasing the sense of urgency with some customers, including a major state transportation division that bought Privileged Cloud in response to the potential threat against critical infrastructure. We are also seeing increased velocity in our add-on business, customers adding more users and expanding to new solutions faster. As examples, a major health plan company is implementing a CyberArk Everywhere strategy to standardize on PAM, securing more privileged users and is also expanding into Secrets Manager for DevOps. A Fortune 100 transportation company landed with PAM in 2018. The customer success team has built an amazing relationship with this customer, and they will now leverage Endpoint Privilege Manager to secure across more than 75,000 endpoints, including 15,000 employees and 60,000 customer touchpoints. A state government expanded from Privilege Cloud to secure web sessions in the quarter to provide more visibility and protection across applications and users. Our land and expense strategy is at work, and this customer is now evaluating a broad workforce identity rollout for our single sign-on and MFA. VARs, global system integrators, advisories, and managed security service providers are building CyberArk identity security practices across PAM, Access, and DevSecOps. Enablement picked up significantly in the first quarter, with both the number of CyberArk certified partners and the average number of certifications trending up. Joshua will get into the specifics of the transition dynamics, but I wanted to reiterate that we were thrilled to exceed our 85% booking target well ahead of our transition timeline and are now focused on operating and scaling as a subscription company. We are already seeing the flywheel effect in action. We now have more than 960 customers with over $100,000 in annual recurring revenue, up over 50% from Q1 2021. We're even more thrilled that our transition is based on a strong SaaS foundation, where we continue to see SaaS first in almost all regions. On innovation, I want to highlight that while we have been transforming CyberArk into a subscription company, we have also been building the industry's most comprehensive, scalable identity security platform in the market. Our platform is centered on PAMP to provide customers with the highest levels of security, but it extends well beyond to secure all human and machine identities. Along with increasing demand for Privileged Cloud, our growth engines like Endpoint Privilege Manager, CyberArk Identity, and Secrets Manager are making meaningful contributions to the business. Most visible is the strength of our subscription ARR. We recently announced that CyberArk Identity achieved four nines of availability, which enhances security and risk mitigation and drives productivity gains. CyberArk Identity protects against the leading point of attack used in data breaches, compromised credentials. Our solution unifies SSO, adaptive MFA, user behavior analytics, lifecycle management, and directory services into one integrated solution. CyberArk Identity, an endpoint privilege manager, also reached in-process status for FedRAMP high authorization, the government's most sensitive status for unclassified data in cloud environments, putting us in a great position to extend further into U.S. federal with new solutions. In April, we rolled out EPM for Linux, significantly expanding our opportunity and building on the incredible growth in EPM. We are very excited to announce that we added Appy, a provider of advanced and modern no-code application integration and workflow automation to CyberArk. We acquired the company late in the first quarter and are looking forward to sharing more details about how we integrate their technology for access capabilities into our solution at Impact Live, our customer event in July. With our roots in cybersecurity and our identity security platform centered on privilege access management, we are in the best position of any vendor to help customers navigate the heightened threat landscape. We have an incredible opportunity to execute against this massive multi-year growth opportunity. Before I hand over to Josh, I want to welcome to CyberArk a strong addition to the team in Simon Moyal, who joins us as our Chief Marketing Officer. Simon brings 25 years of experience in driving strong growth transformational change, and leadership in SaaS companies. I am excited to see how he and his team further improve our leadership position and continue to increase demand for our identity security platform. I will now turn the call over to Josh, who will discuss our great financial results in more detail and provide you with our outlook for the second quarter and full year 2022, including raising our ARR guidance for the year.