CyberArk Software Ltd.

Good morning. My name is Rex, and I'll be your conference operator today. At this time, I would like to welcome everyone to the CyberArk Q2 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. At this time, I'd like to introduce Erica Smith, SVP Investor Relations and EFG. Ms. Smith, you may begin your conference.

Thank you, Rex. Good morning. Thank you for joining us today to review CyberArk's second quarter 2022 financial results. With me on the call today are Udi Mokadi, 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 third quarter, full year 2022, and beyond. Our actual results might differ materially from those projected in these forward-looking statements. I direct your attention to the risk factors contained in the company's annual report on Form 20-F filed with the U.S. Securities and Exchange Commission, and those referenced in the press release today that are posted to CIDARC's website. CIDARC expressly disclaims any application or undertaking to release publicly any updates or revisions to any forward-looking statements made today. 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 in an updated investor presentation that outlines the financial discussion in today's call. We also want to remind you we provide the calculated revenue headwind for additional color on the impact of our subscription bookings mix shift, but it should not be viewed as comparable to or a substitute for reported GAAP revenues or other GAAP metrics. The webcast of today's call is also available on our website in the IR section. With that, I'd like to turn the call over to our Chairman and Chief Executive Officer, Udi Mokadi. Udi?

Thanks, Erica, and thanks everyone for joining the call. We had an outstanding second quarter, best characterized by momentum. Momentum for our identity security platform, momentum across our solutions, PAM, Endpoints, Secrets Management and Access, momentum in the channel, and momentum with new logos and existing customers. Before diving into the details, I wanted to provide a few financial metrics that underscore our stellar performance. ARR remains the best metric to measure our success. Subscription ARR reached $255 million, growing 133% year-over-year, demonstrating the continued acceleration of our subscription engine. Total ARR grew 48% year-over-year, reaching $465 million, we are pleased with how quickly our recurring revenue business is scaling to our 1 billion ARR target. And total revenue exceeded our guidance range, coming in at $142 million, with growth accelerating to 21%. It is important to keep in mind that the subscription transition continues to impact our reported P&L. Or said another way, we are growing much faster than the 21% revenue growth we posted in Q2. In fact, Our bookings were again well above our guidance framework, best evidenced by the combination of higher subscription bookings mix at 88%, revenue above the guidance range, and nearly 50% ARR growth. The revenue headwind from the subscription bookings mix was about $16 million in the second quarter. Normalizing the mix to the second quarter of last year, our total revenue line would have grown by 35% this quarter. Josh will talk about it later, but given the strength of our execution, we are raising our full year revenue and AR guidance. Our pillars continue to be growth, innovation, and profitability. Starting with growth, over the last few weeks from the RSA conference to our recent impact customer event, we met with hundreds of chief information security officers and senior security professionals. Nearly every discussion centered on the major challenges facing the industry. The race to digitize, adopting zero trust, and staying ahead of attacker innovation are accelerating trends, pushing identity security to the top of the CISO priority list. Our strong secular tailwinds and execution have kicked our platform selling motion into a higher gear, which you see in some of the trends from the quarter. We surpassed 1,000 customers with over $100,000 in annual recurring revenue, up over 50% from Q2 last year. SAS continues to serve as the foundation of our growth, leading the way in almost all regions. Our move to a subscription business model is delivering transformative value both to us and to our customers. While PAM remains the predominant landing spot for customers, increasingly new logos are beginning their identity security program with endpoint and access, and then expanding back into PAM. And when it comes to access, our truly differentiated approach is resonating, delivering another strong quarter in Q2. we are creating seamless access across the entire workforce. The combination of single sign-on and adaptive MFA with innovations like secure web session and workforce password management, all based on intelligent privilege controls, is enhancing security and increasing productivity, a combination not replicated by any other vendor. We had impressive diversification in our new logos, signing nearly 250 customers in the second quarter, up over 30% year over year, and included enterprise wins like Fortune 500 manufacturing companies, banks, major retailers, critical infrastructure, and energy and power companies. Momentum continues to pick up in our commercial segment as well, with wins like a next-gen cloud fintech, a well-known conservation society, and multiple school systems, among many others. A few new business highlights include, in a Greenfield PAM deal, a North American retailer had two catalysts for implementing identity security, digital transformation, and cyber insurance requirements, one of the many examples of cyber insurance contributing to our business. This customer embraced our platform, buying Privileged Cloud, Endpoint Privileged Manager, Access, and Secrets Manager enterprise-wide, including protecting UiPath and ServiceNow through our C-cubed integrations. A restaurant chain landed with adaptive MFA, SSO, workforce password management, and advanced lifecycle management to help mitigate risk. Expanding to PAM is next on its horizon. Our landed expense strategy is demonstrated across examples like a Fortune 500 manufacturing company, landed with EPM in Q4, and after just two quarters is replacing a legacy PAM solution with our privileged cloud because of the amazing customer experience. In a highly competitive access deal, an existing PAM customer in the healthcare vertical expanded with single sign-on and MFA. The CISO cited key differentiators, such as our security-first mindset, and our unwavering commitment to maintaining long-term vision and purpose. A financial services company is expanding from PAM to protect Kubernetes at the edge and CI-CD pipelines with our Secrets Management solution. Secrets Manager has had a strong quarter and was included in eight of our top 10 largest wins. Momentum also continued across the partner ecosystem. We are particularly excited about strengthening our relationships with the SIs, managed security service providers, and with AWS. Our partners are building identity security practices with plans to significantly increase their business with CyberArk. Year to date, the number of CyberArk certified professionals has nearly tripled, with the average number of certifications across our products also trending up, a very strong indicator of the momentum with partners. We also deepened our relationship with AWS Marketplace, The deals close in Q2, and our strong pipeline gives us confidence that AWS will be a contributor to our growth over the long term. Moving on to innovation, the cornerstone of our strategy. Our DNA is innovation, and we challenge ourselves every day to lead the industry. We were pleased to be named a leader in the July 2022 Gartner Magic Quadrant for Privilege Access Management, positioned both highest in ability to execute and furthest in completeness of vision for the fourth time in a row. At our recent annual Impact Live customer event, we showcased the depth, breadth, and considerable differentiation of our identity security platform. We hosted more than 1,000 people in person and 2,000 virtually at our marquee event, and the feedback was incredible. Customers and partners recognized that we are putting much more distance between us and the competition. The benefits of our security-first approach are well understood and increasingly a priority in this severe threat landscape. We also demonstrated how we can elegantly secure all identities across environments while driving the business forward. A few highlights from the product announcements. Secrets Hub positions CyberArk as the backbone for secrets management for all application types across the enterprise. Developers seamlessly access secrets through familiar workflows in AWS. At the same time, the security team can secure and rotate all secrets in CyberArk. centralizing visibility and control with a single pane of glass across hybrid and cloud environments. This win-win solution increases alignment between cloud-native DevOps and security. It is a game changer. Conjure Cloud is now in early availability. In addition to faster deployment and time to value with SaaS delivery, much of the power of Conjure Cloud comes from the tight integration into our identity security platform. In Access, we introduced Identity Flows, which streamlines workflow with advanced and modern no-code application integration and automation. And Identity Compliance streamlines Access certifications campaigns with comprehensive risk-driven identity analytics. Secure Cloud Access marks the third solution, along with Cloud Entitlements Manager and Dynamic Privilege Access in our Cloud Privilege Security Pillar. Going well beyond just-in-time, basic just-in-time, secure cloud access integrates session monitoring and enhanced least-privileged permissions for DevOps and cloud consoles. This functionality significantly enhances security and better aligns to the principle of zero trust. To accelerate our development in cloud security, in July, we acquired C3M, a provider of multi-cloud security and compliance solutions for AWS, Azure, and Google Cloud Platforms. We are pleased to welcome about 40 talented cloud security experts and are looking forward to working together to deliver against our cloud-privileged security roadmap. Moving on to profitability. Our reported P&L continues to be impacted by the subscription transition. We haven't changed our investment approach. We are delivering excellent returns, including rapid revenue growth rates and accelerated innovation. We expect to be a Rule of 40 company with strong growth, profitability, and cash flow, we move past the subscription transition dynamics before I turn it over to Josh I want to talk about the macro environment the broader economic uncertainty we are all hearing about has not impacted our business we are watching very closely and analyzing the trends in our business more frequently we continue to execute our strategy our close rates are strong our pipeline is at record levels and we are seeing an acceleration in demand in fact The first half of 2022 was one of the best in the company's history and our Q2 performance demonstrates. First and foremost, identity security is more critical than ever. Second, our identity security platform is gaining momentum and we are increasingly protecting across workforce identities, privileged users, and machines. Third, we are in the best competitive position in our history. And lastly, we are increasingly confident in our ability to execute against a multi-year durable growth opportunity. 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 third quarter and full year 2022, including raising our total revenue and ARR guidance.