CyberArk Software Ltd.

Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the CyberArk third quarter 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 the star one. Thank you. Erica Smith, SVP, Investor Relations and ESG, you may begin your conference.

Thank you, Rob. Good morning. Thank you for joining us today to review CYBORG's third 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 up the call 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 operation for the fourth quarter, fall 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 20F filed with the U.S. Securities and Exchange Commission and those referenced in today's press release that are posted to the CyberArk's website. 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 in an updated investor presentation that outlines the financial discussion in today's call. We also want to remind you that we provide the calculated 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. A 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 a strong third quarter, demonstrating the durability of demand for our solutions and the momentum we continue to see in our business. A number of key metrics underscore the strength of our results. Subscription ARR reached $301 million, up from $255 million at the end of Q2, the largest sequential increase in our history. Total ARR reached $512 million, with growth accelerating for the third consecutive quarter to 49% year over year. While ARR remains the best metric to measure our success, the benefits of our subscription transition are kicking in on the top line, with total revenue growth accelerating again to 26% and reaching $153 million in Q3. It is important to remember that the subscription transition continues to impact our reported P&L. For the quarter, the mix was about 87%, significantly higher than the 72% in the third quarter last year, which created a revenue headwind of about $11 million. Normalizing the mix to the third quarter of last year, our total revenue line would have grown by 35% this quarter. With our strong execution year to date, the prioritization of our identity security platform, the demand for our SaaS solutions, and ongoing secular tailwinds, we are significantly raising our full-year ARR guidance to over 40% growth at the midpoint, which Josh will talk about later in the call. To frame our discussion today, we will focus on growth, innovation, and profitability. Starting with growth, strong secular tailwinds of digital transformation, the adoption of Zero Trust, and attacker innovation continue to push identity security to the top of chief information security officers' priority lists. With the heightened threat landscape, attacker innovation is front and center in our discussions, and privilege escalations continue to be a common denominator in the attack chain. Another growing challenge is the pickup of MFA fatigue, where attackers inundate a victim with prompts until the multi-factor authentication request is approved. The increased use of MFA bypass techniques has clearly demonstrated a need for a more robust defense strategy through an integrated access, PAM, and sequence management approach. This has been a strong pipeline generator for CYBARC and our identity security platform. Digging into our results, on the product side, momentum continued across our solution set. We were particularly pleased with the performance of CYBARC Identity, PAM, and the EPM in the third quarter. On the new business front, we had a strong new logo quarter, signing nearly 230 new customers. A few examples include, in a seven-figure rip-and-replace deal, a Fortune 100 retailer landed with PAM, Secrets Management, and EPM. This customer embraced the breadth of our identity security platform and will leverage CyberArk to scale its growing IT environment, help protect across human and machine identities, lock down thousands of endpoints, and protect against ransomware. The race to digitize is not just expanding the attack surface, but also accelerating the adoption of Zero Trust. And in Q3, we were chosen as the enterprise-wide foundation of a global manufacturer Zero Trust framework with Privileged Cloud and EPM, with plans to expand to Secrets Management. Based on a board-level mandate, a major born-in-the-cloud manufacturing company landed with Privileged Cloud and EPM, demonstrating that identity security is front and center in the highest-level strategic discussions. A European government agency landed with our workforce password manager to give all its employees increased security controls on their personal passwords from CyberArk with our deep expertise in PAM. This is just one example of the robust demand for workforce password management in recent months. Our subscription transformation is increasing the velocity of add-on business and cross-selling across the portfolio. This is contributing to the greater than 50% increase in the number of customers with more than $100,000 of annual recurring revenue to nearly 1,200 customers at the end of September. A few expansion examples include a leading energy company in APJ landed with PAM previously and is now expanding across the portfolio with EPM and Secrets Management as well as with additional Privileged Cloud users. In Q3, a large retailer became our second largest Privileged Cloud customer with a major expansion deal. bringing its ACV to well over a million dollars. A long-standing Fortune 500 PAM customer, who had expanded to secure Ansible with Secrets Management in 2021, further deepened its relationship with Cybark and Q3. As part of its Zero Trust initiative, this customer will lock down over 45,000 endpoints with EPM. We have spoken about it in the past. While the industry has been talking about Zero Trust for a few years, Enterprises today are increasingly executing zero trust strategies, which is contributing to our growth. Our channel program is key to our success, and partners continue to scale their identity security practices. We have added new routes to market, enhanced collaboration, and improved channel program efficiencies across our VARs, advisories, and MSPs. Moving on to innovation, the cornerstone of our strategy and leadership position in identity security. During the third quarter, we began taking our CYBARC Impact Customer Event on a world tour to 16 cities in 14 countries. In our discussions at these events, the new innovations we announced last quarter are gaining traction in the field. CYBARC Identity Compliance is now generally available and makes it easier for organizations to enforce and demonstrate compliance by continuously discovering access, streamlining certifications, and providing comprehensive identity analytics. In early October, we also rolled out a user-friendly way to help block the MFA fatigue technique from gaining unauthorized access to protected systems. Customers are also excited about Secrets Hub and Conjure Cloud, which strengthen our ability to secure both human and machine identity. Profitability is the final pillar I will discuss today. While 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 accelerated innovation, as well as a rapid revenue and booking growth. We continue to expect to be a Rule of 40 company as we move past the subscription transition dynamics. Before I turn it over to Josh, I wanted to update you on what we are seeing with regards to the macro environment. The broader macroeconomic uncertainty did not have a significant impact on our business in the third quarter, which you see in our nearly 50% growth in ARR, revenue acceleration, and the increase in our ARR guidance. Our solutions are mission critical and identity security is being prioritized. We have seen incremental FX headwinds and some large deals require incremental approvals, but this did not meaningfully slow down sales cycles in the third quarter. Our pipeline and demand are robust and we continue to watch the situation very closely and are analyzing the trends in our business more frequently. In closing, the top line benefits of our subscription transition are kicking in. and our identity security platform continues to gain momentum. Our performance, in particular our strong ARR growth, demonstrates that we are in the best competitive position we have ever been in. Given our experience and durability of our business, we are confident that we can execute against a multi-year durable growth opportunity and deliver best-in-class profitability and cash flow over the long term. I will now turn the call over to Josh, who will discuss our strong financial results in more detail and provide you with our outlook for the fourth quarter and full year 2022.