CyberArk Software (CYBR) 10 Aug 232023 Q2 Earnings call transcript

Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the CyberArk Software Earnings Conference Call. Today’s conference is being recorded. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers’ the will question-and-answer be After [Operator Instructions]

go I At Investor turn Please would the time, Relations conference ESG. SVP, to Smith, like this Erica over and ahead. to

the Officer. Thank will Officer; you you, review to Second our and call Matt the Josh XXXX Quarter Cohen, Good open on Financial Thank Results. me today for Siegel, CyberArk's With session. Audra. After Financial call question-and-answer us we today joining our up prepared to remarks, morning. are a Chief Chief Executive

and Before and we on statements of results which today beyond. considered begin, I of XXXX let you the beliefs for based full that operations expectations year to statements, available currently me may regarding quarter made certain remind specifically our reflect forward-looking judgment discussion refer call projected on best third information. management's the the be our

results Our materially these projected those actual statements. might forward-looking differ in from

to publicly statements XX-F direct the today. the are Form or release to posted on risk attention in that and on or annual in report contained to factors Exchange revisions today's those Commission filed website. release any expressly press I application updates disclaims forward-looking referenced your undertaking and CyberArk the any with CyberArk's any Securities U.S. company's made

in available webcast presentation non-GAAP section. investor today's on of in Additionally, in updated also Investor Reconciliations the GAAP today's financial A well to website release, in conference measures outlines is on the this financial press this be discussed available financial the are call. Relations measures call. will our comparable most directly that as call discussion the as

Matt? Matt call With over that, the to I'd to our CEO, like Cohen. turn

our the thanks, build everyone Momentum for Thanks, business. today. to call Erica, and joining continues across

underscores strong the reasons are quarter second performance winning. three we Our key

platform our Security drive First, and motion. Identity to land expand of our the power

our comprehensive business. our to are the depth and the continuing solutions Our velocity portfolio SaaS of increase in

our ever platform is edge the of amplified our imperatives: innovation. motion, protecting enhancing channel, and in organizations. the strategic requirement third, increasing cloud our demand of This accelerating hybrid our is and reach And Security strength native our the against by Identity for is our extending a executing performance. non-negotiable selling customer environments. importance Second, execution only durability of are delivering evident organization success and cutting The through we

earnings year-over-year. Subscription ARR growing million at and robust reached total $XX added And $XXX XX% reached range million net and million ARR. operating non-GAAP $XXX guidance EPS of We $X.XX, new non-GAAP million growing all ARR the XX% above XX%. $X with growing revenue $XXX Total exceeded per to in coming loss million, revenue, share our in loss across operating we a range.

I’m we are incredibly proud how the macroeconomic navigating of backdrop.

to approval we teams deal seen to new enabling We expanding executed their relationships, several solutions that CyberArk to the had performance. a adjust their quarters, to us the continue for Our and cycles selling new to new users go-to-market overcome and customers buying increased longer broaden business a quarter and scrutiny continue approach deliver across have well platform. strong really

cities our event, the fall. and throughout across who strong. in those marquee at person and great who build see many so are XX our our are progressing to It in are pace. a to you, virtual we continues is our tour record in we rates was win We across but Impact appreciate May. tuned pipeline world world Our the really Deals the sessions. attended of customer hosting Impact event Boston into also summer and Impact hosted

feedback is resoundingly we part last touched program. few the Over and months, thousands of of this customers, as have prospects partners positive. The

the drive and new identities, they attack as risk explosion efficiency, new manage mitigate methods. and customers of new helping are We environments

the the details to quarter. on of Moving

typical and of organization surveyed Report, will profitability. than Identity the happen identities before. We initiative. around unique and frame have our of organization a released more drivers. more identities innovation ever as Landscape today part A growth, has In access with every thousands identity this than growth will discussion ahead in Starting Threat those Security digital we an expects related compromise transformation say year half recently the our and

than Generative these Attackers urgency are innovating trends. comprehensive AI is compounding sophisticated, identity and the for further faster are more ever elevating security.

CyberArk consolidating of what trust, are based as trust. superior organizations long-term consolidation They and partners result, on deep a vendors expertise, are of platform domain leadership a technology. refer position, to like As across because we of choosing breadth security

including approach. machine, controls Our comprehensive differentiation across zero multi-cloud environments, environments access, privilege our access access includes standing as while our ability all all applying just-in-time identities, and standing and they human our privileged hybrid to secure and intelligent

product recent most zero secure with which native standing customers. is multi-cloud with Access, introduction, across privileges access provides Secure Our environments resonating Cloud

When combined -- for creates customers customer with workloads, creates ability just-in-time it programs. it to access PAM ability for the a for reimagine their cloud the for

combined Access the Hub and and even is Cloud Conjur teams innovate Cloud, developers addition, cloud. can in security the faster Secure Secrets In with when

For the and workforce, secure to one workforce enterprise sessions privileged providing with the management. further, password controls this take we web step

These delivering value are growth. driving great long-term compelling examples customers of and our how our to platform is

innovation business Our to and engine new our go-to-market contributed quarter and new execution XXX logos. strong

key primary with the or two platform PAM success increasingly While our continues with our spot, customers been be to landing landing solutions. more to has

industry the a the with in by insurance quarter, cloud company's Fortune leading would few and company that cyber wins solution an scale requirements, a strategy. transportation into XXX evolve Digging wanted driven

Hub. human Cloud, to secure global Cloud Privilege across and access addition centrally its In multi-cloud non-human and Secure will privilege infrastructure with customer the Access Secrets

customer platform, be telecommunication platform Endpoint company efficiencies measurable consolidating strategy, CyberArk a to endpoints Secrets is all and of embracing local of the Identity all Endpoint vendors across and seven of Manager from leading part rights South companies. its landed in risk Manager, This and PAM, help with mitigate Security our will is to operational and ransomware attacks. provider risk the using including reduction. As Privilege achieve Manager A trust leading admin remove our Privilege cybersecurity America zero its

at business land is motion vision to customers Identity of value Cloud, customers picking $XXX,XXX Cloud success represented end approximately company embraced our up expanded more of security nearly as by our from Conjur revenue a time Secure and to annual the examples and in our Security energy with in expand a The A of PAM QX. and is SaaS and with faster also to XX% XXX include: few than cloud in The Access. QX, the increase Global solutions. with achieve X,XXX DevOps Secrets Hub velocity recurring our large footprint

identity of the An auto manufacturing quarter company XXXX looking with security to third partner. bought PAM in expand CyberArk was a who modern

more Cloud and workforce Security solution. identity most advisory password bought is our they strong quarter, its first Identity practice. manager added successful Accenture as with second CyberArk Privilege the a During of CyberArk one partners

it deep clients cybersecurity to their they utilize market, and security are also deliver relationship controls understanding use continuing We extend of Given Accenture. to look pleased expand will the Cloud forward for we to CyberArk advanced of themselves. their Privilege with our

customer in gaining NTT, growth market is a more channel for QX street among CyberArk the power. extending key the (ph), new segments. traction we remain wins who us The on Kendra are GuidePoint, services reach are Secrets key delivered and quickly. Certifications and with others, and feet pillar MSPs are Endpoint our helping future growing Management more reach Manager, with for Identity and Privilege

its scalable their partner security BT, protected. managed needed a to as British company, scales services modern, multi-national help critical identities In a leading global rapidly are fact, customers' it telecommunications operations ensure

the During second strategic CyberArk the leverage they made access solution. as to Identity quarter, decision their key

Identity excited we creation working Impact innovation. has At event our on long the to leading were including for Security, EPM, at of competition the at stay are May, policy innovation introduction record of attackers. help customer Moving reduce in implement AI-powered to risk privilege and of in the how we ahead of lease endpoint. to and track to the share automation CyberArk a and both edge

exponentially the capacity increase attackers AI to techniques and increase. effectiveness. to are And Today, tactics and their procedures change continues to leveraging

in While methods evolving rapidly, common identities. attacks attack remains denominator these are the

enhancements to solutions generative to harnessing new combat are We our security customers, develop innovation innovation. AI and for

Azure initiatives AI integrating product as have to Impact, our we across we about forward launching well controls, At our portfolio looking while in year. We security frictionless backbone as can dedicated workflow, the of are love developers continue but security the their year, sharing later Hub enterprise. information innovations, last new the launched team with for professionals a Since and Secrets also self-hosted. PAM Secrets protection, to and the making CyberArk

and CyberArk security, deliver Secure CyberArk's purpose end Secure productivity. overall browsing Identity experience enterprise It and for the securing also of users. a platform, Browser privacy the highlights the for front was one can privileged while as built the act Browser to Security event. of is

sessions form dangerous and by, intrigued to to that and are an steal customers harvest ability areas increasingly hackers of hijacking, our most the stop critical of to attack, data One cookies takeover is looking session the where are IP.

on Moving to profitability.

transition the year line to begin subside, our of towards are you the raise. As full dynamics we goal, Rule XX in our of bottom see as subscription marching

Our across operating Identity of drive leverage effective by our productivity, cost also Security not all supporting will groups. help platform but product increase go-to-market only innovation rapid our

out long-term disciplined made goals always put and months few at growth, we I our Day remain have confident in very ago. Investor We a to just profit the investments support our

engine our innovation summary, are and In go-to-market delivering. organization

drive relationships are new our and robust reach how our we platform platform to leverage our services accelerating partner our selling motion, and our growth. We extend

cloud our solutions seeing cybersecurity a of thrilled strategies. just and human are security We of is market. our access the at in adoption managing momentum all the are the with Securing the identities, center not we customers' early requirement

first improve disciplined full investment for momentum the ARR the us guidance ahead, operating look profitability. our raise we our As and confidently business, execution and approach half year strong in positioned in our to

outperformance quarter Josh, call turn with the and the our who will discuss detail of I our over guidance more for now third the will you provide year. to in

XX% across up. Thanks, XX, another and $XXX grew pick exceptional the subscription increased Momentum guidance ARR Matt. million million. June $XXX the at XX% beating our reached continues We board. strong and delivered while reached to portion yet an quarter,

quarter, of million the the fourth quarter we seasonally XXXX. ARR. This new outside And represents strong net subscription new amount in $XX net had of ARR subscription in the second largest

of As $XXX XX. SaaS mentioned already, our million platform. with at our was solutions Security revenue June portion our across customers, Matt maintenance resonating recurring annual embracing is The expanding Identity and strategy

in ARR activity our amazing in annual capture combined to represents are our rates, the increase In conversion value growth. to percent the mission-critical customers. continuous maintenance solutions which deliver second a today's that demonstrate digit year-on-year Like-for-like, with our environment particularly strong of just renewal and we our an still rates, quarter, macro thrilled, were single

Total of the in XX% our first at $XXX.X growth grew our guidance exceeded revenue revenue of XX% acceleration came half with year-on-year. total year. from an Year-to-date, XX%, million and in that's last

the in year. XX% in subscription bookings came the quarter, at that's to quarter mix of in second last Our XX% compared

Our growth recognized that's and was the about continuing range, well pressure $X million. and again to balanced of our subscription business. in expansion duration Self-hosted bound new came on at across lower put revenue

of into million, the model, second the Moving of revenue revenue to lines perpetual quarter. total details growing in came representing business with move second for (ph) in the at and XX% a year-on-year Consistent revenue $XXX.X our $X.X subscription million. quarter. the revenue XX% reached license Subscription

million Our $XX.X from professional revenue. with maintenance and professional million services in $XX maintenance services revenue recurring and was million, $XX.X coming

in million, revenue $XXX.X to The and million revenue grew business revenue. bookings second recognized $XXX.X headwind quarter of year. diversified. to The million year, percentage from total second year-on-year increase in from quarter. the in last XX% the continues second EMEA the quarter growing in creating XX to mix $XXX.X the meaningful total a XX% a Americas quarter the in XX% portion grew revenue be by or nearly The point XX% $XX.X of reached just by reached EMEA million well XX% subscription million the revenues, about XX% year-on-year. recurring revenue APJ revenue, or XX% Geographically, had year-on-year XX% region in growing that's to $XX.X in last

reconciliation see in our full the tables All on in release. now will of to GAAP Please basis. non-GAAP non-GAAP line the P&L press the a items be discussed

an or year. last the XX% margin quarter second second quarter margin XX% compared gross to in the profit gross was million Our $XXX.X gross

loss end came our of guidance. million operating Our the of in better $X.X than top

quarter and second increase As we leverage million. increasing only our are business the year-on-year. approximately with our expenses Even a the our in incurred XX% Impact, in $X growing expenses revenue demonstrating we with reminder, expenses from operating XX% event Impact in from of

$X.XX marketing. or over Net coming June We $X.X income worldwide, share. X,XXX guidance exceeded in ended employees million at including in X,XXX per sales diluted with and

free million negative For cash flow X.X% XXXX, a the free flow a margin. six months cash was negative of $X.X or

cash flow and a free customer we event the other operating be second As of expenses. expected seasonal to the as lower a quarter reminder, margin Impact sequentially in result

our to guidance. Turning

strong year motion For reflects the still in competitive the against XXXX, the execution, our that's macro our quarter uncertainty third selling leading guidance environment. balanced position and platform and and full the

For midpoint. of $XXX.X of we quarter expect total the $XXX.X growth the million, million at third represents XX% which XXXX, revenue to year-on-year

subscription XX% the the mix expect level. will We to above continue be

We million per range range quarter. expect in EPS million non-GAAP the from non-GAAP $X.XX diluted share. income our And $X to we $X of to operating third the $X.XX for to expect

guidance XX.X diluted taxes. in assumes average about million Our weighted and shares million $X

range For for expect the $XXX $XXX we and range full year million, year-on-year million midpoint the representing of revenue full to the XX% XXXX, from growth year. last an of XX% the year in the total at acceleration

of the be to income We our are $X range to significantly of million. raising results breakeven operating operating year full in

$X.XX EPS average our and diluted we million year in of about And diluted million expect full to expect per of to about shares XXXX. $X.XX taxes share. for the We weighted be XX.X $XX range

back growth, we midpoint year-on-year now for strong a annual macro XXXX, December the that's be the to guidance range. On XX% are at pleased were XX, the between a this particularly our Overall, $XXX of $XXX of environment. raising with at and million in execution, revenue about million ARR growth we also recurring our

our is our transition to of out playing improving. margin playbook. against six operating is XX% growth in the subscription first the Our accelerated year Revenue months and

business as to near build. about talked in driving our our our goals we term Investor are long As continues momentum Day, at we towards and

I turn operator Q&A. call to the the will Operator? for now over

Saket Thank you. to first Barclays. [Operator We'll Instructions] at Kalia go

Okay. Good Matt. my Hey, for Thanks Great. taking guys. Hey. morning, Josh. questions here. Hey,

to morning. hear Good Great from you.

CyberArk PAM, the Maybe most see you. of is Do et general better why security than in It's why Same the that's with the here. and sort is Thanks. areas security? just Do identity, new question great on think just the just you point just to continued that's healthier area like you this start this think the to macro specific? spending? so CyberArk do you growth. a in much Matt, maybe in ARR doing earlier start you of net to made of of is Any subscription to line, much is, better? cetera., thoughts like and identity feel other resilience doing space, that so general appropriate just with feel ARR identity

they that we No. of look It's this causes as to need starts to to this on need are identity we thrilled market map think we and the at And in, perspective. I success overall to the talk this a of of the it and as play identities. idea when through core with the identities of proliferate internally, And that great so the of the at in evolve, able three lot results idea the as cybersecurity back strategy. mentioned. about are with you that question see where we're attackers achieve. trying kind is it strategies We to it from centerpiece the certainly to we continued ARR main a our growth organizations, is get kind One focus to

market And play participate the we that's maybe area so in of cyber particular chose the we to and that in.

be in platform regular Security well do able the that able to the one users solution sitting to and think reasons all be two the IT CyberArk machine privileged from to as to this identity, the ability one I differentiate specific be as non-human with set. protect any to the human most Identity identities, able and users workforce which are driving for us platform, our other is, market One really success. ability with But are in

I their in with think they our them longer-term point as that plans build the direction and of customers CyberArk. resonates

third the come the they for story to call, their before, make you, there. to buy. bit little phenomenal execution out easier then are that adjusting And a a this Board to a area environment. team about talked job doing initiatives the tell They're They the members listen out it executing customer macro and I'll this We the and they've changed but their there. lot to in they're value of to mapping are and

people lot story able the to actually next pitch their IT, side-by-side sitting they're to Josh to the pivot story company value the to to and me, and like how example, go For CIO in with the with a of for CFO deal a we're to talking them to CISO.

and that think starts with having market And phenomenal so I picture a in differentiated the a rounds solution. great of kind out participating execution

this for statement Got quarter's is That a see the revenue the income. though, the slightly I Maybe when for to going both the what revenue see line? guide end. is also than the to operating it. upside this up Great I about up year, through the some And that the how beat. in follow-up much make makes taking of to sense. you sense? think maybe go income considered great more success and you, we're think and quarter, bottom for of Maybe the puts ton thinking operating question Josh, so sort takes question for income were flow my revenue on guide you. that just Does the the of is, at to ARR the

been very And heavily and also has that And we're our year guide but one (ph) able about seeing question. were the for half that the on -- SaaS. full And we think towards growing at that levels. it as yes, ARR, $X is back able we're for thrilled weighted well. eke year for the Yeah. by the ARR things that thanks we pass we want preserve are when happy to then up were does, the And It -- raise kind of to also Saket million. full revenue and to we the take we pipeline the record of we the

And preserve that. half to also where is want the into XX% XXXX. that it want to are could second it while -- in though see of subscription we roll so we eke mix think we that consider we above increase even and definitely to ARR, getting our into -- where I want SaaS the And and up could we'll

at William next We'll to Jonathan move Ho Blair.

Hi, there.

of quarter my maybe surprised performance wanted quarter. strength to congratulate Was products. out the I expectations? there relative in strong sort me in the to -- individual that of on anything stood dig maybe terms into the your Let or that you

Matt It's Jonathan. here. Hey,

and board, a I the across performance quarter. the on good strong PAM it was listen, We workforce in Secrets think the in So a and back the password differentiate front. of Privilege Sessions, EPM there, especially particularly there. We ARR some areas access that some space, in Secure in Cloud areas identity growth saw the the Web strong saw we business really itself, of say and in us manager

quarters across the we of So think were the kind where was of board. it I one strong

that's surprised little Secrets and the deals side bit of took of intake pipeline native Cloud We the cloud by remarks surprise of quickly of were take more We highlighted us protecting to environments, because our the kind solution into of newer the business, maybe Access a in SaaS we Conjur prepared I start some saw a little in into Hub terms the Secure Cloud forward. off. of for looking stuff the where brought being more think so maybe Secrets it's how even deals

signs of the strong tell to a you on newer about that was with we really some at would I innovations so, And were and the able across nice quarter talk Impact. it board

We'll Piper Sandler. next at to Rob Owens go

note the and now for deals. quarter, what economy of seeing thanks size. you the curious, Last just Great are given downsizing guys of my did with and you And in some terms deal puts taking takes question.

Yeah.

other the quarter maybe about that though, deals, put component or The depth about year back parts component on downside happen a into talked for it things, QX, motion. of that and bit and parts talked still downsizing first or sit we talked the in we think I to of progressing that half year the nicely. also pipeline double we little back So actually expansion back the really come to deals in that two deals, the the of the and we ready last half about, do the we're in all, of that, down are saw were were

with So that. we're really happy

supersize against of they able actually ability that a the to based of And begin understanding didn't I think say much a deal as and the the execution We at team second out procure deliver understanding is needed strong upon to upon to as just actually a a did the for saw better close right customer in maybe we job see I quarter. related the to positioning downsizing rates quarter upfront it better seeking what of case, weren't their the the the budget, deal to would end what better based of here kind be with. performance, strong would and that expect. we the of

the itself around say macros the I to nature. trends at stabilize So continues I any we're of the in would in been say change dramatic market us. vis-a-vis position like there's strong a wouldn't a feel moment. We And

about on from Great. building the last and look I half guess half. XX% a the about this would And ARR year, first ARR which come half, the XX% if for That's in ARR year of X-point in implies your back of second XX-XX. shift I the was year, guide at that,

contemplate implied be half that kind QX ARR and any QX what's the of would Thanks. guidance we great. in second help around versus So as

Yeah. Thanks, Rob.

for subscription So because we business I a mean, net essentially, we're for half. implies ARR the flat to that reduction the anticipate even on $XX get of second can maintenance new the side million guiding some the ARR, definitely --

maintenance overachieve -- and in decline half. at half the we ARR the the looking on for is able first glad second to for the So we net we're the then business the ARR new that ARR new were take net on were and achieve flat the

QX we and then I add think of QX, see years. just And consistent prior split I that a normal would between seasonal with kind

Great. Thank you, guys.

Morgan at Song Angie to next Stanley. go We'll

question my much taking for Hi, today. everyone. Thanks so

products seeing you quarter? bit could bought with the So been customers a this you've that about multiple What percentage little bundling? success talk of just

Yeah.

So selection we XX%. in deal tick When to by It not see purchase new through to just continue customers generally but multiple the speaking, it's see way, through logos, continue we bundling, we trend the not that, And certainly, more than in just spot. greater buying if base even talk about process, solutions. that in on we of than up continues expand are than that our higher kind more one landing can the motion. that solution as land-and-expand their customers

see we customers what that a prioritization process. have is the So generally though

At to privilege they're do focused then or one the they're least parallel. level, next some going locking a do on are ahead going EPM it's and in And on core the PAM to what becomes endpoint, priority. controls. about looking they they down in are And what to so customers, for

other the the understand so machine side-by-side customers, with seeing management component, need PAM. becomes nonhuman a and really priority they're this kind to of identities, secret For

actually And do they to CyberArk. and then for understanding Identity IDP some, legacy they're the from swap with thinking Security about that can access their that really looking and their platform out

just a would happy pool little wanting than But customer are customers and with bit each different. we're either start So expand more be that. to really in with PAM or general,

also innovative products We some into of do nice more our a though, our of packages. seeding do, job,

familiar adopt helps suite. Cloud, they're the products password and expand back Privilege little bit you later. with buy so of identity that go you expansion us when you management, we are and the motion, the for our get of to get already little ready And that customers a When a workforce bit

us. very we more around a see are little packaging, that So how customers from just buying world, of how but nature product bit than one that's the also

We'll from take next Mizuho. at our Moskowitz question Gregg

AI CyberArk? you that spoke here? for in that in question Thank and more executing as innovations increase. gen your on agree would that And think to this is QX. I incremental going prepared this cyberattacks nice you're But generative is you look you the everyone very something What are much job in spawning is an for Matt, only AI thoughts revenue at and remarks your taking area. that about the working opportunity

we're talking topic one in in interesting conversation Yes. practical today. It's We're an mythical that We're some at about out it's comes thing every thing. about the talking is there not this in up and talking time. almost real. very about what nice enterprises and And point what's happening about

around talking threat XX% generative AI-based of ahead. practitioners anticipating Our of in that them with were security the landscape, world, enterprises of the attack was and thousands CISOs over it year a

offensive side, existing to we of for attack kind more that their certainly really this ability and making see innovate attackers by innovate on methods effective. So

to I sets a And think existing how for identities more which the operate that they're If attacks of effective existing to against in with AI said those will are innovation I attacks. need with our remarks, then fight it degree their to we make AI-enabled able solutions we be making innovation. to prepared a perspective. And protect the targeting generally kind defensive from stage but

some collecting power to pockets new data product So for of where the harness the provide of solutions we’re creativity able to into do might create analytics some suite. be that sure, or insight we and that new will be there innovation better the

so let’s using are sure more we easier mechanism more AI that would make attackers go let’s general, they effective, tell is controls. you make defend against believe solutions that I our in But which using we deploy how that And to cover strategy is identities. have, primary let’s privilege the make can what go our intelligent our and understand is we solutions

at JPMorgan. Essex Brian to next go We'll

ARR. you you conversions ARR for Hi. question. of quarter. and a to notice around X dynamics on think noted, in about of I for conversions. little follow regard points want But Josh, what, up subscription thank I some particularly I perpetual to you Good this bit morning, spike the with on question, Rob's had and taking and the -- help

comment the think, the So decline I anticipated guess back -- the $XX of and I also year. maintenance half I the that million, for caught in

base you future trending, installed unpack logo So and what bit adds? in are how if little those expectations could the that conversions might the be from new you're approaching maybe a for how quarters versus

business itself quarter-over-quarter. absolute really best number Sure. of as will kind as some in I And seeing jump at actually we an didn’t a forward. And the and which consistent want perpetual versus out down perpetual pipe grow. into and just maybe all, percentage. go But we're color. see is was the then even add that's little forward, what the we pretty going look It start, flat of we now, bit to even And and trailing I'll a first Josh maybe say

is definitely that, last obviously. And CyberArk. So notes at think here we're the I perpetual good business seeing its with

he actually think terms conversions I continues growth. not Josh our the but to talked conversion overall And of think single-digit from a sure gave that in a number, from perspective, be I'm about case. impact I

talk this maybe before, heard what people Xx we're a for convert, to maintenance but charge on we well. rates that You've getting conversion. although meaning do incremental believe like-to-like get not fundamentally for as Xx such upside that's when like-for-like, the big me We about we

bit compelling even with given we such going them customers two primarily in be products customers kind when want customer and and saying go. it's map. of any new a figure it's a create out next forward. years, when over such also big think We at going takes any And strong and road quarter a planning have to to products should upsell it into to out go control materialize jump of into since opportunity security not little figuring we're as that actually a buying SaaS, to core coming I not slot it We're to their makes approaching three to the to existing move and convert. to we and sense to that to we're expand you it stick And

just is are happening. uptick the ARR kind much the what in were that's decline, upper we selling not not the I not that would So due this I -- big seeing activity perpetual quarter before, of the fact the some to to about XX% we how think that's conversions. That's XXs. we we're see due in we on anymore. say And year in conversion think were and maintenance

in see down new when in ARR that really towards the You're tick respect or the half of where look are starting And we strongly maintenance coming that's of maintenance back to of anticipating we the kind down year, the XX% better, we pretty in. off. tail coming

rate million. able some shape to Price in nice maybe captured helped materialize to its see best through from has rates $X actually were the tune were overall QX, been. way Now Renewal us started the a realization in of increase perspective. they've and we to

we see So – much see we kick to half here the we the in year. in as tail-off definitely what back but QX, didn't of starting it in,

next We'll from Eric KeyBanc our question Capital Markets. Heath at take

for great results the the Thanks to there. and question great taking see

Matt could. and Just two-parter me, a if Josh, for I

all And uptick Hashi to that Just offering the first, boxes market any M&A, secondary, at in Matt. on change in (ph) in wanted I noise or relates PAM cycles sales upcoming lease? to boundary or self-managed any just ask

accelerate as areas to you interest that's Just and if look for there's Thanks. it? you of kind map product any of the road

double-click and Hashi boundary, a Hashi we competitive perspective, Specific dynamic a maybe on questions. to Great And entire would our side with from Hashi. in perspective, second Yeah. to two areas a portfolio. try of change against the And help then competitive of difference talked Management, the just and competitive vault Sure. we any any a don't landscape haven't Hashi Secrets that take from explain the and there. to be kind little about, the see there seen you bit across I'll PAM posture

fabulous groups actually get Developers and with using the going What offers on, secrets across that they manage Hashi set, board. in happens developer a a are started. tool Hashi platform local these the They're need development to vault. and

the no secrets hard their they least a for longer work they're they're as instance, So example, into locally applications for group project. at vault their on up setting And work they coding building. Hashi -- they're

store on becomes And efforts says, the And point other at security time, vault vault then that manage you're into the end at And involved it's coding there's and at going an great anymore Hashi hard enterprise. Microsoft across At back policy up end an do kind not gets how one vaults. AWS in applications. passwords But vault. scale? we Hashi development that is in enterprise on, multiple what of happens your some and secret actually or this grade, you with enterprise enterprises your sprawl key

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confident we're for Secrets options we also able those not the environments the our Hub. in with can that into competitive we competitive enterprise in secrets a only legacy and we're we're to through in backbone and it's deliver modern become that the back the that's that fight to secrets, scenarios, provide but applications And multi-cloud around that have, very able fight that

to PAM. seeing move be as boundary, ease-of-use which and it's into that then they are they would really has I a light threat down we're pivot answer as market. at over case around from play on not don't into would perspective. is some are coming And an scenario same people it journey. started we perspective PAM just it think what use who their that the And see Now competitive our Okta, within current on maybe I room for getting a But it market

strongly and feel keep it's are little about answer we dynamic enterprise we And PAM solution. looks But us. talking when bit we'll eye comes we'll Our continue around because like ready an pitches against we're be not a out and what that area it Okta's it to finally longer respond. that you give see beneficial I for and on a be it customers an of see here positioned to

similar when past. some think M&A, given we I kind perspective, think the it's of question in answers second to the about From we've

a we clear that understand, parts inorganic and it there and to is Identity on billion We to over years. have three always an continue next Identity look go five Security accelerate vision to We're Security TAM. looking a $XX method any for significantly will to vision. platform the sitting of our component -- are where at And we trying

need to but component don't we we need So go someplace to parts. accelerate else with strategy, acquisition key our might

map hear us match between and And always out nonhuman us help can talk valuation the and these that's in a us areas market something the our in about that we're how think And and forward. exciting endpoint with and really they're you hear kind get there's and realistic we going market about see road good faster organic of access us a looking to talk you to cloud about accelerate M&A if areas. and approach

from next take Roger Boyd UBS. at our We'll question

is again, quarter, execution. very definitely you But which made additions. difficult Matt, Thanks environment the in again, that quarter? you're an and customer on you Last comment congrats taking a for still the lands then new expecting was is the fewer nice perspective certainly but the this Great. a bigger result. if the expecting of think the for what XXX quarter, This color logo this question on Thanks. record mentioned any pipeline, I the that impressive the from year. And end Wondering year. through case maybe with you're

land. good and go from Yeah. I sign it see to to in QX I think because think QX really that's it in macro headwind. really And point any a we for harder up did Sure. that a was environment Thanks. sequentially a logos QX, that's mentioned We it's important us. And new XX% it's

a QX They to continue little definitely with We and which expect nice. harder the always in customer. into close deals saw new uptick longer. QX. is You're a QX, a certainly here it bit to an little take We

once size in point made selling QX price which and pretty our was dramatically fuel for results. our secondary you up and new is again, deal helped the average played those But logos absolutely average out

Security much bigger they're And bet making on so are landing CyberArk. and the ones landing with of a we are Identity the portfolio more

in really versus so the we're QX the function quarter new with really, change at and really that's step saw And happy logo QX. look and new we why we the business quarter

to at We'll Tilton go Joshua Wolfe Research. next

Hey, my the for echo of great the a my are outperforming guys. and I'll in free of flow should the any had think one actually on how on quarter. half? maybe free questions updates takes back taking -- the just for I what cash puts around and cash How congrats Thanks about some year for and we me. balance flow

all, of we're, in -- Josh. year. we we're the half -- with is full Yeah, are reported -- for through question. full year This the first glad expectations that line and for certainly in first we're with where Thanks with expectations. we're I think our the line And we of as year

puts and ask this transition you when year. about takes, still think is I a

the both talked duration some free create QX, or around which billings. revenue. as we of flow see to can of subscription, and well, And as in cash the the on on course, certainly the relates in so some self-hosted puts in about it reduction some I takes and are on as the tailwind them, maintenance we impacted saw And it that around and of duration headwind

last basis to our one as deals to initiative out deal. going year basis. down to maintenance, we're anyway, we're the of did the And a we three transition years, only a on one seeing And contracts where seeing a Since maintenance our renew for year that's the year over decline decline started three lot already for we opposed two year. last a year

with expect and the what are those puts. year, So for line we're we in this

would quarter I sure, expected. the for And we just first like played of Josh all, add, out think I as in, said, Yeah. just jumping

expand that for that we talked a and But think $XXX for starts And be as clear we I strongest that million were we going of cash put again, get of from into that our into other cash million XXXX there. said in, and want expenses areas to with remarks, the in that cash out of XXXX in pretty and $XXX we're are was it the we I'll to this some XXXX say XXXX. insurance we story upfront quarter, around in areas flow quarterization flow XXXX, flow given accelerate in the I and year to in track cash right other and the that extremely not the flow on reiterate confident I dynamic prepared next about. the kick

Super helpful. again. Thank you

our take from We'll next Borg Stifel. question at Adam

could script. the channel I in the market? Awesome in to talk down and that about have so just how Maybe Maybe even offerings broaden more and the talked much then opportunity follow-up. opportunity thanks more for bit a little reach MSP particular, for managed questions. on your partners taking and you the for Matt And introduce about a PAM that the

MSP us think market than I us. I its it is, how don't this know captivated Yeah. I for to describe mean, other

it. always I we've been at looking think

You heard this me some with talk quarter excitement.

hear talk You'll it about me now.

it's broader think actually we because it's I thought. than what

I reach you us new think a down MSPs, out, going you think help bunch think start market, it's when to of you oh, logos.

the the across on way what enterprise, seeing we're think end enterprise, out it upper down. all actually playing the dynamic is corporate I of

And within spend the sustain vast this afford cyber on enterprises. on going to support that's IT, growing trend their can't on that (ph) specifically because and really it's organizations

report value-added build the us. their if backbone it; around their And and that came like move XX% so recent or to and exciting very you Gartner you MSP think said, cyber the trend the The which that feels to out there's is a in real years. of piece spend is And I of approach. kind what of something XX% into they next as that will it’s estimated just the MSPs services line sticky get three embed offering a

only the way, wanting wanting priv-cloud. we bring not SaaS priv-cloud to to motion, see MSPs, our It's generally our market. our to bring so a by And

increasing uptake see, Management see on an we about non-human We looking as solution our and mentioned, our side. access BT We over into portfolio. Secrets

have we think out of segments great didn't just to I also adopted to to a forward. portfolio it customers, driver the specific a customer into had in going that we to growth so have days, great be MSP for built us not strong that we find broader QX and can obviously, but point we if up. out talking, partnerships start way would going I all the Early I that wins such it's the think as you types down really reach go but it's actually, I hear And new And can get believe to market. market,

mix That's great. you're a in top on financial still really I sequentially. down but Maybe to I your follow-up as have on changed what it. definition appreciate do quarter. the there Maybe it may Thanks. tick as vertical appreciate see well. I that call your the Again, anything mix, just that. the just seeing did out services in did think I quick think vertical. largest

by just jump mix. up to fact our also many growth growth is I'll manufacturing -- to Banking we nice that a we're and back mean, vertical and we financial big probably I was in our retail pharma. go in verticals saw the followed well across and still verticals. overall, Yeah. were strong well And as like in. always really diversified

business the sits. to verticals where we overall, matter we I nine X% the the the be of continue move around of that have But quarters. think them enterprise more pie we are really in and strong see across no

much so the Great. for Thanks color.

go to Securities. at We'll next Trevor Walsh JMP

morning, Good team. taking Great. question. Thanks my for

one quick as for a me. best free in Just Matt, but well. to maybe for you, chime Josh, feel

was in a the your in South play. remarks consolidation telco more mentioned prepared of it and America deal about You

bit state? around look that there be that kind when going and -- deeper start dive how of to gets tools involved if you give but little other course, naming the when playing identity kind just approximately sense many curious without Just you there there a displacement Was were, in that tools us kind there. of might see end it's a or -- if to mass names, can of how do maybe maybe consolidation their Thanks. was customer their of what's what's motion out, to a of like critical the

access enterprise Yeah. that PAM in normally case. secrets bigger what displacing Sure. and in consistent deal, consolidating tool yeah, we is, we're particular On on with in particular see which a and offering, would a was it that legacy

because started what land which and trust new other get on as in how solutions in mentioned our we the of their is are consolidation I enterprise lot foundational phrase the use order a on a And to general see happening. be this then we able we controls it on logo of market, that view to partaking it's is use foundation We PAM customers couple when offering. that they're we our of earlier, I a up privileged a is it's journey. think

with mindset we choke. it's happen in the about it's is know because we're consolidation that happen we that that That's partnership our That from secure point stack. we're of vendor. that and buying really and trust know the They idea enterprise. you're can And expand to logo. customers the first. vendor security all also better their an control our that a core just one not these idea us offer security we actually new that a that the existing market give price maybe up wake their throat one things with customer traditional footprint. as them every to in in with can And day it when we a the It's as They can

trust CyberArk. be hey, I come saying, to receiving always as a be I to actually space versus how landscape in, having again they CyberArk. CyberArk, we're so, this talk inbound the to look vendor identity ourselves. out they within and how look that trust they interesting place consolidate, you can to that's increasingly because And operate to know understand they can threat talk us oh, And that's a positioning to in the really there can hard too, get and they to they say, come

that team. an a really it's delivered we're in that deal proud they of to and in was So there that excellent position LatAm down great be the

Henderson Alex We'll at & Needham go to Company. next

-- marketplace. move quarter. about of looking C-suite dynamics be talk I are seem from been a after for hoping after execution, to specific at stability. thanks companies us strong talking two the fear at world and what to seeing Fortinet cutting be consistency could customers and an CyberArk the to you delivering after your the normalization little seems Conversely, broader print back is that the than up was set to and the you're There in people quarter spending. quarter hearing have about guys just Thanks what you Great. software the the have improved on in and that bit from view

you aggregate on overall the seeing So from are their what on C-suite intentions Thanks. are security? about spending what

they're of from that still we comment happens with customers C-suite day Yeah. landscape said, like understands is out see you point. work-from-home conversations, that work things the what hybrid that getting put threat that's controls the that Sure. developers security coming vantage in my now and understand in the They understand more, this of kind out. More can't build slow digital And the They are makes modern by that I the applications outside day there my and transformation and or harder. been organization all understanding really, purview work is mean, great being done that of have place. the And being that done worse. to to I'll it's C-suite down.

see you CyberArk the more the full up. of spend, It's I even stop, on awareness what is, think, cybersecurity not but spend, the is And cybersecurity need spend so actually going And U.S. disclosure further actually agenda. that pushes that coming to regulation more and maybe requirements Board making see out aware. say the you around even here even Board in even of the

or in its topic, to So I believe importance. think cyber elevate as continues it a not,

they make to decisions difficult and does I think in the this have prioritize. C-suite then to macro need environment,

a have those And saw that be how and make willing most it Where going environment, have going because being in haves the the that where spend that need tool then towards to And threats we're time we cyber to in-house our pipeline drive and be happy then and to in degree are results. can experts And a sets for of security it that's to in in to honest, And primary We part nots choices. discriminating do they the becomes I tight say, our to either think their the we are look see cases, reduction? a in-house choice I certainly more what I risk spend. lucky I organization think or more within the to us is with they're severe? better position. in to We're posture? they are

Kessinger We'll to Davidson. move Rudy next at D.A.

my questions. taking for Thanks Great. Hey.

for side. about Just this you but to I bit, little one applied customer think a the more Matt, talked it's new me.

how much XX%, Take You've the products. with out curious existing two customers, cross-sell conversions on I landing putting of I'm emphasis you it. motion? are XX% guess the plus talked the with about

with migrate at that talked those about cross-sell But motion? potentially and if look are you subscription road customers what products. emphasis you expansion maps them You've you how to placing on with your installed kind seeing rates with multiple much of those customers, base building are perpetual existing the

expand strong it's see, expanding think I is their PAM that and need We the our the still Identity I more But of out. sales of they're the They users motion of growth in the would some, become our And Yeah. off eating backbone to way, team they No, upsell more. seats. it by level privileged, market. to of some the story. dinners tell the you own protect the story It's Hey, is the compelling IT, story Security you're cross-sell workforce. compelling protecting of platform. because as

protecting You're lift-and-shift and hybrid on-prem protect the protect the the environment, cloud, environments.

doing You're human.

to start non-human Now and doing you need identities. machine

you capabilities, selling strong our for use are thrilled, expansion up And that us future. sets tell So such think I I would with expansion that a I would performance. our word, that's we what selling

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of well off working, that the lubricated base. really story when and kind so growth takes we And have the from

our from final at Andrew take Fargo. Nowinski question Wells We'll

you for Thank me Great. in. squeezing

wondering pipeline. So the you that on had or year then your that a -- there? the you heading Fed, was I And of positive the there that transfer comment think was quarter were impact it escalation breach. the on move hoping in used into I'm Fed Thank in have you. instances pipeline we're quarter the given fiscal could also part file this if where I as privilege many

at more understand about side credential much. them, these talking comes take the breaches, CyberArk comes back think landscape, to back we any about Yeah. threat that well-publicized think listen, to we bit escalation. when Sure. to do. I'll a Josh back too not kind sit theft. It the privilege little It of But I will things and to my when comes it we of

is help. and tell I tailwind. someone a would breached, a sales they It need come there's deal and quarter, cycle. or particularly so always the It that that it's And who's always recover more that's Obviously, you in a deals to a with quickly a few quick drives never less.

think, It said. see But in any drives And way assume the the is minute breaches these of them as it's by breach you perimeter. breach. which to it's have because an think expansion, thing growth way, enough to pipeline the organization, It's organizations causes the It what you pipeline -- out assume second we about to to the detect. down generative that we not want would enough the market part we there not the say AI. of same the to lock

inside controls factor. of and implement stops that you actually it breach to play once that inside. to reemphasizes have kind out You the somebody of the have assume that get because they're And move they already just

second your question wrap, continue Fed here before with we what to environment consistent we a To see that's we've before. seen

to People evident. more of course the end happens having that the happens buildup at quarter Now some of are we the each buy talked priority about that big versus ordinary quarter of become before, because business year. it's is kind each

business So we overall full business, global deal Identity mix. we the guidance see closed nice a vertical adopting in overall business, We into It which areas. XX% highlight really embedded the state I the overall the way, is and a in QX. We're our for think strong a government, suite. our SLED a potential our large at our our growth entity. Fed I was state Security deal local happy Fed By with of would QX

when driver get So as as we federal the traditional see market. you that well a beyond even growth

back I Cohen to for remarks. conference Matt the like conclude would closing that over question-and-answer session. does And to turn our

Yeah.

thanking really their commitment. our end to work, for want by I So their employees hard

does their I and want CyberArk. drive everybody proud to I'm the And for informative talk that thank Thanks. execution our customers. incredibly partners helping heard by you you course, thank to of all me You questions talk for about at and everything we'll business us our the soon. and

participation. concludes conference your you Thank for call. this today's And

disconnect. now may You