Q4 2021 Cyberark Software Ltd Earnings Call

Okay.

Speaker 1: Good day and thank you for standing by. Welcome to CyberArk fourth quarter and full year 2021 earnings call. At this time all participants are in a listen only mode.

Thank you for standing by welcome to cyber Ark fourth quarter and full year 2021 earnings call. At this time all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session.

Speaker 1: After the speaker presentation, there will be a question and answer session.

Speaker 1: To ask a question during the session, you will need to press star 1 on your telephone.

You ask a question during the session you will need to press star one on your telephone.

Speaker 1: Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0.

We see it by that today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today Erica Smith. Please go ahead.

Speaker 1: I would now like to hand the conference over to your speaker today, Erica Smith.

Speaker 2: Thank you, April . Good morning. Thank you for joining us today to review CyberOps fourth quarter and year end 2021.

Thank you April good morning, Thank you for joining us today to review <unk>.

Fourth quarter and year end 2021 financial results with me on the call today are really more party, chairman and Chief Executive Officer, and Josh Siegel Chief Financial Officer. After prepared remarks, we will open the call up to a question answer session before we begin.

Speaker 2: With me on the call today are Udi Mokati, Chairman and Chief Executive Officer, and Josh Segal, Chief and A-

Speaker 2: After prepared remarks, we will open the call up to a question.

Speaker 2: Before we begin, let me remind you that certain statements made on the call today may be considered referred to as Nekoto's.

Do you that certain statements made on the call today may be considered forward looking statements, which reflect managements 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 first quarter and full year 2022.

Speaker 2: which reflects management's best judgment based on currently available information.

Speaker 2: I refer specifically to the discussion of our expectations and beliefs regarding our projected results of operations for the first quarter and full year 2020.

Speaker 2: Our actual results might differ materially from those projected in these four...

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 todays press release that are posted to <unk> website.

Speaker 2: 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 today's press release that are posted to Cyberpunk's website.

Speaker 2: As well, as risks regarding our ability to continue to transition the business to a subscription model, the duration and scope of the COVID-19 pandemic. Its related impact on global economies, and our ability to adjust in response to the global to the COVID-19.

As well as risks regarding our ability to continue to transition the business to a subscription model the duration and scope of the COVID-19 pandemic its related impact on global economy, and our ability to do to adjust in response to the global entered the COVID-19 pandemic.

Speaker 2: CyberArch expressly disclaims any application or undertaking to release publicly any updates or revisions to any forward-looking statements made to the

<unk> expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statements made today.

Speaker 2: 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 session.

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 todays call. We also want to remind you that we provide the calculated revs.

Speaker 2: We also want to remind you that we provide the calculated revenue headwind for additional color on the impact of our subscription bookings...

A new headwind for additional color on the impact of our subscription bookings mix shifts.

Speaker 2: but it should not be viewed as comparable to or a substitute for reported GAAP revenues or other GAAP

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.

Speaker 3: A webcast of today's call is also available on our website in the IR section. With that, I would like to turn the call over to our Chairman and Chief Executive Officer, Udi Mulkadi. Udi? Thanks, Erica, and thanks, everyone, for joining the call this morning. It was a record-breaking year for Cyber, best characterized by transformation, outperformance, and acceleration.

With that I would like to turn the call over to our chairman and Chief Executive Officer, including more party Judy Thanks, Erica and thanks, everyone for joining the call. This morning it.

It was a record breaking year for cyber best characterized by transformation outperformance and acceleration.

Speaker 3: Momentum continued to build as we moved through 2021, culminating in a record fourth quarter. The most important takeaway from Q4 is that we experienced another step-functioning increase in demand for our platform, with our SaaS solutions driving our performance. We delivered the largest ever sequential increase in ARR, off an incredible record Q3.

Momentum continues to build as we move through 2021, culminating in a record fourth quarter.

The most important takeaway from Q4 is that we experienced another step function increase in demand for our Blackhawk with our SaaS solutions driving our performance we delivered the largest ever sequential increases here are often an incredible record Q3, so just any IRR reached $183 million.

Speaker 3: So, the Zufani RR reached $183 million, and growth accelerated to 146%.

Growth accelerated to 146%.

Speaker 3: Total ARR reached $393 million and growth accelerated to 44.

So here are reached $393 million and growth accelerated to 44%.

Speaker 3: Again, in the fourth quarter, we significantly beat our bookings assumptions, resulting in total revenue of $151 million and the 71% booking mix with a $33 million calculated revenue headlink. All above the guidance frame.

In the fourth quarter, we significantly beat our bookings assumptions, resulting in total revenue of $161 million as a 71% booking mix with a $33 million calculated revenue headwinds all above the guidance framework.

While the subscription transition mask the underlying growth of the business. If you adjust for mix of bookings our license line grew by about 40% in the fourth quarter.

Speaker 3: While the subscription transition masked the underlying growth of the business, if you adjust from Maeser's bookings, our license line grew by about 40% in the fourth quarter. Geographically, we had another perfect game. Every region outperformed our guidance framework. From every angle, it was a stellar quarter.

Geographically, we had another perfect every region outperformed our guidance framework from every angle it was a stellar quarter.

Speaker 3: Operation, we outperform against our strategic comparatives to drive growth. Execute our subscription transition, continue to deliver innovation and profitably scale our operation.

Operations, we outperformed against our strategic imperatives to drive growth execute our subscription transition continued to deliver innovation and profitably scale our operations.

Speaker 3: I will frame today's discussion around these pillars, starting with growth.

I will frame today's discussion around these pillars starting with growth.

Speaker 3: We are one of the best, we are in one of the best positions, if not the best position, to drive long-term, sustainable growth. The strong secular tailwinds of digital transformation, cloud migration, and attacker innovation gathered more steam in the fourth quarter and continued to push identity security to the center of every customer discussion.

We are one of the best we are one of the best positioned if not the best position to drive long term sustainable growth.

Strong secular tailwind on digital transformation cloud migration and the tanker innovation gathered more steam in the fourth quarter and continued to Bush identity security to the center of every customer discussion.

Speaker 3: As we all know, 2021 kicked off under the dark cloud of solar winds, and we ended the year with the log4j vulnerability, with countless attacks in between. Most recently, SISA published an advisory of a state-sponsored advanced persistent threat or ABT. In this attack and others throughout the year, stolen credentials were the common denominator leveraged in the attack.

As we all know 2021 kicked off under the dark cloud of solar ways and we ended the year with the log for Jay vulnerability with countless attacks in between most recently Cisco published advisory of a state sponsored invest persistent threat or a beauty in this attack and others throughout the year stolen credentials wasn't common denominator leveraged.

And the Apache.

Speaker 3: The threat landscape is the most aggressive that I have ever seen. With our foundation and PAN, we are in the best position of any vendor to address the identity security challenge. Our results demonstrate...

The threat landscape is the most aggressive that I have ever seen with our foundation in the past we are in the best position of any vendor to investigate any security challenge.

Our results demonstrate that enterprises agree while.

Speaker 3: While post-preciptivity is a small part of our business, we have been pulled into engagements in the wake of these attacks as the second called behind remediation.

While post breach activity is a small part of our business we have been pulled into engagements in the wake of these attacks as the second called in hydro mediation firms because of our trusted advisor status as cyber security experts.

Speaker 4: because of our trusted advisor status as cybersecurity.

Speaker 4: Beyond secular tailwinds, we make the right strategic moves at the right time. Supercharging the acceleration of our business. We formerly rolled out our transformation program early in 2021, creating centers of excellence in PAM, access, and DevSecOps. Unifying our experience under one umbrella, our customer experience under one umbrella, and driving the business towards a recurring ramp.

Beyond secular tailwind as we made the right strategic moves at the right time Supercharging the acceleration of our business, we formally rolled out our transformation program early in 2021, creating centers of excellence and Pam access Endesa coughs unifying our experience under one umbrella.

Her experience under one umbrella and driving the business towards recurring revenue.

Speaker 4: Each quarter in 2021 was significantly better than the previous. With our execution kicking into a even higher gear, I in queue for often incredible third quarter, as I'm...

Each quarter in 2021 was significantly better than the previous with our execution kicking into higher gear in Q4, often an incredible third quarter as I mentioned.

Speaker 4: Importantly, productivity is back well above 2019 levels. This, combined with the increased sales capacity, creates a strong foundation for growth in the quarters.

Importantly, productivity is back well above 2019 levels. This combined with the increased sales capacity creates a strong foundation for growth in the quarters ahead.

Sex reached yet another record with particular strength in privilege cloud endpoint privilege manager and <unk> identity.

Speaker 4: SAS reached another record with particular strength in proven cloud. Endpoint Proveage Manager and Cyborg Identity.

Speaker 4: The growth in our privilege access solutions outstripped industry estimates for 2021. On the access and DevSecOps front, the increased focus and specialized resources significantly improved our competitive position.

The growth in our privileged access solutions outstripped industry estimates for 2021 on the access and desktops from the increased focus on specialized resources significantly improved our competitive position.

Speaker 4: From a bookings perspective, access more than doubled in 2021, and we had key competitive enterprise wins for secrets management.

From a bookings perspective access more than doubled in 2021, and we had key competitive enterprise wins for secrets manager.

Speaker 4: We will talk about innovation in a bit, but secure web sessions and dynamic privilege access are game changers, moving us further ahead of the competition.

We will talk about innovation in the bid, but secure web sessions and dynamic privileged access are game changers moving us further ahead of competition.

Speaker 4: Optimizing our go-to-market machine paved the way for our record new business quarter with more than 375 new logos added during the quarter and an material increase in new business deals

Optimizing our go to market machine paved the way for a record new business quarter with more than 375, new logos added during the quarter and a material increase in new business deal sizes.

A few new wins to highlight as part of its digital transformation, a large broadcaster bought our identity security platform because of its foundation and Pam, including privileged cloud endpoint privilege manager Secrets management remote access and cloud intelligence manager.

Speaker 4: Few new wins to highlight. As part of its digital transformation, a large broadcaster bought our identity security platform because of its foundation in PAM, including privilege cloud, end-way privilege manager, sequence manager remote access, and cloud intelligence.

Speaker 4: A travel and transportation company that has outgrown a competitive palm offering is moving to privilege company because of our scalability and fast-tight value. This customer is one among many, turning the cyber arc to meet today's rigorous cyber insurance requirements, and trying to be expected pick up in 2022.

Travel and transportation company that had outgrown and competitive Pam offering is moving to privilege fell because of our scalability and fast time to value. This customer is one among many turning to sidewalks to meet today's riggers cyber insurance requirements a trend we expect to pick up in 2022.

Speaker 4: The crippling effects of ransomware contributed to our record year for EPM, and also the strong growth in PAM. Our two largest deals in the quarter were expansion from PAM into EPM. We signed our largest ever EPM deal with a European manufacturing company, and a major deal into a large US bank. In fact, EPM was an eighth of our top 10 deals in the quarter.

The crippling effects of ransomware contributed to a record year for E. P. M and also the strong growth in past our two largest deals in the quarter were expansion from pad into EPS, we signed our largest ever E. P. M deal with a European manufacturing company and a major deal into a large U S banks.

In fact ETF was in eight of our top 10 deals in the quarter.

Speaker 4: With our subscription model resonating and sat taking off the velocity of our businesses speaking up steep with customers adding on both more users and more products faster.

With our subscription model resonate and SaaS, taking off the velocity of our business is picking up steam with customers, adding on both more users and more products faster.

As examples.

Expanding from pattern into identity, a regional investment bank that has been work had been a sidebar customer since 2012 and required the efficiency of workforce identity for all of its users and as always.

Speaker 4: Depending from planning to identity, a regional investment bank that has been a cyber customer since 2012 and required the efficiency of workforce identity for all of its users and is also...

To secure web sessions.

Speaker 4: It's part of a broad pan program and existing insurance company, a customer, needed a single pane of glass for managing all human and non-human identities and expanded from core privileged access into Secret's Man.

As part of a broad Pan program and existing insurance company customer needed a single pane of glass for managing all human and nonhuman identities and expanded from core privilege access into secrets management.

Speaker 4: Traditionally, our customers have leveraged PAN as a jumping off point for their identity security programs. As our platform motion is gaining momentum, we are excited to see newer EPM and Cyber Identity customers expand into PAN. In Q4, a global food manufacturing company and Cyber Identity customer extended their Cyber Program with Privates Cloud, Remote Vendor Access, and EPM.

Traditionally our customers have leveraged pads as a jumping off point for their identity security programs as our platform motion is gaining momentum. We are excited to see newer E. P M and cyber identity customers expand into pet in Q4, a global food manufacturing company and cyber Ark identity customer extended their side of our program.

Privilege cloud remote vendor access as EPA.

Speaker 4: Stripeening our partner program was another focus area in 2021. We are deepening our relationships across our VARs, global system integrators and advisories, managed security service providers, cloud marketplace and CQPAR.

Strengthening our partner program was another focus area in 2021, we are deepening our relationships across our vast global system integrators and advisory managed security service providers cloud marketplace and seeking partners.

Speaker 4: On the cloud marketplace side, our business with AWS continued to gain traction in the fourth quarter, and our pipeline called Drupal. Marketplaces are a productive, efficient, highly scalable, complimentary new route to market for Cyborg.

On the cloud marketplace site, our business with AWS continued to gain traction in the fourth quarter and our pipeline quadrupled marketplaces are a productive efficient highly scalable complementary new route to market for Ciber.

Moving to subscription transition.

Speaker 4: Our transformation is well on its way. And as we mentioned, we outperformed again in the fourth quarter. Our SASH products continue to lead the way and we are already seeing the flywheel effect. We are confident this will result in higher lifetime value. We now have more than 890 customers with over $100,000 in annual recurring revenue.

Our transformation is well on its way and as we mentioned we outperformed again in the fourth quarter. Our SaaS products continued to lead the way and we are already seeing the flywheel effect. We are confident this will result in higher lifetime value. We now have more than 890 customers with over $100000 in ad.

Recurring revenue.

Speaker 4: Given our success in 2021, we are accelerating the transition exit and expect the reach of about 85% of bookings from subscription in the second quarter of 2022 or in just six quarters, which is well ahead of our initial timeline outline in February of 2020.

Given our success in 2021, we are accelerating the transition exit and expect to reach about 85% of bookings from subscription in the second quarter of 2022 or in just six quarters, which is well ahead of our initial timeline outlined in February of 2021.

Speaker 4: Innovation is a core pillar of our growth strategy. And in 2021, we introduced secure web sessions and dynamic privilege access. The pace of demand for secure web sessions is incredibly strong. In the first few weeks after GA, we have key width and strong pipeline heading into 2020.

Innovation is a core pillar of our growth strategy and in 2020 . One we introduced secure web sessions and dynamic privilege access the pace of demand for secure web sessions is incredibly strong in the first few weeks. After G. Eight we have key words and strong pipeline heading into 2020 to secure website sessions hardest.

Speaker 4: Secure WebSynced sessions, hardens the power of both I-Dats and PAM, providing PAM security and patrols with a frictionless user experience. It is an elegant solution and no other vendor in the market can provide this level of operational efficiency and security in a single type.

The power of both items and paths, providing pad security and controls with a frictionless user experience. It is an elegant solution and no other vendor in the market can provide this level of operational efficiency and security in a single platform.

Speaker 4: We also won early Dynamic Privage Access or DPA customers in Q4. DPA uniquely positioned Cyborg as the only vendor who secures both standing and dynamic privileges regardless of environment, from born in the cloud to hybrid to self-host.

We also won early dynamic privilege access or DPA customers in Q4 D. P. A uniquely positions <unk> as the only vendor who secures both spending and dynamic privileges regardless of environment from born in the cloud to hybrid to self hosted we are hearing from customers that the combination of DPA.

Speaker 4: We are hearing from customers that the combination of DPA and secure web sessions changes the competitive landscape for identity security. I will wrap up my

And secure web sessions changes the competitive landscape for identity security.

I will wrap up my discussion with some comments on profitability our.

Speaker 4: Our investments in 2021 delivered exceptional returns. With our strong execution, the inflection in the demand environment, and our incredibly favorable competitive position across spam, access, and depth-secOps, we plan to invest in growth and innovation in 2020.

Our investments in 2021 delivered exceptional returns with our strong execution the inflection in the demand environment and are incredibly favorable competitive position across bad access and deaths that comps we plan to invest in growth and innovation in 2022, our investments demonstrate the confidence in our unprecedented opportunity as they are.

Speaker 4: Our investments demonstrate the confidence in our unprecedented opportunity as a dentity-centric security models are now a required

That takes the entity centric security models are now a requirement our approach to investments hasn't changed we invest in step with the demands are focused on impactful spending and given our track record are confident in our ability to deliver long term profitable growth.

Speaker 4: Our approach to investment hasn't changed. We invest in step with the demand, our focus on impactful spending, and given our track record, our confidence in our ability to deliver long-term, profitable.

Our priorities heading into 2022 include complete our subscription transition by the second quarter.

Speaker 4: Our priority is heading into 2022, include. Complete our subscription transition by the second floor.

Speaker 4: Invest in our global sales organization, including our partnering ecosystem, the Drive Grown.

Invest in our global sales organization, including our partner ecosystem to drive growth protect.

Speaker 4: Protect our ARR by investing in customer success, support and service.

Protect our IRR by investing in customer success support and services.

Speaker 4: and invest in research and development to enhance our identity security platform and driving of it.

And invest in research and development to enhance our data security platform and drive innovation.

Speaker 4: With our turbocharged performance in the fourth quarter, we are in an incredible position to execute against our massive opportunity.

With our turbocharged performance in the fourth quarter, we are in an incredible position to execute against our massive opportunity.

Speaker 4: I will now turn the call over to Josh, who will discuss our financial results in more detail and provide you our outlook for the first quarter and school year 20.

I will now turn the call over to Josh who will discuss our financial results in more detail and provide you our outlook for the first quarter and full year 2022 over to you Josh. Thanks, Judy we'd like to remind you that we posted slides to the website that will be helpful. As we walk through our results. So as Judy mentioned, we had a record fourth quarter capped.

Speaker 4: Over to you, Dr. Thanks, Udi. We'd like to remind you that we posted slides to the website that will be helpful as we walk through our results.

Speaker 4: So as Judy mentioned, we had a record fourth quarter capping off an incredible year of acceleration, out performance and transformation. In terms of the headline P&L, we generated record total revenue above the high end of the range of $151.3 million in the fourth quarter with a 71% mix of subscription bookings. That is the head of our guidance framework of the 68%.

Off an incredible year of acceleration outperformance in transformation in terms of the headline P&L, we generated record total revenue above the high end of the range of $151 $3 million in the fourth quarter with a 71% mix of subscription bookings that is ahead of our guidance framework of the <unk>.

68% mix, we were thrilled to again see both revenue and mixed outperformance really a great demonstration of the strength in our bookings before.

Speaker 4: We were thrilled to again see both revenue and mixed out performance really a great demonstration of the strength in our booking.

Speaker 4: Before taking deeper into the P&L revenue, I want to highlight our annual recurring revenue, which illustrates the step function change in the demand environment for the fourth quarter.

Before digging deeper into the P&L revenue I want to highlight our annual recurring revenue, which illustrates the step function change in the demand environment for the fourth quarter, we experienced our largest ever sequential increase adding $44 million to the subscription or are in the fourth quarter alone the subscription portion of our annual <unk>.

Speaker 4: We experienced our largest ever sequential increase, adding $44 million to the subscription ARR in the fourth quarter alone. The subscription portion of our annual recurring revenue reached $183 million, representing over 46% of the total, and year-over-year growth, accelerating to 146%.

Occurring revenue reached $183 million, representing over 46% of the total and year over year growth accelerating to 146%.

Speaker 4: Just one year ago, the subscription portion was only 74 million or 27% of total.

Just one year ago, the subscription portion was only $74 million or 27% of total.

Speaker 4: Our total ARR was $393 million. That is an acceleration to 44% year on year versus 38% year growth that we showed in the third quarter of 2021.

Our total a R. R was $393 million that is an acceleration to 44% year on year versus 38% year growth that we showed in the third quarter of 2021.

Speaker 4: The maintenance portion was $210 million at December 31 and reflects our strong renewal rates. The acceleration in our ARR is driven by the strong demand environment, transformation of our business, and great execution of our go-to-market engine, all of which sets us up very well for 2022 and beyond.

The maintenance portion was $210 million at December 31 reflects our strong renewal rates the acceleration in our E. R. R is driven by the strong demand environment transformation of our business and great execution of our go to market engine, all of which sets us up very well for 2022 M b.

And.

Speaker 4: In addition, we are pleased with our increased visibility from the strong execution of our transition. We ended 2021 with remaining performance obligation of $516 million, that is 42% growth from year end 2020.

In addition, we are pleased with our increased visibility from the strong execution of our transition. We ended 2021 with remaining performance obligation of $516 million that is 42% growth from year end 2020.

Speaker 4: Moving to revenue, subscription revenue that includes SaaS and Stalfosit subscription reached $47.6 million and represented 31% of total revenue in the fourth quarter. That's increasing 142%.

Moving to revenue subscription revenue that includes SaaS and self hosted subscription reached $47 $6 million and represented 31% of total revenue in the in the fourth quarter, that's increasing a 142%.

Speaker 4: Consistent with our transition progress, perpetual license revenue declined to 38.7 million. Our maintenance and professional services revenue was $65.1 million with $55.3 million coming from recurring maintenance and $9.8 million in professional services revenue.

Consistent with our transition progress perpetual license revenue declined to $38 7 million, our maintenance and professional services revenue was $65 $1 million with $55 3 million coming from recurring maintenance and $9 $8 million and professional services revenue.

Recurring.

Speaker 4: Recurring revenue defined as our total subscription plus our maintenance related to perpetual license revenue reached $102.9 million or 68% of total revenue growing 48% year on year. We continue to have a SaaS heavy transition with nearly 50% of our total bookings coming from SaaS. With our mix reaching 71% in the fourth quarter, we have made great progress transforming cyborg into a subscription company.

Revenue defined as our total subscription plus maintenance related to perpetual license revenue reached $102.9 million or 68% of total revenue growing 48% year on year.

We continue to have a SaaS every transition with nearly 50% of our total bookings coming from SaaS with our mix, reaching 71% in the fourth quarter. We have made great progress transforming <unk> into a subscription company.

Speaker 4: Economically, the headwind created by the MIX was approximately $33 million in the fourth quarter. When we compare it like for like to the MIX in the fourth quarter 2020.

Economically the headwind created by the mix was approximately $33 million in the fourth quarter, when we compare it like for like to the mix in the fourth quarter 2020.

Speaker 4: Normalizing for the mixed shift, growth in the license portion of the business, our staff, self-hosted subscription and perpetual, would have grown about 40% and demonstrates the underlying growth in the business.

Normalizing for the mix shift growth in the license portion of the business, our SaaS self hosted subscription and perpetual would've grown about 40% and demonstrates the underlying growth in the business.

Speaker 4: Taking the calculated revenue into consideration, total revenue growth would have accelerated to 28% year on year.

The calculated revenue into consideration total revenue growth would have accelerated to 28% year on year.

Speaker 4: New business also accelerated in the quarter. We signed more than 375 new customers, and that's a record. New business average deal size is also increased by just over 20% in the fourth quarter, driven by strong demand for SaaS in particular.

New business also accelerated in the quarter, we signed more than 375, new customers and that's a record new business average deal sizes also increased by just over 20% in the fourth quarter driven by strong demand for SaaS in particular.

Speaker 4: Geographically, the business is well-versified. The Americas generated $86.2 million in revenue representing 57% of total revenue. The Americas again had the strongest percentage of SaaS bookings during the quarter. EMEA had $49.3 million in revenue or 33% of total revenue with SaaS bookings more than doubling over the last year.

Geographically the business is well diversified the Americas generated $86 $2 million in revenue, representing 57% of total revenue. The Americas again had the strongest percentage of SaaS bookings during the quarter.

EMEA had $49 $3 million in revenue or 33% of total revenue with SaaS bookings more than doubling over the last year.

Speaker 4: APJ generated $15.8 million in revenue or 10% of total revenue with SASS and subscription now over 50% of bookings for that quarter.

A P J generated $15.8 million in revenue or 10% of total revenue with SaaS and subscription now over 50% of bookings for that quarter.

Speaker 4: If we looked across the geographies, adjusted for the calculated revenue headwind, created by the mix, each region would have grown by over 25% in license revenue, with our license line growing over 25% in Emea, about 45% in America's, and over 60% in APJ.

If we look across the geographies adjusted for the calculated revenue headwind created by the mix each region would have grown by over 25% and license revenue with our license line growing over 25% and EMEA about 45% in the Americas and over 60% and a P. J.

Speaker 4: Normalizing for the revenue headwind, our license line grew over 30% in each region on a four-year base.

Normalizing for the revenue headwind our license line grew over 30% in each region on a full year basis.

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

Speaker 4: All light items of the P&L will now be discussed on a non-gap basis. Please see the full gap to non-gap reconciliation in the tables of our press release.

Speaker 4: Our fourth quarter gross profit was $130.1 million or an 86% gross margin. That's compared with 88% gross margin in the fourth quarter last year. Primarily the result of the increase in our staff business in 2021.

Our fourth quarter gross profit was $130 $1 million or an 86% gross margin as compared with 88% gross margin in the fourth quarter last year, primarily the result of the increase in our SaaS business in 2021.

Speaker 4: We continue to make investments to drive innovation and growth, resulting in operating expenses of $113.8 million, a 31% increase year on year, an operating income of $16.3 million in the quarter, significantly beating the high end of our guidance.

We continued to make investments to drive innovation and growth, resulting in operating expenses of $113 $8 million at 31% increase year on year and operating income of $16 $3 million in the quarter significantly, beating the high end of our guidance.

Speaker 4: It is important to remember that our operating income is lowered by $2.2 million from far in exchange and the approximately $33 million calculated revenue headwinds.

It is important to remember that our operating income is lower by $2 $2 million from foreign exchange and the approximately $33 million calculated revenue headwind.

Speaker 4: Isolating for the calculated revenue headwind are operating margin would have been approximately 26% and adjusting for the FX impact the margin would have increased by another 2 points to 28% in the fourth quarter of 2021.

Isolating for the calculated revenue headwind, our operating margin would've been approximately 26% and adjusting for the FX impact the margin would have increased by another two points to 28% in the fourth quarter of 2021.

Speaker 4: That income was $11.8 million or 28 cents per diluted share for the fourth quarter. For the full year.

Net income was $11 $8 million or 28 cents per diluted share for the fourth quarter for the full year.

Speaker 4: Revenue was over $500 million and that's a great milestone for Cyborg, reaching $502.9 million with a 66% subscription book in mix for the year.

Revenue was over $500 million and that's a great milestone for cyber Ark, reaching $502.9 million with a 66% subscription bookings mix for the year.

Speaker 4: This resulted in a $74 million calculated headwind for the full year. And taking the economic impact from the headwind into consideration, the year on year comparison would be over 35% license revenue growth and 24% total revenue.

This resulted in a $74 million calculated headwind for.

For the full year and taking the economic impact from the headwind into consideration the year on year comparison would be over 35% license revenue growth and 24% total revenue growth.

Speaker 4: To underscore how great a year 2021 was for Cyborg, I wanted to reflect on the guidance we set in February 2021. The top of our revenue range was $496 million, and that assumed a 55% mix and a $39 million headwind.

To underscore how great a year 2021 was for cyber Ark I wanted to reflect on the guidance. We set in February 2021, the top of our revenue range was $496 million and that assumed a 55% mix and a 39 million dollar headwind.

Speaker 4: We generated revenue above the range and our mix reached 66% or 11% of points above our framework, which resulted in a total calculated revenue headwind in 2021 of $74 million. The bookings underlying our results materially beat the assumptions in our guidance.

We generated revenue above the range and our mix reached 66% or 11 percentage points above our framework, which resulted in a total calculated revenue headwind in 2020 one of $74 million the bookings underlying our results materially beat the assumptions in our guidance.

As Rudy mentioned, there was a step up function increase in demand for our solutions with momentum building both in our bookings.

Speaker 4: There was a step up function increase in demand for our solutions with momentum building both in our bookings and in our pipeline as we moved through the year.

And in our pipeline as we moved through the year.

Speaker 4: Moving to the full year P&L, operating expenses increased by 31% as we invested to deliver against a strong demand. Operating income was $23.9 million and our EPS was 33 cents per diluted share for the full year.

Moving to the full year P&L operating expenses increased by 31% as we invested to deliver against the strong demand operating income was $23 $9 million and our EPS was 33 cents per diluted share for the full year.

We.

Speaker 4: We continue to attract and retain top talent, a testament to our culture and our success in the market, adding 450 new employees in 2021, the highest number in a single year.

To attract and retain top talent, a testament to our culture and our success in the market, adding 450, new employees in 2020 , one the highest number in a single year.

Speaker 4: We ended December with over 2,100 employees worldwide, with 942 employees in sales and markets.

We ended December with over 2100 employees worldwide with 942 employees in sales and marketing.

Speaker 4: For the full year 2021, free cash flow was $65.8 million or 13% free cash flow margin. This cash flow contributed to our strong balance sheet and we now ended the quarter with $1.2 billion in cash and investments.

For the full year 2021 free cash flow was $65 $8 million or 13% free cash flow margin. This cash flow contributed to our strong balance sheet and we now ended the quarter with $1 $2 billion in cash and investments.

Turning to our guidance.

Speaker 4: Our guidance for the first quarter of 2022 and the full year reflects the robust industry, tailwinds, our record pipeline bill, incredible execution and the acceleration in our book.

Our guidance for the first quarter of 2022 and the full year reflects the robust industry two wins, a record pipeline build incredible execution and the acceleration in our bookings and so for the first quarter of 'twenty 'twenty. Two we expect total revenue of $125 million to $133 million, we expect a non-GAAP operating loss.

Speaker 4: And so for the first quarter of 2022, we expect total revenue of $125 to $133 million. We expect a non-gap operating loss of about $16 million to $9 million for the first quarter. We expect our EPS to range from a non-gap net loss of 42 cents to 25 cents per basic and diluted share.

Of about 16 million to $9 million for the first quarter, we expect our EPS to range from a non-GAAP net loss of 42 cents to <unk> 25 cents per basic and diluted share.

Speaker 4: The guidance assumes a jump up to about 79% of subscription bookings mix and a calculated revenue and profitability headwind of approximately $13 million for the first quarter of 2020.

The guidance assumes that jumped up to about 79% of subscription bookings mix and a calculated revenue and profitability headwind of approximately $13 million for the first quarter of 2022.

So if you isolate our license lines of SaaS self hosted subscription and perpetual the normalized growth rate taking into account the calculated revenue headwind for the first quarter would be over 50% year on year for just the license portion.

Speaker 4: So if you isolated our license lines of SAS, self-hosted subscription and perpetual, the normalized growth rate taking into account the calculated revven new headwind for the first quarter would be over 50% year on year for just the license portion.

Similarly for the total revenue the growth rate would be a 26%.

Speaker 4: Similarly, for the total revenue, the growth rate would be a 26% at the midpoint of the range, taking in the headwind into account. Our guidance also assumes 40.3 million basic shares and basic and diluted shares in about $2 million in time.

At the midpoint of the range taking in the headwind into account our guidance also assumes $40 3 million basic shares.

And basic and diluted shares and about $2 million in taxes.

Speaker 4: Looking at the full year 2022, we expect total revenue in the range of $592 to $598 million.

Looking at the full year 2022 we expect total revenue in the range of 582 to 580 $598 million.

Speaker 4: The mixed assumption underlying our guidance for the four years 85% from subscription bookings and our revenue headwind is approximately $53 million.

The midst assumption underlying our guidance for the full year is 85% from subscription bookings and a revenue headwind is approximately $53 million.

And now moving down the P&L for the full year, we expect non-GAAP operating loss to be between $34 million and $20 million, we expect our non-GAAP net loss per basic and diluted share to be in the range of 90 864 cents and for the full year, we expect about $40 7 million basic and diluted shares at about $10 million in taxes.

Speaker 4: And now moving down the P&L. For the full year, we expect non-GAP operating loss to be between $34 million and $20 million. We expect our non-GAP net loss for basic and diluted share to be in the range of 98 cents to 64 cents. And for the full year, we expect about $40.7 million basic and diluted shares and about $10 million in tax.

For the full year the increase in our expenses are related to four more major areas increasing investments in our cloud infrastructure to support our record SaaS bookings in 'twenty, 'twenty, one which will lower our gross margin for the full year to between about 80 and 81%.

Speaker 4: For the full year, the increase in our expenses are related to four major areas. Increasing investments in our cloud infrastructure to support our record SaaS bookings in 2021, which will lower our growth margin for the full year to between about 80 and 81%.

Speaker 4: Changes in exchange rates are increasing our expenses by about $7 million over 2021 in particular for R&D and GNA

Changes in exchange rates are increasing our expenses by about $7 million over 2020 , one in particular for R&D and G&A.

Speaker 4: We are continuing to make critical investments in R&D, including our SaaS and Self-Osted Solutions.

We are continuing to make critical investments in R&D, including our SaaS and cell phone <unk> solutions and lastly, the investments in sales and marketing we have deep conviction in the opportunity and our incredibly strong competitive position and more importantly, our productivity levels continue to increase our win rates are strong and our <unk>.

Speaker 4: And lastly, the investments in sales and marketing. We have deep conviction in the opportunity and our incredibly strong competitive position. More importantly, our productivity levels continue to increase. Our wind rates are strong, and our pipeline is at record levels, which supports productively stepping up our investments to help ensure we capture the opportunity and sustain our strong growth in 2022 and beyond.

Pipeline is at record levels, which supports productively stepping up our investments to help ensure we capture the opportunity and sustain our strong growth in 2020 two and beyond.

Speaker 4: At our investor day in March of 2021, we discussed the trajectory of the transition, which we expected to take eight to 10 quarters, and ARR to grow at about 30% through the transition. Given our success in 21, we now expect to hit our original transition target of about an 85% mix from subscription bookings already in the second quarter of this year, or only six quarters from when the transition kicked off in the first quarter last year.

At our Investor day in March of 2021 we discuss the trajectory of the transition, which we expect it to take eight to 10 quarters in a R. R to grow at about 30% through the transition.

Given our success in 'twenty, one we now expect to hit our original transition target of about an 85% mix from subscription bookings already in the second quarter of this year.

Only six quarters from when the transition kicked off in the first quarter last year.

As we have consistently pulled into subscription timeline it impacts both the growth and profitability curves of the transition.

Speaker 4: As we have consistently pulled in the subscription timeline, it impacts both the growth and profitability curves of the transition.

Speaker 4: The rebound and revenue is already starting in 2022 with 17% growth and about 32% growth in the license lines expected at the midpoint of the guidance ring.

The rebound in revenue is already starting in 2022 with 17% growth and about 32% growth in the license line is expected at the midpoint of the guidance range.

As with any transition a faster timeline has an impact on the bottom line, creating a deeper near term bottom in margins, while the shape of the transition in terms of revenue growth and operating margin is relatively consistent the slope of the curves we talked about in March last year are steeper with a faster transition now.

Speaker 4: As with any transition, a faster timeline has an impact on the bottom line creating a deeper near-term bottom in margins. While the shape of the transition in terms of revenue growth and operating margin is relatively consistent, the slope of the curves we talked about in March last year are steeper with a faster transition now.

Given the acceleration in our business, we expect annual recurring revenue to be between 530 and $536 million at December 31, 'twenty, 'twenty, two or 36% growth year on year at the midpoint as.

Speaker 4: Given the acceleration in our business, we expect annual recurring revenue to be between $530 and $536 million at December 31, 2022, or 36% growth year on year at the mid-

Speaker 4: As we look into 2022, we do expect the maintenance portion of ARR to begin to decline. While this drag, while this will drag the total growth rate, we expect rapid growth in the subscription portion.

As we look into 2022, we do expect the maintenance portion of it a R. R to begin to decline while this drag while this will drag the total growth rate, we expect rapid growth in the subscription portion.

Speaker 4: With our strong performance in 2021, we are on our way to meet $1 billion ARR target, which we now believe we can achieve already by June of 2025.

With our strong performance in 2020 . One we are on our way to meet 1 billion dollar a or our target, which we now believe we can achieve already by June of 2025.

Speaker 4: In terms of free cash flow, we anticipate that it will be in line with our non-gab net income margin over a 12 month period. We also expect capital expenditures to be in the range of $15 million and $16 million, which represents just about 30% of revenue at the midpoint.

In terms of free cash flow, we anticipate that it will that will be in line with our non-GAAP net income margin over a 12 month period. We also expect capital expenditures to be in the range of 15 and $16 million, which represents just about under 3% of revenue at the midpoint.

Speaker 4: The fourth quarter was a standout quarter to round off an amazing year at CyberArc. The business is firing on all cylinders. As we look ahead, we expect to hit our subscription transition target goal much faster than we originally anticipated. Our sustainable growth drivers, paired with outstanding execution from our team, put us in a great position to deliver long-term growth and profitability. I will now turn the call over to the operator.

The fourth quarter was a standout quarter to round off an amazing year cyber Ark. The business is firing on all cylinders. As we look ahead, we expect to hit our subscription transition target goal much faster than we originally anticipated our sustainable growth drivers paired with outstanding execution from our team.

Put us in a great position to deliver long term growth and profitability.

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

Operator.

Speaker 1: As I reminder to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound or hash key. Please try to limit yourself to one question. We'll pause for a second.

As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound or housekeeping. Please try to limit yourself to one question.

Pause for just a moment to compile the Q&A roster.

And your first question is from Sam <unk> with Barclays capital.

Speaker 1: And your first question is from socket calia with bark lace.

Speaker 5: Okay, great. Hey guys, thanks for taking my question here. Great to see the ARR acceleration.

Okay, Great Hey, guys. Thanks for taking my question here, great to see the acceleration.

Thank you.

Speaker 5: Maybe if I can, just a two-part question that's kind of related for both of you.

Maybe maybe if I can just just a two part question kind of related for both of you.

Speaker 5: Ooty again on the ARR acceleration, just starting high level. What do you think is driving the demand? It sounds different, so I'm just kind of curious how you position that. And then Josh, for you, the guide for next year assumes nice growth in net new. You know, you touch on some of this and you're prepared remarks, but can you just kind of lay out a little bit more about sort of what gives you the confidence in guiding to that healthy net new ARR? Sorry, there's a lot there, but all that makes sense.

Again on the AOR acceleration just starting high level. What do you think is driving the demand it sounds different so I'm just kind of curious how do you position that and then Josh for you.

For next year assumes nice growth in net new.

You touched on some of this in your prepared remarks, but can you. Just can you just kind of lay out a little bit more about sort of what gives you the confidence in guiding to that that healthy net new IRR sorry, there's a lot there, but does all that makes sense.

Speaker 4: Absolutely. So I'll kick it off. We've been reading, executed, I would say executed, and fired all cylinders against a strong and growing demand environment. What we've seen is that companies are recognizing the importance of PAM and identity security as that layer and the platform you need in an assumed reach environment. And this heightened threat environment, whether either back to, of all the abilities, like Lockford J or SolarWinds and others, you have to assume reach. And we call it the assume identity. What are the attackers going to go after? How will they propagate the attack? And also identity as a landing point. And so our organizations are aware of the importance of this layer with Prove Jackson's management at the spender and of course expanding to identity security controls. And they partner with the market leader in the space that can support their complex hybrid environment and continuously invest in innovation. I would say that we're in one of the most best competitive positions we've ever been.

Absolutely so I'll kick it off.

We really executed.

I would say execute in firing all cylinders against a strong and growing demand environment. What we're seeing is that companies are recognizing the importance of Pam and and identity security and that is that layer on the platform you need in an assumed breach environment than this and there is heightened threat environment.

Whether either.

Two of vulnerabilities might block for Jay or solar winds in others, you have to assume reach and we call. It assume identity. What are the attackers are going to go after how will they propagate the attack.

And also I, then here's a landing point and so organizations are or are aware of the importance of this layer.

The privilege access management that the sensor on it and of course expanding to identity security controls on they partner with the market leader in the space that can support.

They're complex hybrid environment and continuously investing in innovation I would say that we're in and one of the most best competitive positions we have ever been.

Speaker 4: very clear if you look at the growth of the business in 21 that in the light of industry industry reports, analyst reports that we're taking market share. So except going after this demand and executing against it and always innovating so that the customers see that we have their back for the long run.

It's very clear if you look at the growth of the business in 'twenty one that died in the.

In light of our industry industry reports the island's reports are that we're taking market share.

So exit going after this demand and.

And are executing against it and always innovating so that the customers see that we have their back for it for the long run.

Speaker 6: And second, I'll add to the follow-up of your question, you know.

Yeah in in a second I'll I'll add to the follow up of your question. You know you know based off of also Woody just talked about in terms of the in terms of the demand environment I can look under the Hood and we talked about record again record pipeline growth during last year. So we look at our pipeline levels and our win rates.

Speaker 6: you know, based off of what Udi just talked about in terms of the demand environment, you know, I can look under the hood and we talked about record, again, record pipeline growth during last year, so we look at our pipeline levels and our win rate.

We also look at the execution that we're going that we're coming out of Q4 with that we're going into a into this year with in our productivity levels.

Speaker 6: We also looked at the execution that we're coming out of Q4Wid, that we're going into this year with and our productivity levels.

Speaker 6: from our from our go-to-market teams in the in the last quarter and really over the last several quarters.

From a from a from a go to market teams are in the in the last quarter and really over the last several quarters.

Speaker 6: And I think the third point is that we, you know, we talked about the hiring this year. We have built capacity to be able to meet that, that accelerating demand environment. And so we really are confident about how we look at 2022. Make sense. Thanks, guys.

And I think the third point is is that we you know we talked about the hiring this year, we have built capacity to be able to meet that that accelerating demand environment and so.

We really are confident about how we look at 2022.

Makes sense thanks, guys. Thank.

Thank you.

Your next question is from Jonathan Ho with William Blair.

Speaker 7: Hi, good morning and let me echo my congratulations on a very strong quarter as well. I guess one thing I wanted to understand a little bit better is, where do you see this opportunity to incrementally invest on the sales and marketing side? Are there any particular geographies or verticals or is it these new marketplaces? It can just really help us understand, you know, just given the strong backdrop, you know, where you can have the most impact. Thank you.

Hi, Good morning, and let me Echo my congratulations on a very strong quarter, it's well I guess, one thing I wanted to understand a little bit better is where do you see this opportunity to incrementally invest on the sales and marketing side are there any particular geographies or verticals or is it these new marketplaces.

But can you just really help us understand you know.

Just given the strong backdrop.

Where you can have the most impact thank you.

Yes, right now, we're seeing demand increase both in enterprise and in our and in our commercial.

Speaker 4: Yeah, right now we're seeing demand increase both in enterprise and in our commercial business and we're going across those two, I would say, dimension and globally. So the global opportunity across the organization, we of course, the partners are right in step with us. There's investment in everything that has to do with increasing our work with the channel partners around the world. And then of course, everything that we're doing around securing the ARR around customer success and walking our customers through this cycle. We're very excited to see the platform in play and some of the examples I gave of customers really moving cross products and taking more users also going cross products. And of course, we have the speedboats.

<unk> business and we're going across those two.

I would say that mentioned and globally. So there's the global opportunity across the organization.

We of course, the partners are right in step with us Theres the investment and everything has to do with increasing our work with the channel partners around the world.

Then of course everything that we're doing around securing all of the E. R. R round around customer success and walking our customers through this the.

Cycled, we're very excited to see the platform and play in some of the examples I gave of the of customers really.

Really really really moving.

Cross products is it taking more users also going cross products and of course, we have the speedboats that our unique motion for us for both for both access and in our SEC ops and that's another part of our investment so in all of the above and <unk> and we're confident that we're like we signed 21 that we will see greater portions of that.

Speaker 4: then our unique motion for us for both access and depth tech ops and that's another part of our investment. So in all of the above and and we're confident that like we signed 21 that we'll see great advertisement efforts from now.

Your next question is from Hamzah <unk> with Morgan Stanley .

Speaker 8: Hey guys, thank you for taking my question. I wanted to follow up on a question in line with what socket asked.

Hey, guys. Thanks for taking my question.

Wanted to follow up on a question and in line with what socket.

Speaker 8: So, Josh, for you, we've obviously did a great job highlighting a lot of the Go drivers for 2022.

So Josh for you.

You, obviously did a great job highlighting allowed the growth drivers.

2022.

Speaker 8: If I look at your ARR guide,

If I look at your.

<unk> guide.

Speaker 8: And I assume maintenance is the less the fumigest they flat. You're guiding for about a 30% growth in net new sub there are after what was a really strong acceleration in 21. So I'm curious how much of that is attributed to this demand inflection that you've spoken in the back half of last year versus a faster transit.

And I assume you know maintenance, let's assume it stays flat.

You're guiding for about 30% growth and net new sub there are after what was a really strong acceleration in 'twenty, one so I'm curious.

How much of that is attributed to the demand inflection that you've spoken so clearly about in the back half of last year versus.

A faster transition and.

Speaker 8: Put it bluntly, do you feel like you've given yourself enough wiggle room to really outperform like you did last year?

To put it bluntly do you feel like you've given yourself enough wiggle room to really outperform like you did last year.

Yeah.

Speaker 6: Yeah, you know, thanks. And I think you got a right. And it was important that you talked about the maintenance piece of the ARR as well, because we do actually, and I called it out in my prepared remarks, that we will probably start to see the decline even in the maintenance ARR, but then the super growth rate on the subscription piece of the ARR. And I...

And I think you've got it right.

It was important that you talked about the maintenance piece of D. A R. R as well because we do actually and I called it out in my prepared remarks that we can we will probably see start to see the decline EBIT.

In the on the on the maintenance there are but then the than the than the super growth rate on the subscription piece of the E. R R and ER.

Speaker 6: The confidence again, it's really coming from, first of all, the faster transition and also the fast heavy side of the transition. And we're seeing privilege cloud really, really being a big piece of that. And not just, and we're also seeing privilege cloud also going even further up market. And we talked a little bit about our average deal sizes going up.

The confidence again, and it's really coming from first of all the faster transition and also the SaaS heavy side of the transition and we're seeing privilege cloud really really being a big piece of that and not just and we're also seeing privilege cloud also going even further up market and we talked a little bit about our average deal size is going up.

As well, especially for new logos, and it's and it's really a it's.

It's really tied to privilege cloud success also further up market and the value that that our customers in the enterprise, we're seeing in the subscription packages and end on for this further for the self hosted.

As well so you know.

Thank you.

Speaker 6: You know, we feel confident about the AR growth, you know, about overachieving. You know, we put out the number and our guidance, you know, that we feel comfortable given while given the information we have in front of us. You know, we had great execution in 2021, but you know, for now, the guide is the guide, but absolutely the demand environment is there for us to invest in. Your next question is from Sterling Audi with JP Morgan.

We feel confident about the R. E. R. R growth you know about overachieve. It you know we put out the number in our guidance that we feel comfortable.

Even given the you know the information we have in front of US we had great execution in 2020 , one but the for.

Speaker 6: you know we had great execution 2021 but uh... you know the for now the the guide is the guide absolutely the demand environment uh... uh... is there for for us to invest in

For now the guide is the guide, but absolutely the the demand environment.

Is there for us to invest in.

Your next question is from Sterling Auty with J P. Morgan.

Speaker 5: Hey, this is Doug on from Sterling. Thank you for taking my questions. So in regards to the growth in subscription revenue, you talk about how much of that is coming from new versus existing customers.

Hey, this is Doug on for Sterling. Thank you for taking my question.

So in regards to the growth in subscription revenue can you talk about how much of that is coming from new versus existing customers.

Yeah, if we look at the if we look at our a R. R. <unk>.

Speaker 6: Yeah, if we look at our, if we look at our, AR, our incremental, we're seeing about third, about third, a bit coming from new customers and the balance coming from existing customers.

Incremental we're seeing about third about third of it coming from new customers and the balance coming from our existing customers.

Okay, great. Thank you.

Thanks, Doug.

Your next question is from Rob Owens with Piper Sandler.

Great. Good morning, guys. Thanks for taking my question wanted double click a little bit around the depths that cops portfolio to understand.

Speaker 8: Great, good morning guys. Thanks for taking my question. Want to double click a little bit around the DevSecOps portfolio to understand. Is a lot of that coming from new customers? Is it an add-on? Is it being added into deals? So is it the actual tip of the spear with new customer acquisition in some cases? Are you seeing it more as part of a suite? Is customers are looking at this more holistically?

Is a lot of that coming from new customers is it an add on is it being added into deals. So is it the actual tip of the spear with new customer acquisition in some cases are you seeing it more.

As part of a suite as customers are looking at this more holistically.

Speaker 4: Absolutely Rob. Yeah, I would say this of the spear are much or new tips of the spear are much more EPN and cyber identity as as new landing Uplaces for us and strategically and that that that was our plan The sequence management and the depth-secOps portfolio is much more of Anon business to existing customers as they expand from From the humans to to machine identities

Absolutely, Rob, Yes, I would say some of the spear are much are our new tips of the spear are much more E. P. M. At the cyber Ark identity as well as new landing places for us and strategically and not that that was our plan.

The secrets management and the depths Tech ops.

Portfolio is much more of an.

Add on business to existing customers as they expand from from.

From the humans to to machine identities and and as people really supports that motion with a with an overlay team.

Speaker 4: And the people really support SPAT motion with an overlay team to cater to those needs. And of course, customers want that full platform that covers both the human and the machine.

To cater to those are amazing and of course customers want that that full platform that covers both the human and machine.

Machine and so that's that.

Speaker 4: And so that's primarily the case. And it's part of the cyber blueprint on how we guide customers to go deep in identity security. Thank you.

It's primarily.

The case and it's part of a sidebar blueprint on how we guide customers to to go deep in identity security.

Thank you.

Thank you.

Your next question is from Gregg Moskowitz with Mizuho.

Speaker 9: Yes, hi, this is Mike on for Greg. Thanks for taking the question. I was just wondering, have you made any changes to your sales incentives in 2022

Yes, Hi, this is Mike <unk> on for Greg Thanks for taking the question.

I was just wondering have you made any changes to your sales incentives in 2022 to increase the emphasis of SaaS visa fee perpetual licenses or perhaps even term licenses.

Speaker 4: Yeah, we made, I would say that the major transitions were in 2021, but I would say that we further retrofitted it up in 2022. And we recently had our global kickoff, and it's very clear that we are incentivizing our team to sell fast.

Yes, we made we made that I would say that the major major transitions. We're in in in 2021 'twenty, one, but I would say that we further.

Ratcheted it up in a in 2022, and we recently had our our global kickoff and it's and it's very clear that we are we are.

Incentivising.

Our team to sell SaaS.

Subscription for sure. So I would say a further a further ratchet up of some of the things we put in motion in the 2021 already.

Speaker 4: So I would say my further ratchet up of some of the things we put in motion in 2021 already. Great, thanks.

Great. Thanks.

Thank you.

Your next question is from Brian Essex with Goldman Sachs.

Hi, Good morning, and thank you for taking the question maybe just one for Judy.

Speaker 3: Hi, good morning, and thank you for taking a question. Maybe just one for UD. You know, and maybe more of a longer term strategic type of a question, but if we think about the growing number of enterprise class companies with cloud native architecture, I'm thinking more like a, I don't know, Zoom or Airbnb.

And maybe more of a longer term strategic type of a question, but if we think about the growing number of enterprise class companies with cloud Native architecture, I'm thinking more like a zoom or airbnb.

Speaker 3: I know it's early stages, but maybe you can hit on free areas in particular. You're seeing those types of customers invest in privilege cloud or privilege access differently than those more traditional hybrid models. How do their privilege access strategy and attach evolve over time and how different is your go-to market for those deals as you know is your establishing cyber to compete in cyber to compete in those markets.

I know, it's early stages, but maybe you can hit on three areas in particular.

I'm curious to see how youre seeing those types of customers.

Invest in privilege cloud where privileged access.

Differently than those more traditional hybrid models, how do they have privilege access strategy and attach evolve over time and how different is your go to market for those deals.

As youre, establishing ciber to compete in cyber ought to compete in those markets.

Oh, absolutely I think one of the important strategic initiatives for us is to cater to all types of enterprises.

Speaker 4: No, absolutely. I think one of the important strategic initiatives for us is to cater to all types of enterprises. When we're actually seeing a growing success in board and the cloud type entities, because we give them so much optionally, they can consume privileged cloud as a service. They can consume our EPM as a landing point for least privilege on the end point and also our new innovations around like the PA, the Dynamic Privilege Act, allows them to manage workloads in the just-in-time environment. I would say with some of them, the landing and the beginning part would be different from a hybrid environment. They may look at more traditional core assets to start with first, the Defending Act of the Directory, Defending Critical Service. But the opportunity is very large. They typically have a large number of users, cloud-native or board-on-the-cloud, a large number of users, both from Privilege user definition and of course from a workforce definition. And a large number of machine identities that we can help solve with our customers.

And we're actually seeing our growing success in and born in the cloud Titan.

Titan pilot type entities, because we give them so much optionality they can consume.

<unk> cloud.

Service they can consume.

Our <unk> P M.

As a landing point for lease privilege.

On the on the endpoint then.

And also of our new innovations around all our I'd like DPA dynamic privilege access allows them to to manage workloads in a just in time.

Environment, and so I would say with some of them the lending in the beginning part of it may be different from a hybrid environment. They may they may look at more traditional.

Core our core our core assets to start with first.

Pending active directory, finding critical critical servers, but but the.

The opportunity is very large they typically have a large number of users cloud native or born in the cloud. The large number of users both from a privileged user definition and of course from a workforce.

Condition and a large number of machine identities.

We can help solve with our secrets management.

Speaker 3: Very helpful. Thank you. Thank you.

Great very helpful. Thank you.

Thank you.

Your next question is from Liana <unk> with Bank of America.

Hi, guys.

Speaker 6: Hi guys. I have two questions. First is, can you talk about seasonality? I see the fourth quarter last year was also strong and I'm wondering.

I have two questions first is can you talk about seasonality I see the fourth quarter last year was also strong and I'm wondering.

Speaker 5: If there is any news, there's anality that we need to consider that the fourth quarter is becoming so strong.

If there is any new seasonality that we need to consider that fourth quarter is is becoming so strong.

And then second was there any change in the channel or anything that could.

Speaker 5: And then second, was there any change in the channel or anything that could, demand has been created somehow. You spoke about very strong demand. I'm trying to understand if the demand just happened or you helped it through sales, channel relationship or anything that could explain this demand. And then I have a question on.

Demand is being created somehow you spoke about very strong demand and I'm trying to understand if the demand just happen or you helped it through sales channel relationship or anything that could.

Explained this this demand and then I have a question on margins.

Speaker 4: Great. I'll kick off maybe with your second question on channel and hand it over to Josh to talk about seasonally. I think as I started first off, the biggest change is the demand environment and the centrally and the importance of a project management and identity security as we have been investing in taking a leadership position in what's making money for our channels and in many of our large bars out there, we would be in their top five, top 10 vendors and they're giving it more attention, advisories, building practices around cyber, and new motions around, if you talk about some new motions around MSSP and what I mentioned with the AWS marketplace. So I would say the ongoing investment and the growing priority within the customer and within the channel helped us really execute on the strong pipeline that we've built. Some new channel motions introduced.

Okay, Great I'll kick off maybe with with your second question on channel and hand, it over to John to talk about seasonality.

As I started the first off the biggest changes in the demand environment in this trial and the importance of.

Privileged access management and identity security as we have been investing in.

In and taking a leadership position.

Physician, and what's making money for our channels and many of our large bars out there we would be in their top five top 10.

Vendors and they're giving it more attention advisory is building practices around <unk> around <unk> and new motions around have you talked about some some new some new motions around MSP and and what I mentioned with the AWS marketplace. So.

I would say the the ongoing investment in the growing priority within the customer and within the channel helped us really execute on on this on the strong pipeline that.

We built and yes.

Some new channel motions introduced as well.

Speaker 6: And on his personality, Tal, now I think we're still very much an enterprise security software vendor and this is kind of the nature of the beast and we're seeing I think strong fourth quarters as we have for a while and we don't necessarily anticipate a change at this point.

Seasonality at all no I think you know we're still very much a you know an enterprise security software vendor and.

And this is the kind of the nature of the Beast and we're.

We're seeing I think strong fourth quarters as we have for a while and we don't necessarily anticipate.

A change at this point.

And I think it's pretty much.

Okay.

Speaker 5: So Josh, just on margins, so you're going through an investment phase now in cloud infrastructure. What's the outlook, I'm not looking for specific numbers beyond, but what's the outlook? Is this gonna be multiple years of elevated investments or is it more of an initial investment followed by margin improvement as your volume goes up? I'm trying to understand to what extent you need to invest over the next few years.

Got it.

Josh just on the margins. So you are going through an investment phase now in cloud infrastructure.

What's the outlook.

For specific numbers beyond but what's the outlook is this going to be multiple years of elevated investments or is it more obey the initial investment followed by margin improvement as your volume goes up I'm trying to understand to what extent do you need to invest over the next few years.

Yes.

Speaker 6: I think this is we're continuing to invest really into 2022 the same way that we've been looking at it over the last You know since you've been following us since the public offering which is Investing with the growth and the demand of the market and investing ahead of it to ensure that Not only are we going to be able to meet the current years of growth But when we look at we always looking at it kind of for multiple years and we want to set ourselves up for going into the following year to be able to meet the new capacity and the new growth for the following year as well. So I don't think anything's really changed. There isn't a specific, you know, incremental investment for 2022. There isn't more of because we're seeing a bigger demand and we're scaling the company and at this point that's what I would say.

I think this is we're continuing to invest really into 'twenty to 'twenty two the same way that we've been looking at it over the last.

Since you've been following us since the public offering which is investing with the growth and the demand in the market and investing ahead of it to ensure that not only are we going to be able to meet the current year's growth, but when we look at we always looking at it kind of for multiple years and we wanted to set ourselves up for.

Going into the following year to be able to meet the new capacity in the new growth for.

For the for the following year as well so I don't think anything's really changed there isn't a specific.

You know increased incremental investment for 2022 that is it more because we're seeing a bigger demand than we are scaling the company and and at this point, that's what I would say looking forward as well.

Speaker 6: forward as well.

Okay. Thanks.

Your next question is from Adam Borg.

With Stifel.

Speaker 10: Great, and thanks so much for taking the question. Maybe just for UD on endpoint privilege manager, it was great to hear the success and some of the deals we called out earlier. Maybe just remind us of kind of where we stand now in terms of the mixes they are.

Great and thanks, so much for taking the question maybe it's for Odeon endpoint privilege manager. It was great to hear the success in some of the DLT called out earlier, maybe just remind us kind of where we stand now.

In terms of the mix that they are.

Speaker 10: what kind of upwards it provides relative to a traditional pan deal.

And what kind of uplift that provide relative to a traditional Pam deal.

I'm sorry can you repeat the last part of the question.

Speaker 10: Yeah, absolutely. What kind of binopolis does EPM provide relative to if you just started with core PAM or Priviz Cloud? What does EPM upload?

Yeah, absolutely and what kind of an uplift does E. P. M provide relative to if you just started with core Pam privileged cloud, but what is the EPS uplift look like.

Oh, yeah. So.

Speaker 6: Oh, yeah. So, you know, first of all, in terms of the, in terms of the outlook for the EPM, it basically can be, you know, when we're looking at it on a set.

First of all.

In terms of the.

Sure.

Terms of the outlook for the P. M. It's basically can be.

When we're looking at it on SaaS perspective.

Speaker 2: Eric, did you have that number? Sure, yeah. I think he started off with what EPM was a percent of the ARR, which is about 22%. And so, right, North...

Okay.

Eric do you have that number sure yes, I think he started off with one <unk> percent.

<unk>, which is about 22%.

Right right no at this point.

Speaker 6: Um, we're, we're north to 20% now the EPM portion of the ARR.

We're north of 20% now of the <unk> portion of the E. R. R.

Speaker 10: Great, maybe just, yeah, no worries. And then any color on if a standard core pass or previous Kyle Deilo is a dollar, what kind of uplift ETM looks relative to that?

Great and maybe just.

Yeah, No worries and then.

Any color on it on a standard core pads or privileged cloud deal of the dollar and what kind of uplift VPN looks relative to that.

Speaker 6: Probably about, I would call it about half of that, an additional 50% on top of a core pass. Awesome, thanks so much. Thank you.

Probably about I would call it about half of that an additional 50% on top of our core pass.

Awesome. Thanks, so much.

Your next question is from Jonathan <unk> with Baird.

Yeah, Hey, guys congrats on the strong performance.

Speaker 11: yeah guys congrats on the uh... strong performance uh... we've you've you've talked about pamphled controls for adaptive you know secure web sessions particularly which seems to be doing extremely well uh... i'm curious if you could just talk broadly i know you're thinking about this you know identity security positioning strategically just given the importance of privilege and you know what could be seen in terms of additional security controls uh... for for the product portfolio of further differentiates

You've talked about Pam like controls for adaptive secure wet fashions, particularly which seems to be doing extremely well I'm curious if you could just talk broadly how you're thinking about this identity security positioning strategically just given the importance of privilege and you know what.

Could we see in terms of additional security controls for.

For the product portfolio that further differentiate.

Yes. So these are these are thanks Jonathan.

Speaker 4: Yeah, so these are, thanks Jonathan. The fresh new things that we've rolled out are, like I mentioned, secure web sessions and dynamic pro-excess that you'll see us.

The fresh new things that we've rolled out our like I mentioned secure web sessions and dynamic privilege access so you'll see us.

And again.

Your assertion is very very new but we're seeing great excitement from customers to be able to defend the regular user it could be somebody in HR finance and others, but there but to be able to put controls on protection over the assertion that our Pam like but in a transparent way to to use.

Speaker 4: somebody in HR, finance and others, but they're able to put controls and protection over their session that are Pam-like, but in a transparent way to the user, even the ability to protect the session, protect the session itself. So that's new, and you'll see us extending that motion of bringing Pam-like controls in a transparent way to the regular user. It also will take place in how we continue to advance our continuous authentication, making sure that we work in a continuous zero trust and continuous verification model. The other, I would say, long-term and continuous investment we have is everything just in time to give more and more optionality for our customers to protect standing, staying in access. We have more and more just in time scenarios like Dynamic Prove of Justice, which is brand new and is a great differentiator for us. And stay tuned. I think that's going to be the why customers select cyber. They know that it's coming from the makers of Pam. We're now coming to you with solutions for your workforce, for your vendors, for your third parties, leveraging the same platform. Thank you.

Even given the ability to protect.

Protect the session <unk> session itself, so that's new and Youll see us extending that motion of bringing Pam light controls in a transparent way too.

The regular user of it.

So, we'll we'll take place and how we can we continue to advance our continuous authentication and making sure that we work in a in a in any G&A continuous a zero trust and continuous verification.

Model.

The other.

I would say long term and continuous investment we have is everything just in time to give more and more optionality for for our customers to.

Protect standing standing access, but more and more just in time scenarios like a dynamic privilege access which is brand new.

And in.

It's a great differentiator for us.

And stay tuned I think that that's going to be the that what why customers select xyrem. They know that it's coming from the makers of pad, where now we're now coming to you with with solutions for your workforce from your vendors for your third or third parties leveraging the same platform.

Speaker 4: leveraging of the same platform. That's helpful. Thanks, Judy. Thank you.

That's helpful. Thanks, Judy.

Yes.

Your next question is from Keybanc.

Hi, Mark.

Speaker 4: Hey guys, Greg Porter. A couple for me, maybe Woody for you on the sand slide. I want to double click on that a little bit.

Yeah, Hey, guys great quarter.

A couple for me maybe it would be for you on the SaaS side I want to double click on that a little bit.

Speaker 6: Is there any way you can unpack this for us a little bit in the context of how's the adoption between new customers and existing ones?

Is there any way you can unpack this for us a little bit into context, so how's the adoption between new customers and existing ones.

Speaker 4: And with respect to new ones, is it bringing to the table new customers that you didn't have access to before? I'm just kind of trying to understand how this changes the landscape from a customer standpoint. And for you, Josh, just wanna make sure on your guidance for the year, you know, with inflation all around, are there any price increases that are, that you're implementing? And if so, how have they been worked into the guide? Thanks.

And with respect to new ones is it bring it to the table new customers that you didn't have access to before I'm, just kind of trying to understand how this changes the landscape from a customer standpoint and for you Josh just wanted to make sure on your guidance for the year.

With inflation all around.

Are there any price increases that are.

That you're implementing and if so how have they been worked into the guide. Thanks.

Yes, so I would say that the SaaS solutions definitely open up.

Speaker 4: Yeah, so I would say that the SAS solutions definitely open up.

New have.

We have opened up and were seeing a proven and new opportunities. If you take a look at the new logos just the record new logos in Q4 about about half of them would be what we would call for a mile from the commercial.

Speaker 4: If you take a look at the new logos, just the record new logos in Q4, about half of them would be what we would call from the commercial market, which is still kind of the small type of enterprise, but a new expansion of the month and really cross vertical. So the ability to be able to consume a privileged cloud and EPM SaaS, and of course our cyber identity, it opened up our opportunity further down market. But then I would say cross enterprise, the fact that they can get quicker time to value in such an important layer against this threat environment. It just really expanded our opportunity to give so much optionality to the customer. So it's really across the board there.

Market, which are still kind of.

The small type of enterprise.

But a new expense.

And really cross vertical so the ability to be able to consume.

Privileged cloud and he began SaaS and of course, our cyber Ark identity.

It opened up opportunities further down market.

But then I would say cross enterprise.

The fact that they can get quicker time to value in such an important layer against this threat the threat environment. It just really expanded.

Our opportunity to give so much optionality too.

Customer so it's really a.

Speaker 4: It's really across the board.

Across our across the board there.

Speaker 6: Yes, and then with regard to the prices, it's high. So basically, we didn't do across the board because of inflation increases, but we did absolutely have some price increases across certain products and services. And it is included in terms of the context of our guide as well. Thank you.

Yes, and then with regard to the prices. He Tai. So basically are we didn't do across the board because of because of inflation increases, but we did absolutely have some price increases across certain products and services and it is included.

In terms of.

The context of our guide as well.

Alright, great. Thank you.

Your next question is from Citibank.

City.

Good morning. Thank you for taking my question Josh This one's for you just with respect to free cash flow and so it was nice to see the outperformance this quarter, but if you can help walk us through some of the thought process for calendar 'twenty two as you reinvest as you accelerate the timeframe by which you are going to come.

Speaker 2: Good morning, thank you for taking my questions. Josh, this one's for you, just with respect to free cash flow. So it was nice to see the on-performance this quarter. But if you can help walk us through some of the thought process for calendar of 22 as you reinvest.

Speaker 2: is you accelerate the timeframe by which you are going to complete your subscription transition, as well as some of the drag from maybe the perpetual maintenance or fading away. Anything you can help us vis-a-vis those factors and how we should be thinking about the shape and the complexion of free cash flow in 2022. That'd be really helpful. Thank you.

Tweet your subscription transition.

Some of the drag from maybe the perpetual and maintenance are fading away and anything you can help us.

He said he those factors and how we should be thinking about the shape and the complexion of free cash flow in 2022 that would be really helpful. Thank you.

Speaker 6: Yeah, great. You know, the cash flow, we will definitely see some seasonality in the cash flow. We probably will see it being on the positive side in the beginning of the year in the early quarter. Then as we...

Great.

The cash flow, we will definitely see some seasonality in the cash flow, we probably will see it being on the.

No.

On the positive side in the beginning of the year and the early quarter and then as we.

Speaker 6: And then during the middle of the year, it'll go down. And then towards the end of the year, we can see again some improvement on the cash flow. So it'll be kind of...

And then during the middle of the year.

It will go down.

And then and then towards the end of the year, we can see again some improvement on the cash flow. So it'll be kind of strong in the middle quarters. It will be it'll be weaker then and then towards the end.

Speaker 6: strong in the middle, quarters, it will be weaker than towards the end. It could be stronger again. I'll go again.

It could be stronger again.

Thank you.

It's Andrew here.

Your next question.

Joshua Tilton with Wolfe research.

Speaker 12: Yeah, I guess I'm sort of taking my question. So historically, you guys have kind of been the 800 pound gorilla in the room in the on-premise pan market. But if you move to the cloud, would you say your win rate suggests that you kind of maintain the status? Have you maybe become the 1,000 pound gorilla? Any commentary on kind of the competitive environment and how your position has changed as the pan market moves to the cloud?

Yeah, Hi, guys. Thanks for taking my question.

Historically, you guys have kind of been the 800 pound gorilla in the room in the on premise market.

But as you move to the cloud would you say your win rates suggest that you're kind of maintaining the status have you made me become the 1000 pound gorilla.

Any commentary on kind of the competitive environment, and how youre positioned as challenged as the market moves to the cloud would be great.

Speaker 4: Yeah, absolutely. That's one of the most exciting elements for us is that we are the market leader, no matter how you slice it in Pam and in Proofage Cloud. The solution, it basically has, in past investment caught up and then, and then went beyond what we offer on Prams. So the customers can really get the full solution with Proofage Cloud when we're seeing great win rates.

Yeah, absolutely that's one of the most exciting elements for US is that we are the market leader no matter, how you slice it in and Pam and.

And then privileged cloud.

The solution it basically has.

And past investments caught up and then and then and then one beyond what we offer on Prem. So the customers can really get the full solution with with privileged cloud when we're seeing great win rates and the ability for the customer like I said earlier to get quick time to value and expand and expand faster. So I don't I don't know.

Speaker 4: and the ability for the customer, like I said earlier, to get quick time to value and expand faster. So I don't know what pounds to give it there, but if we were to just slice it and say, hey, how the leadership from a pan perspective, from in Stas, where the clear market leader is there, just like we showed up on the Gargome Magic Quarter three years in...

No what that what pounds too to give it to give it there but.

If we were to just slice it in and say hey, how of the leadership from a Tam perspective.

In SaaS, we're the clear market leader as they are is there just like we showed up on the on the Gartner Magic quadrant three years.

In a row and.

Speaker 4: in a row. And in this space, we're seeing that the pan players have been continuously disrupted by PE and changing hands over the last couple of years and really didn't invest in R&D while cyber markets continue to invest in R&D and innovation.

In this space, we're seeing that.

Players have been continuously disrupted by <unk>.

And changing hands over the last couple of years and really didn't invest in R&D, while sidewalk is continuing to invest in R&D and innovation and continuing to open up a strong GAAP.

Speaker 4: and continue to open up a strong gap. And then take it into the platform approach, where approaching everything as a platform sale and customers can see, well, we're starting with you with ProVage Cloud, the value, you can also secure me on the endpoint and secrets management or my workforce and vendors. And so that's really another great differentiator there for that for the staff.

Then take it to the platform approach, where we're approaching everything as a platform sale and customers can see well, we're starting when he was privileged cloud, but <unk> been also secure me on the endpoint and secrets management or my workforce and vendors and so thats really.

Another great differentiator there for that for the SaaS motion.

Speaker 6: Oudie, I want to interject here and make a and just call out a correction. We said earlier that the EPM was 20% of total ARR and I want to make sure that it was clear that it was 20% of subscription ARR was for EPM. So, I'm sorry for that.

I want to interject here and make a and just call out a correction, we said earlier that.

That the <unk> was 20% of total <unk> I want to make sure that it was clear that was 20% of subscription.

Our was for EPS, so sorry for that.

Your next question is from Roger Boyd with UBS.

Oh, Thanks for taking my questions and congrats on the nice end of the year, Judy you had mentioned the <unk>.

Speaker 9: Well, thanks for taking my questions and congrats on the nice end of the year. Loody, you had mentioned the impact of the tighter cyber insurance market at the tailwind. And I'm just wondering, was it to what we're seeing there higher premium lower capacity? Is it possible to talk about maybe 1% of new deals you're seeing being influenced by cyber insurance conditions? And maybe how you expect that tailwind to hold up in 2022?

Impact of tighter cyber insurance market as a tailwind I'm just wondering relative to what we're seeing there higher premiums lower capacity is it possible to talk about maybe what percent of new deals youre seeing being influenced by cyber insurance conditions.

And maybe how you expect that tailwind to hold up in 2022.

Speaker 4: No, thanks for that. I would say it's still not up percentage. I could put out there. It's more anecdotal But it's coming up in in conversations as as as another reason So I don't think we're dependent on this driver in any shape of form, but it's in the digital

Thanks for that I would say, it's still not a percentage I can put out there it's more anecdotal, but it's coming up in conversations.

Another reason so I don't think we're dependent on this driver in any shape or form, but it's an additional driver that's added to to everything we have seen before for some of the clear understanding that organizations needed, but now they are already getting asked for it.

Speaker 4: driver that's added to everything we've seen before. For some of the clear understanding that organizations needed, but now they're already getting asked for it for different elements of identity security, pro-objects access, secrets management, elements of MFA and protecting the workforce.

For different elements of identity security and privilege access secrets management elements of MFA and protecting the workforce and the fact that there are clearly asked for it as a condition for cyber insurance is I would say additional additional tailwind we thought we do expect it to persistently we think.

Speaker 4: and the fact that they're clearly asked for it as a condition for cyber insurance is, I would say, additional tailwind. We do expect it to persist. We think that it's just emerging. The cyber insurance companies and,

It's just that's just emerging.

Cyber insurance companies and we know.

Speaker 4: We know many of them, they're finding that all of their subscribers are in some sugar farm getting attacked and they want to put meaningful layers in place to minimize damage and perverse access measurement and identity security is one of those no-brainer layers.

Many of them, they're finding that.

All of their subscribers.

Subscribers and subsequent phone getting getting attacked and they want to put.

Meaningful layers in place.

To minimize the damage in privilege access management and are there any securities is one of those no brainer layers.

Terrific. Thanks, a lot thank.

Thank you.

Your next question is from Taz <unk> with Guggenheim partners.

Hey, guys. Thanks, I had a question about adaptive almost six quarters since we acquired the company.

Speaker 13: Hey guys, thanks for the question about adaptive. It will almost six quarters and required the company. Can you give us the ARR run radius for adaptive today and then have a follow up?

Yeah, Rob run rate as well and that good today, but I have a follow up.

So I didn't hear the end of that.

Speaker 13: The ARR contribution from my left is the LBT product.

Do you want to add up to the Iraq contribution.

Contribution from Europe .

The identity product.

Speaker 6: Yeah, we're basically a continuous increase after the first year. You know, where we saw kind of the migration into Cyborg, we've now seen two quarters in a row, which is sequentially increased it by, and I think it's closing in on around the $20 million.

Yes.

Basically it continues to increase after the first year.

Where we saw kind of the migration into <unk>, we've now seen two quarters in a row, we sequentially increased it by.

And I think it's closing in on and around the $20 million number.

Got it thanks and then.

Speaker 13: Got it thanks. And then for the error growth, match here as we compute the transition in the beginning and the middle of next year. Is it fair to be a or our growth? I guess ran up in the first half and then slows down. Because now you're ending the transition and then error growth, what can work more with the granny growth? How do you know what the trajectory of error growth? I guess first half, I can have next year.

So the era of growth next year as we complete the transition in the beginning and the middle of next year.

Is it fair to us for the <unk> grill.

I guess it ramps up in the first half and then slows down.

It does not.

And then the condition and then era group.

And what's more of a revenue growth.

How do you think about the trajectory around growth I guess first half second half next year.

I think if youre, asking about whether or not there'll be seasonality within the RMR growth I know I think we were.

Speaker 6: If you're asking about whether or not there will be seasonality within the ARR growth, I know I think we're not guiding to ARR from quarter to quarter, but we continue to anticipate it growing the ARR every quarter, but we're not going to talk about guiding for every quarter here.

We're not guiding to a R.

Quarter to quarter, but we continue to anticipate growing it.

Every quarter, but.

We're not going to talk about dining for every for every quarter here.

Your next question is from Alex Henderson with Needham.

Speaker 13: Great, thank you very much. So I was hoping you could talk a little bit about the competitive landscape. And not in the way that I think most people are thinking about it. So there's a lot of glaring and swim lanes with people like Sail Point, Moct, and even Hashie Corp getting into your space. But my sense is that that actually has resulted in an increase in demand for your products as...

Great. Thank you very much.

So I was hoping you could talk a little bit about the competitive landscape.

And the way that I think most people are thinking about it so there's a lot of.

Glaring swim lanes with people like Sailpoint Mark.

And even hashi Corp getting into.

Into your space.

But my sense is that that actually plays resulted in an increase in demand for your products as well.

Speaker 13: They have stimulated awareness, but not necessarily impacted the share. And in fact, customers will see them come in here, the pitch, and then realize they need the technology, and therefore come to you as opposed to going with the, the slim down,

Stimulated awareness, but not necessarily impacted.

Sure and in fact customers will see them come in here the pitch and then realize they need the technology and therefore come to you as opposed to going with the slimmed down.

<unk>.

Speaker 13: initial versions of their products. So are we seeing a stimulation in the man for fertilo-jacquist as a result of the light weight competitive entry?

Initial versions of their products.

So we're seeing a stimulation and demand pool privilege access as a result of.

The competitive lightweight competitive entry.

Speaker 4: Thanks Alex, and I love your angle here. I think first and foremost is the increased demand environment and our increased leadership position based on merit, having the better products that address all of the broad use cases and definitely the prime minister's management and expanding to identity. I do agree that there's been more publicity to this space from that perspective with announcements of entry that are very early products where we do not see those products in the field and customers have heard of those pre-announcements.

Thanks, Alex.

I Love your angle here I think first and foremost is the increased increase the demand environment and our increased leadership position based on based on merit, having is having the better the better products that address all of the broad use cases and definitely in privilege access management in and then expanding to do identity I do I do.

I agree that there's been more publicity to to this space from that perspective with.

With announcements of entry that.

Yes.

Our very early very early products that where we do not see those products in the field.

And customers.

Of those three of those.

Pre announcements and.

Speaker 4: And I don't know how much we factor that into the awareness, but the awareness is up across the board for...

I don't know how much we factor that into.

Into the awareness, but the awareness is up across across the board.

Speaker 4: for the security and that may be probably some contributing factor but the biggest thing are the demand drivers and all of these years of focusing on the customers and focusing on being a broad platform for privacy is bearing fruit for us in a very strong competitive position. Strongest I can remember.

For identity.

Security and and that May be.

Some contributing factor, but the biggest thing or.

The demand drivers.

<unk>.

All of these years of focusing on the customers and focusing on <unk>.

Our broad platform for us.

Is bearing fruit for us in a very strong competitive position strongest I can remember.

Great. Thanks.

Thank you.

Speaker 1: And I will now pass the call back over to Udi Mokaldi.

And I will now pass the call back over to Eddie Mccarthy for closing remarks.

Speaker 4: Great, thank you very much. 2021 was an incredible year of transformation for Cyborg, and I want to thank our customers, partners, and our global employees for contributing to this historic year. Thank you very much.

Great. Thank you very much 2021 was an incredible year of transformation for <unk> and I want to thank our customers partners and our global global employees for contributing to this historic year.

Thank you very much.

Speaker 1: Thank you for participating. You may now.

This concludes today's conference call. Thank you for participating you may now disconnect.