Q1 2025 CyberArk Software Ltd Earnings Call

Okay.

Thank you for standing by.

Kate: Thank you for standing by my name is Kate and I will be your conference operator today at this time I would like to welcome everyone to the Q1 2025, Cyber Ark software L. T D earnings Conference call.

Kate: My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1 2025 CyberArk Software Ltd. Earnings Conference Call.

All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you.

All lines have been placed on mute to prevent any background noise.

Kate: After the Speakers' remarks, there will be a question and answer session if.

Kate: If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to would you withdraw your question Press Star. One again. Thank you I would now like to turn the call over for any of US VP of Investor Relations. Please go ahead.

Srinivas Anantha: I would like to turn the call over to Srinivas, VP of Investor Relations. Please go ahead. Thank you, operator. Good morning.

Kate: Okay.

Speaker Change: Thank you operator good morning, Thank you for joining us today to review <unk> strong first quarter 2025 financial results with me on the call today are Matt Cohen, our Chief Executive Officer, and Eric Smith, Our Chief Financial Officer. After prepared remarks, we will open up the call to a question.

Matthew Cohen: Thank you for joining us today to review CyberArk's strong first quarter 2025 financial results. With me on the call today are Matt Cohen, our Chief Executive Officer, and Erica Smith, our Chief Financial Officer. After prepared remarks, we will open up the call to a question and answer session.

Kate: Answer session.

Before we begin, let me remind you that certain statements made on the call today may be considered forward-looking statements, which reflect management's best judgment based on currently available information. I refer specifically to the discussion of our expectations and beliefs regarding our projected results of operations for the second quarter, full year 2025 and beyond. I also refer to our expectations and beliefs regarding the integration of Venafi and Zillow security into our operations. Our actual results might differ materially from those projected in these forward-looking states. I direct your attention to the risk factors contained in the company's annual report on Form 20-F, filed with the U.S.

Kate: <unk>, we begin let me remind 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.

Kate: The second quarter full year 2025, and beyond I also referred to our expectations and beliefs regarding the integration of <unk> fight and say lets security into our operations and our actual results might differ materially from those projected in these forward looking statements I direct your attention to the risk factor.

Kate: <unk> 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.

Securities and Exchange Commission, and those referenced in today's press release that are posted to CyberArk's website. Cyberark expressly disclaims any application or undertaking to release publicly any updates or revisions to any forward-looking statements made herein.

Kate: <unk> expressly disclaims any application or undertaking to release publicly any updates or revisions to any forward looking statements made herein. Additionally, non-GAAP financial measures will be discussed on this conference call reconciliations to the most directly comparable GAAP financial measures are also available.

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

Kate: Today's press release as well as an updated investor presentation that outlines the financial discussion in todays call.

Speaker Change: The 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 CEO Matt Com.

Matthew Cohen: With that, I would like to turn the call over to our CEO, Matt Cohen. Thanks Sri and thanks everyone for joining the call today. We're excited to kick off 2025 with a strong first quarter that exceeded all of our guided metrics. This performance highlights not only the critical role identity security plays in the broader cybersecurity landscape, but also our team's unwavering focus on excellence in execution. In Q1, we achieved total ARR of $1.215 billion, revenue of $318 million, an 18% operating margin, and generated $96 million in free cash flow. A great quarter all around. Our results continue to demonstrate that identity is the new perimeter and that demand remains robust.

Matt Com: Thanks, Jerry and thanks, everyone for joining the call today.

Speaker Change: We're excited to kick off 2025, with a strong first quarter that exceeded all of our guided metrics. This performance highlights not only the critical role of Danny security plays in the broader cyber security landscape.

Speaker Change: But also our team's unwavering focus on excellence and execution.

Speaker Change: In Q1, we achieved total AAR are of one point to one 5 billion revenue of $318 million, an 18% operating margin and generated $96 million in free cash flow.

Speaker Change: Great quarter all around.

Speaker Change: Our results continue to demonstrate that identity is the new perimeter and that demand remains robust with more than 90% of organizations experiencing identity related breaches security leaders recognize that Danny security is a mission critical imperative.

With more than 90% of organizations experiencing identity-related breaches, security leaders recognize that identity security is a mission-critical imperative. Cyberark is at the forefront of this imperative, offering the most comprehensive and most effective platform for securing every identity, human, machine, and now AI.

Speaker Change: <unk> is at the forefront of this imperative offering the most comprehensive and most effective platform for securing every identity human machine and now AI.

Matthew Cohen: Before I dive into the quarter, let's touch on the broader macro environment. As you can see from our results, demand for our solutions is increasing and we continue to deliver strong growth. Despite ongoing macro uncertainty, we have not seen any impact on our business. Given the elevated threat landscape, cybersecurity remains a top priority for organizations, and within that, identity security is a non-discretionary investment. It is a foundational to business continuity, customer trust, and regulatory compliance. Of course, we are carefully monitoring the economic situation and its potential impact. And as we have always done, if we see any negative trends, we will be disciplined in our execution and make the necessary strategic adjustments.

Speaker Change: Before I dive into the quarter, let's touch on the broader macro environment as.

Speaker Change: As you can see from our results demand for our solutions is increasing and we continue to deliver strong growth. Despite ongoing macro uncertainty we have not seen any impact on our business.

Speaker Change: Given the elevated threat landscape cyber security remains a top priority for organizations and within that Danny security is a non discretionary investment. It is a foundational to business continuity customer trust and regulatory compliance.

Of course, we are carefully monitoring the economic situation and its potential impact and as we have always done if we see any negative trends, we will be disciplined in our execution and make the necessary strategic adjustments.

We have successfully navigated similar conditions before by staying close to our customers and infusing even more rigor into our go-to-market execution. Importantly, we believe times like these push customers towards our platform and consolidation, and specifically, consolidation of trust.

Speaker Change: We have successfully navigated similar conditions before by staying close to our customers and infusing even more rigor into our go to market execution.

Speaker Change: Accordingly, we believe times like these push customers towards our platform and consolidation and specifically consolidation of trust.

Matthew Cohen: Our confidence in the underlying demand trends was further reinforced recently with thousands of customers in attendance at the recent IMPACT and RSA conferences. At these conferences, I had the opportunity to engage directly with hundreds of customers and partners in one-on-one meetings. The feedback was clear and consistent. Identity security continues to be a top spending priority. Organizations are actively seeking to consolidate fragmented security tools, modernize legacy systems, address the growing challenges of machine identities, and get advice on how to integrate security from day one into theirogenic AI initiatives. The level of strategic discussions we are having with the C-Suite at our customers and prospects has never been more constructive and underscores the growing demand for our unified identity security solutions.

Speaker Change: Our confidence in the underlying demand trends was further reinforced recently with thousands of customers in attendance at the recent impact and RSA conference.

Speaker Change: At these conferences I had the opportunity to engage directly with hundreds of customers and partners in one on one meetings. The feedback was clear and consistent identity security continues to be a top spending priority organizations are actively seeking to consolidate fragmented security tools modernize legacy systems.

Speaker Change: Address the growing challenges of machine identities and get advice on how to integrate security from day, one into the regenerate AI initiatives.

Speaker Change: The level of strategic discussions we are having with the C suite at our customers and prospects has never been more constructive and underscores the growing demand for our unified identity security solutions I come away from these events more confident than ever in our vision and ability to win and drive long term durable growth.

I come away from these events more confident than ever in our vision and ability to win and drive long-term durable growth.

Matthew Cohen: I want to center our discussion today around three key pillars that anchor so many of these one-on-one conversations I have been having. First, the identity security imperative. Second, our unified platform for every identity. And third, our relentless innovation. Starting with the identity security imperative. As I mentioned at our impact conference last month, we are living and operating in an exponential era, an age where the speed of change, the scale of threats, and the complexity of digital ecosystems are compounding at a pace we've never seen before. The threat landscape continues to intensify with state-sponsored actors, cyber criminals, and emerging threats like AI-driven exploits increasing in both frequency and sophistication.

Speaker Change: I wanted to center, our discussion today around three key pillars that anchor. So many of these one on one conversations I had been having first the identity security imperative second our unified platform for every identity and third our relentless innovation.

Speaker Change: Starting with the identity security imperative as I mentioned that our impact conference last month, we are living and operating in an exponential era, an age where the speed of change the scale of threats and the complexity of digital ecosystems are compounding at a pace we've never seen before the threat landscape continues to intensify with states.

Speaker Change: Monster doctors cyber criminals and emerging threats like AI, driven exploits increasing in both frequency and sophistication.

Identity is the connective tissue of every digital interaction across every user, system, cloud, and application, making it foundational to any modern cybersecurity strategy. With identity at the center of virtually every breach, it's crystal clear that if you don't have a strong identity security, you simply don't have security at all. We are seeing the identity security imperative proliferate across the three different identity groups that our platform is purpose-built to protect, human, machine, and AI. For humans, privileges have proliferated across the entire spectrum of identities, including IT admins, cloud ops, developers, and SaaS admins. In today's dynamic work environments, every employee interacts with sensitive data or critical systems. Identity security requires us to reimagine privilege as a dynamic, contextual, and tightly controlled concept delivered across the workforce without friction.

Speaker Change: Identity is the connective tissue of every digital interaction across every user system cloud and application, making it foundational to any modern cyber security strategy.

Speaker Change: With identity at the center of virtually every breach it's crystal clear that if you don't have a strong identity security you simply don't have security at all.

Speaker Change: We are seeing the identity security impair narrative proliferate across the three different identity groups that our platform is purpose built to protect human machine and AI for humans privileges habit proliferate it across the entire spectrum of identities, including Ikea Admins cloud ops developers and SaaS admins.

Speaker Change: In today's dynamic work environment every employee interacts with sensitive data are critical systems identity security requires us to re imagine privilege as a dynamic contextual and tightly controlled concept delivered across the workforce without friction, we're bringing layered in depth defense to every home.

Matthew Cohen: We're bringing layered, in-depth defense to every human identity without compromising user experience. Applying Privilege Controls against all identities is among the most complex cyber security challenge, and our deep expertise and leadership position sets us apart from the competition, which you see in our results. When it comes to machine identities, a year ago you heard us talk about a 45 to 1 ratio of machine to human identities. Today it's over 80, and that number is still rising rapidly. These machine identities are granted access to critical infrastructure and sensitive information, yet they often operate without oversight. Without an identity-first approach to securing machines, organizations leave a massive blind spot in their defenses.

Speaker Change: Identity without compromising user experience apply.

Speaker Change: Applying privileged controls against all identities is among the most complex cyber security challenge and our deep expertise and leadership position sets us apart from the competition, which you see in our results.

Speaker Change: When it comes to machine identities, a year ago, you heard us talk about a 45 to one ratio of machine to human identities today, it's over 80 and that number is still rising rapidly.

Speaker Change: These machine identities are granted access to critical infrastructure and sensitive information yet they often operate without oversight without an identity first approach to securing machines organizations, we have a massive blind spot in their defenses identity security is the only way to bring visibility control and governance to this rapidly growing attacks.

Identity security is the only way to bring visibility, control, and governance to this rapidly growing attack surface. With the addition of NFI, our machine identity solutions are setting a new standard on how to address this challenge. In turning to AI, we are seeing AI everywhere, embedded in organizational workflows and opening the door to new use cases. It's challenging how privileges are assigned, creating new identities, and becoming a force multiplier for both defenders and attackers. The need to secure AI agents, both autonomous and human-directed, is becoming increasingly top of mind. And as we dive deeper into the depths of agentic approaches, it's increasingly understood that securing AI agents is an identity security problem, not a data problem.

Speaker Change: Surface with the addition of identify our machine identity solutions are setting a new standard on how to address this challenge.

Speaker Change: Turning to AI, we are seeing AI everywhere embedded in organizational workflows and opening the door to new use cases, it's challenging how privileges are assigned creating new identities and becoming a force multiplier for both defenders and attackers to need to secure AI agents, both autonomous and human directed.

Speaker Change: It is becoming increasingly top of mind and as we dive deeper into the depths of <unk> approaches. It is increasingly understood that securing AI agents is an identity security problem not a data problem.

Matthew Cohen: The identity security imperative is clear, rise to meet the exponentially increasing threat landscape by securing every identity with the right level of privilege controls.

Speaker Change: The identity security imperative is clear rise to meet the exponentially increasing threat landscape by securing every identity with the right level of privilege controls.

Matthew Cohen: Which takes us to our second pillar, our Unified Identity Security Platform. Our platform starts with the idea that discovery and context is critical. Understanding what identities exist across human, machine, and AI, their associated access rights, risk profiles, and appropriate privilege controls is foundational to any effective identity security strategy. Once discovered and onboarded, applying industry-leading privilege controls is the most essential step and cornerstone of our differentiation. Privilege controls that cover credential management, authentication management, session management, and entitlements management are the secret sauce of our platform and create a deep, competitive moat against all competitors. Next comes policy automation, which is also crucial, given the scale and scope of modern identity security, it's no longer enough to merely impose policies, they must be automated.

Speaker Change: Which takes us to our second pillar, our unified identity security platform. Our platform starts with the idea that discovery in context as critical understanding what identities exist across human machine in AI, they're associated access rights risk profiles and appropriate privileged controls is foundational to any effect of identity security strategy once disk.

Speaker Change: <unk> and on boarded applying industry, leading privilege controls is the most essential step in cornerstone of our differentiation privileged controls to cover credential management authentic Asian management session management and entitlements management are the secret sauce of our platform and create a deep competitive moat against all competitors.

Speaker Change: <unk>.

Speaker Change: Next comes policy automation, which is also crucial given the scale and scope of modern identity security, it's no longer enough to merely imposed policies. They must be automated we offer automated enforcement of contention contextual security policies to eliminate manual overhead reduce time to value and support rapid scalability across <unk>.

We offer automated enforcement of contextual security policies to eliminate manual overhead, reduce time to value, and support rapid scalability across complex environments. Along with policy automation, you need to automate life cycles, which is the ability to onboard and offboard dynamically provisioned entitlements and provide just-in-time access with the goal of streamlining security to reduce risk and ensure continuous compliance. And lastly, governance and compliance are essential for meeting the growing oversight both within organizations and increasing regulatory standards being imposed by government organizations. As we'll talk about later, with Zillow's Modern IGA, we are setting out to free organizations from the long-standing challenges of legacy IGA.

Speaker Change: Complex environments.

Speaker Change: Along with policy automation, you need to automate life cycles, which is the ability to onboard and off-board dynamically provision entitlements and provide just in time access with the goal of streamlining security to reduce risk and ensure continuous compliance and lastly governance and compliance are essential for meeting.

Speaker Change: The growing oversight, both both within organizations and increasing regulatory standards being imposed by government organizations.

Speaker Change: We'll talk about later with villas modern Iga, we are setting out to free organizations from the longstanding challenges of legacy Iga.

Matthew Cohen: These components are the building blocks and the unique differentiators of our platform. They are the blueprint for how we talk with our customers and partners. More importantly, they enable us to deliver measurable customer outcomes, reducing cyber risk, strengthening business resilience, satisfying audit and compliance, all while increasing efficiency and automation. This is why, while customers may come to us hoping to solve one use case, instead, they often expand to secure additional identities across our solutions and consolidate on our platform over time.

Speaker Change: These components of the building blocks and the unique differentiators of our platform. They are the blueprint for how we talk with our customers and partners more importantly, they enable us to deliver measurable customer outcomes, reducing cyber risk strengthening business resilience satisfying audit and compliance all while.

Speaker Change: Increasing efficiency and automation. This is why while customers may come to us hoping to solve one use case instead, they often expand to secure additional identities across our solutions and consolidate on our platform over time.

Matthew Cohen: Moving on to our third pillar, which is innovation. At Impact, we introduced new solutions and capabilities across human, machine, and AI identities. And I want to highlight a few of them one more time today. For secure and human identities, we announced the availability of Zillow provision and comply modules. Since we closed the acquisition, customer feedback has been overwhelmingly positive, especially around how Cyberark and Zillow can simplify access reviews and automate provisioning across modern environments. Both customers and partners recognize the powerful combination of having modern IGA on our platform and the synergies we are confident we can realize.

Speaker Change: Moving on to our third pillar, which is innovation at impact, we introduced new solutions and capabilities across human machine and AI identities and I want to highlight a few of them one more time today for secure and human identities, we announced the availability of Zillow provision and comply modules since we closed the acquisition.

Speaker Change: <unk> feedback has been overwhelmingly positive, especially around how cyber Ark in silicon simplify access reviews, and automate provisioning across modern environments.

Speaker Change: Customers and partners recognize the powerful combination of having modern Iga on our platform and the synergies we are confident we can realize.

On the machine identity side, we announced our Secure Workload Access Solution, which combines modern workload identity management with CyberArk's secrets management capabilities for the industry's first and most comprehensive protection for all non-human identities that matter, giving security teams visibility and control throughout the machine identity lifecycle. I did want to pause to quickly mention another key development in machine identity security around the lifespan of certificates. The Certification Authority Browser Forum, which sets guidelines for certificate life cycles, recently voted to significantly reduce certificate lifespans from 398 days to just 47 days. Major industry players, including Apple, Google, and Microsoft supported this change emphasize the growing need for automated management of short-lived certificate.

Speaker Change: On the machine identity side, we announced our secure workload access solution, which combines modern workload identity management with cyber Ark secrets management capabilities for the industry's first and most comprehensive protection for all non human identities that matter, giving security teams visibility and control throughout the machine identity lifecycle.

Speaker Change: <unk>.

Speaker Change: I did want to pause to quickly mentioned another key development in machine identity security around the lifespan of certificates the certificates.

Speaker Change: <unk> Authority browser Forum, which sets guidelines for certificate life cycles recently voted to shake significantly reduce certificate lifespans from 398 days to just 47 days major industry players, including Apple Google and Microsoft supported this change emphasized.

Speaker Change: The growing need for automated management of short lived certificates.

Matthew Cohen: In an increasingly complex security environment, this is top of mind for our customers. At the recent RSA conference, this industry change drove more traffic to our booth than any other topic. Customers are realizing that the time to get this part of the machine identity security under control is now.

Speaker Change: In an increasingly complex security environment. This is top of mind for our customers at the recent RSA conference. This industry change drove more traffic to our booth than any other topic.

Speaker Change: Customers are realizing that the time to get this part of the machine identity security under control is now.

The final major innovation we talked about was in the field of agenic AI. Agenic AI sits at the intersection of human and machine identity security. AI agents are machine identities that act like or on behalf of humans, proliferating at machine scale, gaining access to and granting privileges over critical infrastructure. As a result, they will require the same security principles as human identities, and soon, billions of AI agents will require robust access controls, governance, and privilege management frameworks. To address the security challenges of AI agents, we introduced our Secure AI Agent Solution, which integrates our platform capabilities with AI-specific discovery and context, privilege controls, policy automation, lifecycle management, and governance.

Speaker Change: The final major innovation, we talked about was in the field to be genic AI <unk> sits at the intersection of human and machine identity security.

Speaker Change: The agents are machine identities to act like or on behalf of humans proliferating at machine scale, gaining access to and granting privileges over critical infrastructure. As a result, they were required the same security principles as human identities and soon billions of AI agents will require robust access controls.

Speaker Change: Governance and privilege management frameworks drew.

Speaker Change: To address the security challenges of AI agents, we introduced our secure AI agent solution, which integrates our platform capabilities with AI specific discovery in context privileged controls policy automation lifecycle management and governance, we expect this solution to be widely available to customers later this year.

Matthew Cohen: We expect this solution to be widely available to customers later this year. Additionally, we announced the strategic partnership with Accenture, integrating our identity security platform with Accenture's AI refinery. Together, we'll offer customers out-of-the-box security for AI-driven agents, ensuring secure adoption of emerging AI technologies at an exponential scale. Beyond these highlighted announcements, we also launched major innovations across workforce, IT, developer, and machine solutions that deliver incremental value and real-world security controls to meet the demands of the current and future threat landscape. The product and engineering team at Cyberark continues to amaze me in their ability to lead the market.

Speaker Change: Additionally, we announced the strategic partnership with Accenture integrating our identity security platform with sensors AI refinery together will offer customers out of the box security for AI, driven agents, ensuring secure adoption of emerging AI technologies at an exponential scale.

Speaker Change: Beyond these highlighted announcements we also launched major innovations across workforce developer machine solutions that deliver incremental value and real world security controls to meet the demands of the current and future threat landscape the product and engineering team at <unk> continues to amaze me and their ability to lead the market.

Matthew Cohen: As I said, Q1 was a great way to start the year, and I did want to quickly highlight just a few deals from the quarter to illustrate how we are delivering valuable customer outcomes across our platform, as well as an early Zillow deal. In a deal that showcases the power of our full platform, a leading U.S. enterprise software company replaced a competing PAM vendor, prioritizing Cyberark's ability to deliver a complete identity security platform. They are boldly focused on just-in-time access and zero spending privilege to secure IT and developers, and a complete solution for the machine identities in a multi-figure, six-figure ACV deal.

Speaker Change: As I said Q1 was a great way to start the year and I did want to quickly highlight just a few deals from the quarter to illustrate how we are delivering valuable customer outcomes across our platform as well as an early zyla deal.

Speaker Change: And a deal that showcases the power of our full platform a leading U S. Enterprise software company replaced a competing Pam vendor prioritizing <unk> ability to deliver a complete identity security platform. They are boldly focused on just in time access and zero spending privilege to secure it.

Speaker Change: And developers and a complete solution for the machine identities in a multi figure six figure ACB deal.

Matthew Cohen: In another full-platform deal focused solely on modern use cases, a leading U.S. healthcare company wanted to secure modern cloud workloads for developers, protect their entire workforce, both the user and at the endpoint, and secure machine identities with Secrets Hub in another multi-six-figure ACV add-on deal. We continue to see great momentum with Ventify, and this quarter, a Fortune 100 financial services company, who is a longtime Cyberark customer on the human identity side, is now deploying all of our certificate lifecycle management and PKI offerings in a competitive multi-six-figure ACV deal. And in a great Venify deal that demonstrates our cross-sell motion, PDS Health, a leading integrated health care support organization who has been a Cyberark customer since 2019, built on that longstanding relationship, expanding further on the machine identity side with our certificate manager and zero touch PKI in a six figure Q1 ACV deal.

Speaker Change: And another full platform deal focused solely on modern use cases, a leading U S health care company wanted to secure modern cloud workloads for developers protect their entire workforce, both the user and at the endpoint and secure machine identities with secrets hub and another multi figure multi six figure ACB.

Speaker Change: <unk> add on deal.

Speaker Change: We continue to see great momentum with <unk> and this quarter, a fortune 100 financial services company, who was a longtime cyber our customer on the human identity side is now deploying all of our certificate lifecycle management, and PKI offerings and a competitive multi six figure ACB deal.

Speaker Change: And then a great benefit deal that demonstrates our cross sell motion Pds health, a leading integrated health care support organization, who has been a <unk> customer since 2019 built on that long standing relationship expanding further on the machine identity side with our certificate manager and zero touch PKI.

Speaker Change: In a six figure Q1 <unk> deal the.

The excitement around Venify deals continues to build across our go to market teams, and stories like this are becoming commonplace as the business begins to scale.

Speaker Change: The excitement around <unk> deals continues to build across our go to market teams and stories like this are becoming commonplace as the business begins to scale.

Speaker Change: Finally in a Q1 Zyla deal we saw early success. After the acquisition closed with a financial services company, who landed as a new logo with a six figure ACB deal, replacing a competing legacy Iga vendor the customer highlighted that the acquisition by SAR cyber gave them strong.

Speaker Change: Confidence in closing out this deal and starting their modern Iga journey.

Matthew Cohen: In summary, I want to leave you with the following takeaways today. First, the identity security imperative is real and accelerating. As the digital ecosystem grows more interconnected and decentralized, the threat landscape is not just expanding, it's evolving at an unprecedented pace. Organizations must respond. Second, Cyberark is uniquely positioned with the only unified platform for securing every identity and addresses a critical pain point for overburdened CISOs by simplifying identity security. Third, our relentless innovation is strengthening our competitive moat as we solve our customers' problems of today and the future. Fourth, cybersecurity spend and certainly identity is defensible in all macro environments as organizations realize the importance of protecting their most critical assets, particularly in this escalating threat environment.

Speaker Change: In summary, I want to leave you with the following takeaways today.

Speaker Change: The identity security imperative is real and accelerating as the digital ecosystem grows more interconnected and decentralized the threat landscape is not just expanding it is evolving at an unprecedented pace organizations must respond.

Speaker Change: Cyber Ark is uniquely positioned with the only unified platform for securing every identity and addresses a critical pain point for ode overburden cso's by simplifying a Denny security.

Speaker Change: Third our relentless innovation and strengthening our competitive moat as we solve our customers' problems of today and the future.

Speaker Change: Fourth cyber security spend and certainly identity is defensible and all macro environments as organizations realize the importance of protecting their most critical assets, particularly in this escalating threat environment and finally, we are executing with discipline and confidence.

And finally, we are executing with discipline and confidence. Our go-to-market teams are an exceptional differentiator for us. Our continued execution and strong demand environment positions us to deliver strong growth and profitability.

Speaker Change: Our go to market teams are an exceptional differentiator for us our continued execution and strong demand environment positions us to deliver strong growth and profitability.

Erica Smith: Now I'll turn it over to Erica to walk through our strong financials and updated guidance. Thanks. Excuse me. Thanks, Matt. We're off to a strong start in 2025 with our first quarter results exceeding all of our guided metrics. We delivered solid top line growth, expanded operating profitability, and generated robust free cash flow.

Speaker Change: Now I'll turn it over to Erica to walk through our strong financials and updated guidance.

Speaker Change: Thanks.

Erica: Excuse me thanks, Matt we're off to a strong start in 2025 with our first quarter results exceeding all of our guided metrics. We delivered solid top line growth expanded operating profitability and generated robust free cash flow.

Erica Smith: As we review our results, please note that Venafi, which closed in October 2024, and Zilla, which closed in February 2025, contributed to our Q1 results of this year, but were not part of the comparable period in 2024. Moving to our results, annual recurring revenue reached $1.215 billion. Net new ARR was $46 million, up from $37 million in Q1 of last year. As a reminder, Zillow brought to CyberArk approximately $5 million of ARR when we closed the acquisition. Lastly, fluctuations in the euro and pound created about a $1 million headwind to ARR in the first year.

Erica: As we review our results. Please note the identify which closed in October 2024, and July which closed in February 2025, contributing to our Q1 results are this year, but we're not part of the comparable period in 2024 moving to our results annual recurring revenue reached one point to one 5 billion.

Erica: Net new <unk> was 46 million up from $37 million in Q1 of last year. As a reminder, brought to sidewalk approximately 5 million of <unk> when we closed the acquisition.

Erica: Lastly, fluctuations in the Euro and pound created about a 1 million dollar headwind to <unk> in the first quarter.

Erica Smith: As Matt mentioned, the Venafi integration is progressing ahead of expectation. Pipeline continues to build and we are executing on the cross-sell synergies. Momentum in our machine identity business overall, including secrets management, was strong in the first quarter, with Venify and Secrets included in nine of our top 10 deals. As we noted on our last earnings call, we don't plan to break out Venafi's contributions separately, given that customers are increasingly buying across our platform, and our machine identity solutions can include both Venafi and Secrets Manager. The value proposition we outlined at the time of the Venafi acquisition is being validated by strong cross-sell into existing customer base, new customers being added, and growing activation of our channel partners with several hundred certified since we closed the acquisition.

Erica: As Matt mentioned the <unk> integration is progressing ahead of expectations pipeline continues to build and we are executing on the cross sell synergies momentum and our machine identity business overall.

Erica: Secrets management was strong in the first quarter with verify and secrets included in nine of our top 10 deals.

Erica: As we noted on our last earnings call. We don't plan to break out <unk> contribution separately given that customers are increasingly buy across our platform and our machine identity solutions can include both verify and secrets management.

Erica: The value proposition that we outlined at the time of the <unk> acquisition is being validated by strong cross sell into existing customer base, new customers being added and growing activation of our channel partners with several hundred certified since we closed the acquisition.

Erica Smith: Subscription ARR grew to $1.028 billion with subscription net new ARR of $51 million compared to $39 million in Q1 of last year. Our maintenance ARR was $188 million. Like for like, conversion activity remains a single digit percent of our year over year ARR.

Erica: Subscription <unk> grew to $1.0 billion to $8 billion with subscription net new <unk> of 51 million.

Erica: Compared to $39 million in Q1 of last year.

Erica: Our maintenance <unk> was $188 million like for like conversion activity remains a single digit percent of our year over year growth.

Erica Smith: As you saw in the release we posted this morning, we are now reporting revenue in two lines, a subscription line, which includes SAS and self-hosted subscription, and a maintenance professional services, another line, which includes perpetual maintenance services and perpetual license revenue. Given that nearly 95% of our business is recurring revenue, and we expect our perpetual license revenue to represent about 1% of total revenue, we changed the P&L to better reflect the value we provide to our customers and to represent the way we look at our business. Total revenue significantly beat our guidance, reaching $317.6 million in Q1.

Erica: As you saw in the release, we posted this morning, we are now reporting revenue in two lines of subscription line, which includes SaaS and software subscription and maintenance professional services and other line, which includes perpetual maintenance services and perpetual license revenues given that nearly 95.

Erica: 5% of our business is recurring revenue and we expect our perpetual license revenue to represent about 1% of total revenue we changed the P&L to better reflect the value we provide to our customers and to represent the way we look at our business.

Erica: Total revenue significantly beat our guidance, reaching $317 $6 million in Q1 for the first quarter recurring revenue reached $298 $2 million, representing 94% of total revenue or subscription revenue reached 256 million.

Erica Smith: For the first quarter, recurring revenue reached $298.2 million, representing 94% of total revenue. Our subscription revenue reached $250.6 million, or 79% of total revenue. The outperformance in Q1 was from two primary factors, the strength in our overall business compared to our guidance, and in a slightly higher than expected mix of self-hosted subscriptions. Maintenance and Professional Services and other revenue with $67 million in the court. The business remains geographically diverse. America's revenue was $193.5 million, EMEA revenue came in at $93.8 million, and APJ revenue was $30.4 million. We had strong organic and inorganic revenue growth across the platform in all regions.

Erica: Or 79% of total revenue.

Erica: The outperformance in Q1 from two primary factors the strength in our overall business compared to our guidance.

Erica: In a slightly higher than expected mix of self holds hosted subscription.

Erica: Maintenance and professional services and other revenue was $67 million in the quarter.

Erica: Business remains geographically diverse Americas revenue was $193 $5 million EMEA revenue came in at $93 $8 million and a P. J revenue was $34 million, we had strong organic and inorganic revenue growth across the platform in all regions in <unk>.

Erica Smith: In addition, we're leveraging the strength of our sales force to drive identified demand and experienced healthy overall growth, particularly in EMEA. In the first quarter, we signed about 200 new logos. Consistent with prior periods, we continue to see strong momentum in multi-solution adoption, with approximately half of new logos purchasing two or more solutions at last. This contributed to a year-over-year double-digit percent increase in new business deal sizes in the first quarter of 2025.

Erica: We're leveraging the strength of our sales force to drive <unk> demand and experienced healthy overall growth, particularly in EMEA.

Erica: In the first quarter, we signed about 200, new logos consistent with prior periods. We continue to see strong momentum in multi solution adoption with approximately half of new logos purchasing two or more solutions Atlanta.

Erica: This contributed to a year over year double digit percentage increase in new business deal sizes in the first quarter of 2025.

Erica Smith: All P&L line items will be discussed on a non-GAP basis. Please see the full GAP-to-non-GAP reconciliation in the tables of our pressure. First quarter gross profit was $269 million or an 85% gross margin. The expansion of our gross margin was in part due to that higher self-hosted subscription revenue in the quarter, as I mentioned earlier, our operating income was $57.5 million or 18% operating margin, well ahead of our guidance. Our operating margin expanded by three percentage points from Q1 of last year, even as we absorbed over 400 employees from Venify and incurred approximately six weeks of expenses from the Zillow acquisition.

Erica: All P&L line items will be discussed on a non-GAAP basis. Please see the full GAAP to non-GAAP reconciliation in the tables of our press release first quarter gross profit was $269 million or an 85% gross margin.

Erica: The expansion of our gross margin was in part due to that higher self hosted subscription revenue in the quarter as I mentioned earlier, our operating income was $57 $5 million or 18% operating margin well ahead of our guidance our operating margin expanded by three percentage points from Q1 of last year.

Erica: Even as we absorbed over 400 employees from <unk> and incurred approximately six weeks of expenses from the Zale acquisition.

Erica Smith: We ended March with approximately 3,930 employees worldwide, including adding approximately 60 employees from Zillow. We had approximately 1,590 employees in sales and marketing at the end of the quarter. Net income came in at $50.3 million, or $0.98 per diluted share, also ahead of our guidance. We generated strong free cash flow of $95.5 million, or a margin of about 30% in the first quarter. This performance reflects the power of our recurring revenue model, our disciplined execution, and the continued operating efficiency.

Erica: We ended March with approximately 3930 employees worldwide.

Erica: <unk> added a adding approximately 60 employees from Zyla, we had approximately 1590 employees in sales and marketing at the end of the quarter.

Erica: Net income came in at $53 million or 98 cents per diluted share also ahead of our guidance, we generated strong free cash flow of $95 $5 million or a margin of about 30% in the first quarter.

Erica: This performance reflects the power of our recurring revenue model, our disciplined execution and our continued operating efficiency.

Erica Smith: We continued to maintain a strong balance sheet and ended the quarter with approximately $776 million in cash, which takes into account the approximately $165 million of consideration paid for the Zillow acquisition in Q1.

Erica: We continue to maintain a strong balance sheet and ended the quarter with approximately $776 million in cash.

It takes into account the approximately $165 million of consideration paid for the Zale acquisition in Q1.

Erica Smith: Before moving to our guidance, I want to comment on the macroeconomic environment. As you can see from our strong Q1 results, the recent macroeconomic conditions have not impacted our business. Demand remains robust across our platform and our solutions. Execution is strong, and Venafi is performing ahead of our expectations. As Matt discussed, identity security continues to be a top priority for CIOs and for CISOs. And we believe spending on security is resilient across macroeconomic environments. That said, despite the strength in our pipeline and the strategic importance of identity, we are taking the current macro economic environment into consideration in our full year 2025 outlook.

Erica: Before moving to our guidance I want to comment on the macro economic environment. As you can see from our strong Q1 results. The recent macroeconomic conditions have not impacted our business demands demand remains robust across our platform and our solutions execution is strong and <unk> perform.

Erica: Me ahead of our expectations as Matt discussed identity security continues to be a top priority for <unk> and for <unk> service and we believe spending on security is resilient across macroeconomic environments.

Erica: That said, despite the strength in our pipeline and the strategic importance of identity. We are taking the current macro economic environment in to consideration in our full year 2025 outlets.

Erica Smith: Now, turning to our guidance. For the second quarter of 2025, we expect total revenue to be between $312 to $318 million. We expect non-GAAP operating income to be in the range of $41.5 million to $46.5 million for the second quarter. That includes the seasonal increase in marketing expenses related to our Impact customer event, as well as our Impact World Tour. It also reflects a full quarter of costs related to the ZILLA acquisition. We expect our non-GAAP EPS to be in the range of $0.74 to $0.81 per diluted share. Our guidance assumes 51.5 million weighted average diluted share is outstanding.

Erica: Now turning to our guidance for the second quarter of 2025, we expect total revenue to be between $312 million to $318 million. We expect non-GAAP operating income to be in the range of $41 5 million to $46 $5 million for the second quarter that includes the <unk>.

Erica: Seasonal increase in marketing expenses related to our impact customer event as well as our impact World Tour. It also reflects a full quarter of costs related to the Zale acquisition.

Erica: We expect our non-GAAP EPS to be in the range of 74 to.

Erica: To <unk> 81 per diluted share our guidance assumes 51 5 million weighted average diluted shares outstanding. It also assumes about $8 $5 million in financial income and a tax rate of 24% in the second quarter.

Erica Smith: It also assumes about $8.5 million in financial income and a tax rate of 24% in the second quarter. For the full year, we are increasing our total revenue to be in the range of $1.313 billion to $1.323 billion, representing 32% year-over-year growth at the midpoint of the range. Keep in mind, the 2025 growth rate includes a full year of Venafi contribution in 2025 compared to just one quarter in 2024. We are increasing our full year non-GAAP operating income to be between $221 million and $229 million. We expect our non-GAAP EPS to be between $3.73 and $3.85 per diluted share for the full year.

Erica: For the full year, we are increasing our total revenue to be in the range of 1.313 billion to 132 $3 billion, representing 32% year over year growth at the midpoint of the range keep in mind, the 'twenty to 'twenty five growth rate includes a full year of identified contribution in.

Erica: 2025, compared to just one quarter in 2024.

Erica: We are increasing our full year non-GAAP operating income to be between $221 million and $229 million, we expect our non-GAAP EPS to be between $3 73.

Erica: And $3.85 per diluted share for the full year.

Erica Smith: That assumes 51.6 million weighted average diluted shares and approximately $32 million in financial income. We are now assuming a tax rate of 24% for the full year. We expect our annual recurring revenue to be in the range of $1.410 billion and $1.420 billion at December 31, 2025, representing about 21% year over year growth at the mid Turning to cash flow, we expect adjusted free cash flow for the full year 2025 to be in the range of $300 to $310 million, representing an adjusted free cash flow margin of 23% at the midpoint. As outlined in our press release, Adjusted Free Cash Flow excludes the estimated one-time tax payment of $42 million related to the migration of Venafi's SaaS IP to our Israeli entities.

Erica: That assumes 51 6 million weighted average diluted shares and approximately $32 million in financial income we.

Erica: Now assuming a tax rate of 24% for the full year.

Erica: We expect.

Erica: Our annual recurring revenue.

Erica: To be in the range of one for one zero billion dollars and one $420 billion at December 31, 2025, representing about 21% year over year growth at the midpoint.

Erica: Turning to cash flow, we expect adjusted free cash flow for the full year 2025 to be in the range of $300 million to $310 million, representing an adjusted free cash flow margin of 23% at the midpoint.

Erica: As outlined in our press release adjusted free cash flow excludes the estimated one time tax payment of $42 million related to the migration of identify SaaS IP to our Israeli entity and about 15 million of capital expenditures associated with leasehold improvements to our new U S headquarter.

Erica Smith: and about $15 million of capital expenditures associated with leasehold improvements to our new U.S. headquarters. We signed a lease for this office space in the second quarter. We expect to incur a $15 million in capital expenditures, primarily in the third and fourth quarters of 2025. Accordingly, we are raising our CapEx forecast to be between 2.5% and 3% of revenue.

Erica: We signed a lease for this office space in the second quarter.

Erica: Okay.

Erica: We expect to incur a $15 million in capital expenditures, primarily in the third and fourth quarters of 2025.

Erica: Accordingly, we are raising our capex forecast to be between two 5% and 3% of revenue I also want to comment on taxes. The reduction in our estimated IP transfer tax payment from approximately $70 million to $42 million is in part due to the certain tax credits and the strong.

Erica Smith: I also want to comment on taxes. The reduction in our estimated IP transfer tax payment from approximately $70 million to $42 million is in part due to the certain tax credits and the strong growth in our U.S. business. As a result of this growth, Cyberark is now subject to approximately $17 to $20 million of U.S.-based erosion taxes under the Tax Cuts and Jobs Act, also referred to as BEAT tax. This tax expense was not anticipated in the initial February guidance, and it is in part related to the IP transfer. The BEAT tax will be an ongoing expense, and as a result, we've absorbed it within our reported free cash flow guidance.

Erica: Growth in our U S business as a result of this growth cyber is now subject to approximately 17% to $20 million of U S base erosion taxes under the tax cuts and jobs Act.

Erica: Also referred to as beat tax this tax expense was not anticipated in the initial February guidance and it is part and it is in part related to the IP transfer the beat tax will be an ongoing expense and as a result, we've absorbed it within our reported free cash flow guidance to sum up we're pleased with our strong.

Erica Smith: To sum up, we're pleased with our strong first quarter results, which underscores the continued prioritization of identity securities by enterprises around the world. As a market leader, we are well positioned to capture greater share of security spend as customers consolidate around strategic platforms. Our solutions continue to deliver significant value by addressing critical security challenges, improving resiliency, and driving operational efficiency.

Erica: First quarter results, which underscores the continued prioritization of identity securities by enterprises around the world.

Erica: As a market leader, we are well positioned to capture a greater share of security spend as customers consolidate around strategic platforms. Our solutions continued to deliver significant value by addressing critical security challenges, improving resiliency and driving operational efficiencies.

Kate: With that, I will turn the call over to the operator for Q&A. Operator? At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad.

Erica: With that I will turn the call over to the operator for Q&A operator.

Erica: At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, we encourage everyone to limit yourselves to one question and one follow up.

We encourage everyone to limit yourselves to one question and one follow-up. We will pause for just a moment to compile the Q&A roster.

We will pause for just a moment to compile the Q&A roster.

Saket Kalia: Your first question comes from the line of Saket Kalia with Barclays. Your line is open. Okay, great. Hey guys, thanks for taking my questions here and nice start to the year. Thanks, Saket. Sure.

Erica: Your first question comes from the line of socket Calia with Barclays. Your line is open.

Erica: Okay, Great Hey, guys. Thanks for taking my questions here and nice start to the year.

Erica: Socket, Thank sockets sure Matt maybe for you.

Matthew Cohen: Matt, maybe for you. I'd love if you could just talk a little bit about customers' willingness to buy multiple products here, as you become more of an identity platform. I mean, you had some great customer examples, right, that you spoke about in prepared remarks. Erica, I think, threw out some stats in her prepared remarks as well. But maybe you could just bring that home for us. And maybe also touch on what are you doing to drive that multi-product sale? Yeah, sure, Saket. And listen, I shared a little bit of some examples of the conversations I was having at Impact and the conversations I had at RSA, and frankly, the conversations I have every day here at our visit center.

Speaker Change: I'd Love, if you could just talk a little bit about cusp.

Erica: Customers' willingness to buy multiple products here.

You become more of an identity platform I mean, he had some great customer examples right that you spoke about in the prepared remarks, Eric I think throughout some stats in her prepared remarks as well, but maybe you could just bring it home for us and maybe also touch on what are you doing to drive that multi product sale more.

Erica: Yeah, sure socket and unless the night.

Speaker Change: I shared a little bit of some examples of the conversations I was having an impact in the conversations I had at RSA and frankly, the conversations I have every day here at our visit center and I would tell you that theres not one conversation I have not one that isn't multi product or multi solution based.

And I would tell you that there's not one conversation I have, not one, that isn't multi-product or multi-solution based. You know, customers want to engage in a conversation that is specifically around how do they tackle their entire identity security problems or opportunities? It can be that they want to talk about human and machine, and we're talking about, you know, PAM plus machine identity, either in the form of Secrets and Identify or both. It can be on the human spectrum. How do they actually get all of their human identities covered from IT to developers back into the workforce?

Customers want to engage in a conversation that is specifically around how do they how do they tackle their entire identity security problems or opportunities there it could be that they want to talk about human and machine in and we're talking about Pam plus machine identity in the either in the former secrets indemnify, our both it can be on the humans.

Speaker Change: Backstrom, how do they actually get all of their human identities covered from IP.

Speaker Change: <unk> to developers back into the workforce and we're talking about not only our it solutions, but also our endpoint solutions as well as our access solutions.

And we're talking about not only our IT solutions, but also our endpoint solutions, as well as our access solutions. It's really across the board, and it's the foundation of our entire discussion. It's our entire strategy at this point.

Speaker Change: Really across the board and it is the foundation of our entire discussion is our it's our entire strategy at this point. So what are we doing we continue to elevate the team's ability to talk platform versus individual areas. We go in and we talk about three year Roadmaps I'm really around value around architecture, and then ultimately how do you build that in.

So what are we doing? We continue to elevate the team's ability to talk platform versus individual areas. We go in and we talk about three-year roadmaps, really around value, around architecture, and then ultimately, how do you build that into a plan? Even customers that want to get started with one solution, Erica mentioned that about 50% or so of new logos land with multiple solutions, but even the ones that don't are working with us on that roadmap, on that architecture about where they're going to go over time, and ultimately, that lends itself to our confidence in what we're going to be able to get from a lifetime value out of our customer base.

Speaker Change: Two our plan even customers that want to get started with one solution, Eric mentioned that about 50% or so of new logos land with multiple solutions, but even the ones that don't are working with us on that roadmap on that architecture about where theyre going to go over time, and ultimately that lends itself to our confidence in.

Speaker Change: What we're going to be able to get from a lifetime value out of our customer base.

Speaker Change: Yeah.

Erica Smith: That makes a ton of sense.

Matt Com: That makes a ton of sense Erika maybe for my follow up for you.

Erica, maybe for my follow-up. Obviously, a smaller and smaller part of the business. But can we just talk a little bit about the maintenance business? You know, how do you think about that, that sort of decline or shift this year? And how are you thinking about that conversion? Yeah, Saket, it's a great question on that maintenance business. We're at about, you know, that $188 million. And I think all of the things that Matt just talked about really do apply to that maintenance business as well, meaning that the customer base is now more willing to move to our SaaS and our subscription solutions.

Matt Com: Obviously, a smaller and smaller part of the business, but can we just talk a little bit about the maintenance business. How do you think about that that sort of decline a shift this year and how are you thinking about that conversion opportunity.

Yeah. It's a great question on that maintenance business were at about $188 million and I think all of the things that Matt just talked about really do apply to that maintenance business as well, meaning that the customer base is now more willing to move towards SaaS and subscription solutions, we saw a little bit of an uptick.

We saw a little bit of an uptick in the in the conversion activity in Q1. As I mentioned, in the prepared remarks, it was still a single digit percent of our overall growth. But we did see a slight uptick, tick. I think as we progress through the year, our expectation is, is that the readiness of our customer base is increasing. And we do think we'll see an increase of that maintenance ARR coming down. Think about it in the tune of about $15 million, roughly. But I think really, there is a tremendous opportunity for us there to continue to execute on that maintenance ARR.

Matt Com: In the conversion activity in Q1 as I mentioned in the prepared remarks. It was still a single digit percentage of our overall growth, but we did see a slight uptake tick I think as we progress through the year. Our expectation is is that the readiness of our customer base is increasing and we do think we'll see an increase of that maintenance.

Matt Com: <unk> coming down and think about it in the tune of about $15 million roughly but I think really there is a tremendous opportunity for us there to continue to execute on that maintenance IRR and the customer readiness is moving in that direction. We don't expect it to be a meaningful change in what we've seen in the past and still a single digit percent to the overall growth but.

And the customer readiness is moving in that direction. We don't expect it to be a meaningful change in what we've seen in the past, and still a single digit percent to the overall growth. But there should be an uptick as we move through the year here.

Matt Com: There should be an uptick as we move through the year and maybe just one add for me just again back because it's so fresh in my mind, all the customer conversations we've been having an impact I got a chance to meet with several customers who have been customers of ours for a long time think financial institutions, and we're having conversations with them about migrate.

And maybe just one add for me, just again, back because it's so fresh in my mind, all the customer conversations we've been having. You know, at Impact, I got a chance to meet with several customers who have been customers of ours for a long time, think financial institutions. And, you know, we're having conversations with them about migration and conversion. Now, it takes a while to plan those things out. But the number one comment I heard coming into those conversations was, I'm excited by what you guys are talking about on stage. I want that platform, help me figure out how to get there.

Matt Com: <unk> and conversion now it takes a while to plan those things out, but the number one comment I heard coming into those conversations was I'm excited by what you guys are talking about on stage I want that platform help me figure out how to get there and I think that sets. The stage for the next couple of years as we think about the migration and conversion opportunity.

And I think that sets the stage for the next couple of years as we think about the migration and conversion opportunity. Super helpful guys, thank you. Thanks, Saket.

Matt Com: Super helpful guys. Thank you.

Matt Com: And second.

Joe Gallo: Your next question comes from the line of Joe Gallo with Jefferies. Your line is open. Hey, everyone. Thanks for the question. Erica, I wanted to circle back to what you said regarding guidance. Have you seen macro headwinds or you're just embedding that it gets worse in your updated guidance? Can you just walk us through any changes to your process versus 90 days ago? We have not seen any macro headwinds. Our Q1 results were strong, pipeline continues to be strong, close rates were consistent. I think we just wanted to, as we look at the macro volatility we were seeing in the market, we wanted to make an assumption in the guide that took a bit more conservatism than certainly we were seeing in the trends and the data.

Speaker Change: Your next question comes from the line of Joe got Little with Jefferies. Your line is open.

Speaker Change: Hey, everyone. Thanks for the question, Eric I wanted to circle back to what you said regarding guidance have you seen macro headwinds or you're just embedding and then it gets worse and your updated guidance can you just walk us through any changes to your process versus 90 days ago.

Speaker Change: Not seeing any macro headwinds our Q1 results were strong pipeline continues to be strong close rates were consistent I think we just wanted to as we looked at the the macro volatility we're seeing in the market. We wanted to make an assumption in the guy that.

Speaker Change: It took a bit more conservatism than certainly we were seeing and the trends in the data.

And so when you think about that guidance, if the macro holds and the trends we saw in Q1 persist as we move through the year, there's room for us to move that guidance up. But given that we were in the first quarter, there were a lot of moving parts around the tariffs and around the broader macro.

Speaker Change: So when you think about that guidance if the macro holds and the trends we saw in Q1 persist as we move through the year, there's room for us to move that guidance out, but given that we were in the first quarter. There were a lot of moving parts around the tariffs and around the broader macro we thought it best to take a more prudent.

Joe Gallo: We thought it best to take a more prudent approach to those very strong metrics we were seeing coming out of the first quarter and apply that to the guidance as we move forward. Crystal Clear.

Speaker Change: <unk> approach to those very strong metrics metrics, we're seeing coming out of the first quarter and apply that to the guidance as we move forward yet.

And then maybe as a follow up, you know, how should we think about sales capacity, sales comfortability, selling Venafi in this ever broadening portfolio and where your go to market investments are going? Yeah, I'll jump in there. I mean, we, we see an uptick of, of Venify pipeline at a really strong rate. We see, you know, sales across not just Americas where they were traditionally strong, but actually into EMEA and APJ, you know, running Venify and kind of machine identity as a whole, cross-sell campaigns, we see a real exceptional reception from the customers. In fact, actually, while we talk here, the European impact events are going on this week.

Speaker Change: Crystal clear and then maybe as a follow up how should we think about sales capacity sales comfortably selling benefit in this ever broadening portfolio and where your go to market investments are going.

Speaker Change: Yeah I'll jump in there I mean, we we see an uptick of of verified pipeline at a really strong rate we see sales.

Speaker Change: Across not just Americas, where they were traditionally strong, but actually into EMEA and a P. J running verify and kind of machine identity as a whole cross sell campaigns, we see a real exceptional reception from the customers in fact actually while we talk here the European impact events are going on this week.

Matthew Cohen: And I got notes this morning about, about the level of attendance in our machine identity sessions that are going on there. So I think across the board, we see a go-to-market organization that's poised to attack that opportunity. I think they're also extremely excited about the Zillow opportunity in the IGA space, and they continue to see momentum in just our core business around human identity security. And so across the board, it's a good time to be in go-to-market at CyberArk. And we feel, we feel that when we're out there in the field meeting with the team.

Speaker Change: And I got notes this morning about about the level of attendance in our machine identity sessions that are going on there. So I think across the board. We see a go to market organization that is poised to attack that opportunity I think they are also extremely excited about the zelle opportunity in the Iga space.

Speaker Change: And they continue to see momentum in just our core business around human identity security and so across the board. It's a good time to be in go to market at cyber Ark and.

Speaker Change: And we feel we feel that when we're out there in the field meeting with the teams.

Thanks and nice job guys.

Speaker Change: Thanks, and nice job guys.

Speaker Change: Thank you.

Brian Essex: Your next question comes from the line of Brian Essex with J.P. Mergen.

Speaker Change: Your next question comes from the line of Brian Essex with Jpmorgan. Your line is open.

Speaker Change: Hi, This is Charlie <unk> on for Brian. Thank you so much for taking my question and it was nice to see great results.

Speaker Change: Now that we're in still in early days on Zillow and <unk> can you talk about if you've seen any trends of adoption across segments, sorry about it just like size of customers is there anyone that's particularly looking to adopt.

Speaker Change: Such technologies. Thank you.

Sure, so let me start, you know, they're obviously in different points of maturity of absorption within the company. So Ventify, we've got a couple quarters under our belts. We've been out there training, enabling, working with our customers, working with our sales teams, working with our partners. And ultimately, what we're seeing is kind of universal interest. And I mentioned that little story about our RSA booth around this 47-day mandate around certificate life cycles, because it was really remarkable. It was remarkable to see customers come in, and basically from all segments, big and small, and say, can you help us with this problem?

Speaker Change: Sure. So let me start there obviously indifferent.

Speaker Change: <unk> of maturity of absorption within the company. So verified we've got a couple of quarters under our belts, we've been out there training, enabling working with our customers working with our sales team is working with our partners and ultimately what we're seeing is kind of universal interest and I mentioned that little story about R. R.

Speaker Change: It's a booth around this 47 day mandate around certificate life cycles, because it was really remarkable it was remarkable to see customers come in and basically from all segments Big and small and say can you help us with this problem and I think that's what we're seeing across the board is as a shift I think we talked about it when we acquired.

Matthew Cohen: And I think that's what we're seeing across the board, is a shift. I think we talked about it when we acquired Ventify, that we were seeing that shift in the market, where the time for machine identity security was now, where certificate life cycle management was becoming top of mind. And even though it had been a long process to get here, we felt like we could really amplify the success that Ventify was going to be able to have in the market. Well, that is what we're seeing across the board. We see it in our sales reception.

Speaker Change: Benefit that we were seeing that shift in the market, where the time for a machine identity security was now we're certificate lifecycle management was becoming top of mind and even though it had been a long process to get here. We felt like we could we could really amplified the success that Ben if I was going to be able to have in the market well that that is what we're seeing across the board.

Speaker Change: And we see it in our sales reception, we see in our customer reception and ultimately we see it in the pipeline build Villa is earlier days Zillow, where we're starting the conversations but I would say there it's been an interesting.

We see it in our customer reception. And ultimately, we see it in the pipeline build.

Matthew Cohen: Zillow is earlier days. You know, Zillow, we're starting the conversations. But I would say there, it's been an interesting set of dozens and dozens, if not hundreds of conversations, where customers are coming to us, and they're really leaning in to the thesis of the acquisition. They're saying, we've deployed a traditional IGA provider out there in the market. We've spent a lot of money deploying that. And the time to value has taken a very long time. Can you help us get started on managing the governance and administration of our modern environments? Because we need to move faster.

Speaker Change: Set of dozens and dozens if not hundreds of conversations where customers are coming to us and they are really leaning in to the thesis of the acquisition, they're saying we've deployed a traditional idea iga provider out there in the market. We've spent a lot of money deploying that.

Speaker Change: And the time to value has taken a very long time can you help us get started on managing the governance and administration of our modern environments, because we need to move faster we needed to be more efficient more effective we need to have apps online in days and weeks not months and years.

We need it to be more efficient, more effective. We need to have apps online in days and weeks, not months and years. And that type of discussion is what frames our early discussions around Zillow. And ultimately, it gives us the optimism that as we get into the back half of this year, and certainly into 2026, that Zillow can start to contribute as we get past the sales cycles that we need to build.

Speaker Change: And that type of discussion is what frames our early discussions around zyla.

Speaker Change: And ultimately it gives us the optimism that as we get into the back half of this year and certainly into 2026 that silicon start to contribute as we get past the sales cycles that we need to build.

Matthew Cohen: Thank you so much for the color.

Speaker Change: Thank you so much for the color.

Your next question comes from the line of Matt Hedberg with RBC Capital Markets. Your line is open. Great. Thanks for taking my question, guys. Matt, I had a question on pricing. In your prepared remarks, you noted that the number of machines to humans has increased pretty significantly. I think you said it was 45 to 1, now it's 80 to 1. I can imagine a similar dynamic will play out for agents as agent proliferation continues. I guess the question is, how do you think about pricing longer term from these non-human identities, especially as the numbers increase?

Speaker Change: Your next question comes from the line of Matt Hedberg with RBC capital markets. Your line is open.

Matt Hedberg: Great. Thanks for taking my question guys.

Matt Hedberg: Matt I had a question on pricing you know in your prepared remarks, you noted that the number of machines to humans is has increased pretty significantly I think you said it was 45 to one now it's 80 to one.

Matt Hedberg: You know I can imagine a similar dynamic will play out for agents as agent proliferation continues.

Speaker Change: The question is is how do you think about pricing longer term from these nonhuman identities, especially as the numbers increase I mean do you kind of think that it has to evolve over time.

Matt Hedberg: Do you think that it has to evolve over time? Yeah, Matt, great question. I think as we as we look forward, the lens we should look through is the machine lens, even when we're applying it against the AI agent space, which is the idea that it becomes a curve, right? As you get exponential numbers, the price per agent or in the case of machines, the price per application or workload starts to come down. And in some cases, it comes down dramatically. You know, I don't think anyone's going to be, you know, if they have hundreds of millions of agents running around, they're not going to be paying us, you know, top dollar for every agent, but you're going to start to see the deals as a deal size, continue to increase, you know, already, we see the average deal size on the machine side is, is often two or three x, what we see if we're just going out there and selling PAM.

Matt: Yeah, Matt Great question, I think as we as we look forward.

Matt: The lens, we should look through is the machine lens, even when we're applying it against the AI agent space, which is the idea that it becomes a a curve right as you get exponential numbers the price per agent or in the case of machines, the pace per application or workload starts to come down and in some cases comes down dramatically.

Matt: Anyone is going to be there.

Matt: Hundreds of millions of agents running around there that could be paying us top dollar for every agent, but youre going to start to see the deals as a deal size continue to increase you know already we see the average deal size on the machine side is is often two or three act, what we see and if we're just going out there and selling Pam and I expect that to.

And I expect that to be similar on the AI agent side, even at the scale we're talking about. So I think it is a slightly different pricing model in that you're able to scale the cost effectively or efficiently, as the numbers become really large. But ultimately, it's the total deal size that matters. And we're optimistic about what those average deal size will look like as we scale that piece of the business. Thanks a lot. Well done, guys. Thank you, Matt.

Matt: Similar on the agent side, even at the scale, we're talking about so I think it is a slightly different pricing model in that you are able to scale the cost of thick effectively or efficiently as the numbers become really large but ultimately it's the total deal size that matters and we're optimistic about what those average deal size will look.

Matt: As we scale that piece of the business.

Matt: Very clear thanks, a lot guys. Thank.

Matt: Thank you Matt.

Keith Wise: Your next question comes from the line of Keith Wise with Morgan Stanley. Your line is open. Mr. Keith Wise, your line is open. Sorry. Thank you guys for taking the question and congratulations on a good quarter.

Speaker Change: Your next.

Keith Weiss: Next question comes from the line of Keith Weiss with Morgan Stanley. Your line is open.

Keith Weiss: Mr. Keith Weiss your line is open.

Keith Weiss: Thank you guys for taking my question and congratulations on a good quarter.

Two questions, one kind of more strategic, one more tactical. On the strategic side of the equation, definitely heard and felt the excitement around identity and identity security at RSA. A lot of vendors are running around trying to tell their new identity stories. Have you been seeing any change in the competitive environment? I'm sure you do to some extent now that like Fennify and Zillow are part of the equation. So perhaps you could talk to us about the evolution of your competitive environment, who you see yourselves coming up against more so as you sell the broader set of solutions into the customers.

Keith Weiss: Two questions one kind of more strategic one more tactical on the strategic side of the equation definitely heard and felt the excitement around identity and identity security at RSA a lot of vendors are running around trying to tell their new <unk>.

Speaker Change: Identity stories have you been seeing any change in the competitive environment and I'm sure you do it to some extent now that it's been defined zillow are part of the equation. So perhaps you could talk to us about the evolution of your competitive environment, who you see yourself coming up against.

Keith Weiss: More so as you sell the broader.

Speaker Change: Set of solutions into the customers.

Keith Wise: And then on the more tactical side, and this is I think one of the bits that's going on in our e-mail boxes right now, you haven't spoke specifically to the contribution of ARR from Fennify or Zillow. But if we think about that $51 million in net new ARR, is that still growing on a year-on-year basis if we take out the incremental contributions from Fennify and Zillow?

Speaker Change: And then on the more tactical side and this is I think one of the bits that's going on in our email boxes right now.

Speaker Change: You Havent spoke specifically to the contribution or they are often identify or zyla, but if we think about that $51 million and net new air or.

Speaker Change: Is that still growing on a year on year basis, if we take out the incremental contributions from identifying zyla.

Yeah, so why don't Erica, why don't you jump in on the second one, and then I'll come back around to the first. Yeah, so I think the way you should really think about the contribution and the growth of Net New ARR, we are seeing their growth on the subscription Net New ARR side, and so that would be where we would anchor. We aren't going to break out the various component parts. I think that the reality is that there's a lot of customers that are beginning to buy the combined SKUs, and then when you kind of think about the broad platform selling motion, you are seeing some very strong synergies across the broader platform, but you should think of that as being a Net New ARR growing, but we aren't going to break it out in more granularity.

Speaker Change: Yeah, So Eric let you jump in on the second one and then I'll come back around on the <unk>. Yeah. So I think the way you should really think about the the contribution and the growth of menu I E are we are seeing their growth on the subscription net new <unk> side, and so that would be where we would anchor we arent going to break out the various component parts.

Speaker Change: I think that the reality is is that there's a lot of customers.

Speaker Change: Customers that are buying are beginning to buy the combined Skus and then when you think about the broad.

Speaker Change: Platform selling motion you are seeing some very strong synergies across the broader platform, but you should think of that as being a.

Speaker Change: Nowhere are growing.

Speaker Change: But we aren't going to break it out in more granularity net new.

Matthew Cohen: Net New ARR organic subscription growing. Yeah, 100%. Yeah, exactly.

Speaker Change: Organic subscription growth, yes exactly.

Okay, I think on the more strategic question, you know, I was at that RSA conference as well, and I like to do it too. I do it to myself. I walk the booths, and I walk around the floor, and I feel out what's going on, and at one level, you're right, it's like identity, identity, identity in every booth, and on the other side, it's what is the message that they're trying to tell, and I think what you see with those kind of upstart competitors is that they're trying to solve a small slice of the identity security problem.

Speaker Change: I think on the one.

Speaker Change: On the more strategic question I was at that RSA conference as well.

Speaker Change: I can do it too I do it myself I walked walked the booths at I walk around the floor and I feel out what's going on and at one level, you're right. It's like identity identity identity and every booth and on the other side. It is what is the message that they're trying to tell and I think what you what you see with those kind of upstart competitors is that they're trying to solve a small.

Speaker Change: Slice of the identity security problem, they may be talking a big message, but when you actually pin them down and ask what's the use case, they're solving a very narrow use case I think what differentiates us in the market.

Matthew Cohen: They may be talking a big message, but when you actually pin them down and ask what's the use case, they're solving a very narrow use case. I think what differentiates us in the market and is the reason for our strong results and our outlook going forward is identity security can't be solved in small little increments. In fact, CISOs are overwhelmed with all the tools they already have. They don't need more tools to go do small levels of solutions. They need a tool that actually can solve human and machine. We are the only one in the market that's able to do that.

Speaker Change: And is the reason for our strong results and our outlook going forward is the Denny security can't be solved in small little increments. In fact sito's are overwhelmed with all the tools. They already have they don't need more tools to go do small levels of solutions. They need a tool that actually can solve human and machine. We are the only one in the market that.

They need one that can apply privilege controls effectively, not only in a standing access motion, but also in this just-in-time, zero-standing privilege access. We're the only ones who can do that, and ultimately, those are the conversations we're having with customers where, yeah, of course they hear the noise, and they see some of these other providers, and then we sit down and we do these, again, value architecture roadmap workshops, and coming out of that, they see that actually their best path forward for actual coverage and ultimately consolidation is to come on to our platform. Ultimately, the short answer to that is we don't really see a strong change in the competitive positioning or competitive situation.

Speaker Change: Table to do that they need one that can apply privilege controls effectively not only in our standing access motion, but also in this just in time zero standing privilege access we're the only ones who can do that and ultimately those are the conversations we're having with customers where yes of course, they hear the noise and they see some of these other providers and then we sit.

Speaker Change: Down and we do these again value valuable architecture roadmap workshops.

Speaker Change: Coming out of that they see that actually their best path forward for actual coverage and ultimately consolidation is to come on to our platform. So ultimately the answer the short answer to that is we don't really see a strong change in the competitive positioning.

Speaker Change: Our competitive situation, we don't see somebody growing and competitiveness at the moment and ultimately we find the market to be the same market that we're operating in from a competitive positioning last year and the year before.

Matthew Cohen: We don't see somebody growing in competitiveness at the moment, and ultimately, we find the market to be the same market that we were operating in from a competitive positioning last year and the year before.

Your next question comes from the line of John DiFucci with Guggenheim Securities. Your line is open. Thank you.

Speaker Change: Your next question comes from the line of John di Fucci with Guggenheim Securities. Your line is open.

Speaker Change: Thank you.

John DiFucci: I want to go back to Joe Gallo's question, Erica, you said you're being just being more conservative with annual ARR guidance, but just trying to gauge that a little bit more, Matt talked a lot about conversations with customers for machine identity that make Cyberark feel good about the future there. I mean, even though the quarter was strong, and it was, and pipeline is good, are there, is it customer conversations that give you pause on that guidance? Or is it just the press? Because that could change day to day. Yeah, no, I mean, it's a great question, John.

Speaker Change: I want to go back to Joe <unk> question, Eric You said, you're being just being more conservative with annually our guidance, but just trying to gauge that a little bit more Matt talked a lot about conversations with customers for machine identity that may.

Speaker Change: February feel good about the future there.

Speaker Change: Even though the quarter was strong and it was in pipeline is good are there is it customer conversations that give you pause on that guidance or is it just the press.

Speaker Change: That could change day to day.

Speaker Change: Yeah, No I mean, it's a great question, Jon and it really customer conversations as Matt outlined have been incredibly positive and so if you think about impact or impact event, where we had very constructive conversations with the customers not just about machine identities, but across the broader platform.

And it really, customer conversations, as Matt's outlined, have been incredibly positive. And so, you know, if you think about impact, our impact event, where we had very constructive conversations with the customers, not just about machine identities, but across the broader platform, and our offerings, it's been very consistently positive. So really, when we provided the guidance, it was more around the fact that we weren't sure of what the impact would be on our customers, if there were things around tariffs that had moved forward. So we wanted to be more prudent in the guidance, and really take a haircut against some of the metrics that we saw in the first quarter, to ensure that if something were to happen in the back half of the year, that we accounted for that in the guidance.

Speaker Change: And our offerings.

Speaker Change: It's been very consistently positive so really when we provided the guidance. It was more around the fact that we weren't sure of what the impact would be on our customers. If there were things around tariffs that had moved forward. So we wanted to be more prudent in the guidance.

Speaker Change: And really take a haircut against some of the metrics that we saw in the first quarter to ensure that if something were to happen in the back half of the year that we accounted for that in the guidance at this point. It just didn't seem like there was much benefit to us being more aggressive on the guide. Despite the positive feedback we were getting from the customers.

John DiFucci: At this point, it just didn't seem like there was much benefit to us being more aggressive on the guide, despite the positive feedback we were getting from the customers. So nothing to make us pause at this point, but we thought that it was the right approach for us to take given what the noise that we were hearing in the broader macro.

Speaker Change: Nothing to make us pause at this point, but we thought that it was the right approach for us to take given what the noise that we were hearing and in the broader macro.

Yeah, maybe just, since I'm in those customer conversations and I'm generally talking to C-suite there, and in some cases, you know, even hire a board or two, you know, what is on their mind? is the macros. Like, let me be clear, like our customers, when you meet with an auto OEM in Germany, they're worried about the tariffs. When you meet with, you know, manufacturing organization here in the US, that's planning out their strategy, they're worried about the economics and the tariffs. We get into a conversation about that. And I noticed the worry. We then get into a conversation about their cybersecurity strategy, what they have to go do and where identity security ranks on their list.

Speaker Change: He just said some in those customer conversations and I'm generally talking to C suite, there and in some cases, even even higher aboard or to.

Speaker Change: What what is on their mind.

Speaker Change: Is the macros like let me be clear like our customers when you meet with an auto OEM in Germany, there, they're worried about the tariffs when you meet with manufacturing organization here in the U S. That's planning out their strategy, they're worried about the economics and the tariffs we get into a conversation about that and I noticed the.

Speaker Change: The worry we then get into a conversation about their cyber security strategy, what they have to go do and where identity security ranks on their list and my worry kind of moves away for a while but you know when you're having those conversations about the overall macros with customers you have to take that into account from where you sit in your.

Matthew Cohen: And my worry kind of moves away for a while. But you know, when you're having those conversations about the overall macros with customers, you have to take that into account from where you sit, and you're watching carefully to understand if it's ever going to come in to your space and have impact on your business. That's the smart thing to go do. So I think what Erica is really emphasizing is we sat down and we said, listen, based upon that uncertainty that our customers have around the broader macros, not specific to us, You know, do we pass our beat through or not?

Speaker Change: Watching carefully to understand if it's ever going to come in <unk> space and have impact on your business. That's the smart thing to go do so I think what Eric is really emphasizing is we sat down and we said listen based upon that uncertainty that our customers have around the broader macro is not specific to us.

Speaker Change: Do we pass our beat through or not and.

And, you know, the thought process was it's Q1. And there's a lot going on. And we probably shouldn't pass our beat through, because that's the responsible thing to go do. So just taking it down to that level there for you.

Speaker Change: The thought process was it's Q1.

Speaker Change: And there's a lot going on and we probably shouldn't pass our breakthrough because that's the responsible thing to go do so just taking it down to that level there for you.

John DiFucci: That that makes sense to me that Erica, but I think the confusion out there with the investment community is that not everybody's done. But thank you for all the explanation. It makes total sense. Thank you. Thank you, John.

Speaker Change: That makes total sense to me that there, but I think.

Speaker Change: The confusion out there with the investment community to use that not everybody has done what you've done and but thank you for all that.

Speaker Change: Explanation it makes total sense.

John: Great. Thank you. Thank you John.

Your next question comes from the line of Roger Boyd with UBS. Your line is open. Great. Thanks for taking the questions. And yeah, congrats on a great quarter. Matt, I appreciate your comments on identity consolidation.

Speaker Change: Your next question comes from the line of Roger <unk> with UBS. Your line is open.

Speaker Change: Great. Thanks for taking the questions and congrats on a great quarter, Matt I. Appreciate your comments on identity consolidation I think maybe just to play Devil's advocate when we talked to see says there's generally an admission that projects around identity can be lengthy complex expensive and to your point around Iga in some cases have significant sunk costs it sounds like youre seeing.

Roger Boyd: I think maybe just to play devil's advocate, when we talk to CISOs, there's generally an admission that projects around identity can be lengthy, complex, expensive, and to your point around IGA, in some cases, have significant sunk costs. It sounds like you're seeing very good momentum on that consolidation kind of play. But as you think about kind of the next couple quarters, what are you contemplating from a sales cycle perspective? Have you seen any sort of expansion to date?

Speaker Change: Very good momentum on that consolidation kind of kind of play, but as you think about kind of the next couple of quarters. What are you. What are you contemplating from a sales cycle perspective have you seen any sort of expansion to date and when Eric when you think about kind of a more conservative outlook is that the primary way that's manifesting as your sales cycle is taking longer.

And when Erica, when you think about kind of a more conservative outlook, is that the primary way that's manifesting is just sales cycles taking longer? Thanks. Yeah, so no, I mean, we haven't seen any change in sales cycles, actually, Q1 was, if anything, a little bit of a tick up in improvement. But overall, they've been pretty consistent, you know, they've been pretty consistent over the last, you know, more than more than several quarters. So I don't think I don't think we see any changes there. You know, in general, our sales process is to talk, as I said, about longer term roadmaps to design out how somebody might take advantage of the platform, but to get them started where they are.

Speaker Change: Yes, no I mean, we haven't seen any change in sales cycles actually Q1 was a if anything a little bit of a tick up in improvement, but overall they've been pretty consistent you know they've been pretty consistent over the last.

Speaker Change: More than more than several quarters. So.

Speaker Change: So I don't think I don't think we see any changes there in general our sales process is to talk as I said about longer term roadmaps to design out how somebody might take advantage of the platform, but to get them started where they are so if they're not ready to make a full platform purchase and get started with one or two solutions and you see that in and some of the new logos.

Matthew Cohen: So if they're not ready to make a full platform purchase, then get started with one or two solutions. And you see that in in some of the new logos that come in. And then over time, we'll expand your footprint and we'll expand you across the whole platform. Most cases, we have a roadmap, a plan for that already, even if they're getting started with with less of the platform. That being said, as Erica mentioned, if you look at our top 10 deals in the quarter in Q1, you know, almost all of them actually nine out of the 10 were multi platform deals, I mean, multi solution deals across the platform.

Speaker Change: Come in and then over time, we will expand your footprint and will expand your across the whole platform. Most cases, we have a roadmap of planned for that already even if theyre getting started with with less of the platform that being said as Eric had mentioned if you look at our top 10 deals in the quarter in Q1.

Speaker Change: Almost all of them actually nine out of the 10 were multi platform deals I mean multi solution deals across the platform and it speaks to the ability we already have to be able to drive that conversation with our customers. So no I don't think it changes the sales cycle because our go to market team is excellent at understanding where the customer.

And it speaks to the ability we already have to be able to drive that conversation with our customers. So no, I don't think it changes the sales cycle, because our go to market team is excellent at understanding where the customer is and to keep them moving on their on their buyers journey, if you will.

Speaker Change: There is and to keep them moving on their on their buyers' journey. If you will I think what you will see is you know.

Matthew Cohen: I think what you will see is, you know, as you try to bring in some of these displacement opportunities, those will take a little bit longer. And so we're not building that into our guidance, you know, the idea that we're going to go in and disrupt legacy IGA, rather than sit alongside of it, we've built in an idea of how we sit alongside of it, we're not going to build in disruption, because that will take that will take a little bit more time to materialize. But in a lot of cases, when we're talking about our platform, you know, they don't have in place the machine side yet.

Speaker Change: You try to bring in some of these displacement opportunities those will take a little bit longer and so we're not building that into our guidance. You know the idea that we're going to go in and disrupt legacy Iga rather than sit alongside of it. We've built in an idea of how we sit alongside of it we're not going to build and disruption because that will take that will take a little bit more time to materialize.

Speaker Change: But in a lot of cases, when we're talking about our platform. They don't have in place the machine side, yet and so it's a it's a pure expansion not a replacement when youre talking about going into the into the access or the workforce side. The APM side and a lot of cases, we're layering security controls on top of what they already have so they don't have to replace.

And so it's a it's a pure expansion, not a replacement, when you're talking about going into the into the access or the workforce side, the EPM side, and a lot of cases, we're layering security controls on top of what they already have. So they don't have to worry replace, and that allows them to efficiently get onto our platform quickly, even in a in a tougher macro environment.

Speaker Change: And that allows them to efficiently get onto our platform quickly even in a tougher macro environment.

Matthew Cohen: Super cool.

Thanks, Matt. Your next question comes from the line of Gregg Moskowitz with Mizzou. Your line is open. All right, thank you very much for taking the question. In your recent identity survey, we found it interesting that 42% of machine identities have access to sensitive data, which is a little higher than it is for human users. And yet only 12%, I think, consider machine identities to be privileged users.

Speaker Change: Super Thanks, Matt.

Speaker Change: Your next question comes from the line of Gregg Moskowitz with Mizuho. Your line is open.

Speaker Change: Alright. Thank you very much for taking the question and your recent identity survey, we found it interesting that 42% of machine identities have access to sensitive data, which is a little higher than it is for human users and yet only 12% I think consider machine identities to be privileged users Matt.

Matthew Cohen: Matt, you mentioned that Ventify is performing ahead of expectation so far, but the data here also shows that there's clearly still an awareness gap. So how do you go about closing? And that's what we're seeing today in the market.

Speaker Change: Matt you mentioned that <unk> is performing ahead of expectation so far but the data here also shows that there is clearly still an awareness gap. So how do you go about closing this.

Speaker Change: Yeah listen I think that that's the moment of now right and I think we've been talking about it when we acquired <unk> by the way, we talking about it beforehand with our secrets business and kind of the take off we've seen in the secrets business. The moment is now that security is getting involved in the discussion and I think we've talked about that before right, which is a lot of these machine idea.

Speaker Change: New security decisions were left to the Dev ops teams to local developers to choose on their own which which left no visibility to central security on what was actually happening that is the fact that comes out in that data. So what happens now is the CSO and the security team is saying no way.

Speaker Change: No way are you, making those decisions without us no way are you having localized vault sprawl throughout your organization nowhere Youre doing certificates on spreadsheets anymore, and they're coming with a central authority when the <unk> gets the right to have Central authority cyber Ark wins, and that's what we're seeing today in the market and.

And so it's really a matter of helping the CISO get control rather than it is us educating the market on something. Very helpful. Thank you.

Speaker Change: So it's really a matter of helping the CSO that control rather than it is us educating the market on something.

Speaker Change: Very helpful. Thank you.

Shaul Eyal: Your next question comes from the line of Shaul Eyal with TD Common. Your line is open. Thank you. Hi. Good morning.

Speaker Change: Your next question comes from the line of Shaul Eyal with TD Colin Your line is open.

Shaul Eyal: Thank you hi, good morning, Congrats on a great quarter one around.

Congrats on a great quarter all around. I wanted to go back to Matt Hedberg's question on machine identity and pricing. I understand the ratio of 80 to 1. Specifically on pricing, SailPoint, for example, they indicate that pricing of their Machine identity is going to come at about one-third of human identity. And I understand you guys are different companies yet operating in the same broader arena. What's the thinking along these lines? And maybe just as a follow-up, I've been getting some emails, some questions about the commentary about the certificate lifecycle change. Is that a recommendation or is that a decision being supported by some industry regulations?

Speaker Change: I wanted to go back to Matt Hedberg.

Speaker Change: Question on machine identity, and pricing I understand the ratios.

Speaker Change: 80 to one.

Speaker Change: Specifically on pricing Sailpoint for example.

Speaker Change: They indicate that pricing there.

Speaker Change: Machine identity is going to come at about one third of human identity and I understand you guys are different companies yet operating in the same broader arena.

Speaker Change: What's what's the thinking along these lines and maybe just as a follow up and getting some emails some questions about the commentary about the certificates lifecycle kink is is that a recommendation or is that a decision being supported by some industry regulations. Thank you guys.

Matthew Cohen: Thank you, guys. Yeah, sure. So to your pricing discussion, and again, specifically around what we see, I think it's, and I bring it back, I know it's the same answer I gave Matt, but I bring it back to the idea of it's the deal size that matters, not the individual cost per identity. I think you should expect to see a fully deployed customer on the machine side to basically 1.5 to 2X on the secret side and 1.5 to 2X on the certificate side to what we are able to do on the human side. Ultimately, when you're fully deployed on the machine side, we're talking about somewhere between 3 to 5X, the size of the base that we can go sell to.

Speaker Change: Yeah sure so to your pricing discussion and.

Speaker Change: Again, specifically around.

Speaker Change: What we see I think I bring it back I know, it's the same answer I gave Matt, but I bring it back to the idea of it is the deal size that matters not the individual cost per identity. I think you should expect to see a fully deployed.

Speaker Change: Our customer on the machine side to basically one and a half to two acts on the on the secret side and one and a half to two acts on the certificate side to what we are able to do on the human side ultimately when you're fully deployed on the machine side, we're talking about somewhere between three to five X. The size of the the base that we can go sell to them and it's a big deal.

And it's a big deal. It's an enterprise sale. And ultimately, over time, it will continue to grow. I think that's what we see.

Speaker Change: It's an enterprise sale and ultimately over time it will continue to grow I think that's what we see.

Matthew Cohen: Listen, I don't think SailPoint is really in the machine space. I'm not sure where their pricing is coming from, but it's not really covering the type of machine identity that we're talking about.

Speaker Change: Listen I don't think Sailpoint is really in the machine space. So I'm not sure where their pricing is coming from but it's not really covering the type of machine identity that we're talking about.

Speaker Change: <unk>.

Speaker Change: Right.

The second part of your question around certificate authority, it is a mandate. So it's called the CA Browser Forum. It is a kind of governing body, and it's mandated that it go down to 47 days. That mandate is for 2028 or 2029. But basically, it indicates that the Google 90-day mandate, which was a kind of a Google-specific thing, didn't go far enough. They want to go even farther, and they want to push the envelope there. It basically wakes people up to the idea that certificates are a thing that's going to change. Their world of certificates and long-lived certificates are not going to exist for long.

Speaker Change: The second part of your question around certificates already it is a mandate. So it's actual it's called the C. A browser forum. It is a kind of governing body and its mandated that it go down to 47 days that mandate is for 2028 or 2029.

Speaker Change: But basically it indicates that the Google 90 day mandate, which was a kind of a Google specific thing didn't go far enough. They want to go even further and they want to push the envelope. There. It basically wakes people up to the idea that certificates are a thing that's going to change their world of certificates in long lived certificates are not going to exist for long and I think.

Matthew Cohen: And I think enterprise companies are coming in and saying, what can I do about it? And we've got the perfect solution to solve that problem for them. Thank you so much. Super helpful. Great caller. Thank you.

Speaker Change: Enterprise companies are coming in and saying what can I do about it and we've got the we've got the perfect solution to solve that problem for them.

Speaker Change: Thank you so much super helpful Great quarter.

Speaker Change: Thank you.

Matthew Cohen: I will now turn the call back to Matt Cohen, CAO, for closing remarks. So thanks everybody for the for the questions today and the dialogue. It was it was fun and appreciated. I want to conclude by thanking our customers and our partners for their support and trust. And most importantly, our employees here at CyberArk who wake up every day and make sure we can deliver strong quarters like we did today. You know, when we think about a world where identity security is an imperative, we feel ready to respond, continue to grow and drive durable growth for the future.

Speaker Change: I will now turn the call back to Matt Cohen CEO for closing remarks.

Speaker Change: So thanks, everybody for the questions today and the dialogue. It was it was fun and appreciate it.

Speaker Change: I want to conclude by by thanking our customers and our partners for their support and trust and most importantly, our employees here at cyber Ark, who wake up every day and make sure. We can deliver strong quarters like we did today when we think about a world where at any security is an imperative we feel ready to respond.

Speaker Change: To grow and drive durable growth for the future. Thanks, everybody.

Thanks, everybody.

Kate: Ladies and gentlemen, that concludes today's call. You can now disconnect. Thank you and have a...

Speaker Change: Ladies and gentlemen that concludes today's call you may now disconnect. Thank you and have a great day.

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