CyberArk Software(US:CYBR)2024-03-12 16:00Currency Impact - In 2023, a 10% strengthening or weakening of the NIS against the U.S. dollar would have impacted the operating loss by approximately $17.7 million[104]. - A 10% strengthening or weakening of the British pounds against the U.S. dollar would have affected the operating loss by approximately $2.0 million in 2023[104]. - The fluctuation in different currencies in 2023 decreased total operating loss by approximately $14.7 million compared to 2022[104]. Intellectual Property - As of December 31, 2023, the company held 147 issued patents in the U.S. and 62 issued patents in non-U.S. jurisdictions[110]. - The company has 48 pending U.S. patent applications and expects to file additional patent applications in the future[110]. Certifications and Compliance - The company has maintained SOC 2 accreditation since 2019 and attained ISO 27018 certification in 2023[106]. - The company is pursuing authorization from the Federal Risk and Authorization Management Program (FedRAMP) for certain SaaS products[106]. - The company is subject to the Sarbanes-Oxley Act requirements, which necessitate effective internal control over financial reporting[137]. - The company may lose its foreign private issuer status, resulting in increased regulatory and compliance costs under U.S. securities laws[135]. Financial Instruments and Shareholder Impact - The company issued $575.0 million aggregate principal amount of 0.00% Convertible Senior Notes due 2024, which may impact earnings per share calculations[127]. - The current conversion rate for the Convertible Notes is 6.3478 ordinary shares per $1,000 principal amount, equating to a conversion price of approximately $157.53[127]. - The company anticipates potential dilution of existing shareholders due to the Convertible Notes, which could create downward pressure on the share price[126]. - The Capped Call Transactions are designed to reduce potential dilution upon conversion of the Convertible Notes, with a cap currently set at $229.14 per share[128]. - The indenture for the Convertible Notes prohibits certain mergers or acquisitions unless the surviving entity assumes obligations under the Convertible Notes[129]. - The company may face increased Israeli withholding tax costs if clarifications from the Israeli Tax Authorities are not obtained regarding the Convertible Notes[131]. - The company may not have sufficient funds to repurchase the Convertible Notes upon a fundamental change, which could lead to defaults under the indenture[133]. Taxation Risks - Changes in tax laws relating to multinational corporations could adversely affect the company's tax position and effective tax rate over time[143]. - The company is monitoring international taxation changes, including a potential global minimum tax rate of at least 15%, which could affect its effective tax rate[25]. - The company has been granted Approved Enterprise status under the Israeli Investment Law, which provides tax benefits that may be reduced or terminated in the future, potentially increasing tax liabilities[158]. Operational Risks - The ongoing war between Israel and Hamas, along with regional instability, may adversely impact the company's business operations and workforce availability[146][151]. - The Israeli government has downgraded its credit rating from A1 to A2, which may negatively affect the company's financial condition and operations[153]. - The company is subject to increased risks of cyberattacks due to its Israeli location, which could impact business continuity and operational capacity[151]. - The company has experienced workforce disruptions due to military service obligations, which may impact product development and customer expectations[152]. - The company may face challenges in enforcing U.S. court judgments in Israel, complicating legal proceedings related to U.S. securities laws[166]. Shareholder Rights and Governance - The company’s articles of association contain provisions that may delay or prevent a change of control, impacting potential mergers or acquisitions[163]. - The rights and responsibilities of shareholders are governed by Israeli law, differing materially from U.S. corporations[168]. - Shareholders of the Israeli company have a duty to act in good faith and refrain from abusing their power in company matters[169]. - There is limited case law in Israel regarding the enforcement of shareholder rights and responsibilities[169]. - Shareholders must act fairly when determining the outcome of votes or appointments within the company[169]. - Enforcing judgments against the company in Israel may be difficult, impacting shareholders' ability to collect damages awarded by courts[167].