Imperva Announces Third Quarter 2012 Financial Results

  Imperva Announces Third Quarter 2012 Financial Results

  *Total revenue of $26.3 million during the third quarter, up 33%
    year-over-year
  *Services revenue growth of 41% was driven by the 231% increase in
    subscription revenue
  *GAAP operating loss of $1.7 million compared to $2.6 million last year
  *Non-GAAP operating profit improves to $0.1 million from a loss of $2.0
    million last year
  *Total deferred revenue increased 50% year over year to $38.3 million

Business Wire

REDWOOD SHORES, Calif. -- November 01, 2012

Imperva, Inc. (NYSE: IMPV), a pioneer and leader of a new category of business
security solutions for critical applications and high-value data in the data
center, today announced financial results for the third quarter ended
September 30, 2012.

“Our ability to execute across all verticals and geographies drove our strong
performance in the quarter as we further extended our leadership position in
the business security market,” stated Shlomo Kramer, President and Chief
Executive Officer of Imperva. “The third quarter was highlighted by continued
strong growth of subscriptions along with our ability to achieve non-GAAP
operating profitability for the first time as a public company, as we further
leverage the investments made in our global sales and research and development
infrastructure. The combination of a healthy pipeline of business and
expanding product line, positions Imperva to maintain the momentum for the
remainder of the year.”

Third Quarter 2012 Financial Highlights

  *Revenue: Total revenue for the third quarter of 2012 was $26.3 million, an
    increase of 33% compared to $19.7 million in the third quarter of 2011.
    Within total revenue, product revenue was $14.7 million, an increase of
    28% compared to the third quarter of 2011. Services revenue increased 41%
    year over year to $11.6 million and accounted for 44% of total revenue, up
    from 42% in the third quarter of 2011. Within services revenue, overall
    subscription revenue grew 231%, to $1.3 million, compared to the third
    quarter of 2011.
  *Operating Profit (Loss): Operating loss as reported in accordance with
    U.S. generally accepted accounting principles (GAAP) was $(1.7) million
    for the third quarter compared to a loss of $(2.6) million during the
    third quarter in 2011. GAAP results included stock-based compensation
    expense of $1.8 million for the third quarter of 2012 and $0.6 million for
    the third quarter of 2011. Non-GAAP operating profit for the third quarter
    was $0.1 million, compared to a loss of $(2.0) million during the same
    period in 2011, excluding the above mentioned charges.
  *Net Profit (Loss): GAAP net loss attributable to Imperva stockholders for
    the third quarter was $(1.9) million, or $(0.08) per share based on 23.2
    million weighted average diluted shares outstanding. This compares to GAAP
    net loss attributable to Imperva stockholders of $(2.7) million, or
    $(0.48) per share based on 5.6 million weighted average shares outstanding
    in the prior-year period.

    Non-GAAP net loss attributable to Imperva stockholders for the third
    quarter of 2012 was $(97,000), or $(0.00) per share based on 23.2 million
    weighted average diluted shares outstanding, excluding the above mentioned
    charges. This compares to non-GAAP net loss attributable to Imperva
    stockholders of $(2.1) million, or $(0.13) per share based on 16.3 million
    weighted average diluted shares outstanding in the prior year period.

    Both GAAP and non-GAAP loss per share attributable to Imperva stockholders
    for the third quarter ended September 30, 2012 adjust for the loss
    attributable to Imperva’s non controlling interest in Incapsula. A
    reconciliation of GAAP to non-GAAP financial measures has been provided in
    the financial statement tables included in this press release. An
    explanation of these measures is also included below under the heading
    “Non-GAAP Financial Measures.”

  *Balance Sheet: As of September 30, 2012, Imperva had cash, cash
    equivalents and investments of $101.7 million.

Third Quarter 2012 Operating Highlights

  *During the third quarter of 2012, Imperva booked 70 deals with a value
    over $100,000, up 30% compared to the third quarter of last year. During
    the nine months ended September 30, 2012, the company booked 183 deals
    with a value over $100,000, an increase of 34% year over year.
  *Total deferred revenue of $38.3 million was up 50% compared to $25.6
    million at September 30, 2011.
  *During the third quarter of 2012, Imperva added 138 new customers, up 33%
    compared to the third quarter of last year. During the nine months ended
    September 30, 2012, the company added 354 new customers, an increase of
    29% year over year. Imperva now has over 2,000 customers in more than 60
    countries around the world.
  *Imperva announced a collaboration with Cisco to achieve interoperability
    between Imperva’s SecureSphere Web Application Firewall (WAF) and Cisco’s
    Nexus 1110/1010 virtual service appliances to improve application
    security, ease management and reduce operational costs.
  *Imperva announced that it had earned the Government Technology Research
    Alliance (GTRA) Insider Threat Roundtable Award based on cutting edge
    demonstrations, presentations and best in class government technology
    solutions.

Business Outlook

The following forward-looking statements reflect expectations as of November
1, 2012. Results may be materially different and could be affected by the
factors detailed in this press release and in recent Imperva SEC filings.

Fourth Quarter Expectations – Ending December 31, 2012

Imperva expects total revenue for the fourth quarter of 2012 to be in the
range of $29.5 million to $30.0 million, representing growth in the range of
27% to 29% compared to the same period in 2011. The company expects in the
fourth quarter of 2012 non-GAAP gross margins of approximately 80%. Further,
Imperva expects in the fourth quarter of 2012 non-GAAP operating income to be
in the range of $0.5 million to $0.8 million and non-GAAP net income
attributable to Imperva stockholders to be in the range of $0.3 million to
$0.6 million, or a profit of $0.01 to $0.02 per share, which excludes
stock-based compensation expense.

Full Year Expectations –Ending December 31, 2012

Imperva expects total revenue for 2012 to be in the range of $102.0 million to
$102.5 million, or up 30% to 31% compared to 2011. Imperva expects 2012
non-GAAP gross margins of approximately 79%. Further, the company expects 2012
non-GAAP operating loss to be in the range of $1.8 million to $2.1 million and
non-GAAP net loss attributable to Imperva stockholders to be in the range of
$2.4 million to $2.7 million, or a loss of $0.11 to $0.12, which excludes
stock-based compensation expense. Imperva expects capital expenditures for the
full year to be in the range of $2.0 million to $2.5 million. Finally, the
company expects to generate positive cash flows from operations in 2012.

Quarterly Conference Call

Imperva will host a conference call today at 2:00 p.m. Pacific Time (5:00 p.m.
Eastern Time) to review the company’s financial results for the third quarter
ended September 30, 2012. To access this call, dial 800.967.7143 for the U.S.
and Canada or 719.457.2632 for international callers with conference ID
#7311664. A live webcast of the conference call will be accessible from the
investors page of Imperva’s website at www.imperva.com, and a recording will
be archived and accessible at www.imperva.com. An audio replay of this
conference call will also be available through November 15, 2012, by dialing
877.870.5176 for the U.S. and Canada, or 858.384.5517 for international
callers and entering passcode #7311664.

Non-GAAP Financial Measures

Imperva reports all financial information required in accordance with U.S.
generally accepted accounting principles (GAAP). To supplement the Imperva
unaudited condensed consolidated financial statements presented in accordance
with GAAP, Imperva uses certain non-GAAP measures of financial performance.
The presentation of these non-GAAP financial measures is not intended to be
considered in isolation from, as a substitute for, or superior to, the
financial information prepared and presented in accordance with GAAP, and may
be different from non-GAAP financial measures used by other companies. In
addition, these non-GAAP measures have limitations in that they do not reflect
all of the amounts associated with the results of Imperva operations as
determined in accordance with GAAP. The non-GAAP financial measures used by
Imperva include historical non-GAAP net loss and non-GAAP basic and diluted
loss per share. These non-GAAP financial measures exclude stock-based
compensation from the Imperva unaudited condensed consolidated statement of
operations and give pro forma effect to the conversion of convertible
preferred stock and issuance of common stock in connection with Imperva’s
initial public offering as if both had happened at the beginning of each
period presented.

For a description of these items, including the reasons why management adjusts
for them, and reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures, please see the section of the
accompanying tables titled “Use of Non-GAAP Financial Information” as well as
the related tables that precede it. Imperva may consider whether other
significant non-recurring items that arise in the future should also be
excluded in calculating the non-GAAP financial measures it uses.

Imperva believes that these non-GAAP financial measures, when taken together
with the corresponding GAAP financial measures, provide meaningful
supplemental information regarding the performance of Imperva by excluding
certain items that may not be indicative of the company’s core business,
operating results or future outlook. Imperva management uses, and believes
that investors benefit from referring to, these non-GAAP financial measures in
assessing operating results of Imperva, as well as when planning, forecasting
and analyzing future periods. These non-GAAP financial measures also
facilitate comparisons of the performance of Imperva to prior periods.

Forward Looking Statements

This press release contains forward-looking statements, including without
limitation those regarding Imperva’s “Business Outlook” (“Fourth Quarter
Expectations – Ending December 31, 2012” and “Full Year Expectations – Ending
December 31, 2012”); Imperva’s beliefs regarding maintaining its momentum
during the last quarter of the year, its belief that it has a healthy pipeline
of business, its expectations regarding the impact of its expanding product
line on revenue growth, and its plan to achieve interoperability between its
SecureSphere Web Application Firewall and Cisco’s Nexus 1110/1010 virtual
service appliances. These forward-looking statements are subject to material
risks and uncertainties that may cause actual results to differ substantially
from expectations. Investors should consider important risk factors, which
include: the risk that demand for our business security solutions may not
increase and may decrease; the risk that we may not timely introduce new
products or versions of our products and that they may not be accepted by the
market; the risk that competitors may be perceived by customers to be better
positioned to help handle business security threats and protect their
businesses from major risk; the risk that the growth of Imperva may be lower
than anticipated; and other risks detailed under the caption “Risk Factors” in
the company’s Form 10-Q filed with the Securities and Exchange Commission, or
the SEC, on August 13, 2012 and the company’s other SEC filings. You can
obtain copies of the company’s SEC filings on the SEC’s website at
www.sec.gov.

The foregoing information represents the company’s outlook only as of the date
of this press release, and Imperva undertakes no obligation to update or
revise any forward-looking statements, whether as a result of new information,
new developments or otherwise.

About Imperva

Imperva is a pioneer and leader of a new category of business security
solutions for critical applications and high-value data in the data center.
Imperva’s award-winning solutions protect against data theft, insider abuse,
and fraud while streamlining regulatory compliance by monitoring and
controlling data usage and business transactions across the data center, from
storage in a database or on a file server to consumption through applications.
With over 2,000 end-user customers in more than 60 countries and thousands of
organizations protected through cloud-based deployments, securing your
business with Imperva puts you in the company of the world’s leading
organizations. For more information, visitwww.imperva.com, follow us
onTwitteror visit ourblog.

© 2012 Imperva, Inc. All rights reserved. Imperva, the Imperva logo and
SecureSphere are trademarks of Imperva, Inc.

IMPERVA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(On a GAAP basis)
(In thousands, except per share amounts)
(Unaudited)
                                                           
                                                                      
                    For the Three Months Ended       For the Nine Months Ended
                    September 30,     September      September      September
                                      30,            30,            30,
                    2012              2011           2012           2011
                                                                      
Net revenue:
Products and        $  14,677         $ 11,464       $ 40,773       $ 32,821
license
Services              11,667         8,274        31,643       22,166 
Total net              26,344           19,738         72,416         54,987
revenue
Cost of
revenue^(1):
Products and           2,064            1,357          6,192          4,433
license
Services              3,466          2,893        9,338        7,062  
Total cost of         5,530          4,250        15,530       11,495 
revenue
Gross profit           20,814           15,488         56,886         43,492
Operating
expenses^(1):
Research and           5,154            4,615          15,072         12,858
development
Sales and              13,218           10,411         36,740         30,970
marketing
General and           4,104          3,063        11,336       8,186  
administrative
Total operating       22,476         18,089       63,148       52,014 
expenses
Loss from              (1,662  )        (2,601 )       (6,262 )       (8,522 )
operations
Other expense,        (67     )       (63    )      (126   )      (238   )
net
Loss before
provision for          (1,729  )        (2,664 )       (6,388 )       (8,760 )
income taxes
Provision for         262            205          642          471    
income taxes
Net loss               (1,991  )        (2,869 )       (7,030 )       (9,231 )
Add: Loss
attributable to       132            178          367          458    
noncontrolling
interest
Net loss
attributable to     $  (1,859  )      $ (2,691 )     $ (6,663 )     $ (8,773 )
Imperva, Inc.
stockholders
                                                                      
Net loss per
share of common
stock
attributable to
Imperva, Inc.
stockholders,       $  (0.08   )      $ (0.48  )     $ (0.29  )     $ (1.64  )
basic and
diluted
                                                                      
Shares used in
computing net
loss per share
of
common stock,
basic and             23,160         5,554        22,684       5,335  
diluted
                                                                      
                                                                      
(1) Stock-based
compensation
expense as
included in
above:
Cost of revenue     $  143            $ 29           $ 302          $ 73
Research and           372              35             759            83
development
Sales and              665              102            1,365          245
marketing
General and           582            412          1,170        753    
administrative
Total
stock-based         $  1,762         $ 578         $ 3,596       $ 1,154  
compensation
expense
                                                                             
                                                                             

IMPERVA, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                                             
                                                As of             As of
                                                September 30,     December 31,
                                                2012              2011
Assets
Current assets:
Cash and cash equivalents                     $ 56,468          $ 96,025
Short-term investments                          45,212            1,587
Restricted cash, current                        591               687
Accounts receivable, net                        26,719            25,736
Inventory                                       313               442
Deferred tax assets                             250               246
Prepaid expenses and other current assets       2,624            1,352     
Total current assets                            132,177           126,075
                                                                  
Property and equipment, net                     4,457             4,026
Severance pay fund                              2,825             2,652
Restricted cash                                 666               666
Deferred tax assets                             46                46
Other assets                                    608              77        
Total assets                                  $ 140,779        $ 133,542   
                                                                  
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable                              $ 3,730           $ 3,534
Accrued compensation and benefits               10,107            7,491
Accrued and other current liabilities           3,848             4,408
Deferred revenue                                26,430           21,982    
Total current liabilities                       44,115            37,415
                                                                  
Other liabilities                               1,955             2,856
Deferred revenue                                11,868            10,943
Accrued severance pay                           3,238            2,760     
Total liabilities                               61,176            53,974
                                                                  
Stockholders’ equity:
Common stock                                    2                 2
Additional paid-in capital                      153,328           147,085
Accumulated deficit                             (72,793   )       (66,130   )
Accumulated other comprehensive                 32               (616      )
income/(loss)
Total Imperva, Inc. stockholders’ equity        80,569            80,341
Noncontrolling interest                         (966      )       (773      )
Total stockholders’ equity                      79,603           79,568    
Total liabilities and stockholders’ equity    $ 140,779        $ 133,542   
                                                                            
                                                                            

IMPERVA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                                            
                                               For the Nine Months Ended
                                               September 30,     September 30,
                                               2012              2011
                                                                 
Cash flows from operating activities:
Net loss                                     $ (7,030    )     $ (9,231    )
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization                  1,312             1,123
Stock-based compensation                       3,596             1,154
Revaluation of convertible preferred stock     -                 154
warrant liability
Amortization of premiums/accretion of          337               -
discounts on short-term investments
Changes in operating assets and
liabilities:
Accounts receivable, net                       (983      )       (2,289    )
Inventory                                      129               (100      )
Prepaid expenses and other assets              (1,134    )       (159      )
Accounts payable                               196               59
Accrued compensation and benefits              2,616             728
Accrued and other liabilities                  (587      )       (963      )
Severance pay, net                             305               44
Deferred revenue                               5,373             4,343
Deferred tax assets                            (4        )       2
Other                                          15               79        
Net cash provided by (used in) operating       4,141             (5,056    )
activities
Cash flows from investing activities:
Purchase of short-term investments             (50,744   )       (988      )
Proceeds from sales/maturities of              6,928             2,266
short-term investments
Purchase of property and equipment             (1,758    )       (1,036    )
Change in other assets                         (400      )       -
Change in restricted cash                      96               159       
Net cash provided by (used in) investing       (45,878   )       401
activities
Cash flows from financing activities:
Proceeds from exercise of stock options        2,140             542
Initial public offering costs paid             -                 (2,802    )
Proceeds from issuance of restricted stock     -                 963
Increase in line of credit                     -                 3,000
Repayment of revolving credit facility         -                (501      )
Net cash provided by financing activities      2,140             1,202
Effect of exchange rate changes on cash        40               68        
Net decrease in cash and cash equivalents      (39,557   )       (3,385    )
Cash and cash equivalents at beginning of    $ 96,025         $ 16,410    
period
Cash and cash equivalents at end of period   $ 56,468         $ 13,025    
                                                                           
                                                                           

IMPERVA, INC. AND SUBSIDIARIES
(Reconciliation of GAAP to Non-GAAP Measures)
(In thousands, except per share amounts)
(Unaudited)
                                                           
                                                                      
                                                                      
                      For the Three Months Ended     For the Nine Months Ended
                      September       September      September      September
                      30,             30,            30,            30,
                      2012            2011           2012           2011
                                                                      
GAAP operating        $  (1,662 )     $ (2,601 )     $ (6,262 )     $ (8,522 )
loss
Plus:
Stock-based
compensation            1,762        578          3,596        1,154  
expense
Non-GAAP
operating profit      $  100         $ (2,023 )     $ (2,666 )     $ (7,368 )
(loss)
                                                                      
GAAP net loss
attributable to       $  (1,859 )     $ (2,691 )     $ (6,663 )     $ (8,773 )
Imperva, Inc.
stockholders
Plus:
Stock-based
compensation            1,762        578          3,596        1,154  
expense
Non-GAAP net loss     $  (97    )     $ (2,113 )     $ (3,067 )     $ (7,619 )
                                                                      
Weighted average
shares                   23,160         5,554          22,684         5,335
outstanding,
basic and diluted
Plus:
Additional
weighted average
shares giving
effect to initial
public offering         -            10,761       -            10,761 
and conversion of
convertible
preferred stock
at the beginning
of the period
                                                                      
Shares used in
computing
Non-GAAP
net loss per
share, basic and        23,160       16,315       22,684       16,096 
diluted
                                                                      
Non-GAAP net
loss, basic and       $  (0.00  )     $ (0.13  )     $ (0.14  )     $ (0.47  )
diluted
                                                                      
- Due to
rounding, totals
may not equal the
sum of the line
items in the
table above.
                                                                      

Use of Non-GAAP Financial Information

In addition to the reasons stated above, which are generally applicable to
each of the items Imperva excludes from its non-GAAP financial measures,
Imperva believes it is appropriate to exclude or give effect to certain items
for the following reasons:

Stock-Based Compensation: When evaluating the performance of its consolidated
results, Imperva does not consider stock-based compensation charges. Likewise,
the Imperva management team excludes stock-based compensation expense from its
operating plans. In contrast, the Imperva management team is held accountable
for cash-based compensation and such amounts are included in its operating
plans. Further, when considering the impact of equity award grants, Imperva
places a greater emphasis on overall stockholder dilution rather than the
accounting charges associated with such grants.

Imperva believes it is useful to provide a non-GAAP financial measure that
excludes stock-based compensation in order to better understand the long-term
performance of its business.

Conversion of Preferred and Shares from Initial Public Offering: Imperva
believes it is useful to provide a non-GAAP financial measure that gives pro
forma effect to the conversion of preferred stock and issuance of common stock
in connection with Imperva’s initial public offering as if both had happened
at the beginning of each period presented in order to have an alternative way
to evaluate per share performance on a comparative basis.

Contact:

Investor Relations Contact Information
Imperva, Inc.
Seth Potter, 646-277-1230
IR@imperva.com
Seth.Potter@icrinc.com
 
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