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
Imperva Announces Third Quarter 2012 Financial Results
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