Imperva Announces Fourth Quarter and Full Year 2012 Financial Results

  Imperva Announces Fourth Quarter and Full Year 2012 Financial Results

  *Total revenue of $31.8million during the fourth quarter, up 36%
    year-over-year
  *Fourth quarter services revenue growth of 53% was driven by the 205%
    increase in subscription revenue
  *GAAP operating loss improved to $0.8million for the fourth quarter
    compared to $1.5million in the year ago period
  *Non-GAAP operating profit of $1.5million for the fourth quarter compared
    to a loss of $0.9million in the year ago period
  *Total deferred revenue at December 31, 2012 increased 41% year-over-year
    to $46.3million

Business Wire

REDWOOD SHORES, Calif. -- February 7, 2013

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 fourth quarter and full year
ended December31, 2012.

“2012 was an exceptional year for Imperva, as we demonstrated our ability to
successfully execute our global go-to-market growth strategy and significantly
improved our operating leverage,” stated Shlomo Kramer, President and Chief
Executive Officer of Imperva. “Our strong fourth quarter results were driven
by the ongoing demand for our comprehensive integrated solution, as the number
of sophisticated attacks and regulations governing business data continues to
increase worldwide. Looking forward, we are well positioned to maintain our
momentum and extend our leadership position due to our commitment to product
innovation and ability to further leverage the investments being made to our
global sales infrastructure.”

Fourth Quarter 2012 Financial Highlights

  *Revenue: Total revenue for the fourth quarter of 2012 was $31.8million,
    an increase of 36% compared to $23.3million in the fourth quarter of
    2011. Within total revenue, product revenue was $18.7million, an increase
    of 27% compared to the fourth quarter of 2011. Services revenue increased
    53% year-over-year to $13.1million and accounted for 41% of total
    revenue, up from 37% in the fourth quarter of 2011. Within services
    revenue, overall subscription revenue grew 205% to $1.7million, compared
    to the fourth quarter of 2011. Combined product and subscriptions revenue,
    a leading indicator of the strength of our business, grew 33% to
    $20.4million, compared to the fourth quarter of 2011.
  *Operating Profit (Loss): Operating loss as reported in accordance with
    U.S. generally accepted accounting principles (GAAP) was $(0.8)million
    for the fourth quarter compared to a loss of $(1.5)million during the
    fourth quarter in 2011. GAAP results included stock-based compensation
    expense of $2.4million for the fourth quarter of 2012 and $0.6million
    for the fourth quarter of 2011. Non-GAAP operating profit for the fourth
    quarter was $1.5million, compared to a loss of $(0.9)million during the
    same period in 2011, excluding the above mentioned charges.
  *Net Profit (Loss): GAAP net loss attributable to Imperva stockholders for
    the fourth quarter was $(0.7)million, or $(0.03)per share based on
    23.6million weighted average diluted shares outstanding. This compares to
    GAAP net loss attributable to Imperva stockholders of $(1.5)million, or
    $(0.10)per share based on 14.6million weighted average shares
    outstanding in the prior-year period.

    Non-GAAP net profit attributable to Imperva stockholders for the fourth
    quarter of 2012 was $1.6million, or $0.06per share based on 25.4million
    weighted average diluted shares outstanding, excluding the above mentioned
    charges. This compares to non-GAAP net loss attributable to Imperva
    stockholders of $(0.9)million, or $(0.05)per share based on 19.3million
    weighted average diluted shares outstanding in the prior-year period.

    Both GAAP and non-GAAP profit and loss per share attributable to Imperva
    stockholders for the fourth quarter ended December31, 2012 adjust for the
    loss attributable to Imperva’s non-controlling interest in Incapsula.
  *Balance Sheet: As of December31, 2012, Imperva had cash, cash equivalents
    and investments of $102.3million. Total deferred revenue of $46.3million
    increased 41% compared to $32.9million as of December31, 2011.

Full Year 2012 Financial Highlights

  *Revenue: Total revenue for 2012 was $104.2million, an increase of 33%
    compared to $78.3million for 2011. Within total revenue, product revenue
    was $59.5million, an increase of 25% year-over-year. Services revenue
    increased 46% year-over-year to $44.7million and accounted for 43% of
    total revenue, up from 39% for 2011. Within services revenue, overall
    subscriptions revenue grew 217% to $4.7million, compared to 2011.
    Combined product and subscriptions revenue, a leading indicator of the
    strength of our business, grew 31% to $64.2million, compared to 2011.
  *Operating Profit (Loss): Operating loss as reported in accordance with
    U.S. generally accepted accounting principles (GAAP) was $(7.1)million
    for 2012 compared to a loss of $(10.0)million during 2011. GAAP results
    included stock-based compensation expense of $6.0million for 2012 and
    $1.7million for 2011. Non-GAAP operating loss for 2012 was
    $(1.1)million, compared to a loss of $(8.3)million during 2011,
    excluding the above mentioned charges.
  *Net Profit (Loss): GAAP net loss attributable to Imperva stockholders for
    2012 was $(7.4)million, or $(0.32)per share based on 22.9million
    weighted average diluted shares outstanding. This compares to GAAP net
    loss attributable to Imperva stockholders of $(10.3)million, or
    $(1.34)per share based on 7.7million weighted average shares outstanding
    in the prior-year period.

    Non-GAAP net loss attributable to Imperva stockholders for 2012 was
    $(1.4)million, or $(0.06)per share based on 22.9million weighted
    average diluted shares outstanding, excluding the above mentioned charges.
    This compares to non-GAAP net loss attributable to Imperva stockholders of
    $(8.5)million, or $(0.51)per share based on 16.9million weighted
    average diluted shares outstanding in the prior-year period.

    Both GAAP and non-GAAP loss per share attributable to Imperva stockholders
    for the full year ended December31, 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.”

Fourth Quarter and Full Year 2012 Operating Highlights

  *During the fourth quarter of 2012, Imperva booked 95 deals with a value
    over $100,000, up 20% compared to the fourth quarter of last year. For the
    full year 2012, the company booked 278 deals with a value over $100,000,
    an increase of 29% year-over-year.
  *During the fourth quarter of 2012, Imperva added 199 new customers, up 28%
    compared to the fourth quarter of last year. For the full year 2012, the
    company added 553 new customers, an increase of 28% year-over-year.
    Imperva now has over 2,200 customers in more than 60 countries around the
    world.
  *Imperva announced a partnership with Acunetix to achieve interoperability
    between Imperva’s SecureSphere Web Application Firewall (WAF) and
    Acunetix’s Web Vulnerability Scan (WVS) to provide reduced risk exposure,
    enhanced protection, reduced development cost, and compliance reporting.
  *In January 2013, Imperva announced a technology alliance with FireEye
    which fully integrates our products to enhance protection for critical
    applications, data and intellectual property from advanced cyber attacks.

Business Outlook

The following forward-looking statements reflect expectations as of
February7, 2013. Results may be materially different and could be affected by
the factors detailed in this press release and in recent Imperva SEC filings.

First Quarter Expectations – Ending March31, 2013

Imperva expects total revenue for the first quarter of 2013 to be in the range
of $27.0million to $27.5million, representing growth in the range of 25% to
28% compared to the same period in 2012. The company expects in the first
quarter of 2013 non-GAAP gross margins of approximately 79%. Further, Imperva
expects in the first quarter of 2013 non-GAAP operating loss to be in the
range of $(2.0)million to $(2.5)million and non-GAAP net loss attributable
to Imperva stockholders to be in the range of $(2.25)million to
$(2.75)million, or a loss of $(0.09) to $(0.11)per share, which excludes
stock-based compensation expense.

Full Year Expectations –Ending December31, 2013

Imperva expects total revenue for 2013 to be in the range of $131.0million to
$135.0million, or up 26% to 30% compared to 2012. Imperva expects 2013
non-GAAP gross margins of approximately 80%. Further, the company expects 2013
non-GAAP operating profit to be in the range of $5.0million to $6.5million
and non-GAAP net profit attributable to Imperva stockholders to be in the
range of $4.0million to $5.0million, or $0.15 to $0.21per share, which
excludes stock-based compensation expense. Imperva expects capital
expenditures for the full year to be in the range of $2.5million to
$3.5million. Finally, the company expects to continue to generate positive
cash flows from operations in 2013.

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 fourth quarter
and full year ended December31, 2012. To access this call, dial 888.337.8259
for the U.S. and Canada or 719.325.2336 for international callers with
conference ID #7457180. 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 February21,
2013, by dialing 877.870.5176 for the U.S. and Canada, or 858.384.5517 for
international callers and entering passcode #7457180.

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” (“First Quarter
Expectations – Ending March31, 2013” and “Full Year Expectations – Ending
December31, 2013”); Imperva’s belief that quarterly and annual combined
product and subscriptions revenue are a leading indicator of the strength of
its business; the company’s belief that it will continue to successfully
execute its global go-to-market growth strategy and significantly improve its
operating leverage; Imperva’s belief that the number of sophisticated attacks
and regulations governing business data will continue to increase worldwide;
the company’s belief that there will be continued demand for its comprehensive
integrated solution; and Imperva’s belief that it will continue to maintain
its momentum, extend its leadership position and further leverage the
investments being made to its global sales infrastructure. 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 Form10-Q
filed with the Securities and Exchange Commission, or the SEC, on November13,
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 2,200 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.

© 2013 Imperva, Inc. All rights reserved. Imperva and the Imperva logo 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          For the Twelve Months Ended
                     Ended
                        Dec 31,       Dec 31,         Dec 31,        Dec 31,
                       2012         2011           2012          2011
                                                                     
Net revenue:
Products and         $  18,717     $  14,779       $  59,490      $  47,600
license
Services               13,102       8,536          44,745        30,702
Total net               31,819        23,315          104,235        78,302
revenue
Cost of
revenue^(1):
Products and            2,338         2,278           8,530          6,711
license
Services               4,036        2,448          13,374        9,510
Total cost of          6,374        4,726          21,904        16,221
revenue
Gross profit            25,445        18,589          82,331         62,081
Operating
expenses^(1):
Research and            5,483         4,740           20,555         17,598
development
Sales and               16,769        11,712          53,509         42,682
marketing
General and            4,035        3,621          15,371        11,807
administrative
Total operating        26,287       20,073         89,435        72,087
expenses
Loss from               (842)         (1,484)         (7,104)        (10,006)
operations
Other expense,         (117)        48             (243)         (190)
net
Loss before
provision for           (959)         (1,436)         (7,347)        (10,196)
income taxes
Provision for          (97)         191            545           662
income taxes
Net loss                (862)         (1,627)         (7,892)        (10,858)
Add: Loss
attributable to        138          131            505           589
noncontrolling
interest
Net loss
attributable to      $  (724)      $  (1,496)      $  (7,387)     $  (10,269)
Imperva, Inc.
stockholders
                                                                     
Net loss per
share of common
stock
attributable to
Imperva, Inc.
stockholders,        $  (0.03)     $  (0.10)       $  (0.32)      $  (1.34)
basic and
diluted
                                                                     
Shares used in
computing net
loss per share
of
common stock,
basic and              23,605       14,618         22,916        7,675
diluted
                                                                     
                                                                     
(1) Stock-based compensation expense as included in above:
Cost of revenue      $  167        $  45           $  469         $  118
Research and            468           47              1,227          130
development
Sales and               1,178         167             2,543          412
marketing
General and            559          314            1,729         1,067
administrative
Total
stock-based          $  2,372      $  573          $  5,968       $  1,727
compensation
expense
                                                                     
                                                                     

IMPERVA, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                                             
                                                     As of            As of
                                                     Dec 31,          Dec 31,
                                                     2012             2011
Assets
Current assets:
Cash and cash equivalents                          $ 59,201         $ 96,025
Short-term investments                               43,126           1,587
Restricted cash, current                             591              687
Accounts receivable, net                             35,576           25,736
Inventory                                            328              442
Deferred tax assets                                  597              246
Prepaid expenses and other current assets            4,356            1,352
Total current assets                                 143,775          126,075
                                                                      
Property and equipment, net                          5,515            4,026
Severance pay fund                                   3,150            2,652
Restricted cash                                      753              666
Deferred tax assets                                  -                46
Other assets                                         764              77
Total assets                                       $ 153,957        $ 133,542
                                                                      
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable                                   $ 3,789          $ 3,534
Accrued compensation and benefits                    9,258            7,491
Accrued and other current liabilities                4,323            4,408
Deferred revenue                                     33,609           21,982
Total current liabilities                            50,979           37,415
                                                                      
Other liabilities                                    2,638            2,856
Deferred revenue                                     12,682           10,943
Accrued severance pay                                3,427            2,760
Total liabilities                                    69,726           53,974
                                                                      
Stockholders’ equity:
Common stock                                         2                2
Additional paid-in capital                           157,989          147,085
Accumulated deficit                                  (73,517)         (66,130)
Accumulated other comprehensive income               861              (616)
(loss)
Total Imperva, Inc. stockholders’ equity             85,335           80,341
Noncontrolling interest                              (1,104)          (773)
Total stockholders’ equity                           84,231           79,568
Total liabilities and stockholders’ equity         $ 153,957        $ 133,542
                                                                      
                                                                      

IMPERVA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                                            
                                                   For the Twelve Months Ended
                                                   Dec 31,            Dec 31,
                                                   2012               2011
                                                                      
Cash flows from operating activities:
Net loss                                         $ (7,892)         $  (10,858)
Adjustments to reconcile net loss to net
cash provided by
(used in) operating activities:
Depreciation and amortization                      1,841              1,540
Stock-based compensation                           5,968              1,727
Revaluation of convertible preferred stock         -                  238
warrant liability
Amortization of premiums/accretion of
discounts                                          496                -
on short-term investments
Excess tax benefits from share-based               (19)               -
compensation
Changes in operating assets and
liabilities:
Accounts receivable, net                           (9,840)            (12,572)
Inventory                                          114                (55)
Prepaid expenses and other assets                  (2,174)            (95)
Accounts payable                                   255                1,019
Accrued compensation and benefits                  1,767              1,623
Accrued and other liabilities                      703                (622)
Severance pay, net                                 169                (60)
Deferred revenue                                   13,366             11,707
Deferred tax assets                                (286)              (121)
Other                                              (1)                (8)
Net cash provided by (used in) operating           4,467              (6,537)
activities
Cash flows from investing activities:
Purchase of short-term investments                 (58,158)           (2,948)
Proceeds from sales/maturities of                  16,305             2,611
short-term investments
Net purchases of property and equipment            (3,330)            (1,465)
Purchase of other assets                           (400)              -
Change in restricted cash                          9                  160
Net cash used in investing activities              (45,574)           (1,642)
Cash flows from financing activities:
Proceeds from issuance of common stock             4,211              1,149
Proceeds from initial public offering, net         -                  86,245
of offering costs
Proceeds from issuance of restricted stock         -                  963
Increase in line of credit                         -                  4,000
Repayment of revolving credit facility             -                  (4,501)
Excess tax benefits from share-based               19                 -
compensation
Net cash provided by financing activities          4,230              87,856
Effect of exchange rate changes on cash            53                 (62)
Net increase (decrease) in cash and cash           (36,824)           79,615
equivalents
                                                                      
Cash and cash equivalents at beginning of        $ 96,025          $  16,410
year
Cash and cash equivalents at end of year         $ 59,201          $  96,025
                                                                      
                                                                      

IMPERVA, INC. AND SUBSIDIARIES
(Reconciliation of GAAP to Non-GAAP Measures)
(In thousands, except per share amounts)
(Unaudited)
                                                          
                                                                      
                                                                      
                     For the Three Months            For the Twelve Months
                     Ended                           Ended
                     Dec 31,       Dec 31,           Dec 31,        Dec 31,
                     2012          2011              2012           2011
                                                                      
GAAP operating       $  (842)      $  (1,484)        $  (7,104)     $ (10,006)
loss
Plus:
Stock-based
compensation           2,372        573              5,968        1,727
expense
Non-GAAP
operating            $  1,530      $  (911)          $  (1,136)     $ (8,279)
income (loss)
                                                                      
GAAP net loss
attributable
to Imperva,          $  (724)      $  (1,496)        $  (7,387)     $ (10,269)
Inc.
stockholders
Plus:
Stock-based
compensation           2,372        573              5,968        1,727
expense
Non-GAAP net         $  1,648      $  (923)          $  (1,419)     $ (8,542)
income (loss)
                                                                      
Weighted
average basic           23,605        14,618            22,916        7,675
shares
outstanding
Plus:
Additional
weighted
average shares
giving effect
to initial
public
offering and
conversion of
convertible
preferred
stock at the           -            4,679            -            9,228
beginning of
the period
                                                                      
Shares used in
computing
Non-GAAP
net income
(loss) per             23,605       19,297           22,916       16,903
share, basic
                                                                      
Shares used in
computing
Non-GAAP
net income
(loss) per             25,363       19,297           22,916       16,903
share, diluted
                                                                      
Non-GAAP net
income (loss),       $  0.07       $  (0.05)         $  (0.06)      $ (0.51)
basic
                                                                      
Non-GAAP net
income (loss),       $  0.06       $  (0.05)         $  (0.06)      $ (0.51)
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 excludes stock based compensation charges from its non-GAAP financial
measures primarily because they are non cash expenses that it does not
consider part of ongoing operating results when assessing the performance of
its business, and the exclusion of these expenses facilitates the comparison
of results and business outlook for future periods with results for prior
periods 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
Imperva, Inc.
Seth Potter, 646-277-1230
IR@imperva.com
Seth.Potter@icrinc.com