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Imperva Announces First Quarter 2013 Financial Results

  Imperva Announces First Quarter 2013 Financial Results

  *Total revenue of $28.6 million during the first quarter, up 33%
    year-over-year
  *First quarter services revenue growth of 52% was driven by the 205%
    increase in subscription revenue
  *New customers increased 66% year-over-year to 148 during the first quarter
  *GAAP EPS loss of $0.25; Non-GAAP EPS loss of $0.13
  *Total deferred revenue at March 31, 2013 increased 33% year-over-year to
    $46.6 million

Business Wire

REDWOOD SHORES, Calif. -- May 02, 2013

Imperva, Inc. (NYSE: IMPV), a pioneer and leader of a new category of business
security solutions for critical applications and high-value business data in
the data center, today announced financial results for the first quarter ended
March 31, 2013.

“The investments being made to our global sales and support infrastructure are
beginning to pay off, evidenced by the 66% year-over-year increase in new
customers during the first quarter,” stated Shlomo Kramer, President and Chief
Executive Officer of Imperva. “Our results highlight the underlying strength
of our technology, our comprehensive, fully-integrated solution, and our
global footprint as we accelerated our investments in the business to take
advantage of the demand we are seeing worldwide. Looking forward, we see
numerous growth opportunities to expand our geographic reach and introduce
additional products to enhance our offering and extend our leadership
position.”

First Quarter 2013 Financial Highlights

  *Revenue: Total revenue for the first quarter of 2013 was $28.6 million, an
    increase of 33% compared to $21.5 million in the first quarter of 2012.
    Within total revenue, product revenue was $14.2 million, an increase of
    17% compared to the first quarter of 2012. Services revenue increased 52%
    year-over-year to $14.4million and accounted for 50% of total revenue, up
    from 44% in the first quarter of 2012. Within services revenue, overall
    subscription revenue grew 205% to $2.0 million, compared to the first
    quarter of 2012. Combined product and subscriptions revenue, a leading
    indicator of the strength of our business, grew 27% to $16.2 million,
    compared to the first quarter of 2012.
  *Operating Profit (Loss): Operating loss as reported in accordance with
    U.S. generally accepted accounting principles (GAAP) was $(6.0) million
    for the first quarter compared to a loss of $(3.2) million during the
    first quarter in 2012. GAAP results included stock-based compensation
    expense of $2.9 million for the first quarter of 2013 and $0.7 million for
    the first quarter of 2012. Non-GAAP operating loss for the first quarter
    was $(3.1) million, compared to a loss of $(2.5) million during the same
    period in 2012, excluding the above mentioned charges.
  *Net Profit (Loss): GAAP net loss attributable to Imperva stockholders for
    the first quarter was $(6.1) million, or $(0.25) per share based on 23.9
    million weighted average diluted shares outstanding. This compares to GAAP
    net loss attributable to Imperva stockholders of $(3.3) million, or
    $(0.15) per share based on 22.3 million weighted average shares
    outstanding in the prior-year period.

    Non-GAAP net loss attributable to Imperva stockholders for the first
    quarter of 2013 was $(3.2) million, or $(0.13) per share based on 23.9
    million weighted average diluted shares outstanding, excluding the above
    mentioned charges. This compares to non-GAAP net loss attributable to
    Imperva stockholders of $(2.6) million, or $(0.12) per share based on 22.3
    million 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 first quarter ended March 31, 2013 adjust for the
    loss attributable to Imperva’s non-controlling interest in Incapsula.
  *Balance Sheet: As of March 31, 2013, Imperva had cash, cash equivalents
    and investments of $109.9 million. Total deferred revenue of $46.6 million
    increased 33% compared to $35.2 million as of March 31, 2012.

First Quarter and Recent Operating Highlights

  *During the first quarter of 2013, Imperva added 148 new customers, up 66%
    compared to the first quarter of last year. Imperva now has over 2,400
    customers in more than 60 countries around the world.
  *During the first quarter of 2013, Imperva booked 64 deals with a value
    over $100,000, compared to 57 deals in the first quarter of last year.
  *Imperva announced the release of SecureSphere 10.0, unveiled ThreatRadar
    Community Defense, the first cross-site information security intelligence
    service and enriched its File and Database Security products with
    SecureSphere Directory Services Monitoring (DSM), which provides the
    ability to audit, alert and report changes made in Active Directory.
  *Imperva announced that it extended the fraud prevention capabilities of
    the Imperva SecureSphere Web Application Firewall and ThreatRadar Fraud
    Prevention to include integration with ReputationManager from iovation, a
    provider of device reputation protection against online fraud and abuse.
  *Imperva announced it was named to CRN’s 2013 Partner Program Guide and was
    awarded a 5-Star partner rating.

Business Outlook

The following forward-looking statements reflect expectations as of May 2,
2013. Results may be materially different and could be affected by the factors
detailed in this press release and in recent Imperva SEC filings.

Second Quarter Expectations – Ending June30, 2013

Imperva expects total revenue for the second quarter of 2013 to be in the
range of $31.0million to $31.5 million, representing growth in the range of
26% to 28% compared to the same period in 2012. The company expects in the
second quarter of 2013 non-GAAP gross margins of approximately 80%. Further,
Imperva expects in the second quarter of 2013 non-GAAP operating loss to be in
the range of $(0.5) million to $(1.0)million and non-GAAP net loss
attributable to Imperva stockholders to be in the range of $(0.75)million to
$(1.25)million, or a loss of $(0.03) to $(0.05)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 $133.0million to
$137.0million, or up 28% to 31% 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 $1.0million to $3.0million
and non-GAAP net profit attributable to Imperva stockholders to be in the
range of $0.5million to $2.5million, or $0.02 to $0.09per 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 first quarter
ended March 31, 2013. To access this call, dial 888.801.6497 for the U.S. and
Canada or 913.312.1403 for international callers with conference ID #6284652.
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 May 16, 2013, by dialing 877.870.5176 for the
U.S. and Canada, or 858.384.5517 for international callers and entering
passcode #6284652.

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.

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” (“Second Quarter
Expectations – Ending June30, 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 the investments being made to its
global sales and support infrastructure will pay off; Imperva’s beliefs
regarding worldwide demand and that its investments in its business, the
underlying strength of its technology, its comprehensive, fully-integrated
solution, and its global footprint will enable it to take advantage of such
demand; and the company’s belief that there are numerous growth opportunities
to expand its geographic reach and introduce additional products to enhance
its offering and extend its leadership position. 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-K filed with the
Securities and Exchange Commission, or the SEC, on March15, 2013 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 business 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 2,400 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, visit www.imperva.com, follow us on
Twitteror visit our blog.

© 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 Ended
                                                    March 31,        March 31,
                                                    2013             2012
                                                                       
Net revenue:
Products and license                                $  14,154        $ 12,052
Services                                              14,431         9,466
Total net revenue                                      28,585          21,518
Cost of revenue^(1):
Products and license                                   1,876           1,854
Services                                              4,415          2,733
Total cost of revenue                                 6,291          4,587
Gross profit                                           22,294          16,931
Operating expenses^(1):
Research and development                               6,358           4,993
Sales and marketing                                    17,547          11,596
General and administrative                            4,383          3,493
Total operating expenses                              28,288         20,082
Loss from operations                                   (5,994)         (3,151)
Other expense, net                                    (47)           (70)
Loss before provision for income taxes                 (6,041)         (3,221)
Provision for income taxes                            154            153
Net loss                                               (6,195)         (3,374)
Add: Loss attributable to noncontrolling              136            103
interest
Net loss attributable to Imperva, Inc.              $  (6,059)       $ (3,271)
stockholders
                                                                       
Net loss per share of common stock
attributable to
Imperva, Inc. stockholders, basic and diluted       $  (0.25)        $ (0.15)
                                                                       
Shares used in computing net loss per share
of
common stock, basic and diluted                       23,905         22,304
                                                                       
                                                                       
(1) Stock-based compensation expense as
included in above:
Cost of revenue                                     $  211           $ 55
Research and development                               667             127
Sales and marketing                                    1,334           261
General and administrative                            641            225
Total stock-based compensation expense              $  2,853         $ 668
                                                                       
                                                                       

IMPERVA, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                                          
                                                  As of           As of
                                                  March 31,       December 31,
                                                  2013            2012
Assets
Current assets:
Cash and cash equivalents                       $ 66,154        $ 59,201
Short-term investments                            43,724          43,126
Restricted cash                                   596             591
Accounts receivable, net                          24,299          35,576
Inventory                                         315             328
Deferred tax assets                               609             597
Prepaid expenses and other current assets         5,083           4,356
Total current assets                              140,780         143,775
                                                                  
Property and equipment, net                       5,400           5,515
Severance pay fund                                3,307           3,150
Restricted cash                                   753             753
Other assets                                      772             764
Total assets                                    $ 151,012       $ 153,957
                                                                  
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable                                $ 2,783         $ 3,789
Accrued compensation and benefits                 10,060          9,258
Accrued and other current liabilities             3,547           4,323
Deferred revenue                                  32,999          33,609
Total current liabilities                         49,389          50,979
                                                                  
Other liabilities                                 2,491           2,638
Deferred revenue                                  13,650          12,682
Accrued severance pay                             3,695           3,427
Total liabilities                                 69,225          69,726
                                                                  
Stockholders’ equity:
Common stock                                      2               2
Additional paid-in capital                        161,670         157,989
Accumulated deficit                               (79,576)        (73,517)
Accumulated other comprehensive income            931             861
(loss)
Total Imperva, Inc. stockholders’ equity          83,027          85,335
Noncontrolling interest                           (1,240)         (1,104)
Total stockholders’ equity                        81,787          84,231
Total liabilities and stockholders’             $ 151,012       $ 153,957
equity
                                                                  
                                                                  

IMPERVA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                                             
                                                    For the Three Months Ended
                                                    March 31,        March 31,
                                                    2013             2012
                                                                     
Cash flows from operating activities:
Net loss                                          $ (6,195)        $ (3,374)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization                       626              411
Stock-based compensation                            2,853            668
Amortization of premiums/accretion of               186              76
discounts on short-term investments
Changes in operating assets and
liabilities:
Accounts receivable, net                            11,277           6,280
Inventory                                           13               117
Prepaid expenses and other assets                   (598)            (14)
Accounts payable                                    (1,006)          (1,114)
Accrued compensation and benefits                   802              (925)
Accrued and other liabilities                       (714)            (1,359)
Severance pay, net                                  111              326
Deferred revenue                                    358              2,226
Deferred tax assets                                 (12)             (15)
Other                                               (10)             (4)
Net cash provided by operating activities           7,691            3,299
Cash flows from investing activities:
Purchase of short-term investments                  (18,400)         (34,903)
Proceeds from sales/maturities of                   17,631           925
short-term investments
Net purchases of property and equipment             (511)            (244)
Change in other assets                              -                (300)
Change in restricted cash                           (5)              100
Net cash used in investing activities               (1,285)          (34,422)
Cash flows from financing activities:
Proceeds from issuance of common stock, net         630              103
of repurchases
Net cash provided by financing activities           630              103
Effect of exchange rate changes on cash             (83)             (37)
Net increase (decrease) in cash and cash            6,953            (31,057)
equivalents
                                                                     
Cash and cash equivalents at beginning of         $ 59,201         $ 96,025
period
Cash and cash equivalents at end of period        $ 66,154         $ 64,968
                                                                     
                                                                     

IMPERVA, INC. AND SUBSIDIARIES
(Reconciliation of GAAP to Non-GAAP Measures)
(In thousands, except per share amounts)
(Unaudited)
                                                               
                                                                       
                                                                       
                                                    For the Three Months Ended
                                                    March 31,        March 31,
                                                    2013             2012
                                                                       
GAAP operating loss                                 $  (5,994)       $ (3,151)
Plus:
Stock-based compensation expense                      2,853          668
Non-GAAP operating loss                             $  (3,141)       $ (2,483)
                                                                       
GAAP net loss attributable to Imperva, Inc.         $  (6,059)       $ (3,271)
stockholders
Plus:
Stock-based compensation expense                      2,853          668
Non-GAAP net loss                                   $  (3,206)       $ (2,603)
                                                                       
Weighted average shares outstanding, basic             23,905          22,304
and diluted
                                                                       
Non-GAAP net loss, basic and diluted                $  (0.13)        $ (0.12)
                                                                       
                                                                       

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.

Contact:

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