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8-K - FORM 8-K - IMPERVA INCd193578d8k.htm

Exhibit 99.1

Imperva Announces First Quarter 2016 Financial Results

 

  Total revenue of $59.8 million, up 34% year-over-year

 

  Combined product and subscription revenue increased 45% year-over-year

 

  Services revenue growth of 41% was driven by the 92% year-over-year increase in subscription revenue

 

  Number of deals booked valued over $100,000 increased 30% year-over-year

 

  Short-term deferred revenue increased 39% year-over-year

 

  Increasing FY16 non-GAAP profitability guidance

Redwood Shores, Calif. May 5, 2016Imperva, Inc. (NYSE: IMPV), committed to protecting business-critical data and applications in the cloud and on-premises, today announced financial results for the first quarter ended March 31, 2016.

“We had a great start to the year driven by the ongoing demand for our best-of-breed discovery, protection and compliance solutions,” stated Anthony Bettencourt, President and Chief Executive Officer of Imperva. “During the first quarter, we were particularly pleased with the ongoing strong growth of our subscription revenue as well as deals over $100,000. We are confident in our ability to maintain the momentum for the remainder of the year given the growing need for enterprises to protect their business critical data and applications which has resulted in a strong pipeline of opportunities globally.”

First Quarter 2016 Financial Highlights

 

    Revenue: Total revenue for the first quarter of 2016 was $59.8 million, an increase of 34% compared to $44.8 million in the first quarter of 2015. Within total revenue, product revenue was $20.8 million, compared to $17.1 million in the same period last year. Services revenue increased 41% year-over-year to $38.9 million and accounted for 65% of total revenue. Within services revenue, overall subscription revenue grew 92% to $16.6 million, compared to the first quarter of 2015. Combined product and subscription revenue was $37.5 million, an increase of 45% compared to $25.8 million in the first quarter of 2015.

 

    Operating Profit (Loss): Operating loss as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $(24.2) million for the first quarter compared to a loss of $(19.6) million during the first quarter in 2015. GAAP results included stock-based compensation and amortization of purchased intangibles of $16.0 million for the first quarter of 2016 and $12.9 million for the first quarter of 2015. Non-GAAP operating loss for the first quarter was $(8.2) million, compared to an operating loss of $(6.7) million during the same period in 2015, excluding the above mentioned charges.

 

    Net Profit (Loss): GAAP net loss for the first quarter was $(24.0) million, or $(0.75) per share based on 31.8 million weighted average shares outstanding. This compares to GAAP net loss of $(20.0) million, or $(0.74) per share based on 27.0 million weighted average shares outstanding in the first quarter of 2015.


Non-GAAP net loss for the first quarter of 2016 was $(8.0) million, or $0.25 per share based on 31.8 million weighted average shares outstanding, excluding the above mentioned charges. This compares to non-GAAP net loss of $(7.1) million, or $(0.26) per share based on 27.0 million weighted average shares outstanding in the first quarter of 2015.

 

    Balance Sheet and Cash Flow: As of March 31, 2016, Imperva had cash, cash equivalents and investments of $258.7 million. Total deferred revenue of $108.1 million increased 29% compared to $83.7 million as of March 31, 2015. Short-term deferred revenue of $82.1 million increased 39% compared to $59.0 million as of March 31, 2015.

The company generated $6.0 million in net cash from operations for the first quarter of 2016 compared to $6.8 million during the first quarter of 2015. The company generated $2.6 million in free cash flow (cash flows from operating activities, less capital expenditures) for the quarter compared to $5.8 million during the first quarter of 2015.

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.”

First Quarter and Recent Operating Highlights

 

    During the first quarter of 2016, Imperva booked 118 deals with a value over $100,000, an increase of 30% compared to 91 deals during the first quarter of 2015.

 

    During the first quarter of 2016, Imperva added 163 new customers compared to 150 during the first quarter of 2015. Imperva now has over 4,700 customers in more than 100 countries around the world.

 

    Imperva announced the availability of Imperva SecureSphere Web Application Firewall and Database Activity Monitoring Agents for Microsoft Azure cloud computing services.

 

    Imperva announced that Symantec has added the Imperva Incapsula service to its Complete Website Security solution.

 

    Imperva announced the general availability of Imperva CounterBreach, its new solution empowering organizations to combat the widespread insider threat problem.

 

    Imperva announced a new, North American distribution agreement with Westcon-Comstor (Westcon), a leading value-added global distributor of security, unified communications, network infrastructure and data center solutions.


Business Outlook

The following forward-looking statements reflect expectations as of May 5, 2016. 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 June 30, 2016

Imperva expects total revenue for the second quarter of 2016 to be in the range of $65.5 million to $66.5 million. The company expects in the second quarter of 2016 non-GAAP gross margins of approximately 80%. Further, Imperva expects in the second quarter of 2016 non-GAAP operating loss to be in the range of $(0.3) million to $(1.3) million and non-GAAP net loss to be in the range of $(0.5) million to $(1.5) million, or $(0.02) to $(0.04) per share based on approximately 32.5 million weighted average shares, which excludes stock-based compensation and amortization of purchased intangibles.

Full Year Expectations – Ending December 31, 2016

Imperva expects total revenue for 2016 to be in the range of $304.0 million to $307.0 million. Imperva expects 2016 non-GAAP gross margins of approximately 80%. Further, the company expects 2016 non-GAAP operating profit to be in the range of $9.0 million to $11.0 million and non-GAAP net profit to be in the range of $7.7 million to $9.7 million, or $0.23 to $0.29 per share based on approximately 33.5 million weighted average shares, which excludes stock-based compensation and amortization of purchased intangibles. Imperva expects capital expenditures for the full year to be in the range of $18.0 million to $20.0 million. Finally, the company expects to generate positive cash flows from operations in 2016.

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, 2016. To access this call, dial (888) 395-3241 for the U.S. or Canada or (719) 325-2138 for international callers with conference ID #8104683. A live webcast of the conference call will be accessible from the investors page of the Imperva 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 19, 2016, by dialing (877) 870-5176 for the U.S. and Canada, or (858) 384-5517 for international callers and entering passcode #8104683.

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 operating income (loss), non-GAAP net income (loss) and non-GAAP basic and diluted loss per share. These non-GAAP financial measures exclude stock-based compensation and amortization of purchased intangibles 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 the Imperva “Business Outlook” (“Second Quarter Expectations – Ending June 30, 2016” and “Full Year Expectations – Ending December 31, 2016”); the company’s belief about its ability to maintain momentum in the growth of its business in 2016, including the growth in subscription revenue and number of deals over $100,000; and the company’s belief that enterprises will continue to need products and services such as those offered by Imperva to protect their business critical data and applications leading to a strong pipeline of opportunities. 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 the company’s cyber security solutions may not increase or may decrease, including as a result of global macroeconomic conditions and other economic conditions that may reduce enterprise software or security spending generally or customer perceptions about the reliability of our solutions; the risk that our sales expectations for large customers do not materialize in a particular quarter or at all; the risk that the company may not timely introduce new products or services versions of its products or services and that such products or services may not be accepted by the market or may have defects, errors, outages or failures; the risk that competitors may be perceived by customers to offer greater value or to be better positioned to help handle cyber security threats and protect their businesses from major risk; the risk that existing customers may focus their additional cyber security spending on other technologies or addressing other risks; the risk that the company’s growth may be lower than anticipated; the risk that the markets that Imperva addresses may not grow as anticipated; and other risks detailed under the caption “Risk Factors” in the company’s Form 10-K filed with the Securities and Exchange Commission, or the SEC, on February 26, 2016 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® (NYSE:IMPV) is a leading provider of cyber security solutions that protect business-critical data and applications. The company’s SecureSphere, CounterBreach, Incapsula and Skyfence product lines enable organizations to discover assets and risks, protect information wherever it lives – in the cloud and on-premises – and comply with regulations. The Imperva Defense Center, a research team comprised of some of the world’s leading experts in data and application security, continually enhances Imperva products with up-to-the minute threat intelligence, and publishes reports that provide insight and guidance on the latest threats and how to mitigate them. Imperva is headquartered in Redwood Shores, California. Learn more: www.imperva.com, our blog, on Twitter.

© 2016 Imperva, Inc. All rights reserved. Imperva, the Imperva logo, SecureSphere, CounterBreach, Incapsula and Skyfence are trademarks of Imperva, Inc. and its subsidiaries.

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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  
     Mar 31     Mar 31  
     2016     2015  

Net revenue:

    

Products and license

   $ 20,841      $ 17,104   

Services

     38,932        27,653   
  

 

 

   

 

 

 

Total net revenue

     59,773        44,757   

Cost of revenue(1):

    

Products and license

     2,184        1,998   

Services

     10,784        8,332   
  

 

 

   

 

 

 

Total cost of revenue

     12,968        10,330   
  

 

 

   

 

 

 

Gross profit

     46,805        34,427   

Operating expenses(1):

    

Research and development

     16,019        12,678   

Sales and marketing

     40,740        31,253   

General and administrative

     13,886        9,743   

Amortization of purchased intangibles

     352        352   
  

 

 

   

 

 

 

Total operating expenses

     70,997        54,026   
  

 

 

   

 

 

 

Loss from operations

     (24,192     (19,599

Other income (expense), net

     83        (80
  

 

 

   

 

 

 

Loss before provision/(benefit) for income taxes

     (24,109     (19,679

Provision/(Benefit) for income taxes

     (102     351   
  

 

 

   

 

 

 

Net loss

   $ (24,007   $ (20,030
  

 

 

   

 

 

 

Net loss per share of common stock, basic and diluted

   $ (0.75   $ (0.74
  

 

 

   

 

 

 

Shares used in computing net loss per share of common stock, basic and diluted

     31,843        26,973   
  

 

 

   

 

 

 

(1)    Stock-based compensation expense as included in above:

       

 

Cost of revenue

   $ 1,393      $ 914   

Research and development

     4,249        3,328   

Sales and marketing

     5,094        4,465   

General and administrative

     4,919        3,839   
  

 

 

   

 

 

 

Total stock-based compensation expense

   $ 15,655      $ 12,546   
  

 

 

   

 

 

 


IMPERVA, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

     As of
Mar 31
2016
    As of
Dec 31
2015
 

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 158,691      $ 168,252   

Short-term investments

     100,054        96,555   

Restricted cash

     69        79   

Accounts receivable, net

     43,570        61,051   

Inventory

     860        815   

Prepaid expenses and other current assets

     9,476        7,965   
  

 

 

   

 

 

 

Total current assets

     312,720        334,717   

Property and equipment, net

     17,486        12,164   

Goodwill

     34,972        34,972   

Acquired intangible assets, net

     7,639        7,991   

Severance pay fund

     4,789        4,530   

Restricted cash

     1,665        1,665   

Deferred tax assets

     683        588   

Other assets

     1,157        1,042   
  

 

 

   

 

 

 

Total assets

   $ 381,111      $ 397,669   
  

 

 

   

 

 

 

Liabilities and stockholders’ equity

    

Current liabilities:

    

Accounts payable

   $ 7,772      $ 6,870   

Accrued compensation and benefits

     17,195        20,259   

Accrued and other current liabilities

     6,462        14,283   

Deferred revenue

     82,119        79,132   
  

 

 

   

 

 

 

Total current liabilities

     113,548        120,544   

Other liabilities

     5,005        4,515   

Deferred revenue

     25,936        27,525   

Accrued severance pay

     5,454        4,884   
  

 

 

   

 

 

 

Total liabilities

     149,943        157,468   

Stockholders’ equity:

    

Common stock

     3        3   

Additional paid-in capital

     461,958        448,069   

Accumulated deficit

     (230,547     (206,540

Accumulated other comprehensive loss

     (246     (1,331
  

 

 

   

 

 

 

Total stockholders’ equity

     231,168        240,201   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 381,111      $ 397,669   
  

 

 

   

 

 

 


IMPERVA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

     For the Three Months Ended  
     Mar 31
2016
    Mar 31
2015
 

Cash flows from operating activities:

    

Net loss

   $ (24,007   $ (20,030

Adjustments to reconcile net loss to net cash provided by operating activities:

    

Depreciation and amortization

     1,308        1,056   

Stock-based compensation

     15,655        12,546   

Amortization of acquired intangible assets

     352        352   

Amortization of premiums/accretion of discounts on short-term investments

     136        92   

Allowance for doubtful accounts

     157        65   

Excess tax (benefits)/deficiencies from share-based compensation

     4        (43

Other

     (172     114   

Changes in operating assets and liabilities:

    

Accounts receivable, net

     17,324        14,016   

Inventory

     (45     (296

Prepaid expenses and other assets

     (809     (515

Accounts payable

     (2,302     (1,812

Accrued compensation and benefits

     (3,064     (1,268

Accrued and other liabilities

     (169     79   

Severance pay, net

     311        (64

Deferred revenue

     1,398        2,508   

Deferred tax assets

     (95     4   
  

 

 

   

 

 

 

Net cash provided by operating activities

     5,982        6,804   

Cash flows from investing activities:

    

Purchase of short-term investments

     (26,285     (22,843

Proceeds from sales/maturities of short-term investments

     22,909        18,168   

Net purchases of property and equipment

     (3,426     (991

Change in restricted cash

     10        (11
  

 

 

   

 

 

 

Net cash used in investing activities

     (6,792     (5,677

Cash flows from financing activities:

    

Proceeds from follow-on public offering, net of offering costs

     —          127,854   

Settlement of holdback liability

     (7,157     —     

Proceeds from issuance of common stock, net of repurchases

     590        1,618   

Excess tax benefits/(deficiencies) from share-based compensation

     (4     43   

Shares withheld for tax withholding on vesting of restricted stock units

     (2,352     (2,137
  

 

 

   

 

 

 

Net cash provided/(used) by financing activities

     (8,923     127,378   

Effect of exchange rate changes on cash and cash equivalents

     172        (115
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (9,561     128,390   

Cash and cash equivalents at beginning of period

     168,252        68,096   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 158,691      $ 196,486   
  

 

 

   

 

 

 


IMPERVA, INC. AND SUBSIDIARIES

(Reconciliation of GAAP to Non-GAAP Measures)

(In thousands, except per share amounts)

(Unaudited)

 

     For the Three Months Ended  
     Mar 31
2016
    Mar 31
2015
 

GAAP operating loss

   $ (24,192   $ (19,599

Plus:

    

Stock-based compensation expense

     15,655        12,546   

Amortization of purchased intangibles

     352        352   
  

 

 

   

 

 

 

Non-GAAP operating loss

   $ (8,185   $ (6,701
  

 

 

   

 

 

 

GAAP net loss

   $ (24,007   $ (20,030

Plus:

    

Stock-based compensation expense

     15,655        12,546   

Amortization of purchased intangibles

     352        352   
  

 

 

   

 

 

 

Non-GAAP net loss

   $ (8,000   $ (7,132
  

 

 

   

 

 

 

Weighted average shares outstanding, basic and diluted

     31,843        26,973   

Non-GAAP net loss, basic and diluted

   $ (0.25   $ (0.26


IMPERVA, INC. AND SUBSIDIARIES

(Reconciliation of Free Cash Flow)

(In thousands)

(Unaudited)

 

     For the Three Months Ended  
     Mar 31
2016
    Mar 31
2015
 

Net cash provided by operating activities

   $ 5,982      $ 6,804   

Less:

    

Net purchases of property and equipment

     (3,426     (991
  

 

 

   

 

 

 

Total free cash generated

   $ 2,556      $ 5,813   
  

 

 

   

 

 

 


Use of Non-GAAP Financial Information

In addition to the reasons stated under “Non-GAAP Financial Measures” 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 expense from its non-GAAP financial measures primarily because it does not consider it part of ongoing operating results when assessing the performance of its business, and the exclusion of the expense 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.

Amortization of Purchased Intangibles. When analyzing the operating performance of an acquired entity, Imperva’s management focuses on the total return provided by the investment (i.e., operating profit generated from the acquired entity as compared to the purchase price paid) without taking into consideration any allocations made for accounting purposes. Because the purchase price for an acquisition necessarily reflects the accounting value assigned to intangible assets (including acquired technology and goodwill), when analyzing the operating performance of an acquisition in subsequent periods, Imperva’s management excludes the GAAP impact of acquired intangible assets to its financial results. Imperva believes that such an approach is useful in understanding the long-term return provided by an acquisition and that investors benefit from a supplemental non-GAAP financial measure that excludes the accounting expense associated with acquired intangible assets.

In addition, in accordance with GAAP, Imperva generally recognizes expenses for internally-developed intangible assets as they are incurred until technological feasibility is reached, notwithstanding the potential future benefit such assets may provide. Unlike internally-developed intangible assets, however, and also in accordance with GAAP, Imperva generally capitalizes the cost of acquired intangible assets and recognizes that cost as an expense over the useful lives of the assets acquired (other than goodwill, which is not amortized, as required under GAAP). As a result of their GAAP treatment, there is an inherent lack of comparability between the financial performance of internally-developed intangible assets and acquired intangible assets. Accordingly, Imperva believes it is useful to provide, as a supplement to its GAAP operating results, a non-GAAP financial measure that excludes the amortization of acquired intangibles.


Investor Relations Contact Information

Seth Potter

646.277.1230

IR@imperva.com

Seth.Potter@icrinc.com