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8-K - 8-K - IMPERVA INCimpv-8k_20171108.htm

EXHIBIT 99.1

Imperva Announces Third Quarter 2017 Financial Results

Total revenue of $83.9 million, up 23% year‑over‑year

Combined product and subscription revenue growth of 28% was driven by the 38% year‑over‑year increase in subscription revenue

Number of deals booked valued over $100,000 increased 28% year-over-year

GAAP operating loss of $0.2 million; Non-GAAP operating income of $11.4 million

Generated $25.5 million in operating cash flow and $22.2 million in free cash flow

Increasing FY17 profitability guidance

 

 

Redwood Shores, Calif. – November 8, 2017Imperva, Inc. (NASDAQ: IMPV), committed to protecting business‑critical data and applications in the cloud and on‑premises, today announced financial results for the third quarter ended September 30, 2017.

 

“Imperva executed well during the third quarter evidenced by our ability to exceed guidance across all key operating metrics,” stated Chris Hylen, President and Chief Executive Officer of Imperva. “During the quarter, we were pleased to deliver top line growth, improved profitability and strong free cash flow which were driven by the ongoing demand for our best-of-breed solutions, as well as continued cost controls. The combination of our commitment to innovation, ability to attract new customers and expand within our large existing global customer base, positions Imperva to maintain the momentum for the remainder of the year and beyond.

 

Third Quarter 2017 Financial Highlights

 

Revenue: Total revenue for the third quarter of 2017 was $83.9 million, an increase of 23% compared to $68.4 million in the third quarter of 2016. Within total revenue, product revenue was $26.6 million, an increase of 18% compared to $22.5 million in the same period last year. Services revenue of $57.3 million accounted for 68% of total revenue. Within services revenue, overall subscription revenue grew 38% to $31.0 million, compared to the third quarter of 2016. Combined product and subscription revenue was $57.6 million, an increase of 28% compared to $44.9 million in the third quarter of 2016.

 

Operating Profit (Loss): GAAP operating loss was $(0.2) million for the third quarter compared to a loss of $(11.8) million during the third quarter in 2016. NonGAAP operating income for the third quarter was $11.4 million, compared to a non-GAAP operating income of $2.5 million during the same period in 2016.

 

Net Profit (Loss): GAAP net loss for the third quarter was $(0.4) million, or $(0.01) per share based on 33.9 million weighted average diluted shares outstanding. This compares to net loss of $(11.7) million, or $(0.36) per share based on 32.4 million weighted average shares outstanding in the third quarter of 2016.

NonGAAP net income for the third quarter of 2017 was $11.2 million, or $0.33 per share based on 34.4 million weighted average diluted shares outstanding. This compares to a nonGAAP net income of $2.5 million, or $0.08 per share based on 33.1 million weighted average shares outstanding in the third quarter of 2016.


A reconciliation of GAAP to nonGAAP 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 “NonGAAP Financial Measures.”

 

Balance Sheet and Cash Flow: As of September 30, 2017, Imperva had cash, cash equivalents and investments of $343.2 million and no debt. Total deferred revenue was $142.3 million compared to $116.6 million as of September 30, 2016. Short‑term deferred revenue of $112.0 million increased 24% compared to $90.4 million as of September 30, 2016.

 

The company generated $25.5 million in net cash from operations for the third quarter of 2017, compared to $9.8 million for the third quarter of 2016. The company generated $22.2 million in free cash flow (cash flows from operating activities, less capital expenditures) for the third quarter of 2017, compared to $4.2 million for the third quarter of 2016.

 

Third Quarter Operating Highlights

 

During the third quarter of 2017, Imperva booked 175 deals with a value over $100,000, an increase of 28% compared to 137 in the third quarter of 2016.

 

During the third quarter of 2017, Imperva added 169 new customers compared to 209 during the third quarter of 2016. Imperva now has over 5,700 customers in more than 100 countries around the world.

 

Imperva was named a leader in the Gartner Magic Quadrant for Web Application Firewalls (WAF) for the fourth consecutive year.  

 

Imperva announced that Chris Hylen, a 20-year technology veteran and former CEO of Citrix GetGo, was appointed president, CEO and a member of the board.

Business Outlook

The following forward‑looking statements reflect expectations as of November 8, 2017. 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, 2017

Imperva expects total revenue for the fourth quarter of 2017 to be in the range of $89.2 million to $92.2 million. The company expects in the fourth quarter of 2017 non‑GAAP gross margins of approximately 80%. Further, Imperva expects in the fourth quarter of 2017 non‑GAAP operating income to be in the range of $9.4 million to $11.3 million and non‑GAAP net income to be in the range of $8.3 million to $10.2 million, or $0.24 to $0.29 per share based on approximately 34.8 million weighted diluted average shares.

Full Year Expectations –Ending December 31, 2017

Imperva expects total revenue for 2017 to be in the range of $319.8 million to $322.8 million. Imperva expects 2017 non‑GAAP gross margins of approximately 81%. Further, the company expects 2017 non‑GAAP operating income to be in the range of $31.1 million to $33.0 million and non‑GAAP net income to be in the range of $30.8 million to $32.7 million, or $0.90 to $0.95 per share based on approximately 34.3 million weighted average diluted shares. Imperva expects capital expenditures for the full year to be in the range of $15.0 million to $20.0 million. Finally, the company expects to generate positive cash flows from operations in 2017.


No reconciliation of forward-looking GAAP to non-GAAP financial measures has been provided in this press release. An explanation is included below under the heading “Non-GAAP Financial Measures.”

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 companys financial results for the third quarter ended September 30, 2017. To access the conference call, dial (877) 874-1588 for the U.S. or Canada or (719) 325-2494 for international callers with conference ID # 2343225. The webcast will be available live on the Investors section of the company’s website at www.imperva.com. An audio replay of the call will also be available to investors by phone beginning at approximately 5:00 p.m. Pacific Time on November 8, 2017 until 8:59 p.m. Pacific Time on November 22, 2017, by dialing (844) 512-2921 for the U.S. or Canada or (412) 317-6671 for international callers, and entering passcode # 2343225. In addition, an archived webcast will be available on the Investors section of the company’s website at www.imperva.com.

NonGAAP 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 nonGAAP measures of financial performance. The presentation of these nonGAAP 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 nonGAAP financial measures used by other companies. In addition, these nonGAAP 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 nonGAAP financial measures used by Imperva include historical and forward-looking nonGAAP operating income (loss), non-GAAP net income (loss), nonGAAP basic and diluted loss per share, free cash flow and forward-looking non-GAAP gross margin. These nonGAAP financial measures exclude stockbased compensation, acquisition- and disposition-related expenses, amortization of purchased intangibles, restructuring costs, gain on sale of business and provision for income taxes on sale of business from the Imperva unaudited condensed consolidated statement of operations and net purchases of property and equipment from the unaudited condensed consolidated balance sheet.

For a description of these items, including the reasons why management adjusts for them, and reconciliations of historical nonGAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled “Use of NonGAAP Financial Information” as well as the related tables that precede it. Imperva may consider whether other significant nonrecurring items that arise in the future should also be excluded in calculating the nonGAAP 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 nonGAAP financial measures in assessing operating results of Imperva, as well as when planning, forecasting and analyzing future periods. These nonGAAP financial measures also facilitate comparisons of the performance of Imperva to prior periods.

Imperva does not provide a reconciliation of forward-looking non-GAAP financial measures to their comparable GAAP financial measures because it could not do so without unreasonable effort due to unavailability of information needed to calculate reconciling items and due to variability, complexity and limited visibility of the adjusting items that would be excluded from the non-GAAP financial measures in future periods. When planning, forecasting and analyzing future periods, Imperva does so primarily on a non-GAAP


basis without preparing a GAAP analysis as that would require estimates for items such as stockbased compensation, acquisition- and disposition-related expenses and restructuring costs, which are inherently difficult to predict with reasonable accuracy. Stock-based compensation expense, for example, is difficult to estimate because it depends on the company’s future hiring and retention needs, as well as the future fair market value of the company’s common stock, all of which are difficult to predict and subject to constant change. In addition, for purposes of setting annual guidance, it would be difficult to quantify stock-based compensation expense for the year with reasonable accuracy in the current quarter. As a result, the company does not believe that a GAAP reconciliation would provide meaningful supplemental information about the company’s outlook.

Forward Looking Statements

This press release contains forwardlooking statements, including without limitation those regarding the Imperva “Business Outlook” (“Fourth Quarter Expectations – Ending December 31, 2017” and “Full Year Expectations – Ending December 31, 2017”); the company’s expectations regarding continuing cost controls, and its beliefs regarding its ability to attract new customers and expand within the company’s existing global customer base, as well as its momentum for the remainder of the year and beyond. 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: 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 necessity or reliability of solutions such as ours; the company’s sales expectations for large customers may not materialize in a particular quarter or at all; the company may not timely introduce new products or services or versions of its products or services and such products or services may not be accepted by the market or may have defects, errors, outages or failures; 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; existing customers may focus their additional cyber security spending on other technologies or addressing other risks; the company’s growth may be lower than anticipated; the markets that the company addresses may not grow as anticipated; the company may not be able to achieve the anticipated operational efficiencies and other benefits of the restructuring initiative; 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 3, 2017 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 forwardlooking statements, whether as a result of new information, new developments or otherwise.

About Imperva

Imperva® (NASDAQ: IMPV) is a leading provider of cyber security solutions that protect business-critical data and applications. The company’s SecureSphere, CounterBreach, Incapsula and Camouflage 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.

 

© 2017 Imperva, Inc. All rights reserved. Imperva, the Imperva logo, CounterBreach, Incapsula, SecureSphere, ThreatRadar and Camouflage along with its design are trademarks of Imperva, Inc. and its subsidiaries.

###


IMPERVA, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(On a GAAP basis)

(In thousands, except per share data)

(Unaudited)

 

 

Three months ended

September 30,

 

 

Nine months ended

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products and license

 

$

26,627

 

 

$

22,486

 

 

$

66,217

 

 

$

58,157

 

Services

 

 

57,265

 

 

 

45,921

 

 

 

164,418

 

 

 

127,896

 

Total net revenue

 

 

83,892

 

 

 

68,407

 

 

 

230,635

 

 

 

186,053

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products and license

 

 

1,883

 

 

 

2,394

 

 

 

5,638

 

 

 

6,392

 

Services

 

 

14,684

 

 

 

11,354

 

 

 

41,455

 

 

 

32,841

 

Total cost of revenue

 

 

16,567

 

 

 

13,748

 

 

 

47,093

 

 

 

39,233

 

Gross profit

 

 

67,325

 

 

 

54,659

 

 

 

183,542

 

 

 

146,820

 

Operating expenses (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

15,515

 

 

 

15,289

 

 

 

47,493

 

 

 

46,884

 

Sales and marketing

 

 

38,245

 

 

 

38,128

 

 

 

111,757

 

 

 

119,845

 

General and administrative (2), (3), (4)

 

 

13,645

 

 

 

12,669

 

 

 

39,556

 

 

 

38,800

 

Restructuring charges

 

 

-

 

 

 

-

 

 

 

667

 

 

 

-

 

Amortization of acquired intangible assets

 

 

133

 

 

 

352

 

 

 

582

 

 

 

1,056

 

Total operating expenses

 

 

67,538

 

 

 

66,438

 

 

 

200,055

 

 

 

206,585

 

Loss from operations

 

 

(213

)

 

 

(11,779

)

 

 

(16,513

)

 

 

(59,765

)

Gain on sale of business

 

 

-

 

 

 

-

 

 

 

35,871

 

 

 

-

 

Other income (expense), net

 

 

567

 

 

 

107

 

 

 

633

 

 

 

(51

)

Income (Loss) before provision (benefit) for income taxes

 

 

354

 

 

 

(11,672

)

 

 

19,991

 

 

 

(59,816

)

Provision for income taxes (2)

 

 

724

 

 

 

66

 

 

 

768

 

 

 

645

 

Net income (loss)

 

$

(370

)

 

$

(11,738

)

 

$

19,223

 

 

$

(60,461

)

Net income (loss) per share of common stock stockholders, basic

 

$

(0.01

)

 

$

(0.36

)

 

$

0.57

 

 

$

(1.88

)

Net income (loss) per share of common stock stockholders, diluted

 

$

(0.01

)

 

$

(0.36

)

 

$

0.56

 

 

$

(1.88

)

Shares used in computing earnings per share of common stock, basic

 

 

33,907

 

 

 

32,445

 

 

 

33,590

 

 

 

32,130

 

Shares used in computing earnings per share of common stock, diluted

 

 

33,907

 

 

 

32,445

 

 

 

34,118

 

 

 

32,130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

1,343

 

 

 

1,079

 

 

 

4,015

 

 

 

3,604

 

Research and development

 

 

2,584

 

 

 

3,380

 

 

 

9,912

 

 

 

11,431

 

Sales and marketing

 

 

3,850

 

 

 

4,405

 

 

 

11,016

 

 

 

17,182

 

General and administrative

 

 

3,694

 

 

 

4,113

 

 

 

10,970

 

 

 

13,519

 

     Total stock-based compensation expense

 

$

11,471

 

 

$

12,977

 

 

$

35,913

 

 

$

45,736

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) Acquisition- and disposition-related expense as included in above:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

0

 

 

 

0

 

 

 

1,082

 

 

 

0

 

Provision for income taxes on sale of business

 

 

0

 

 

 

0

 

 

 

901

 

 

 

0

 

     Total acquisition- and disposition-related expense

 

$

-

 

 

$

-

 

 

$

1,983

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3) Strategic review expense as included in above:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

0

 

 

 

298

 

 

 

0

 

 

 

298

 

     Total strategic review expense

 

$

-

 

 

$

298

 

 

$

-

 

 

$

298

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4) Non-routine stockholder matters expense as included in above:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

0

 

 

 

651

 

 

 

0

 

 

 

651

 

     Total non-routine stockholder matters expense

 

$

-

 

 

$

651

 

 

$

-

 

 

$

651

 

 


IMPERVA, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

 

September 30,

2017

 

 

December 31,

2016

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

163,935

 

 

$

107,343

 

Short-term investments

 

 

179,269

 

 

 

153,749

 

Restricted cash

 

 

51

 

 

 

68

 

Accounts receivable, net

 

 

59,804

 

 

 

62,571

 

Inventory

 

 

475

 

 

 

590

 

Prepaid expenses and other current assets

 

 

14,303

 

 

 

7,922

 

Insurance recoveries receivable

 

 

19,000

 

 

 

0

 

Total current assets

 

 

436,837

 

 

 

332,243

 

Property and equipment, net

 

 

25,884

 

 

 

21,496

 

Goodwill

 

 

36,389

 

 

 

37,448

 

Acquired intangible assets, net

 

 

3,316

 

 

 

8,393

 

Severance pay fund

 

 

6,558

 

 

 

5,070

 

Restricted cash

 

 

2,203

 

 

 

1,884

 

Deferred tax assets

 

 

2,902

 

 

 

1,220

 

Other assets

 

 

1,593

 

 

 

1,065

 

TOTAL ASSETS

 

$

515,682

 

 

$

408,819

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

$

5,330

 

 

$

5,529

 

Accrued compensation and benefits

 

 

21,697

 

 

 

20,840

 

Accrued and other current liabilities

 

 

12,834

 

 

 

7,683

 

Accrued legal settlement

 

 

19,000

 

 

 

0

 

Deferred revenue

 

 

111,962

 

 

 

104,042

 

Total current liabilities

 

 

170,823

 

 

 

138,094

 

Other liabilities

 

 

8,358

 

 

 

6,637

 

Deferred revenue

 

 

30,309

 

 

 

26,429

 

Accrued severance pay

 

 

7,440

 

 

 

5,696

 

TOTAL LIABILITIES

 

 

216,930

 

 

 

176,856

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

 

 

Common stock

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

559,144

 

 

 

510,257

 

Accumulated deficit

 

 

(260,183

)

 

 

(276,819

)

Accumulated other comprehensive loss

 

 

(212

)

 

 

(1,478

)

TOTAL STOCKHOLDERS' EQUITY

 

 

298,752

 

 

 

231,963

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

515,682

 

 

$

408,819

 

 


IMPERVA, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

  

 

Nine months ended September 30

 

 

 

2017

 

 

2016

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

19,223

 

 

$

(60,461

)

Adjustments to reconcile net income (loss) to net cash provided by operating

   activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

7,780

 

 

 

5,107

 

Stock-based compensation

 

 

36,588

 

 

 

45,736

 

Amortization of acquired intangibles

 

 

582

 

 

 

1,056

 

Gain on sale of business

 

 

(35,871

)

 

 

-

 

Loss on disposals of PPE

 

 

48

 

 

 

267

 

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

 

 

56

 

 

 

144

 

Excess tax deficiencies from share-based compensation

 

 

-

 

 

 

29

 

Other

 

 

(1,090

)

 

 

(265

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

2,767

 

 

 

15,349

 

Inventory

 

 

61

 

 

 

40

 

Prepaid expenses and other assets

 

 

(794

)

 

 

549

 

Accounts payable

 

 

(628

)

 

 

(2,089

)

Accrued compensation and benefits

 

 

3,981

 

 

 

(2,360

)

Accrued and other liabilities

 

 

4,936

 

 

 

515

 

Severance pay (net)

 

 

256

 

 

 

315

 

Deferred revenue

 

 

13,253

 

 

 

9,893

 

Deferred tax assets

 

 

(1,682

)

 

 

(183

)

Net cash provided by operating activities

 

 

49,466

 

 

 

13,642

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from sales/maturities of short-term investments

 

 

66,463

 

 

 

54,916

 

Proceeds from sale of business

 

 

35,015

 

 

 

-

 

Purchase of short-term investments

 

 

(91,878

)

 

 

(107,403

)

Net purchases of property and equipment

 

 

(9,835

)

 

 

(13,953

)

Change in restricted cash

 

 

(302

)

 

 

10

 

Net cash used in investing activities

 

 

(537

)

 

 

(66,430

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Settlement of holdback liability

 

 

-

 

 

 

(7,157

)

Proceeds from issuance of common stock, net of repurchases

 

 

14,790

 

 

 

8,106

 

Shares withheld for tax withholding on vesting of restricted stock units

 

 

(8,217

)

 

 

(6,520

)

Offering costs relating to follow-on public offering

 

 

-

 

 

 

(112

)

Excess tax deficiencies from share-based compensation

 

 

-

 

 

 

(29

)

Net cash provided by (used in) financing activities

 

 

6,573

 

 

 

(5,712

)

Effect of exchange rate changes on cash and cash equivalents

 

 

1,090

 

 

 

265

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

56,592

 

 

 

(58,235

)

CASH AND CASH EQUIVALENTS - Beginning of period

 

 

107,343

 

 

 

168,252

 

CASH AND CASH EQUIVALENTS - End of period

 

$

163,935

 

 

$

110,017

 

 


IMPERVA, INC. AND SUBSIDIARIES

(Reconciliation of GAAP to Non-GAAP Measures)

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three months ended

September 30,

 

 

Nine months ended

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

GAAP operating loss

 

$

(213

)

 

 

(11,779

)

 

$

(16,513

)

 

 

(59,765

)

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Stock-based compensation expense

 

 

11,471

 

 

 

12,977

 

 

 

35,913

 

 

 

45,736

 

      Acquisition- and disposition-related expense

 

 

-

 

 

 

-

 

 

 

1,082

 

 

 

-

 

      Strategic review expense

 

 

-

 

 

 

298

 

 

 

-

 

 

 

298

 

      Non-routine stockholder matters expense

 

 

-

 

 

 

651

 

 

 

-

 

 

 

651

 

      Restructuring

 

 

-

 

 

 

-

 

 

 

667

 

 

 

-

 

      Amortization of purchased intangibles

 

 

133

 

 

 

352

 

 

 

582

 

 

 

1,056

 

Non-GAAP operating income (loss)

 

$

11,391

 

 

 

2,499

 

 

$

21,731

 

 

 

(12,024

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income (loss)

 

$

(370

)

 

 

(11,738

)

 

$

19,223

 

 

 

(60,461

)

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Stock-based compensation expense

 

 

11,471

 

 

 

12,977

 

 

 

35,913

 

 

 

45,736

 

      Acquisition- and disposition-related expense

 

 

-

 

 

 

-

 

 

 

1,082

 

 

 

-

 

      Strategic review expense

 

 

-

 

 

 

298

 

 

 

-

 

 

 

298

 

      Non-routine stockholder matters expense

 

 

-

 

 

 

651

 

 

 

-

 

 

 

651

 

      Restructuring

 

 

-

 

 

 

-

 

 

 

667

 

 

 

-

 

      Amortization of purchased intangibles

 

 

133

 

 

 

352

 

 

 

582

 

 

 

1,056

 

      Gain on sale of business

 

 

-

 

 

 

-

 

 

 

(35,871

)

 

 

-

 

      Provision for income taxes on sale of business

 

 

-

 

 

 

-

 

 

 

901

 

 

 

-

 

Non-GAAP net income (loss)

 

$

11,234

 

 

 

2,540

 

 

$

22,497

 

 

 

(12,720

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, basic

 

 

33,907

 

 

 

32,445

 

 

 

33,590

 

 

 

32,130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, diluted

 

 

34,430

 

 

 

33,125

 

 

 

34,118

 

 

 

32,130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income (loss), basic

 

$

0.33

 

 

$

0.08

 

 

$

0.67

 

 

$

(0.40

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income (loss), diluted

 

$

0.33

 

 

$

0.08

 

 

$

0.66

 

 

$

(0.40

)

 


IMPERVA, INC. AND SUBSIDIARIES

(Reconciliation of Free Cash Flow)

(In thousands)

(Unaudited)

 

 

Three months ended September 30

 

 

Nine months ended September 30

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net cash provided by operating activities

 

$

25,528

 

 

$

9,848

 

 

$

49,466

 

 

$

13,642

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Net purchases of property and equipment

 

 

(3,289

)

 

 

(5,690

)

 

 

(9,835

)

 

 

(13,953

)

Total free cash generated (used)

 

$

22,239

 

 

$

4,158

 

 

$

39,631

 

 

$

(311

)

 

 



Use of NonGAAP 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 nonGAAP financial measures, Imperva believes it is appropriate to exclude or give effect to certain items for the following reasons:

StockBased Compensation. When evaluating the performance of its consolidated results, Imperva does not consider stockbased compensation expense. Likewise, the Imperva management team excludes stockbased compensation expense from its operating plans. In contrast, the Imperva management team is held accountable for cashbased 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 nonGAAP financial measures primarily because it does not consider such expense as part of its ongoing operating results when assessing the performance of its business, and the exclusion of the expense facilitates the comparison of current period results with results from prior periods.

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 expense 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.

 

Strategic Review and Non-routine Stockholder Matters. During the third quarter of 2016, Imperva incurred professional service fees and costs related to its review of strategic alternatives and other non-routine stockholder matters. Imperva has excluded the expenses associated with these activities from its non-GAAP financial results because they are not representative of and Imperva does not consider them part of ongoing operating costs. The exclusion of these expenses facilitates the comparison of current period results with results from prior periods.

Acquisition and Disposition-related Expense, Gain on Sale of Business, and Provision for Income Taxes on Sale of Business. Imperva completed an acquisition during the fourth quarter of 2016 and completed the sale of the Skyfence business during the first quarter of 2017. Imperva incurred legal, accounting, advisory and other transaction-related expense in connection with these transactions. Imperva has excluded these acquisition- and disposition-related expenses from its non-GAAP financial measures because they are not representative of ongoing operating costs. Imperva also has excluded the gain on the sale of the Skyfence business and the related


tax effects given that such gain and the associated taxes are not representative of Imperva’s ongoing operations. Imperva does not acquire or dispose of businesses on a predictable cycle and the expenses, gains (if any) and the associated taxes from these transactions vary significantly and are unique to each transaction. Imperva records acquisition- and disposition-related expense as operating expense when incurred and the gain on sale of business and provision for income taxes associated with the sale were recorded at the time the Skyfence transaction closed. As a result, when they occur, these expenses, gains and taxes affect comparability from period to period and Imperva believes that investors benefit from a supplemental non-GAAP financial measure that excludes these expenses, gains and taxes to facilitate the comparison of current period results with the results from prior periods.

 

Restructuring Charges. Imperva undertook a restructuring plan in the fourth quarter of 2016 and recorded additional restructuring charges in connection with the plan during the first quarter of 2017, substantially all of which were related to stock-based compensation expense associated with accelerated vesting of equity awards for certain terminated employees. In contrast to cost-reduction initiatives that are part of ongoing operations, the restructuring plan resulted in one-time severance costs that are not representative of ongoing operating costs. Because the restructuring plan was incremental to the operating activities of Imperva’s core business, Imperva has excluded the expense associated with the restructuring from its non-GAAP financial measures to facilitate the comparison of current period results with the results from prior periods.

 

Contacts

 

Investor Relations

Imperva, Inc.

Seth Potter, 646.277.1230

IR@imperva.com

Seth.Potter@icrinc.com