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8-K - 8-K - IMPERVA INCd769521d8k.htm

Exhibit 99.01

Imperva Announces Second Quarter 2014 Financial Results

 

    Total revenue of $38.4 million, up 23% year-over-year

 

    Services revenue growth of 39% was driven by the 110% year-over-year increase in subscription revenue

 

    Total deferred revenue at June 30, 2014 increased 33% year-over-year to $64.1 million

Redwood Shores, Calif. – July 31, 2014Imperva, Inc. (NYSE: IMPV), pioneering the third pillar of enterprise security with a new layer of protection designed specifically for physical and virtual data centers, today announced financial results for the second quarter ended June 30, 2014.

“We were pleased with our execution during the second quarter and our ability to exceed guidance,” stated Shlomo Kramer, President and Chief Executive Officer of Imperva. “During the quarter, we made good progress on the productivity initiatives we began to implement last quarter highlighted by a rebound in the United States as well as a continuation of our overall high win rates globally. We believe that Imperva is well positioned to maintain its momentum during the second half of the year due to the combination of ongoing demand for our integrated solution, strong growth of subscriptions and growing pipeline of opportunities globally.”

Second Quarter 2014 Financial Highlights

 

    Revenue: Total revenue for the second quarter of 2014 was $38.4 million, an increase of 23% compared to $31.3 million in the second quarter of 2013. Within total revenue, product revenue was $16.6 million compared to $15.7 million in the same period last year. Services revenue increased 39% year-over-year to $21.9 million and accounted for 57% of total revenue, up from 50% in the second quarter of 2013. Within services revenue, overall subscription revenue grew 110% to $5.3 million, compared to the second quarter of 2013. Combined product and subscriptions revenue was $21.8 million compared to $18.2 million in the second quarter of 2013.

 

    Operating Profit (Loss): Operating loss as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $(15.3) million for the second quarter compared to a loss of $(5.7) million during the second quarter in 2013. GAAP results included stock-based compensation expense of $8.7 million for the second quarter of 2014 and $3.6 million for the second quarter of 2013. GAAP results also included amortization of intangibles of $0.4 million during the second quarter of 2014. Non-GAAP operating loss for the second quarter was $(6.2) million, compared to a loss of $(2.1) million during the same period in 2013, excluding the above mentioned charges.

 

    Net Profit (Loss): GAAP net loss attributable to Imperva stockholders for the second quarter was $(15.4) million, or $(0.60) per share based on 25.8 million weighted average shares outstanding. This compares to GAAP net loss attributable to Imperva stockholders of $(5.9) million, or $(0.24) per share based on 24.2 million weighted average shares outstanding in the prior-year period.


Non-GAAP net loss attributable to Imperva stockholders for the second quarter of 2014 was $(6.4) million, or $(0.25) per share based on 25.8 million weighted average shares outstanding, excluding the above mentioned charges. This compares to non-GAAP net loss attributable to Imperva stockholders of $(2.3) million, or $(0.10) per share based on 24.2 million weighted average diluted shares outstanding in the prior-year period.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

 

    Balance Sheet: As of June 30, 2014, Imperva had cash, cash equivalents and investments of $99.5 million. Total deferred revenue of $64.1 million increased 33% compared to $48.3 million as of June 30, 2013.

Second Quarter 2014 Operating Highlights

 

    During the second quarter of 2014, Imperva booked 88 deals with a value over $100,000 compared to 76 deals during the second quarter of last year. During the six months ended June 30, 2014, Imperva booked 155 deals with a value over $100,000 compared to 140 during the same period in 2013.

 

    During the second quarter of 2014, Imperva added 175 new customers compared to 185 during the second quarter of last year. During the six months ended June 30, 2014, Imperva added 346 new customers compared to 333 during the same period in 2013. Imperva now has over 3,300 customers in more than 75 countries around the world.

Business Outlook

The following forward-looking statements reflect expectations as of July 31, 2014. Results may be materially different and could be affected by the factors detailed in this press release and in recent Imperva SEC filings.

Third Quarter Expectations – Ending September 30, 2014

Imperva expects total revenue for the third quarter of 2014 to be in the range of $38.0 million to $41.0 million, representing growth in the range of 8% to 17% compared to the same period in 2013. The company expects in the third quarter of 2014 non-GAAP gross margins of approximately 78.5%. Further, Imperva expects in the third quarter of 2014 non-GAAP operating loss to be in the range of $(6.0) million to $(8.0) million and non-GAAP net loss attributable to Imperva stockholders to be in the range of $(6.5) million to $(8.5) million, or a loss of $(0.25) to $(0.33) per share based on approximately 26.0 million weighted average shares, which excludes stock-based compensation expense and amortization of intangibles.

Full Year Expectations –Ending December 31, 2014

Imperva expects total revenue for 2014 to be in the range of $155.5 million to $162.5 million, or up 13% to 18% compared to 2013. Imperva expects 2014 non-GAAP gross margins of approximately 79%. Further, the company expects 2014 non-GAAP operating loss to be in the range of $(21.0) million to $(26.5) million and non-GAAP net loss attributable to Imperva stockholders to be in the range of $(21.5) million to $(27.5) million, or a loss of $(0.83) to $(1.06) per share based on approximately 26.0 million weighted average shares, which excludes stock-based compensation, amortization of intangibles and acquisition-related expenses. Imperva expects capital expenditures for the full year to be in the range of $3.5 million to $4.5 million. Finally, the company expects to generate negative cash flows from operations in 2014.


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 second quarter ended June 30, 2014. To access this call, dial 877.879.6203 for the U.S. and Canada or 719.325.4800 for international callers with conference ID #5315327. 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 August 14, 2014, by dialing 877.870.5176 for the U.S. and Canada, or 858.384.5517 for international callers and entering passcode #5315327.

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, amortization of intangibles and acquisition-related expenses 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” (“Third Quarter Expectations – Ending September 30, 2014” and “Full Year Expectations – Ending December 31, 2014”); Imperva’s belief that it is in


position to maintain its momentum during the second half of the year; and the company’s expectations regarding ongoing demand for its integrated solution. 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 the steps the company has taken and plans to take to address its sales execution challenges may prove insufficient; the risk that demand for the company’s data center security solutions may not increase and may decrease; the risk that Imperva may not timely introduce new products or versions of its products and that they may not be accepted by the market; the risk that competitors may be perceived by customers to be better positioned to help handle business security threats and protect their businesses from major risk; the risk that the growth of Imperva may be lower than anticipated; and other risks detailed under the caption “Risk Factors” in the company’s Form 10-Q filed with the Securities and Exchange Commission, or the SEC, on May 9, 2014 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, pioneering the third pillar of enterprise security, fills the gaps in endpoint and network security by directly protecting high-value applications and data assets in physical and virtual data centers. With an integrated security platform built specifically for modern threats, Imperva data center security provides the visibility and control needed to neutralize attack, theft, and fraud from inside and outside the organization, mitigate risk, and streamline compliance. Over 3,300 customers in more than 75 countries rely on our SecureSphere® platform to safeguard their business. Imperva is headquartered in Redwood Shores, California. Learn more: www.imperva.com, our blog, on Twitter.

© 2014 Imperva, Inc. All rights reserved. Imperva, the Imperva logo, and SecureSphere are trademarks of Imperva, Inc.

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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     For the Six Months Ended  
     Jun 30
2014
    Jun 30
2013
    Jun 30
2014
    Jun 30
2013
 

Net revenue:

        

Products and license

   $ 16,586      $ 15,671      $ 28,557      $ 29,825   

Services

     21,856        15,668        41,401        30,099   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net revenue

     38,442        31,339        69,958        59,924   

Cost of revenue(1):

        

Products and license

     2,075        2,446        3,807        4,322   

Services

     6,959        5,098        12,979        9,513   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

     9,034        7,544        16,786        13,835   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     29,408        23,795        53,172        46,089   

Operating expenses(1, 2):

        

Research and development

     11,618        6,646        21,579        13,004   

Sales and marketing

     25,065        18,281        48,100        35,828   

General and administrative

     7,622        4,597        16,027        8,980   

Amortization of purchased intangibles

     361        —          565        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     44,666        29,524        86,271        57,812   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (15,258     (5,729     (33,099     (11,723

Other expense, net

     (215     (55     (369     (102
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before provision (benefit) for income taxes

     (15,473     (5,784     (33,468     (11,825

Provision (Benefit) for income taxes

     (35     261        (406     415   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

     (15,438     (6,045     (33,062     (12,240

Add: Loss attributable to noncontrolling interest

     —          130        213        266   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to Imperva, Inc. stockholders

   $ (15,438   $ (5,915   $ (32,849   $ (11,974
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share of common stock attributable to Imperva, Inc. stockholders, basic and diluted

   $ (0.60   $ (0.24   $ (1.29   $ (0.50
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     25,782        24,171        25,545        24,039   
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Cost of revenue

   $ 529      $ 255      $ 903      $ 468   

Research and development

     2,190        720        3,982        1,386   

Sales and marketing

     3,209        1,643        5,639        2,976   

General and administrative

     2,737        974        4,807        1,615   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total stock-based compensation expense

   $ 8,665      $ 3,592      $ 15,331      $ 6,445   
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Cost of revenue

     —          —          156        —     

General and administrative

     —          —          1,243        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total acquisition-related expense

   $ —        $ —        $ 1,399      $ —     
  

 

 

   

 

 

   

 

 

   

 

 

 


IMPERVA, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

     As of
Jun 30
2014
    As of
Dec 31,
2013
 

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 62,990      $ 76,704   

Short-term investments

     36,489        38,381   

Restricted cash, current

     57        34   

Accounts receivable, net

     33,604        44,446   

Inventory

     324        512   

Deferred tax assets

     374        341   

Prepaid expenses and other current assets

     3,398        3,972   
  

 

 

   

 

 

 

Total current assets

     137,236        164,390   

Property and equipment, net

     6,732        5,475   

Goodwill

     34,972        —     

Purchased intangible assets, net

     10,103        —     

Severance pay fund

     4,599        4,140   

Restricted cash

     1,575        1,252   

Deferred tax assets

     42        42   

Other assets

     719        1,192   
  

 

 

   

 

 

 

Total assets

   $ 195,978      $ 176,491   
  

 

 

   

 

 

 

Liabilities and stockholders’ equity

    

Current liabilities:

    

Accounts payable

   $ 3,298      $ 3,948   

Accrued compensation and benefits

     12,235        12,930   

Accrued and other current liabilities

     4,369        3,961   

Deferred revenue

     42,206        40,337   
  

 

 

   

 

 

 

Total current liabilities

     62,108        61,176   

Other liabilities

     10,129        1,993   

Deferred revenue

     21,936        22,715   

Accrued severance pay

     5,078        4,385   
  

 

 

   

 

 

 

Total liabilities

     99,251        90,269   

Stockholders’ equity:

    

Common stock

     2        2   

Additional paid-in capital

     228,602        187,957   

Accumulated deficit

     (131,544     (98,695

Accumulated other comprehensive loss

     (333     (428
  

 

 

   

 

 

 

Total Imperva, Inc. stockholders’ equity

     96,727        88,836   

Noncontrolling interest

     —          (2,614
  

 

 

   

 

 

 

Total stockholders’ equity

     96,727        86,222   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 195,978      $ 176,491   
  

 

 

   

 

 

 


IMPERVA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

     For the Six Months Ended  
     Jun 30
2014
    Jun 30
2013
 

Cash flows from operating activities:

    

Net loss

   $ (33,062   $ (12,240

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

    

Depreciation and amortization

     1,688        1,269   

Stock-based compensation

     15,331        6,445   

Amortization of acquired intangible assets

     565        —     

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

     217        383   

Changes in operating assets and liabilities:

    

Accounts receivable, net

     10,842        8,489   

Inventory

     188        (40

Prepaid expenses and other assets

     1,207        (404

Accounts payable

     (928     (16

Accrued compensation and benefits

     (884     1,350   

Accrued and other liabilities

     (88     (390

Severance pay, net

     234        65   

Deferred revenue

     1,090        2,012   

Deferred tax assets

     (33     (18

Other

     —          (8
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     (3,633     6,897   

Cash flows from investing activities:

    

Purchase of short-term investments

     (11,615     (27,026

Proceeds from sales/maturities of short-term investments

     13,585        29,361   

Net purchases of property and equipment

     (2,845     (1,202

Change in restricted cash

     (346     59   

Acquisitions, net of cash acquired

     (12,083     —     
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (13,304     1,192   

Cash flows from financing activities:

    

Proceeds from issuance of common stock, net of repurchases

     3,223        2,893   
  

 

 

   

 

 

 

Net cash provided by financing activities

     3,223        2,893   

Effect of exchange rate changes on cash

     —          (162
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (13,714     10,820   

Cash and cash equivalents at beginning of period

   $ 76,704      $ 59,201   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 62,990      $ 70,021   
  

 

 

   

 

 

 


IMPERVA, INC. AND SUBSIDIARIES

(Reconciliation of GAAP to Non-GAAP Measures)

(In thousands, except per share amounts)

(Unaudited)

 

     For the Three Months Ended     For the Six Months Ended  
     Jun 30
2014
    Jun 30
2013
    Jun 30
2014
    Jun 30
2013
 

GAAP operating loss

   $ (15,258   $ (5,729   $ (33,099   $ (11,723

Plus:

        

Stock-based compensation expense

     8,665        3,592        15,331        6,445   

Acquisition-related expense

     —          —          1,399        —     

Amortization of purchased intangibles

     361        —          565        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating loss

   $ (6,232   $ (2,137   $ (15,804   $ (5,278
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP net loss attributable to Imperva, Inc. stockholders

   $ (15,438   $ (5,915   $ (32,849   $ (11,974

Plus:

        

Stock-based compensation expense

     8,665        3,592        15,331        6,445   

Acquisition-related expense

     —          —          1,399        —     

Amortization of purchased intangibles

     361        —          565        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net loss

   $ (6,412   $ (2,323   $ (15,554   $ (5,529
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding, basic and diluted

     25,782        24,171        25,545        24,039   

Non-GAAP net loss, basic and diluted

   $ (0.25   $ (0.10   $ (0.61   $ (0.23


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.

Amortization of Intangible Assets. 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.

Acquisition-related charges: GAAP requires expenses to be recognized for various types of events associated with a business acquisition, such as legal, accounting, advisory and other deal related expenses. These expenses vary significantly and are unique to each transaction. Additionally, Imperva does not acquire businesses on a predictable cycle. Imperva records these acquisition and other transaction costs as operating expenses when they are incurred. Imperva does not include these expenses when considering operating performance, and believes that these acquisition and other transaction costs affect comparability from period to period and that investors benefit from a supplemental non-GAAP financial measure that excludes these expenses.

Imperva excludes stock based compensation, amortization of intangibles and acquisition-related charges from its non-GAAP financial measures primarily because they are non-cash expenses or other 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.


Investor Relations Contact Information

Seth Potter

646.277.1230

IR@imperva.com

Seth.Potter@icrinc.com