Fourth Quarter Highlights

  • Total revenue of $72.7 million, up 42% year-over-year
  • Combined product and subscription revenue increased 53% year-over-year driven by subscription and product revenue growth of 105% and 38%, respectively
  • GAAP operating loss of $5.7 million; Non-GAAP operating income of $6.9 million
  • Total deferred revenue as of December 31, 2015 increased 31% year-over-year to $106.7 million driven by 41% increase in short-term deferred revenue
  • Generated free cash flow of $4.6 million

REDWOOD SHORES, Calif.–(BUSINESS WIRE)–Feb. 3, 2016– Imperva, Inc. (NYSE: IMPV), committed to protecting business-critical data and applications in the cloud and on-premises, today announced financial results for the fourth quarter and full year ended December 31, 2015.

“The fourth quarter marked a strong finish to the year highlighted by our ability to achieve record product and subscription revenue,” stated Anthony Bettencourt, President and Chief Executive Officer of Imperva. “The combination of robust demand for our best-of-breed discovery, protection and compliance solutions and traction from our improved go-to-market strategy drove our record results during the year. Looking forward, we believe that Imperva is well positioned to maintain momentum in 2016 as we continue to help enterprises protect their business critical data and applications.”

Fourth Quarter 2015 Financial Highlights

  • Revenue: Total revenue for the fourth quarter of 2015 was $72.7 million, an increase of 42% compared to $51.4 million in the fourth quarter of 2014. Within total revenue, product revenue was $36.1 million, up 38% compared to $26.1 million in the same period last year. Services revenue increased 45% year-over-year to $36.6 million and accounted for 50% of total revenue. Within services revenue, overall subscription revenue grew 105% to $14.9 million, compared to the fourth quarter of 2014. Combined product and subscription revenue was $51.0 million, an increase of 53% compared to $33.4 million in the fourth quarter of 2014.
  • Operating Profit (Loss): Operating loss as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $(5.7) million for the fourth quarter compared to a loss of $(11.2) million during the fourth quarter in 2014. GAAP results included stock-based compensation and amortization of purchased intangibles of $12.5 million for the fourth quarter of 2015 and $11.5 million for the fourth quarter of 2014. Non-GAAP operating income for the fourth quarter was $6.9 million or 9.4% of total revenue, compared to $0.3 million during the same period in 2014, excluding the above mentioned charges.
  • Net Profit (Loss): GAAP net loss attributable to Imperva stockholders for the fourth quarter was $(5.8) million, or $(0.18) per share based on 31.4 million weighted average shares outstanding. This compares to GAAP net loss attributable to Imperva stockholders of $(12.5) million, or $(0.48) per share based on 26.2 million weighted average shares outstanding in the fourth quarter of 2014.

    Non-GAAP net income attributable to Imperva stockholders for the fourth quarter of 2015 was $6.7 million, or $0.20 per share based on 32.9 million weighted average diluted shares outstanding, excluding the above mentioned charges. This compares to non-GAAP net loss attributable to Imperva stockholders of $(1.0) million, or $(0.04) per share based on 26.2 million weighted average shares outstanding in the fourth quarter of 2014.

  • Balance Sheet and Cash Flow: As of December 31, 2015, Imperva had cash, cash equivalents and investments of $264.8 million. Total deferred revenue of $106.7 million increased 31% compared to $81.2 million as of December 31, 2014. Short-term deferred revenue of $79.1 million increased 41% compared to $56.1 million as of December 31, 2014.

    The company generated $8.7 million in net cash from operations for the fourth quarter of 2015 compared to $5.2 million during the fourth quarter of 2014. The company generated $4.6 million in free cash flow (cash flows from operating activities, less capital expenditures) for the quarter compared to $3.3 million during the fourth quarter of 2014.

Full Year 2015 Financial Highlights

  • Revenue: Total revenue for 2015 was $234.3 million, an increase of 43% compared to $164.0 million for 2014. Within total revenue, product revenue was $107.6 million, up 45% compared to $74.3 million in 2014. Services revenue increased 41% year-over-year to $126.7 million and accounted for 54% of total revenue. Within services revenue, overall subscriptions revenue grew 97% to $46.3 million, compared to 2014. Combined product and subscriptions revenue was $153.8 million, an increase of 57% compared to $97.8 million during 2014.
  • Operating Profit (Loss): GAAP operating loss was $(47.8) million for 2015 compared to a loss of $(57.8) million during 2014. GAAP results included stock-based compensation, amortization of purchased intangibles and acquisition-related expenses of $52.4 million for 2015 and $40.0 million for 2014. Non-GAAP operating income for 2015 was $4.6 million, compared to an operating loss of $(17.8) million during 2014, excluding the above mentioned charges.
  • Net Profit (Loss): GAAP net loss attributable to Imperva stockholders for 2015 was $(48.9) million, or $(1.64) per share based on 29.8 million weighted average shares outstanding. This compares to GAAP net loss attributable to Imperva stockholders of $(59.0) million, or $(2.28) per share based on 25.8 million weighted average shares outstanding in 2014.

    Non-GAAP net income attributable to Imperva stockholders for 2015 was $3.5 million, or $0.11 per share based on 31.6 million weighted average diluted shares outstanding, excluding the above mentioned charges. This compares to non-GAAP net loss attributable to Imperva stockholders of $(19.0) million, or $(0.74) per share based on 25.8 million weighted average shares outstanding in 2014.

  • Cash Flow: The company generated $23.9 million in net cash from operations for 2015 compared to $4.1 million during 2014. The company generated $15.8 million in free cash flow for 2015 compared to using $(1.5) million during 2014.

    Both GAAP and non-GAAP loss per share attributable to Imperva stockholders for the full year ended December 31, 2014 adjust for the loss attributable to the company’s non-controlling interest in Incapsula. A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Fourth Quarter and Recent Operating Highlights

  • During the fourth quarter of 2015, Imperva booked 165 deals with a value over $100,000, compared to 143 deals during the fourth quarter of 2014. For the full year 2015, the company booked 501 deals with a value over $100,000, compared to 404 during 2014.
  • During the fourth quarter of 2015, Imperva added 228 new customers compared to 245 during the fourth quarter of 2014. For the full year 2015, the company added 756 new customers compared to 774 during 2014. Imperva now has over 4,500 customers in more than 90 countries around the world.
  • Imperva unveiled a new release of its Imperva Skyfence Cloud Gateway, a Cloud Access Security Broker (CASB) solution, which includes enhanced data loss prevention (DLP) and new data governance features to help global organizations mitigate the security and compliance risks associated with employee use of file-sync services.
  • Imperva announced Imperva CounterBreach, a new multi-layered security solution that protects enterprise data from theft and loss due to compromised, malicious and careless users.

Business Outlook

The following forward-looking statements reflect expectations as of February 3, 2016. Results may be materially different and could be affected by the factors detailed in this press release and in recent Imperva SEC filings.

First Quarter Expectations – Ending March 31, 2016

Imperva expects total revenue for the first quarter of 2016 to be in the range of $58.0 million to $60.0 million. The company expects in the first quarter of 2016 non-GAAP gross margins of approximately 78%. Further, Imperva expects in the first quarter of 2016 non-GAAP operating loss to be in the range of $(7.5) million to $(9.5) million and non-GAAP net loss to be in the range of $(8.5) million to $(10.5) million, or $(0.26) to $(0.32) per share based on approximately 32.4 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 $302.0 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 $7.0 million to $9.0 million and non-GAAP net profit to be in the range of $5.7 million to $7.7 million, or $0.17 to $0.23 per share based on approximately 33.5 million weighted average diluted 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 fourth quarter and full year ended December 31, 2015. To access this call, dial (877) 718-5104 for the U.S. or Canada or (719) 325-4801 for international callers with conference ID #9284463. 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 February 17, 2016, by dialing (877) 870-5176 for the U.S. and Canada, or (858) 384-5517 for international callers and entering passcode #9284463.

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, amortization of purchased 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 the Imperva “Business Outlook” (“First Quarter Expectations – Ending March 31, 2016” and “Full Year Expectations – Ending December 31, 2016”); and the company’s belief related to its ability to maintain momentum in 2016; and the company’s belief that enterprises will continue to use Imperva products and services to protect their business critical data and applications. 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; the risk that the company may not timely introduce new products or versions of its products and that such products may not be accepted by the market; 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-Q filed with the Securities and Exchange Commission, or the SEC, on November 5, 2015 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, 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 Application 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, Incapsula and Skyfence are trademarks of Imperva, Inc. and its subsidiaries.

 
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 Twelve Months Ended
Dec 31 Dec 31 Dec 31 Dec 31
2015 2014 2015 2014
 
Net revenue:
Products and license $ 36,113 $ 26,100 $ 107,563 $ 74,299
Services   36,601   25,277   126,735   89,711
Total net revenue 72,714 51,377 234,298 164,010
Cost of revenue(1, 2):
Products and license 3,412 3,142 10,947 9,248
Services   10,383   7,154   36,633   27,335
Total cost of revenue   13,795   10,296   47,580   36,583
Gross profit 58,919 41,081 186,718 127,427
Operating expenses(1, 2):
Research and development 14,403 11,014 53,376 43,052
Sales and marketing 39,162 31,429 136,292 106,382
General and administrative 10,659 9,486 43,440 34,499
Amortization of purchased intangibles   352   352   1,408   1,269
Total operating expenses   64,576   52,281   234,516   185,202
Loss from operations (5,657) (11,200) (47,798) (57,775)
Other income (expense), net   (189)   101   (402)   (220)
Loss before provision for income taxes (5,846) (11,099) (48,200) (57,995)
 
Provision for income taxes   (65)   1,397   682   1,181
Net loss (5,781) (12,496) (48,882) (59,176)
Add: Loss attributable to noncontrolling interest         213
Net loss attributable to Imperva, Inc. stockholders $ (5,781) $ (12,496) $ (48,882) $ (58,963)
 
Net loss per share of common stock attributable to
Imperva, Inc. stockholders, basic and diluted $ (0.18) $ (0.48) $ (1.64) $ (2.28)
 
Shares used in computing net loss per share of
common stock, basic and diluted   31,393   26,177   29,849   25,806
 
(1) Stock-based compensation expense as included in above:
Cost of revenue $ 1,149 $ 586 $ 3,862 $ 2,058
Research and development 3,709 2,464 13,831 8,799
Sales and marketing 3,893 4,189 16,717 13,558
General and administrative   3,412   3,928   16,554   12,858
Total stock-based compensation expense $ 12,163 $ 11,167 $ 50,964 $ 37,273
 
(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 As of
Dec 31 Dec 31
2015 2014
Assets
Current assets:
Cash and cash equivalents $ 168,252 $ 68,096
Short-term investments 96,555 41,624
Restricted cash, current 79 62
Accounts receivable, net 61,051 47,446
Inventory 815 259
Deferred tax assets 408
Prepaid expenses and other current assets   7,965   3,927
Total current assets 334,717 161,822
 
Property and equipment, net 12,164 7,618
Goodwill 34,972 34,972
Purchased intangible assets, net 7,991 9,399
Severance pay fund 4,530 3,980
Restricted cash 1,665 1,665
Deferred tax assets 588 329
Other assets   1,042   860
Total assets $ 397,669 $ 220,645
 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 6,870 $ 5,376
Accrued compensation and benefits 20,259 15,749
Accrued and other current liabilities 14,170 6,376
Deferred revenue   79,132   56,077
Total current liabilities 120,431 83,578
 
Other liabilities 4,515 10,408
Deferred revenue 27,525 25,098
Accrued severance pay   4,884   4,318
Total liabilities 157,355 123,402
 
Stockholders’ equity:
Common stock 3 2
Additional paid-in capital 448,182 256,388
Accumulated deficit (206,540) (157,658)
Accumulated other comprehensive loss   (1,331)   (1,489)
Total Imperva, Inc. stockholders’ equity 240,314 97,243
Noncontrolling interest    
Total stockholders’ equity   240,314   97,243
Total liabilities and stockholders’ equity $ 397,669 $ 220,645
 
 
IMPERVA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
           
For the Twelve Months Ended
Dec 31 Dec 31
2015 2014
 
Cash flows from operating activities:
Net loss $ (48,882) $ (59,176)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 4,551 3,578
Stock-based compensation 50,964 37,273
Amortization of acquired intangible assets 1,408 1,269
Amortization of premiums/accretion of discounts
on short-term investments
496 416
Allowance for doubtful accounts 1,223 (195)
Excess tax benefits from share-based compensation (165) (385)
Changes in operating assets and liabilities:
Accounts receivable, net (14,828) (2,805)
Inventory (1,056) 253
Prepaid expenses and other assets (4,220) 409
Accounts payable 977 1,150
Accrued compensation and benefits 4,510 2,630
Accrued and other liabilities 3,242 1,847
Severance pay, net 16 93
Deferred revenue 25,482 18,123
Deferred tax assets   149   (354)
Net cash provided by operating activities 23,867 4,126
Cash flows from investing activities:
Purchase of short-term investments (89,626) (33,267)
Proceeds from sales/maturities of short-term investments 33,948 29,821
Acquisitions, net of cash acquired (12,083)
Net purchases of property and equipment (8,080) (5,621)
Change in restricted cash   (17)   (441)
Net cash used in investing activities (63,775) (21,591)
Cash flows from financing activities:
Proceeds from follow-on public offering, net of offering costs 127,853
Proceeds from issuance of common stock, net of repurchases 23,524 10,546
Excess tax benefits from share-based compensation 165 385
Shares withheld for tax withholding on vesting of restricted stock units   (11,464)   (2,074)
Net cash provided by financing activities 140,078 8,857
Effect of exchange rate changes on cash and cash equivalents   (14)  
Net increase (decrease) in cash and cash equivalents 100,156 (8,608)
 
Cash and cash equivalents at beginning of period   68,096   76,704
Cash and cash equivalents at end of period $ 168,252 $ 68,096
 
 
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 Twelve Months Ended
Dec 31 Dec 31 Dec 31 Dec 31
2015 2014 2015 2014
 
GAAP operating loss $ (5,657) $ (11,200) $ (47,798) $ (57,775)
Plus:
Stock-based compensation expense 12,163 11,167 50,964 37,273
Acquisition-related expense 1,399
Amortization of purchased intangibles   352   352   1,408   1,269
Non-GAAP operating income (loss) $ 6,858 $ 319 $ 4,574 $ (17,834)
 
GAAP net loss attributable to Imperva, Inc. stockholders $ (5,781) $ (12,496) $ (48,882) $ (58,963)
Plus:
Stock-based compensation expense 12,163 11,167 50,964 37,273
Acquisition-related expense 1,399
Amortization of purchased intangibles   352   352   1,408   1,269
Non-GAAP net income (loss) $ 6,734 $ (977) $ 3,490 $ (19,022)
 
Weighted average basic shares outstanding 31,393 26,177 29,849 25,806
 
Weighted average diluted shares outstanding 32,889 26,177 31,619 25,806
 
Non-GAAP net income (loss), basic $ 0.21 $ (0.04) $ 0.12 $ (0.74)
 
Non-GAAP net income (loss), diluted $ 0.20 $ (0.04) $ 0.11 $ (0.74)
 
 
IMPERVA, INC. AND SUBSIDIARIES
(Reconciliation of Free Cash Flow)
(In thousands)
(Unaudited)
                       
For the Three Months Ended For the Twelve Months Ended
Dec 31 Dec 31 Dec 31 Dec 31
2015 2014 2015 2014
 
Net cash provided by operating activities $ 8,679 $ 5,213 $ 23,867 $ 4,126
Less:
Net purchases of property and equipment   (4,042)   (1,927)   (8,080)   (5,621)
 
Total free cash generated (used) $ 4,637 $ 3,286 $ 15,787 $ (1,495)
 

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.

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 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 and acquisition-related charges from its non-GAAP financial measures primarily because they are 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.

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.

Source: Imperva, Inc.

Investor Relations
For Imperva
Seth Potter, 646-277-1230
IR@imperva.com
Seth.Potter@icrinc.com