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, 2016 –Imperva, Inc. (NYSE: IMPV), committed to protectingbusiness-critical data and applications in the cloud andon-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 ourbest-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 includedstock-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 tonon-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 followingforward-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 2016non-GAAP gross margins of approximately 80%. Further, Imperva expects in the second quarter of 2016non-GAAP operating loss to be in the range of $(0.3) million to $(1.3) million andnon-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 excludesstock-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 2016non-GAAP gross margins of approximately 80%. Further, the company expects 2016non-GAAP operating profit to be in the range of $9.0 million to $11.0 million andnon-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 excludesstock-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 atwww.imperva.com, and a recording will be archived and accessible atwww.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 certainnon-GAAP measures of financial performance. The presentation of thesenon-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 fromnon-GAAP financial measures used by other companies. In addition, thesenon-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. Thenon-GAAP financial measures used by Imperva include historicalnon-GAAP operating income (loss), non-GAAP net income (loss) andnon-GAAP basic and diluted loss per share. Thesenon-GAAP financial measures excludestock-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 thesenon-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled “Use ofNon-GAAP Financial Information” as well as the related tables that precede it. Imperva may consider whether other significantnon-recurring items that arise in the future should also be excluded in calculating thenon-GAAP financial measures it uses.
Imperva believes that thesenon-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, thesenon-GAAP financial measures in assessing operating results of Imperva, as well as when planning, forecasting and analyzing future periods. Thesenon-GAAP financial measures also facilitate comparisons of the performance of Imperva to prior periods.
Forward Looking Statements
This press release containsforward-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. Theseforward-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’sForm 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 atwww.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 anyforward-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, ourblog, onTwitter.
© 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 | ||||||
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Total net revenue | 59,773 | 44,757 | ||||||
Cost of revenue(1): | ||||||||
Products and license | 2,184 | 1,998 | ||||||
Services | 10,784 | 8,332 | ||||||
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Total cost of revenue | 12,968 | 10,330 | ||||||
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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 | ||||||
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Total operating expenses | 70,997 | 54,026 | ||||||
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Loss from operations | (24,192 | ) | (19,599 | ) | ||||
Other income (expense), net | 83 | (80 | ) | |||||
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Loss before provision/(benefit) for income taxes | (24,109 | ) | (19,679 | ) | ||||
Provision/(Benefit) for income taxes | (102 | ) | 351 | |||||
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Net loss | $ | (24,007 | ) | $ | (20,030 | ) | ||
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Net loss per share of common stock, basic and diluted | $ | (0.75 | ) | $ | (0.74 | ) | ||
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Shares used in computing net loss per share of common stock, basic and diluted | 31,843 | 26,973 | ||||||
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(1) Stock-based compensation expense as included in above: |
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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 | ||||||
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Total stock-based compensation expense | $ | 15,655 | $ | 12,546 | ||||
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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 | ||||||
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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 | ||||||
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Total assets | $ | 381,111 | $ | 397,669 | ||||
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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 | ||||||
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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 | ||||||
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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 | ) | ||||
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Total stockholders’ equity | 231,168 | 240,201 | ||||||
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Total liabilities and stockholders’ equity | $ | 381,111 | $ | 397,669 | ||||
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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 | |||||
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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 | ) | |||||
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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 | ) | ||||
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Net cash provided/(used) by financing activities | (8,923 | ) | 127,378 | |||||
Effect of exchange rate changes on cash and cash equivalents | 172 | (115 | ) | |||||
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Net increase (decrease) in cash and cash equivalents | (9,561 | ) | 128,390 | |||||
Cash and cash equivalents at beginning of period | 168,252 | 68,096 | ||||||
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Cash and cash equivalents at end of period | $ | 158,691 | $ | 196,486 | ||||
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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 | ||||||
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Non-GAAP operating loss | $ | (8,185 | ) | $ | (6,701 | ) | ||
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GAAP net loss | $ | (24,007 | ) | $ | (20,030 | ) | ||
Plus: | ||||||||
Stock-based compensation expense | 15,655 | 12,546 | ||||||
Amortization of purchased intangibles | 352 | 352 | ||||||
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Non-GAAP net loss | $ | (8,000 | ) | $ | (7,132 | ) | ||
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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 | ) | ||||
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Total free cash generated | $ | 2,556 | $ | 5,813 | ||||
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Use ofNon-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 itsnon-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 considerstock-based compensation charges. Likewise, the Imperva management team excludesstock-based compensation expense from its operating plans. In contrast, the Imperva management team is held accountable forcash-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 excludesstock-based compensation expense from itsnon-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 thelong-term return provided by an acquisition and that investors benefit from a supplementalnon-GAAP financial measure that excludes the accounting expense associated with acquired intangible assets.
In addition, in accordance with GAAP, Imperva generally recognizes expenses forinternally-developed intangible assets as they are incurred until technological feasibility is reached, notwithstanding the potential future benefit such assets may provide. Unlikeinternally-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 ofinternally-developed intangible assets and acquired intangible assets. Accordingly, Imperva believes it is useful to provide, as a supplement to its GAAP operating results, anon-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