- Total revenue of $91.6 million, up
9% year-over-year
- Billings of $106.5 million, up 16%
year-over-year
- GAAP operating income of $0.5
million; Non-GAAP operating income of $14.7 million
- Generated $32.2 million in operating
cash flow and $30.0 million in free cash flow
Imperva, Inc. (NASDAQ: IMPV), a leading global provider of
best-in-class cybersecurity solutions on premises, in the cloud,
and across hybrid environments, announced today financial results
for the third quarter ended September 30, 2018.
Third Quarter 2018 Financial Highlights
- Revenue: Total revenue was $91.6
million, a year-over-year increase of 9%. Total Services revenue
was $68.4 million, a year-over-year increase of 19%.
- Billings: Billings in the
quarter were $106.5 million, a year-over-year increase of 16%.
- Operating Income (Loss): GAAP
operating income was $0.5 million for the third quarter, improved
from a loss of $(0.2) million during the third quarter in 2017.
Non-GAAP operating income for the third quarter was $14.7 million,
up 29% from a non-GAAP operating income of $11.4 million during the
same period in 2017.
- Net Income (Loss): GAAP net
income was $1.1 million, or $0.03 per share based on 35.7 million
weighted average diluted shares outstanding. This compares to net
loss of $(0.4) million, or $(0.01) per share based on 33.9 million
weighted average diluted shares outstanding in the third quarter of
2017.Non-GAAP net income was $15.3 million, or $0.43 per share
based on 35.7 million weighted average diluted shares outstanding.
This compares to a non-GAAP net income of $11.2 million, or $0.33
per share based on 34.4 million weighted average diluted shares
outstanding in the third quarter of 2017.
- Balance Sheet and Cash Flow: As
of September 30, 2018, Imperva had cash, cash equivalents and
investments of $304.4 million and no debt. Total deferred revenue
was $191.8 million, an increase of 35% compared to $142.3 million
as of September 30, 2017. Total deferred revenue for the third
quarter of 2018 includes $2.3 million of deferred revenue balances
acquired from business combinations during the period.The company
generated $32.2 million in cash flow from operations, compared to
$25.5 million in the third quarter of 2017. The company generated
$30.0 million in free cash flow (cash flow from operations less
capital expenditures) for the quarter, compared to $22.2 million
during the third quarter of 2017.As previously disclosed, the
Company has adopted ASC 606 under the modified retrospective method
effective January 1, 2018. The accounting impact on revenue,
expenses and income has been provided in the tables included in
this press release.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.”
No Quarterly Conference Call
Due to the previously announced definitive agreement to be
acquired by leading private equity technology investment firm Thoma
Bravo, LLC, Imperva does not plan to host an earnings conference
call to discuss third quarter 2018 financial results.
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
billings, or revenue plus the change in deferred revenue, net of
acquired deferred revenue during the period plus any adjustment to
the deferred revenue balance due to adoption of the new revenue
recognition standard; free cash flow, or cash provided by operating
activities less capital expenditures; and 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, acquisition- and disposition-related
expenses, amortization of purchased intangibles, restructuring and
non-routine consulting expenses related to our restructuring and
strategy, facilities exit costs, gain on sale of business,
provision for income taxes on sale of business and the amount of
legal settlements 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 historical
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-routine 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.
About Imperva
Imperva® is a leading cybersecurity company that delivers
best-in-class solutions to protect data and applications – wherever
they reside – on-premises, in the cloud, and across hybrid
environments. The company’s Incapsula, SecureSphere, and
CounterBreach product lines help organizations protect websites,
applications, APIs, and databases from cyberattacks while ensuring
compliance. Imperva innovates using data, analytics, and insights
from our experts and our community to deliver simple, effective and
enduring solutions that protect our customers from cybercriminals.
Learn more at www.imperva.com, our blog, or Twitter.
© 2018 Imperva, Inc. All rights reserved. Imperva, the Imperva
logo, CounterBreach, Incapsula, SecureSphere, ThreatRadar,
Camouflage along with its design and Prevoty 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 Nine months ended
September 30, September 30, 2018
2017 2018 2017 Net revenue:
Products and license $ 23,241 $ 26,627 $ 62,971 $ 66,217 Services
68,392 57,265 197,706
164,418 Total net revenue 91,633 83,892 260,677 230,635
Cost of revenue: (1) (4) Products and license 1,985 1,883
5,623 5,638 Services 16,997 14,684
49,634 41,455 Total cost of revenue
18,982 16,567 55,257 47,093
Gross profit 72,651 67,325 205,420 183,542 Operating
expenses: (1) (4) Research and development 18,618 15,515 56,219
47,493 Sales and marketing (2) 39,051 38,245 119,098 111,757
General and administrative (3) (5) 13,872 13,645 41,789 39,556
Restructuring charges - - 2,551 667 Amortization of acquired
intangible assets 644 133 908
582 Total operating expenses 72,185
67,538 220,565 200,055 Income
(loss) from operations 466 (213 ) (15,145 ) (16,513 ) Gain on sale
of business - - - 35,871 Other income, net 1,034 567
2,983 633 Income (loss) before
provision for income taxes 1,500 354 (12,162 ) 19,991 Provision for
income taxes (3) 442 724 19,620
768 Net (loss) income $ 1,058 $ (370 ) $ (31,782 ) $
19,223 Net (loss) income per share of common stock
stockholders, basic $ 0.03 $ (0.01 ) $ (0.91 ) $ 0.57 Net
(loss) income per share of common stock stockholders, diluted $
0.03 $ (0.01 ) $ (0.91 ) $ 0.56 Shares used in computing
earnings per share of common stock, basic 35,066
33,907 34,782 33,590 Shares used
in computing earnings per share of common stock, diluted
35,745 33,907 34,782 34,118
(1) Stock-based compensation expense as included in
above: Cost of revenue $ 2,072 $ 1,343 $ 4,789 $ 4,015 Research and
development 2,354 2,584 7,299 9,912 Sales and marketing 3,989 3,850
11,034 11,016 General and administrative 3,566 3,694 14,809 10,970
Restructuring charges - - -
675 Total stock-based compensation expense $ 11,981 $
11,471 $ 37,931 $ 36,588 (2)
Non-routine consulting related to our restructuring and strategy as
included in above: Sales and marketing $ - $ - $ 1,700
$ - $ - $ - $ 1,700 $ -
(3) Acquisition related expense as included in above: General and
administrative $ 1,075 $ $ 1,315 $ 1,082 Provision for income taxes
on sales of business - - -
901 $ 1,075 $ - $ 1,315 $ 1,983
(4) Legal Settlements Cost of revenue $ - $ - $ 120 $ -
Research and development - - - - Sales and marketing $ - - $ 1,292
- General and administrative $ - - $ 981
- $ - $ -
$
2,393
$ - (5) Facilities exit costs as included in above:
General and administrative $ 559 $ - $ 559 $ -
$ 559 $ - $ 559 $ -
IMPERVA, INC.
AND SUBSIDIARIES Consolidated Balance Sheets (In
thousands) (Unaudited)
September 30,
December 31, 2018 2017 ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 155,932 $ 192,538
Short-term investments 148,487 166,993 Restricted cash 30 52
Accounts receivable, net 68,261 75,535 Deferred costs, current
6,647 - Inventory 189 617 Prepaid expenses and other current assets
9,191 14,894 Total current assets
388,737 450,629 Property and equipment, net 22,600 25,407 Goodwill
149,445 36,389 Acquired intangible assets, net 14,376 3,184
Severance pay fund 5,799 6,554 Restricted cash 2,603 2,284 Deferred
tax assets 995 2,022 Other assets including non-current deferred
costs 21,388 1,593 TOTAL ASSETS $
605,943 $ 528,062
LIABILITIES AND STOCKHOLDERS'
EQUITY CURRENT LIABILITIES: Accounts payable $ 5,372 $ 5,869
Income taxes 8,916 319 Accrued compensation and benefits 23,422
22,913 Accrued and other current liabilities 15,327 11,098 Deferred
revenue 137,814 126,174 Total current
liabilities 190,851 166,373 Long-term accrued severance pay 6,564
7,238 Other non-current liabilities 12,887 6,253 Deferred revenue
54,022 33,081 TOTAL LIABILITIES
264,324 212,945 Commitments and Contingencies
STOCKHOLDERS' EQUITY: Common stock 3 3 Additional paid-in capital
612,249 572,106 Accumulated deficit (268,846 ) (256,537 )
Accumulated other comprehensive loss (1,787 ) (455 )
TOTAL STOCKHOLDERS' EQUITY 341,619 315,117
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 605,943
$ 528,062
IMPERVA, INC. AND
SUBSIDIARIES Consolidated Statements of Cash Flows (In
thousands) (Unaudited)
Nine months ended September
30 2018 2017 CASH FLOWS FROM
OPERATING ACTIVITIES: Net income (loss) $ (31,782 ) $ 19,223
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: Depreciation and amortization 8,709 7,780
Stock-based compensation 37,931 36,588 Amortization of deferred
costs 3,864 - Amortization of acquired intangibles 908 582 Loss on
disposals - 48 Amortization of premiums/accretion of discounts on
short-term investments 163 56 Gain on sale of business - (35,871 )
Facilities exit costs 559 - Other 668 (1,090 ) Changes in operating
assets and liabilities: Accounts receivable, net 8,741 2,767
Inventory 355 61 Deferred costs (14,541 ) - Prepaid expenses and
other assets 558 (794 ) Accounts payable (653 ) (628 ) Income taxes
8,597 707 Accrued compensation and benefits 509 3,981 Accrued and
other liabilities 9,033 4,229 Severance pay (net) 81 256 Deferred
revenue 33,848 13,253 Deferred tax assets 1,027
(1,682 ) Net cash provided by operating activities
68,575 49,466
CASH FLOWS FROM INVESTING
ACTIVITIES: Proceeds from sales/maturities of short-term
investments 71,736 66,463 Purchase of short-term investments
(53,339 ) (91,878 ) Proceeds from sale of business - 35,015 Receipt
of cash in escrow from sale of business 5,000 - Acquisitions, net
of cash acquired (123,507 ) - Net purchases of property and
equipment (5,724 ) (9,835 ) Net cash used in
investing activities (105,834 ) (235 )
CASH FLOWS
FROM FINANCING ACTIVITIES: Proceeds from issuance of common
stock, net of repurchases 10,799 14,790 Shares withheld for tax
withholding on vesting of restricted stock units (9,151 )
(8,217 ) Net cash provided by financing activities
1,648 6,573 Effect of exchange rate changes on
cash, cash equivalents, and restricted cash (698 )
1,090 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND
RESTRICTED CASH (36,309 ) 56,894 CASH, CASH EQUIVALENTS AND
RESTRICTED CASH - Beginning of period 194,874
109,295 CASH, CASH EQUIVALENTS AND RESTRICTED CASH - End of
period $ 158,565 $ 166,189
IMPERVA,
INC. AND SUBSIDIARIES Topic 606 Adoption Financial
Impact (In thousands, except per share data) (Unaudited)
Three months ended Nine months ended
September 30,2018 September 30,2018
Asreported
Adjustments
Balanceswithoutadoption
ofTopic 606
Asreported
Adjustments
Balanceswithoutadoption
ofTopic 606
Net revenue: Products and license $ 23,241 $ (2,768 ) $ 20,473
$ 62,971 $ (5,778 ) $ 57,193 Services:
Subscriptions 38,519 (378 ) 38,141 109,956 (352 ) 109,604
Maintenance and Support 25,219 (967 ) 24,252 75,393 (2,365 ) 73,028
Professional services and training 4,654 72
4,726 12,357 258
12,615 Total services 68,392 (1,273 )
67,119 197,706 (2,459 ) 195,247
Total net revenue 91,633 (4,041 )
87,592 260,677 (8,237 ) 252,440
Operating expenses: Sales and marketing 39,051
2,882 41,933 119,098
10,677 129,775 Income (loss) from operations
466 (6,923 ) (6,457 ) (15,145 )
(18,914 ) (34,059 ) Net (loss) income $ 1,058 $ (6,923 ) $
(5,865 ) $ (31,782 ) $ (18,914 ) $ (50,696 ) Net (loss) income per
share of common stock stockholders, basic and diluted $ 0.03 $
(0.17 ) $ (0.91 ) $ (1.46 )
IMPERVA, INC. AND
SUBSIDIARIES Reconciliation of GAAP to Non-GAAP Measures
(In thousands, except per share data) (Unaudited)
Three months ended September 30
Nine months ended September 30
2018 2017
2018
2017
GAAP operating income (loss) $ 466 $ (213 ) $ (15,145 ) $ (16,513 )
Plus: Stock-based compensation expense 11,981 11,471 37,931 35,913
Acquisition- and disposition-related expense 1,075 - 1,315 1,082
Restructuring - - 2,551 667 Facilities exit costs 559 - 559 - Legal
settlement - - 2,393 - Non-routine consulting related to our
restructuring and strategy - - 1,700 - Amortization of purchased
intangibles 644 133 908
582 Non-GAAP operating income $ 14,725 $ 11,391 $
32,212 $ 21,731 GAAP net income (loss) $ 1,058
$ (370 ) $ (31,782 ) $ 19,223 Plus: Stock-based compensation
expense 11,981 11,471 37,931 35,913 Acquisition- and
disposition-related expense 1,075 - 1,315 1,082 Restructuring - -
2,551 667 Non-routine consulting related to our restructuring and
strategy - - 1,700 - Legal settlement - - 2,393 - Facilities exit
costs 559 - 559 - Amortization of purchased intangibles 644 133 908
582 Gain on sale of business - - - (35,871 ) Provision for income
taxes on sale of business - - -
901 Non-GAAP net income $ 15,317 $ 11,234 $
15,575 $ 22,497 Weighted average shares
outstanding, basic 35,066 33,907 34,782 33,590 Weighted
average shares outstanding, diluted 35,745 34,430 35,407 34,118
Non-GAAP net income, basic $ 0.44 $ 0.33
$
0.45 $ 0.67 Non-GAAP net income, diluted $ 0.43 $ 0.33
$
0.44 $ 0.66
IMPERVA, INC. AND SUBSIDIARIES
Billings (In thousands) (Unaudited)
Three
months ended
Nine months ended
September 30,
September 30,
2018 2017 2018 2017 Total
revenue
$ 91,633 $ 83,892 $ 260,677 $ 230,635 Change in
deferred revenue 17,185 8,121 32,581 11,800 Adjustment for acquired
deferred revenue (2,295 ) - (2,295 ) - Deferred revenue adjustment
due to adoption of the new revenue recognition standard -
- 3,562 - Billings
$
106,523 $ 92,013 $ 294,525 $ 242,435
IMPERVA, INC. AND SUBSIDIARIES Reconciliation of Free
Cash Flow (In thousands) (Unaudited)
Nine
months ended September 30 2018 2017 Net
cash provided by operating activities $ 68,575 $ 49,466 Less: Net
purchases of property and equipment (5,724 ) (9,835 )
Total free cash generated $ 62,851 $ 39,631
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 expense. Likewise, the Imperva management team
excludes stock-based compensation expense from its operating plans.
In contrast, the Imperva management team is held accountable for
cash-based compensation and such amounts are included in its
operating plans. Further, when considering the impact of equity
award grants, Imperva places a greater emphasis on overall
stockholder dilution rather than the accounting charges associated
with such grants.
Imperva excludes stock-based compensation expense from its
non-GAAP financial measures primarily because it does not consider
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.
Acquisition and Disposition-related Expense, Gain on Sale of
Business, and Provision for Income Taxes on Sale of
Business. Imperva completed the acquisition of Prevoty on
August 9, 2018 and on October 10, 2018 announced that it had
entered into a definitive agreement to be acquired by Thoma Bravo,
LLC. During the first quarter of 2017 Imperva completed the
disposition of the Skyfence business. Imperva incurred legal,
accounting, advisory and other transaction-related expense in
connection with these transactions and excluded the associated
acquisition and disposition-related expenses from its non-GAAP
financial measures because they are not representative of ongoing
operating costs. Imperva also 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.
Facility Exit Costs. In September 2018, Imperva exited and
subleased a portion of its facilities located in Redwood Shores,
California and recorded charges in connection with the exit. These
charges are not representative of ongoing costs to the business as
they were part of a site consolidation plan that has been completed
and is not expected to recur. As a result, these charges are being
excluded to provide investors with a more comparable measure of
costs associated with ongoing operations.
Restructuring Charges and Related Non-routine Consulting
Expenses. Imperva undertook a restructuring plan in the fourth
quarter of 2016 and recorded 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. Imperva undertook a separate restructuring
plan in the first quarter of 2018, and recorded restructuring
charges in connection with the plan related to cash severance
payments. Imperva also incurred non-routine consulting fees and
expenses related to developing the restructuring plan and company
strategy. In contrast to cost-reduction initiatives that are part
of ongoing operations, the restructuring plan and the consulting
fees that went into developing the plan resulted in severance and
consulting costs that we believe are not representative of ongoing
operating costs. Imperva has excluded the expense associated with
these activities to provide investors with a more comparable
measure of costs associated with ongoing operations.
Legal Settlements. During the second quarter of 2018, Imperva
entered into an agreement in principle to settle two class action
lawsuits and accrued the amounts of the settlements, which remain
subject to court approvals, among other conditions prior to being
funded. When planning and evaluating the performance of its
consolidated results, Imperva does not consider the amount of legal
settlements it was required to recognize in the second quarter of
2018 as representative of ongoing operating costs due to the
unusual and one-time nature of the charges. Imperva will recognize
charges related to in-period settlement activities for future
periods, and does not expect to exclude such charges from its
non-GAAP financial measures.
Billings. Imperva believes billings provide management and
investors with important information about the health of the
business particularly as sales of subscription and support services
and related renewals grow.
Free Cash Flow. Imperva considers free cash flow to be a
profitability and liquidity measure that provides useful
information to management and investors about the amount of cash
generated by the business after necessary capital expenditures.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181031005797/en/
Investor Relations Contact InformationSunil
Shah650.832.6852IR@imperva.comSunil.Shah@imperva.com
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