[October 30, 2014]

Imperva Announces Third Quarter 2014 Financial Results

Imperva, 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 third quarter ended September 30, 2014.

"Our ability to exceed guidance during the third quarter was driven by the continuing global demand for our integrated solutions," stated Anthony Bettencourt, President and Chief Executive Officer of Imperva. "The company is well positioned to benefit from demand driven by the increase in size and frequency of Cyber attacks due to our best-in-class data center security solutions. Longer-term, we believe Imperva is poised to maintain the momentum due to our commitment to innovation and compelling product and service offerings which we believe will enable us to continue to attract new customers, as well as the opportunity to expand within our large and growing existing global customer base."

Third Quarter 2014 Financial Highlights

• Revenue: Total revenue for the third quarter of 2014 was $42.7 million, an increase of 22% compared to $35.1 million in the third quarter of 2013. Within total revenue, product revenue was $19.6 million compared to $18.2 million in the same period last year. Services revenue increased 36% year-over-year to $23.0 million and accounted for 54% of total revenue, up from 48% in the third quarter of 2013. Within services revenue, overall subscription revenue grew 108% to $6.4 million, compared to the third quarter of 2013. Combined product and subscriptions revenue was $26.0 million, an increase of 23% compared to $21.2 million in the third quarter of 2013.
• Operating Profit (Loss): Operating loss as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $(13.5) million for the third quarter compared to a loss of $(3.7) million during the third quarter in 2013. GAAP results included stock-based compensation expense of $10.8 million for the third quarter of 2014 and $3.4 million for the third quarter of 2013. GAAP results also included amortization of intangibles of $0.3 million during the third quarter of 2014. Non-GAAP operating loss for the third quarter was $(2.4) million, compared to a loss of $(0.3) million during the same period in 2013, excluding the above mentioned charges.
• Net Profit (Loss): GAAP net loss attributable to Imperva stockholders for the third quarter was $(13.6) million, or $(0.52) per share based on 26.0 million weighted average shares outstanding. This compares to GAAP net loss attributable to Imperva stockholders of $(3.8) million, or $(0.15) per share based on 24.5 million weighted average shares outstanding in the prior-year period.
  
  Non-GAAP net loss attributable to Imperva stockholders for the third quarter of 2014 was $(2.5) million, or $(0.10) per share based on 26.0 million weighted average shares outstanding, excluding the above mentioned charges. This compares to non-GAAP net loss attributable to Imperva stockholders of $(0.4) million, or $(0.01) per share based on 24.5 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 September 30, 2014, Imperva had cash, cash equivalents and investments of $101.2 million. Total deferred revenue of $68.9 million increased 31% compared to $52.6 million as of September 30, 2013.

Third Quarter 2014 and Recent Operating Highlights

• During the third quarter of 2014, Imperva booked 106 deals with a value over $100,000 compared to 97 deals during the third quarter of last year. During the nine months ended September 30, 2014, Imperva booked 261 deals with a value over $100,000 compared to 237 during the same period in 2013.
• During the third quarter of 2014, Imperva added 183 new customers, up 24% compared to 148 during the third quarter of last year. During the nine months ended September 30, 2014, Imperva added 529 new customers compared to 481 during the same period in 2013. Imperva now has over 3,500 customers in more than 90 countries around the world.
• On August 18^th, Imperva appointed Anthony Bettencourt as President and CEO, as well as a member of Imperva's board of directors. Shlomo Kramer, Imperva founder, continues to serve as chairman of Imperva's board of directors and also serves as Chief Strategy Officer.
• The Imperva Skyfence group announced a free version of Skyfence Cloud Discovery that enables organizations to instantly assess authorized and unauthorized cloud app usage to determine which SaaS applications should be managed, blocked or actively monitored in order to mitigate security threats.
• Imperva announced SecureSphere support for Cloudera Navigator, which allows organizations the ability to mitigate costly non-compliance fines and protect against data breaches as they leverage Big Data deployments to deliver business value.
• In October, Imperva also announced the availability of pay-as-you-go pricing for our SecureSphere WAF for Amazon Web Services allowing customers the ability to dynamically scale their WAF capabilities in real time.

Business Outlook

The following forward-looking statements reflect expectations as of October 30, 2014. Results may be materially different and could be affected by the factors detailed in this press release and in recent Imperva SEC filings.

Fourth Quarter Expectations - Ending December 31, 2014

Imperva expects total revenue for the fourth quarter of 2014 to be in the range of $48.6 million to $50.6 million, representing growth in the range of 14% to 18% compared to the same period in 2013. The company expects in the fourth quarter of 2014 non-GAAP gross margins of approximately 81.5%. Further, Imperva expects in the fourth quarter of 2014 non-GAAP operating loss to be in the range of $(1.7) million to $(0.3) million and non-GAAP net loss attributable to Imperva stockholders to be in the range of $(1.9) million to $(0.6) million, or a loss of $(0.07) to $(0.02) 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 $161.2 million to $163.2 million, or up 17% 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 $(19.8) million to $(18.5) million and non-GAAP net loss attributable to Imperva stockholders to be in the range of $(20.0) million to $(18.6) million, or a loss of $(0.77) to $(0.72) per share based on approximately 25.8 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 third quarter ended September 30, 2014. To access this call, dial 888.352.6793 for the U.S. and Canada or 719.325.2327 for international callers with conference ID #9593113. 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 November 13, 2014, by dialing 877.870.5176 for the U.S. and Canada, or 858.384.5517 for international callers and entering passcode #9593113.

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" ("Fourth Quarter Expectations - Ending December 31, 2014" and "Full Year Expectations - Ending December 31, 2014"); the belief that the company is well positioned to benefit from demand driven by the increase in size and frequency of Cyber attacks due to its best-in-class data center security solutions; the company's belief that its product and service offerings will enable it to continue to attract new customers and grow its customer base; and the company's belief that those offerings, Imperva's commitment to innovation and the opportunity to expand within its customer base position it to maintain momentum longer term. 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 August 8, 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 3,500 customers in more than 90 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.

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.

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