Form 8-K IMPERVA INC For: Feb 02

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

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FORM 8-K

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CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report: February�2, 2015

(Date of earliest event reported)

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Imperva, Inc.

(Exact Name of Registrant as Specified in Its Charter)

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Delaware

(State or Other Jurisdiction of Incorporation)

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001-35338	�	03-0460133
(Commission File Number)	�	(IRS Employer Identification No.)

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3400 Bridge Parkway, Suite 200 Redwood Shores, California	�	94065
(Address of Principal Executive Offices)	�	(Zip Code)

(650) 345-9000

(Registrant�s Telephone Number, Including Area Code)

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Check the appropriate box below if the Form�8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

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�	Written communications pursuant to Rule�425 under the Securities Act (17 CFR 230.425)

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�	Soliciting material pursuant to Rule�14a-12 under the Exchange Act (17 CFR 240.14a-12)

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�	Pre-commencement communications pursuant to Rule�14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

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�	Pre-commencement communications pursuant to Rule�13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item�2.02.

Results of Operations and Financial Condition.

On February�5, 2015, Imperva, Inc. (�Imperva�) issued a press release announcing its financial results for the fourth quarter and year ended December�31, 2014 and providing its business outlook. A copy of the press release is attached as Exhibit�99.1 to this Current Report on Form�8-K.

The information in Item�2.02 of this Current Report, including Exhibit�99.1 to this Current Report, is being furnished and shall not be deemed to be �filed� for purposes of Section�18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections�11 and�12(a)(2) of the Securities Act of 1933, as amended. The information contained in this Item�2.02 and in the accompanying Exhibit�99.1 shall not be incorporated by reference into any registration statement or other document filed by Imperva with the Securities and Exchange Commission, whether made before or after the date of this Current Report, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.

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Item�5.02.

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Senior Management Bonus Plan

On February�3, 2015, the Compensation Committee of Imperva approved and adopted a senior management bonus plan for 2015 (the �2015 Bonus Plan�) to provide incentive to executive officers of Imperva. Each of Imperva�s named executive officers who is currently an executive officer is a participant in the 2015 Bonus Plan.

Under the 2015 Bonus Plan, each named executive officer who is currently an executive officer is eligible to receive a quarterly bonus equal to the Quarterly Revenues Bonus, as defined below, and focuses on Imperva�s quarterly revenues performance to determine the bonus amount payable to such eligible named executive officer in each quarter. The target quarterly bonus amount for each eligible named executive officer is set forth in the table below, provided that the Compensation Committee has not determined to reduce such bonus, including such a determination in the event that Imperva does not substantially meet its margin or operating expense targets (as provided in Imperva�s annual operating plan) in such quarter taking into account the actual revenue level:

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Executive Officer	��	Quarterly�Bonus�Amount		�
President and Chief Executive Officer	��	$	93,750	��
Chief Financial Officer	��	$	40,425	��
Chief Product Officer	��	$	25,000	��

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The �Quarterly Revenues Bonus� is equal to the Quarterly Bonus Amount specified in the table above, multiplied by the Quarterly Revenues Bonus, determined as follows:

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Quarterly Revenues�Bonus Percentage	�	�	��	Percentage Achievement Relative to Quarterly Revenue Target (in accordance with Imperva�s internal operating plan)
112.5%	�		��	> 105%
110%	�		��	> 104% and < 105%
107.5%	�		��	> 103% and < 104%
105%	�		��	> 102% and < 103%
102.5%	�		��	> 101% and < 102%
100%	�		��	> 100% and < 101%
97.5%	�		��	> 99% and < 100%
95%	�		��	> 98% and < 99%
92.5%	�		��	> 97% and < 98%
90%	�		��	> 96% and < 97%
87.5%	�		��	> 95% and < 96%
85%	�		��	> 94% and < 95%
82.5%	�		��	> 93% and < 94%
80%	�		��	> 92% and < 93%
77.5%	�		��	> 91% and < 92%
75%	�		��	> 90% and < 91%
70%	�		��	> 89% and < 90%
65%	�		��	> 88% and < 89%
60%	�		��	> 87% and < 88%
55%	�		��	> 86% and < 87%
50%	�		��	> 85% and < 86%
0%	�		��	< 85%

The 2015 Bonus Plan also provides for a pool of shares of common stock to be granted to Imperva�s executive officers. The size of the equity pool will be determined by the Compensation Committee in connection with the year-end review based on the number of executive officers participating, the cumulative achievement of quarterly revenues targets within the fiscal year, the relative retention value of existing grants held by executive officers and in recognition of our benchmark targets in light of updated compensation data from our compensation consultant, as well as other factors. Imperva anticipates that equity awards under the 2015 Bonus Plan will be granted in the first quarter of 2016. The 2015 Bonus Plan will be administered, and cash bonus and equity awards under the plan determined, in the same manner as for Imperva�s bonus plan for 2014.

Appointment of Director

The Board of Directors (the �Board�) of Imperva appointed Allan Tessler to the Board, effective February�2, 2015 upon Mr.�Tessler�s acceptance of such appointment by delivery of his signed Offer Letter on that date.

In connection with his appointment to the Board, Mr.�Tessler received (1)�an option to purchase shares of Imperva�s common stock equal to a Black-Scholes value on the date of grant of $130,000 at an exercise price equal to the closing price of Imperva�s common stock on the New York Stock Exchange on the date of grant, and (2)�restricted stock units with a number of shares equal to $130,000 divided by the closing price of Imperva�s common stock on the New York Stock Exchange on the date of grant. The date of grant was February�4, 2015, the first Wednesday following Mr.�Tessler�s acceptance of appointment to the Board. Accordingly, Mr.�Tessler received an option to purchase 6,380�shares of Imperva�s common stock at an exercise price of $42.16, which was equal to the closing price of Imperva�s common stock on the New York Stock Exchange on that date (the �Option�), and restricted stock units for 3,083�shares of common stock (the �RSUs�). The Option and the RSUs will vest annually in equal installments over three

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years of service beginning on February�2, 2015. Upon a change in control of Imperva, the Option and the RSUs will vest in full. In addition, Mr.�Tessler will receive an annual retainer of $40,000 for his service as a Board member. Mr.�Tessler has not been appointed to a Board committee.

It is expected that Mr.�Tessler will execute Imperva�s standard form of indemnification agreement. This agreement provides for indemnification for related expenses including, among other things, attorneys� fees, judgments, fines and settlement amounts incurred by Mr.�Tessler in any action or proceeding to the fullest extent permitted by applicable law.

The foregoing descriptions are qualified in their entirety by the full text of the Offer Letter, effective February�2, 2015, between Imperva and Allan Tessler, attached as Exhibit�10.1 to this Current Report on Form�8-K, and the form of Indemnification Agreement, which was filed as Exhibit�10.4 to Imperva�s Amendment No.�4 to Form�S-1 Registration Statement filed on October�28, 2011, each of which exhibits is incorporated by reference herein.

Departure of Director

On February�3, 2015, Steve Krausz informed Imperva of his intention not to stand for re-election as a Class�I director. Mr.�Krausz will remain on the Board until Imperva�s 2015 annual stockholders meeting to be held on May�6, 2015 at which the Class�I directors will be elected.

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Item�9.01.

Financial Statements and Exhibits.

(d) Exhibits.

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Number	��	Description
10.1	��	Offer Letter, effective as of February�2, 2015, between Imperva, Inc. and Allan Tessler.
99.1	��	Financial Results press release issued by Imperva, Inc., dated February�5, 2015.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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Date: February�5, 2015

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EXHIBIT INDEX

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Number	��	Description
10.1	��	Offer Letter, effective as of February�2, 2015, between Imperva, Inc. and Allan Tessler.
99.1	��	Financial Results press release issued by Imperva, Inc., dated February�5, 2015.

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Exhibit 10.1

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3400 Bridge Parkway, Suite 200

Redwood Shores, CA 94065

Tel: +1 (650)�345-9000

Fax: +1 (650)�345-9004

www.imperva.com

January�30, 2015

Allan Tessler

Dear Allan:

Imperva, Inc. (the �Company�) is pleased to offer you a position as a member of the Company�s Board of Directors (the �Board�), effective as of the date on which you execute and return this letter agreement (this �Agreement�). As a Board member, you will be responsible for attending any scheduled Board meetings in person or by telephone. In addition, from time to time, we would like to have the benefit of your experience and insight regarding various Company-related matters. We would also appreciate your assistance in helping us gain access to individuals and organizations that may be helpful to the Company�s objectives.

In exchange for your services, you will be granted (1)�a nonqualified stock option to purchase shares of common stock equal to a Black-Sholes value on the date of grant of $130,000 at an exercise price equal to the closing price of the Company�s common stock on the New York Stock Exchange on the date of grant (the �Option�), and (2)�restricted stock units with a number of shares equal to $130,000 divided the closing price of the Company�s common stock on the New York Stock Exchange on the date of grant (the �RSUs�). The Option and the RSUs will vest annually in equal installments over three years of service as a Board member. Further, the Option and the RSUs shall become fully vested upon any merger, acquisition or any other event which causes a change of control. In addition, you will receive an annual retainer of $40,000 for your service as a Board member, payable quarterly in arrears.

The Company will reimburse reasonable travel and other business expenses in connection with your duties as a Board member in accordance with the Company�s generally applicable policies.

The Company has adopted a form of director and officer indemnification agreement and will enter into such an agreement with you. In addition, the Company has obtained directors and officers (�D&O�) insurance and it will extend all such D&O insurance benefits to protect you in your role as a director of the Company.

In connection with your Board services, we expect that the Company and its agents will disclose technical, business, or financial information to you, including (without limitation) the identity of and information relating to customers or employees and information the Company has received and in the future will receive from third parties that is subject to a duty from the Company to maintain the confidentiality of such information and to use it only for certain limited

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purposes (�Confidential Information�). To the extent such Confidential Information is not generally publicly known or otherwise previously known by you without an obligation of confidentiality, you agree not to use such Confidential Information (except in connection with your Board services) or disclose such Confidential Information to any third party and to take reasonable steps to maintain the confidential nature of such Confidential Information. When you cease to be a Board member, you must return all Confidential Information to the Company.

As a precautionary matter and to avoid any conflicts of interest, we ask that you inform the Company of any potential, actual, direct or indirect conflict of interest that you think exists or may arise as a result of your relationship with Company, so that we may come to a quick and mutually agreeable resolution. By signing this Agreement you also represent and warrant that neither this Agreement nor the performance thereof will conflict with or violate any obligation of yours or right of any third party, and further that you will not disclose any third party proprietary or confidential information to the Company in connection with your Board services.

This Agreement shall be governed by and construed under the laws of the State of California without regard to principles of conflicts of laws. The foregoing constitutes the complete agreement between us with respect to the subject matter hereof and supersede in all respects all prior or contemporaneous proposals, negotiations, conversations, discussions and agreements between us.

I am excited about you joining our Board and look forward to working with you to help make the Company a truly great and prosperous company. Please acknowledge your receipt of and agreement with this Agreement by signing and dating this Agreement and returning it to me.

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ACCEPTED AND AGREED TO:

/s/ Allan R. Tessler

Allan Tessler

2/1/15

Date

Exhibit 99.1

Imperva Announces Fourth Quarter and Full Year 2014 Financial Results

Fourth Quarter Highlights

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Total revenue of $51.4�million, up 20% year-over-year

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Services revenue growth of 36% was driven by the 94% year-over-year increase in subscription revenue

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Total deferred revenue as of December�31, 2014 increased 29% year-over-year to $81.2�million

Redwood Shores, Calif. � February�5, 2015 � Imperva, Inc. (NYSE: IMPV), committed to protecting business-critical data and applications on-premises and in the cloud, today announced financial results for the fourth quarter and full year ended December�31, 2014.

�We are very pleased with our execution during the fourth quarter as evidenced by our ability to exceed our guidance across all key operating metrics,� stated Anthony Bettencourt, President and Chief Executive Officer of Imperva. �Market demand remained strong globally for our integrated discovery, compliance and protection solutions which resulted in record new customer wins and deals greater than $100,000 during the quarter. The combination of our large and growing market, improving go-to-market strategy, and best-of-breed business critical data and application security solutions, positions Imperva to maintain the momentum in 2015.�

Fourth Quarter 2014 Financial Highlights

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Revenue: Total revenue for the fourth quarter of 2014 was $51.4 million, an increase of 20% compared to $42.7 million in the fourth quarter of 2013. Within total revenue, product revenue was $26.1�million compared to $24.2�million in the same period last year. Services revenue increased 36% year-over-year to $25.3�million and accounted for 49% of total revenue, up from 43% in the fourth quarter of 2013. Within services revenue, overall subscription revenue grew 94% to $7.3�million, compared to the fourth quarter of 2013. Combined product and subscriptions revenue was $33.4�million, an increase of 20% compared to $27.9�million in the fourth quarter of 2013.

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Operating Profit (Loss): Operating loss as reported in accordance with U.S. generally accepted accounting principles (GAAP) was $(11.2)�million for the fourth quarter compared to a loss of $(10.0)�million during the fourth quarter in 2013. GAAP results included stock-based compensation and acquisition-related expenses of $11.2�million for the fourth quarter of 2014 and $13.0�million for the fourth quarter of 2013. GAAP results also included amortization of purchased intangibles of $0.3 million during the fourth quarter of 2014. Non-GAAP operating profit for the fourth quarter was $0.3�million, compared to $3.0�million during the same period in 2013, excluding the above mentioned charges.

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Net Profit (Loss): GAAP net loss attributable to Imperva stockholders for the fourth quarter was $(12.5)�million, or $(0.48)�per share based on 26.2�million weighted average shares outstanding. This compares to GAAP net loss attributable to Imperva stockholders of $(9.4)�million, or $(0.38)�per share based on 24.7�million weighted average shares outstanding in the prior-year period.

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Non-GAAP net loss attributable to Imperva stockholders for the fourth quarter of 2014 was $(1.0)�million, or $(0.04)�per share based on 26.2�million weighted average shares outstanding, excluding the above mentioned charges. This compares to non-GAAP net income attributable to Imperva stockholders of $3.0�million, or $0.12�per share based on 25.9�million weighted average diluted shares outstanding in the prior-year period.

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Balance Sheet: As of December�31, 2014, Imperva had cash, cash equivalents and investments of $109.7�million. Total deferred revenue of $81.2�million increased 29% compared to $63.1�million as of December�31, 2013.

Full Year 2014 Financial Highlights

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Revenue: Total revenue for 2014 was $164.0 million, an increase of 19% compared to $137.8�million for 2013. Within total revenue, product revenue was $74.3�million compared to $72.2�million in the same period last year. Services revenue increased 37% year-over-year to $89.7�million and accounted for 55% of total revenue, up from 48% for 2013. Within services revenue, overall subscriptions revenue grew 107% to $23.5 million, compared to 2013. Combined product and subscriptions revenue was $97.8�million, an increase of 17% compared to $83.5�million during 2013.

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Operating Profit (Loss): GAAP operating loss was $(57.8)�million for 2014 compared to a loss of $(25.4)�million during 2013. GAAP results included stock-based compensation and acquisition-related expenses of $38.7�million for 2014 and $22.8�million for 2013. GAAP results also included amortization of purchased intangibles of $1.3 million during 2014. Non-GAAP operating loss for 2014 was $(17.8)�million, compared to a loss of $(2.6)�million during 2013, excluding the above mentioned charges.

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Net Profit (Loss): GAAP net loss attributable to Imperva stockholders for 2014 was $(59.0)�million, or $(2.28)�per share based on 25.8�million weighted average shares outstanding. This compares to GAAP net loss attributable to Imperva stockholders of $(25.2)�million, or $(1.04)�per share based on 24.3�million weighted average shares outstanding in the prior-year period.

Non-GAAP net loss attributable to Imperva stockholders for 2014 was $(19.0)�million, or $(0.74)�per share based on 25.8�million weighted average shares outstanding, excluding the above mentioned charges. This compares to non-GAAP net loss attributable to Imperva stockholders of $(2.9)�million, or $(0.12)�per share based on 24.3�million weighted average shares outstanding in the prior-year period.

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.�

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Fourth Quarter and Recent Operating Highlights

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During the fourth quarter of 2014, Imperva added 245 new customers compared to 237 during the fourth quarter of last year. For the full year 2014, the company added 774 new customers compared to 718 during 2013. Imperva now has over 3,700 customers in more than 90 countries around the world.

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During the fourth quarter of 2014, Imperva booked 143 deals with a value over $100,000 compared to 136 deals during the fourth quarter of last year. For the full year 2014, the company booked 404 deals with a value over $100,000 compared to 373 during 2013.

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Imperva announced the availability of a Cloud Reference Architecture for Infrastructure-as-a-Service (IaaS), focused on Amazon Web Services (AWS).

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Imperva announced SecureSphere version 11 and, with it, a new real-time agent-based solution designed to keep high-value data assets in Big Data deployments safe, yet accessible.

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Imperva announced ThreatRadar Bot Protection Services, a new add-on for the SecureSphere Web Application Firewall (WAF).

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Imperva Incapsula DDoS Protection Service was named �Denial of Service Protection Readers� Choice Award Winner� in the Information Security Magazine� and SearchSecurity.com 2014 Readers� Choice Awards.

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Imperva announced a new version of the Imperva Skyfence Cloud Gateway that addresses mobile access blindspots, provides enterprise-wide risk assessment and remediation, and provides data privacy for proprietary information stored within sanctioned and unsanctioned cloud apps.

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Imperva announced the addition of two Distributed Denial of Service (DDoS) protection services to its line-up of acclaimed DDoS offerings. The new services, Incapsula Infrastructure Protection and Incapsula DNS Protection, complement Imperva SecureSphere security and compliance solutions, as well as the company�s existing DDoS service, Incapsula Website Protection.

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Imperva was selected as the Winner in the 2014 Government Security News (GSN) Homeland Security Awards Program in the category of Best Data Security/Loss Management Solution.

Business Outlook

The following forward-looking statements reflect expectations as of February�5, 2015. 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, 2015

Imperva expects total revenue for the first quarter of 2015 to be in the range of $39.0�million to $41.0�million, representing growth in the range of 24% to 30% compared to the same period in 2014. The company expects in the first quarter of 2015 non-GAAP gross margins of approximately 77.0%. Further, Imperva expects in the first quarter of 2015 non-GAAP operating loss to be in the range of $(10.8)�million to $(9.2)�million and non-GAAP net loss to be in the

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range of $(11.3)�million to $(9.7)�million, or a loss of $(0.42) to $(0.36) per share based on approximately 27.0�million weighted average shares, which excludes stock-based compensation and amortization of purchased intangibles.

Full Year Expectations �Ending December�31, 2015

Imperva expects total revenue for 2015 to be in the range of $195.0�million to $200.0�million, or up 19% to 22% compared to 2014. Imperva expects 2015 non-GAAP gross margins of approximately 78.5%. Further, the company expects 2015 non-GAAP operating loss to be in the range of $(24.0)�million to $(20.0)�million and non-GAAP net loss to be in the range of $(26.0)�million to $(22.0)�million, or a loss of $(0.93) to $(0.79) per share based on approximately 27.8�million weighted average 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 $5.5�million to $6.5�million. Finally, the company expects to generate positive cash flows from operations in 2015.

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, 2014. To access this call, dial 888.554.1432 for the U.S. and Canada or 719.785.1749 for international callers with conference ID #9298578. 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�19, 2015, by dialing 877.870.5176 for the U.S. and Canada, or 858.384.5517 for international callers and entering passcode #9298578.

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 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

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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, 2015� and �Full Year Expectations � Ending December�31, 2015�); and Imperva�s belief that the combination of its large and growing market, improving go-to-market strategy, and business critical data and application security solutions, positions the company to maintain the momentum in 2015. 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 our cyber security solutions may not increase and may decrease; the risk that we may not timely introduce new products or versions of our 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 cyber 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 November�7, 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^� (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 vulnerabilities, protect information wherever it lives � on-premises and in the cloud � 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 enhance Imperva products with up-to-the minute threat intelligence, and publish 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.

^� 2015 Imperva, Inc. All rights reserved. Imperva, the Imperva logo, SecureSphere, 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)

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For�the�Three�Months�Ended

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For�the�Twelve�Months�Ended

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Dec 31

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Dec 31

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Dec 31

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Dec 31

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2014

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2013

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2014

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2013

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Net revenue:

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Products and license

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$

26,100

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$

24,150

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$

74,299

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$

72,153

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Services

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25,277

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18,583

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89,711

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65,606

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Total net revenue

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51,377

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42,733

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164,010

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137,759

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Cost of revenue(1, 2):

Products and license

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3,142

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�

2,540

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�

9,248

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8,756

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Services

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7,154

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6,031

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27,335

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20,940

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Total cost of revenue

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10,296

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8,571

��

�

36,583

��

�

29,696

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Gross profit

�

41,081

��

�

34,162

��

�

127,427

��

�

108,063

��

Operating expenses(1, 2):

Research and development

�

11,014

��

�

7,827

��

�

43,052

��

�

27,556

��

Sales and marketing

�

31,429

��

�

25,537

��

�

106,382

��

�

81,500

��

General and administrative

�

9,486

��

�

10,759

��

�

34,499

��

�

24,436

��

Amortization of purchased intangibles

�

352

��

�

���

��

�

1,269

��

�

���

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Total operating expenses

�

52,281

��

�

44,123

��

�

185,202

��

�

133,492

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Loss from operations

�

(11,200

)�

�

(9,961

)�

�

(57,775

)�

�

(25,429

)�

Other income (expense), net

�

101

��

�

(136

)�

�

(220

)�

�

(125

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Loss before provision for income taxes

�

(11,099

)�

�

(10,097

)�

�

(57,995

)�

�

(25,554

)�

Provision for income taxes

�

1,397

��

�

74

��

�

1,181

��

�

777

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Net loss

�

(12,496

)�

�

(10,171

)�

�

(59,176

)�

�

(26,331

)�

Add: Loss attributable to noncontrolling interest

�

���

��

�

742

��

�

213

��

�

1,153

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Net loss attributable to Imperva, Inc. stockholders

$

(12,496

)�

$

(9,429

)�

$

(58,963

)�

$

(25,178

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

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

$

(0.48

)�

$

(0.38

)�

$

(2.28

)�

$

(1.04

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

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

�

26,177

��

�

24,722

��

�

25,806

��

�

24,300

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

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

Cost of revenue

$

586

��

$

718

��

$

2,058

��

$

1,440

��

Research and development

�

2,464

��

�

1,527

��

�

8,799

��

�

3,660

��

Sales and marketing

�

4,189

��

�

3,941

��

�

13,558

��

�

8,537

��

General and administrative

�

3,928

��

�

6,450

��

�

12,858

��

�

8,857

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Total stock-based compensation expense

$

11,167

��

$

12,636

��

$

37,273

��

$

22,494

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

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

Cost of revenue

$

���

��

$

���

��

$

156

��

$

���

��

General and administrative

�

���

��

�

349

��

�

1,243

��

�

349

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Total acquisition-related expense

$

���

��

$

349

��

$

1,399

��

$

349

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

---

IMPERVA, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

�

�	��	As of		�	�	As of		�
�	��	Dec 31		�	�	Dec 31		�
�	��	2014		�	�	2013		�
Assets	��				�
Current assets:	��				�
Cash and cash equivalents	��	$	68,096	��	�	$	76,704	��
Short-term investments	��	�	41,624	��	�	�	38,381	��
Restricted cash, current	��	�	62	��	�	�	34	��
Accounts receivable, net	��	�	47,446	��	�	�	44,446	��
Inventory	��	�	259	��	�	�	512	��
Deferred tax assets	��	�	408	��	�	�	341	��
Prepaid expenses and other current assets	��	�	3,927	��	�	�	3,972	��
	��	�	�	�	�	�	�	�
Total current assets		�	161,822	��		�	164,390	��
Property and equipment, net		�	7,618	��		�	5,475	��
Goodwill		�	34,972	��		�	���	��
Purchased intangible assets, net		�	9,399	��		�	���	��
Severance pay fund		�	3,980	��		�	4,140	��
Restricted cash		�	1,665	��		�	1,252	��
Deferred tax assets		�	329	��		�	42	��
Other assets		�	860	��		�	1,192	��
	��	�	�	�	�	�	�	�
Total assets		$	220,645	��		$	176,491	��
	��	�	�	�	�	�	�	�
Liabilities and stockholders� equity
Current liabilities:
Accounts payable		$	5,376	��		$	3,948	��
Accrued compensation and benefits		�	15,749	��		�	12,930	��
Accrued and other current liabilities		�	6,376	��		�	3,961	��
Deferred revenue		�	56,077	��		�	40,337	��
	��	�	�	�	�	�	�	�
Total current liabilities		�	83,578	��		�	61,176	��
Other liabilities		�	10,408	��		�	1,993	��
Deferred revenue		�	25,098	��		�	22,715	��
Accrued severance pay		�	4,318	��		�	4,385	��
	��	�	�	�	�	�	�	�
Total liabilities		�	123,402	��		�	90,269	��
Stockholders� equity:
Common stock		�	2	��		�	2	��
Additional paid-in capital		�	256,388	��		�	187,957	��
Accumulated deficit		�	(157,658	)�		�	(98,695	)�
Accumulated other comprehensive loss		�	(1,489	)�		�	(428	)�
	��	�	�	�	�	�	�	�
Total Imperva, Inc. stockholders� equity		�	97,243	��		�	88,836	��
Noncontrolling interest		�	���	��		�	(2,614	)�
	��	�	�	�	�	�	�	�
Total stockholders� equity		�	97,243	��		�	86,222	��
	��	�	�	�	�	�	�	�
Total liabilities and stockholders� equity		$	220,645	��		$	176,491	��
	��	�	�	�	�	�	�	�

---

IMPERVA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

�

�	��	For�the�Twelve�Months�Ended						�
�	��	Dec 31		�	�	Dec 31		�
�	��	2014		�	�	2013		�
Cash flows from operating activities:	��				�
Net loss	��	$	(59,176	)�	�	$	(26,331	)�
Adjustments to reconcile net loss to net cash provided by operating activities:	��				�
Depreciation and amortization	��	�	3,578	��	�	�	2,642	��
Stock-based compensation	��	�	37,273	��	�	�	22,494	��
Amortization of acquired intangible assets	��	�	1,269	��	�	�	���	��
Amortization of premiums/accretion of discounts on short-term investments	��	�	416	��	�	�	639	��
Excess tax benefits from share-based compensation	��	�	(385	)�	�	�	���	��
Changes in operating assets and liabilities:	��				�
Accounts receivable, net	��	�	(3,000	)�	�	�	(8,870	)�
Inventory	��	�	253	��	�	�	(184	)�
Prepaid expenses and other assets	��	�	409	��	�	�	(1,161	)�
Accounts payable	��	�	1,150	��	�	�	159	��
Accrued compensation and benefits	��	�	2,630	��	�	�	3,672	��
Accrued and other liabilities	��	�	1,847	��	�	�	(206	)�
Severance pay, net	��	�	93	��	�	�	(32	)�
Deferred revenue	��	�	18,123	��	�	�	16,761	��
Deferred tax assets	��	�	(354	)�	�	�	214	��
	��	�	�	�	�	�	�	�
Net cash provided by operating activities		�	4,126	��		�	9,797	��
Cash flows from investing activities:
Purchase of short-term investments		�	(33,267	)�		�	(38,021	)�
Proceeds from sales/maturities of short-term investments		�	29,821	��		�	42,162	��
Net purchases of property and equipment		�	(5,621	)�		�	(2,602	)�
Change in restricted cash		�	(441	)�		�	58	��
Acquisitions, net of cash acquired		�	(12,083	)�		�	���	��
	��	�	�	�	�	�	�	�
Net�cash�provided�by�(used in)�investing�activities		�	(21,591	)�		�	1,597	��
Cash flows from financing activities:
Proceeds from issuance of common stock, net of repurchases		�	8,472	��		�	6,316	��
Excess tax benefits from share-based compensation		�	385	��		�	���	��
	��	�	�	�	�	�	�	�
Net cash provided by financing activities		�	8,857	��		�	6,316	��
Effect of exchange rate changes on cash		�	���	��		�	(207	)�
	��	�	�	�	�	�	�	�
Net increase (decrease) in cash and cash equivalents		�	(8,608	)�		�	17,503	��
Cash and cash equivalents at beginning of period		�	76,704	��		�	59,201	��
	��	�	�	�	�	�	�	�
Cash and cash equivalents at end of period		$	68,096	��		$	76,704	��
	��	�	�	�	�	�	�	�

---

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

�

�

��

2014

�

�

2013

�

�

2014

�

�

2013

�

GAAP operating loss

��

$

(11,200

)�

�

$

(9,961

)�

�

$

(57,775

)�

�

$

(25,429

)�

Plus:

��

�

�

�

Stock-based compensation expense

��

�

11,167

��

�

�

12,636

��

�

�

37,273

��

�

�

22,494

��

Acquisition-related expense

��

�

���

��

�

�

349

��

�

�

1,399

��

�

�

349

��

Amortization of purchased intangibles

��

�

352

��

�

�

���

��

�

�

1,269

��

�

�

���

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Non-GAAP operating income (loss)

$

319

��

$

3,024

��

$

(17,834

)�

$

(2,586

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

GAAP net loss attributable to Imperva, Inc. stockholders

$

(12,496

)�

$

(9,429

)�

$

(58,963

)�

$

(25,178

)�

Plus:

Stock-based compensation expense

�

11,167

��

�

12,088

��

�

37,273

��

�

21,946

��

Acquisition-related expense

�

���

��

�

349

��

�

1,399

��

�

349

��

Amortization of purchased intangibles

�

352

��

�

���

��

�

1,269

��

�

���

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Non-GAAP net income (loss)

$

(977

)�

$

3,008

��

$

(19,022

)�

$

(2,883

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Weighted average basic shares outstanding

�

26,177

��

�

24,722

��

�

25,806

��

�

24,300

��

Weighted average diluted shares outstanding

�

26,177

��

�

25,931

��

�

25,806

��

�

24,300

��

Non-GAAP net income (loss), basic

$

(0.04

)�

$

0.12

��

$

(0.74

)�

$

(0.12

)�

Non-GAAP net income (loss), diluted

$

(0.04

)�

$

0.12

��

$

(0.74

)�

$

(0.12

)�

---

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.

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.

---

Investor Relations Contact Information

Seth Potter

646.277.1230

[email protected]

[email protected]

---

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