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Is Imperva Just Another Cyber Security Player?

Posted on Wednesday, Sep 26th 2018

According to a report by Cyber Security Ventures, the global spending on cyber security products and services will grow to more than $1 trillion by the year 2021 from $120 billion in 2017. The growth in the industry will be driven due to the rising pressures of cyber crime. Imperva (Nasdaq: IMPV) has been a player in the sector for quite a while.

Imperva’s Offerings

Imperva was founded in 2002 by Mickey Boodaei and Shlomo Kramer to become a leading provider of data and application security solutions that protect business-critical information in the cloud and on-premises. Its security data suite includes products and services designed to prioritize and mitigate risks to high-value business data, protect them against hackers and malicious insiders and address and streamline regulatory compliance. Today, its solutions encompass the application security, data security, threat intelligence, and application delivery services.

Imperva was privately held for nearly a decade. It had raised under $50 million through venture funds till 2011. In November 2011, it went public at a valuation of just under $400 million. Today, Imperva has a valuation of over a billion dollars. It has been a slow, but steady climb to this position.

Imperva’s Financials

Revenues for the second quarter grew to $84.8 million from $74.4 million but were short of the market’s forecast of $87.2 million. Loss was $23.1 million, or $0.66 a share, compared with a loss of $3.5 million, or $0.10 a share a year ago. Adjusted loss was $9 million, or $0.26, compared with earnings of $8.3 million, or $0.24 a share reported a year ago. The market was looking for an adjusted loss of $0.33 per share. Imperva reported an adjusted loss to account for a catch-up tax charge.

By segment, Services revenues increased 21% to $65.6 million. Within the segment, subscription revenues grew 30% to $36.5 million. Product and license revenues registered a decline of 4% to $19.2 million. Billings in the quarter grew 24% to $103.1 million.

For the current year, Imperva forecast revenues of $349-$353 million with a non-GAAP net income of $0.22-$0.28 per share. It expects to end the current quarter with revenues of $87-$89 million with non-GAAP net income of $0.13-$0.15 per share. The market was looking for revenues of $87.97 million and net income of $0.14 per share for Q3 and revenues of $351 million and net income of $0.27 per share for the year.

Imperva’s Growth

Analysts expect consolidation in the cybersecurity segment given the number of players in the market. Imperva recently announced its acquisition of Prevoty, a leader in Runtime Application Self-Protection, for an estimated $140 million. Prevoty is known for its security-as-a-service solutions for web applications that include the Autonomous Application Protection (AAP) platform. Its enterprise-based portfolio focuses on security solutions for the technology, media, retail, and finance industries.

Prior to the acquisition, Prevoty had raised $25.8 million in four funding rounds. Imperva plans to integrate Prevoty’s offerings with its on-premises and cloud products to help businesses better protect themselves from attacks and breaches. The acquisition will help Imperva identify risks to customers’ application services as it will be able to provide the customers with visibility into how applications are accessed, what happens within the applications, and how applications and users interact with data.

Besides inorganic growth, Imperva has also been working on leveraging AI-based products to deliver improved security services. It recently announced the release of Imperva Attack Analytics, which uses AI to provide actionable insights to its customers by helping security teams identify the attacks that pose the highest risk.

Cyber security has quite a few players like Check Point, Cisco, F5 Networks, FireEye, Palo Alto Networks, and McAfee. I would like to know from you, what does Imperva have that much more successful companies don’t?

Its stock is trading at $46.75 with a market capitalization of $1.6 billion. It had touched a year high of $57.65 in July this year. It had fallen to a year low of $37.17 in December last year.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns.


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