Why Imperva Inc Shares Temporarily Dropped Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Imperva Inc (NYSE: IMPV  ) fell by as much as 10% in Friday's early trading, then recovered to close down just 2% after the enterprise security specialist released first-quarter results.

So what: Remember, Imperva stock already plunged more than 40% when it released disappointing preliminary numbers three weeks ago, so today's report shouldn't have contained any big surprises.

Still, quarterly sales came in at $31.5 million, which translated to an adjusted net loss of $9.1 million, or $0.36 per share. For reference, that's at the top end of Imperva's freshly revised revenue range, while its per share net loss turned out to be better than the $0.44 to $0.40 range of which it warned last month.

For the current quarter, Imperva expects revenue of $33 million to $36 million, with an adjusted per share loss of $0.47 to $0.37. By comparison, analysts were looking for a Q2 loss of $0.32 per share on sales of $36.07 million.

Finally, for the full year 2014, Imperva sees revenue in the range of $150 million to $160 million, which should result in an adjusted per share net loss of $1.25 to $0.94. Analysts' latest models called for 2014 sales and earnings of $157.8 million and $1.06 per share, respectively.

Now what: Again, no big surprises here, but Imperva's previous big drop and slightly better-than-expected quarterly loss explains why shares rebounded off this morning's lows. Imperva also has no debt and over $105 millon in cash and short-term investments on its balance sheet, and management insists it's in position to reaccelerate growth over the longer term.

Even so, it's hard to get excited about a company hemorrhaging cash and expecting to generate negative cash flows from operations this year. For now, until I see more progress toward sustained profitability, I'm perfectly happy watching Imperva from the sidelines.

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12/19/2014 3:55 PM
IMPV $50.23 Down -0.05 -0.10%
IMPERVA INC CAPS Rating: **

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