Why Imperva (IMPV) Stock Is Tanking After Hours

NEW YORK (TheStreet) -- Imperva (IMPV) is tanking in extended trading after warning of lower first-quarter revenue than previously expected.

After market close, shares had plummeted 35.4% to $32.11.

The data security software developer said it expects total revenue for its March-ended quarter between $31 million and $31.5 million compared to previous guidance of $36 million to $37 million.

Adjusted net losses between 40 cents and 44 cents a share were wider than a previously-announced net loss range of 33 cents to 37 cents a share.

Analysts surveyed by Thomson Reuters forecast a net loss of 35 cents a share and revenue of $36.69 million.

"Our first-quarter results were primarily impacted by extended sales cycles on deals over $100,000, which led to delays in receiving anticipated orders from customers, particularly in the U.S., which resulted in lower than expected revenue for products," said CEO, Shlomo Kramer in a statement.

The company is scheduled to report full financial results for the three months to March 31 after market close on May 1.

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TheStreet Ratings team rates IMPERVA INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate IMPERVA INC (IMPV) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 1202.3% when compared to the same quarter one year ago, falling from -$0.72 million to -$9.43 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Software industry and the overall market, IMPERVA INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • IMPERVA INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, IMPERVA INC reported poor results of -$1.02 versus -$0.33 in the prior year. This year, the market expects an improvement in earnings (-$0.81 versus -$1.02).
  • The gross profit margin for IMPERVA INC is currently very high, coming in at 81.60%. Regardless of IMPV's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, IMPV's net profit margin of -22.06% significantly underperformed when compared to the industry average.
  • Net operating cash flow has significantly increased by 2215.33% to $7.55 million when compared to the same quarter last year. In addition, IMPERVA INC has also vastly surpassed the industry average cash flow growth rate of -5.52%.
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