10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2017

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number 001-35338

Imperva, Inc.

(Exact name of the Registrant as Specified in its Charter)

Delaware	03-0460133
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

3400 Bridge Parkway

Redwood Shores, California 94065

(Address of Principal Executive Offices, including Zip Code)

(650) 345-9000

(Registrant’s Telephone Number, including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  ☒    NO  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES  ☒    NO  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes  ☐    No  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Shares of Imperva, Inc. common stock, $0.0001 par value per share, outstanding as of April 28, 2017: 33,461,592 shares.

IMPERVA, INC.

FORM 10-Q

Quarterly Period Ended March 31, 2017

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016	3
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2017 and 2016	5
	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2017 and 2016	6
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	56
Item 5.	Other Information	56
Item 6.	Exhibits	56
Signatures		57

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

IMPERVA, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

	March 31, 2017			December 31, 2016
	Unaudited			*
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	136,318		$	107,343
Short-term investments		176,494			153,749
Restricted cash		72			68
Accounts receivable, net of allowance of $1,605 and $ 1,784 as of March 31, 2017 and    December 31, 2016, respectively		44,882			62,571
Inventory		496			590
Prepaid expenses and other current assets		10,804			7,922
Total current assets		369,066			332,243
Property and equipment, net		22,465			21,496
Goodwill		36,389			37,448
Acquired intangible assets, net		3,581			8,393
Severance pay fund		5,773			5,070
Restricted cash		1,898			1,884
Deferred tax assets		1,460			1,220
Other assets		6,094			1,065
TOTAL ASSETS	$	446,726		$	408,819
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	4,047		$	5,529
Accrued compensation and benefits		19,981			20,840
Accrued and other current liabilities		9,979			7,683
Deferred revenue		100,971			104,042
Total current liabilities		134,978			138,094
Other liabilities		7,932			6,637
Deferred revenue		24,178			26,429
Accrued severance pay		6,694			5,696
TOTAL LIABILITIES		173,782			176,856
Commitments and Contingencies (Note 6)
STOCKHOLDERS' EQUITY:
Preferred stock, $0.0001 par value - 5,000,000 shares authorized, no shares issued and    outstanding as of March 31, 2017 and December 31, 2016, respectively		—			—
Common stock, $0.0001 par value - 145,000,000 shares authorized, 33,454,542    and 33,088,990 shares issued and outstanding as of March 31, 2017    and December 31, 2016, respectively		3			3
Additional paid-in capital		528,985			510,257
Accumulated deficit		(256,323	)		(276,819	)
Accumulated other comprehensive income (loss)		279			(1,478	)
TOTAL STOCKHOLDERS' EQUITY		272,944			231,963
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	446,726		$	408,819

The accompanying notes are an integral part of these condensed consolidated financial statements.

* The Condensed Consolidated Balance Sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

3

IMPERVA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

	Three months ended March 31,
	2017			2016
Net revenue:
Products and license	$	19,578		$	20,841
Services		52,730			38,932
Total net revenue		72,308			59,773
Cost of revenue:
Products and license		1,932			2,184
Services		13,020			10,784
Total cost of revenue		14,952			12,968
Gross profit		57,356			46,805
Operating expenses:
Research and development		17,450			16,019
Sales and marketing		37,124			40,740
General and administrative		13,536			13,886
Restructuring charges		667			-
Amortization of acquired intangible assets		317			352
Total operating expenses		69,094			70,997
Loss from operations		(11,738	)		(24,192	)
Gain on sale of business		35,871			-
Other income (expense), net		(92	)		83
Income (loss) before provision for income taxes		24,041			(24,109	)
Provision (benefit) for income taxes		958			(102	)
Net income (loss)	$	23,083		$	(24,007	)
Earnings per share:
Basic	$	0.70		$	(0.75	)
Diluted	$	0.68		$	(0.75	)
Shares used in computing earnings per share:
Basic		33,207			31,843
Diluted		33,771			31,843

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

IMPERVA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(Unaudited)

	Three months ended March 31,
	2017		2016
Net Income (loss)	$	23,083	$	(24,007	)
Other comprehensive gain (loss) (net of tax):
Net change in net unrealized gain (loss) on investments		28		169
Net change in unrealized gain (loss) on hedging instruments		1,729		916
		1,757		1,085
Comprehensive income (loss)	$	24,840	$	(22,922	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

IMPERVA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

(Unaudited) 

	Common Stock				Additional Paid-in			Accumulated			Accumulated Other Comprehensive			Total Shareholders'
	Shares		Amount		Capital			Deficit			Income(Loss)			Equity
For the three months ended March 31, 2017
Balance as at January 1, 2017		33,088,990	$	3	$	510,257		$	(276,819	)	$	(1,478	)	$	231,963
Cumulative effect of a change in accounting principle						2,601		$	(2,587	)					14
Issuance of common stock under employee equity    plans, net of repurchases		365,552		—		7,149			—			—			7,149
Stock-based compensation		—		—		13,610			—			—			13,610
Shares withheld for tax withholding on vesting of    restricted stock units		—		—		(4,632	)		—			—			(4,632	)
Components of other comprehensive income (loss),    net of tax
Change in unrealized gain (loss) on investments		—		—		—			—			28			28
Change in unrealized gain (loss) on hedging instruments		—		—		—			—			1,729			1,729
Net income		—		—		—			23,083			—			23,083
Comprehensive income															24,840
Balance as at March 31, 2017		33,454,542	$	3	$	528,985		$	(256,323	)	$	279		$	272,944

	Common Stock				Additional Paid-in			Accumulated			Accumulated Other Comprehensive			Total Shareholders'
	Shares		Amount		Capital			Deficit			Income(Loss)			Equity
For the three months ended March 31, 2016
Balance as at January 1, 2016		31,837,144	$	3	$	448,069		$	(206,540	)	$	(1,331	)	$	240,201
Issuance of common stock under employee equity    plans, net of repurchases		215,958		—		590			—			—			590
Issuance of holdback shares in connection    with acquisitions		206,499		—		—			—			—			—
Stock-based compensation		—		—		15,655			—			—			15,655
Income tax deficiencies from employee stock option    exercises		—		—		(4	)		—			—			(4	)
Shares withheld for tax withholding on vesting of    restricted stock units		—		—		(2,352	)		—			—			(2,352	)
Components of other comprehensive income (loss),    net of tax
Change in unrealized gain (loss) on investments		—		—		—			—			169			169
Change in unrealized gain (loss) on hedging instruments		—		—		—			—			916			916
Net loss		—		—		—			(24,007	)		—			(24,007	)
Comprehensive loss															(22,922	)
Balance as at March 31, 2016		32,259,601	$	3	$	461,958		$	(230,547	)	$	(246	)	$	231,168

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

IMPERVA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three months ended March 31
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	23,083		$	(24,007	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		2,376			1,308
Stock-based compensation		13,610			15,655
Amortization of acquired intangibles		317			352
Amortization of premiums/accretion of discounts on short-term investments		(91	)		136
Excess tax deficiencies from share-based compensation		-			4
Gain on sale of business		(35,871	)		-
Other		(646	)		(172	)
Changes in operating assets and liabilities:
Accounts receivable, net		17,689			17,481
Inventory		110			(45	)
Prepaid expenses and other assets		(910	)		(809	)
Accounts payable		(804	)		(2,302	)
Accrued compensation and benefits		2,265			(3,064	)
Accrued and other liabilities		1,169			(169	)
Severance pay (net)		295			311
Deferred revenue		(3,869	)		1,398
Deferred tax assets		(227	)		(95	)
Net cash provided by operating activities		18,496			5,982
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales/maturities of short-term investments		28,521			22,909
Purchase of short-term investments		(51,130	)		(26,285	)
Proceeds from sale of business		35,015			-
Net purchases of property and equipment		(1,949	)		(3,426	)
Change in restricted cash		(18	)		10
Net cash provided by (used in) investing activities		10,439			(6,792	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Settlement of holdback liability		-			(7,157	)
Proceeds from issuance of common stock, net of repurchases		4,026			590
Shares withheld for tax withholding on vesting of restricted stock units		(4,632	)		(2,352	)
Excess tax deficiencies from share-based compensation		-			(4	)
Net cash used in financing activities		(606	)		(8,923	)
Effect of exchange rate changes on cash and cash equivalents		646			172
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		28,975			(9,561	)
CASH AND CASH EQUIVALENTS - Beginning of period		107,343			168,252
CASH AND CASH EQUIVALENTS - End of period	$	136,318		$	158,691
NONCASH INVESTING AND FINANCING ACTIVITIES:
Property and equipment acquired but not yet paid	$	2,205		$	3,721

The accompanying notes are an integral part of the condensed consolidated financial statements.

7

IMPERVA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation and Summary of Significant Accounting Policies

Business

Imperva, Inc. (together with its subsidiaries, the “Company”) was incorporated in April 2002 in Delaware. The Company is headquartered in Redwood Shores, California and has subsidiaries located throughout the world including Israel, Asia and Europe. The Company is engaged in the development, marketing, sales, service and support of cyber-security solutions that protect business-critical data and applications whether in the cloud or on premises.

Basis of Presentation

The Company has prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with Article 10 of Regulation S-X and pursuant to the rules and regulations for Form 10-Q of the Securities and Exchange Commission (the “SEC”). Pursuant to those rules and regulations, the Company has condensed or omitted certain information and footnote disclosure it normally includes in its annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). In management’s opinion, the Company has made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present its consolidated financial position, results of operations, and cash flows. The Company’s interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, which was filed with the SEC on February 27, 2017 (the “Annual Report”).

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Concentration of Revenue and Accounts Receivable

Significant customers are those which represent 10% or more of the Company’s total revenue or gross accounts receivable balance at each respective balance sheet date. For the three months ended March 31, 2017 and 2016, the Company had one customer that represented 11% and 14% of the Company’s total revenue, respectively. The same customer represented 11% and 18% of accounts receivable as of March 31, 2017 and December 31, 2016, respectively. A different customer represented 10% and 9% of accounts receivable as of March 31, 2017 and December 31, 2016, respectively.

Significant Accounting Policies

The Company adopted the guidance in Accounting Standards Update (“ASU”) 2016-09, Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting, on January 1, 2017. Under this ASU, entities are permitted to make an accounting policy election to either estimate forfeitures on share-based payment awards, as previously required, or to recognize forfeitures as they occur. The Company has elected to recognize forfeitures as they occur and the impact of that change in accounting policy has been recorded as a $2.6 million cumulative effect adjustment to increase our accumulated deficit as of January 1, 2017. Additionally, the Company has elected to use a prospective transition method for presentation of excess tax benefits on the statement of cash flows. The remaining provisions of ASU 2016-09 did not have a material impact on the accompanying condensed consolidated financial statements.

There have been no other material changes to the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

Recent Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment (Topic 350), which simplifies the measurement of goodwill impairment by removing the second step of the goodwill impairment test, which requires the determination of the fair value of individual assets and liabilities of a reporting unit. Under this guidance, goodwill impairment is to be measured as the amount by which a reporting unit’s carrying value exceeds its fair value with the loss recognized not to exceed the total amount of goodwill allocated to the reporting unit. The guidance is effective beginning January 1, 2020 on a prospective basis, with early adoption permitted for interim or annual goodwill impairment tests

8

performed after January 1, 2017. The standard is to be applied on a prospective basis. The Company does not anticipate a material impact to the consolidated financial statements once implemented.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The new standard provides a screen to determine when a set of activities and assets, or “set,” is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated.

If the screen is not met, the amendments in this ASU:

(1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output, and

(2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for a set to be a business, outputs generally, are a key element of a business; therefore, the Board has developed more stringent criteria for sets without outputs.

Lastly, the amendments in this ASU narrow the definition of the term output so that the term is consistent with how outputs are described in Topic 606.

The standard will be effective for the Company beginning January 1, 2018, with early application permitted. The standard will require adoption on a prospective basis. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The new standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The standard will be effective for the Company beginning January 1, 2018, with early application permitted. The standard will require adoption on a retrospective basis. The new accounting pronouncements will not have a significant impact on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The standard will be effective for the Company beginning January 1, 2018, with early application permitted. The standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In June 2016, the FASB Issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new standard requires financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The standard will be effective for the Company beginning January 1, 2020, with early application permitted. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02 regarding ASC Topic 842 “Leases.” The amendments in this guidance require balance sheet recognition of lease assets and lease liabilities by lessees for leases classified as operating leases, with an optional policy election to not recognize lease assets and lease liabilities for leases with a term of 12 months or less. The amendments also require new disclosures, including qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. The standard will be effective for the Company beginning January 1, 2019. The amendments require a modified retrospective approach with optional practical expedients. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09—Revenue (Topic 606): Revenue from Contracts with Customers. The standard will replace most existing U.S. GAAP guidance on this topic. The standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The standard defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation, among others. The standard also provides guidance on the recognition of costs related to obtaining customer contracts.

9

The standard will be effective for the Company beginning January 1, 2018 using either of two methods: (1) retrospective application of the standard to each prior reporting period presented with the option to elect certain practical expedients as defined within the standard, or (2) retrospective application of the standard with the cumulative effect of initially applying the standard recognized at the date of initial application and providing certain additional disclosures as defined per the standard. Adoption as of the original effective date of January 1, 2017 is permitted. The Company is considering adopting the standard under the modified retrospective method effective January 1, 2018; however, a final decision regarding the adoption method has not been finalized at this time. The Company’s ability to adopt using the modified retrospective method is dependent on several factors such as the significance of the impact of the new standard on the Company’s financial results, and system readiness.

The Company has developed a project plan for this transition, which includes necessary changes to accounting policies, processes, and system requirements. The Company expects to implement the plan in time to report in accordance with ASC 606 for the first quarterly filing on Form 10-Q for the period ended March 31, 2018.

As part of its preliminary evaluation, the Company has considered the impact of the standard’s requirements with respect to capitalization and amortization of incremental costs of obtaining a contract, primarily sales commissions. Under the Company’s current accounting policy, contract origination costs are expensed as incurred. The new standard requires the capitalization of all incremental costs that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained, provided the Company expects to recover the costs.

While the Company continues to assess the potential impacts of the new standard, the Company does not know or cannot reasonably estimate quantitative information related to the impact of the new standard on the financial statements at this time.

2. Cash, Cash Equivalents, and Short-Term Investments

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of cash on hand, highly liquid investments in commercial paper, money market funds and various deposit accounts.

The Company considers all high quality investments purchased with original maturities at the date of purchase greater than three months to be short-term investments. Investments are available to be used for current operations and are, therefore, classified as current assets even though maturities may extend beyond one year. Cash equivalents and short-term investments are classified as available-for-sale and are, therefore, recorded at fair value on the condensed consolidated balance sheets, with any unrealized gains and losses reported in accumulated other comprehensive income (loss), which is reflected as a separate component of stockholders’ equity in its condensed consolidated balance sheets, until realized. The Company uses the specific-identification method to compute gains and losses on the investments. The amortized cost of securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion is included as a component of other income (expense), net in the condensed consolidated statements of operations.

Cash, cash equivalents and short-term investments consist of the following (in thousands):

	As of March 31, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Cash and cash equivalents:
Cash	$	65,293	$	—	$	—	$	65,293
Commercial paper		4,996		—		2		4,994
Money market funds		66,031		—		—		66,031
Total	$	136,320	$	—	$	2	$	136,318
Short-term investments:
Commercial paper	$	20,175	$	—	$	8	$	20,167
Corporate debt obligations		137,200		1		310		136,891
US government agencies		18,998		—		42		18,956
Bank deposits		480		—		—		480
Total	$	176,853	$	1	$	360	$	176,494

10

	As of December 31, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Cash and cash equivalents:
Cash	$	63,642	$	—	$	—	$	63,642
Commercial paper		6,995		—		2		6,993
Money market funds		36,708		—		—		36,708
Total	$	107,345	$	—	$	2	$	107,343
Short-term investments:
Commercial paper	$	14,245	$	—	$	8	$	14,237
Corporate debt obligations		110,062		—		347		109,715
US government agencies		18,998		2		50		18,950
Bank deposits		10,846		1		—		10,847
Total	$	154,151	$	3	$	405	$	153,749

The following table summarizes the cost and estimated fair value of short-term investments based on stated effective maturities as of March 31, 2017 (in thousands):

	As of March 31, 2017
			Estimated
	Amortized		Fair
	Cost		Value
Short-term investments:
Due within one year	$	89,856	$	89,696
Due within two years		86,997		86,798
Total	$	176,853	$	176,494

The gross unrealized loss related to these securities was due primarily to changes in interest rates. The Company reviews its short-term investments on a regular basis to evaluate whether or not any security has experienced an other-than-temporary decline in fair value. The Company considers factors such as the length of time and extent to which the market value has been less than the cost, the financial condition and near-term prospects of the issuer and its intent to sell, or whether it is more likely than not the Company will be required to sell, the investment before recovery of the investment’s amortized cost basis. If the Company believes that an other-than-temporary decline exists in one of these securities, the Company writes down these investments to fair value. For debt securities, the portion of the write-down related to credit loss would be recorded to other income (expense), net, in the Company’s condensed consolidated statements of operations. Any portion not related to credit loss would be recorded to accumulated other comprehensive income (loss), which is reflected as a separate component of stockholders’ equity in the Company’s condensed consolidated balance sheets. During the three months ended March 31, 2017 and 2016, the Company did not consider any of its investments to be other-than-temporarily impaired.

The following tables show the short-term investments in an unrealized loss position and the related gross unrealized losses and fair value and length of time that the short-term investments have been in a continuous unrealized loss position (in thousands):

	As of March 31, 2017
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Commercial paper	$	14,215	$	8	$	—	$	—	$	14,215	$	8
Corporate debt obligations		108,446		271		25,948		38		134,394	$	309
US government agencies		11,459		38		7,496		4		18,955		42
Bank deposits		240		1		-		-		240	$	1
	$	134,360	$	318	$	33,444	$	42	$	167,804	$	360

11

	As of December 31, 2016
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Commercial paper	$	14,237	$	8	$	—	$	—	$	14,237	$	8
Corporate debt obligations		78,821		323		29,689		24		108,510	$	347
US government agencies		11,451		46		3,496		4		14,947		50
	$	104,509	$	377	$	33,185	$	28	$	137,694	$	405

3. Fair Value of Financial Instruments

The Company evaluates assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level to classify them for each reporting period. There have been no transfers between fair value measurement levels during the three months ended March 31, 2017.

The Company’s cash equivalents and short-term investment instruments are classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The types of instruments valued based on quoted market prices in active markets include mutual funds and money market securities, and are generally classified within Level 1 of the fair value hierarchy. The types of instruments valued based on quoted prices in less active markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability include U.S. agency securities, investment-grade corporate bonds, bank deposits, and commercial paper. Such instruments are generally classified within Level 2 of the fair value hierarchy.

The Company executes its foreign currency contracts primarily in the retail market in an over-the-counter environment with a relatively high level of price transparency. The market participants usually are large multi-national and regional banks. The Company’s foreign currency contracts valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. These contracts are typically classified within Level 2 of the fair value hierarchy.

The following table sets forth the Company’s assets and liabilities that were measured at fair value as of March 31, 2017 and December 31, 2016, by level within the fair value hierarchy (in thousands):

	As of March 31, 2017
	Level I		Level II		Level III		FairValue
Financial Assets:
Cash equivalents:
Commercial paper	$	—	$	4,994	$	—	$	4,994
Money market funds		66,031		—		—		66,031
Short-term investments:
Commercial paper		—		20,167		—		20,167
Corporate debt obligations		—		136,891		—		136,891
US government agencies		—		18,956		—		18,956
Bank deposits		—		480		—		480
Prepaid expenses and other current assets - Forward foreign exchange    contracts		—		2,047		—		2,047
Total financial assets	$	66,031	$	183,535	$	—	$	249,566

12

	As of December 31, 2016
	Level I		Level II		Level III		Fair Value
Financial Assets:
Cash equivalents:
Commercial paper	$	—	$	6,993	$	—	$	6,993
Money market funds		36,708		—		—		36,708
Short-term investments:
Commercial paper		—		14,237		—		14,237
Corporate debt obligations		—		109,715		—		109,715
US government agencies		—		18,950		—		18,950
Bank deposits		—		10,847		—		10,847
Total financial assets	$	36,708	$	160,742	$	-	$	197,450
Financial Liability:
Accrued and other current liabilities - Forward foreign exchange    contracts	$	—	$	639	$	—	$	639

In addition to the amounts disclosed in the above table, the fair value of the Company’s Israeli severance pay assets, which were comprised of Level II assets, was $5.8 million and $5.1 million as of March 31, 2017 and December 31, 2016, respectively.

4. Derivative Instruments

The Company’s primary objective for holding derivative instruments is to reduce its exposure to foreign currency rate changes. The Company reduces its exposure by entering into forward foreign exchange contracts with respect to operating expenses that are forecast to be incurred in currencies other than U.S. dollars. Substantially all of the Company’s revenue and capital purchasing activities and a majority of its operating expenditures are transacted in U.S. dollars. However, certain operating expenditures are incurred in or exposed to other currencies, primarily the Israeli shekel and the Euro.

The Company has established forecasted transaction currency risk management programs to protect against fluctuations in fair value and the volatility of future cash flows caused by changes in exchange rates. The Company’s currency risk management program includes forward foreign exchange contracts designated as cash flow hedges. These forward foreign exchange contracts generally mature within 12 months. The Company does not enter into derivative financial instruments for trading purposes.

Derivative instruments measured at fair value and their classification on the condensed consolidated balance sheets are presented in the following tables (in thousands):

	As of March 31, 2017				As of December 31, 2016
	Notional Amount		Fair Value		Notional Amount		Fair Value
Foreign exchange forward contract derivatives in cash flow hedging    relationships -  included in prepaid expenses and other current    assets (accrued and other current liabilities)	$	44,368	$	2,047	$	60,756	$	(639	)

Gains (losses) on derivative instruments and their classification on the condensed consolidated statement of operations are presented in the following table (in thousands):

	For the three months ended March 31
	2017			2016
Foreign Exchange Forward Contract Derivatives in    cash flow hedging relationships:
Gains recognized in OCI (a)	$	2,887		$	1,316
Losses recognized in OCI (a)	$	—		$	(99	)
Gains recognized from accumulated OCI into net income (b)	$	206		$	—
Losses recognized from accumulated OCI into net income (b)	$	(5	)	$	(194	)

13

(a) Net change in the fair value of the effective portion classified in other comprehensive income (loss) (“OCI”).

(b) Effective portion of cash flow hedges reclassified from accumulated other comprehensive income (loss) into net income, of which $14 and $187 were recognized within cost of sales and operating expenses, respectively, for the three months ended March 31, 2017; $(13) and $(181) were recognized within cost of sales and operating expenses, respectively, for the three months ended March 31, 2016. All amounts are reflected within the respective condensed consolidated statement of operations.

5. Goodwill and Acquired Intangible Assets

In February 2017, the Company completed the sale of its assets related to the Skyfence cloud access security broker business (“Skyfence”) to Forcepoint LLC and its Israeli subsidiary, of which we allocated goodwill of $1.1 million to the business being disposed of. Additionally, the acquired intangible assets with the carrying value of $4.5 million were derecognized in connection with this transaction. The Company did not have any goodwill impairments during three months ended March 31, 2017 and 2016.

The changes in the carrying amount of goodwill for the periods ended March 31, 2017 and December 31, 2016 were as follows (in thousands):

Balance as of December 31, 2016	$	37,448
Goodwill disposed with sale of Skyfence		(1,059	)
Balance as of March 31, 2017	$	36,389

The Company amortizes intangible assets, which consist of purchased technologies that have estimated useful lives ranging from 7 to 10 years, using the straight-line method when the consumption pattern of the asset is not apparent. The Company reviews such assets for impairment whenever an impairment indicator exists and continually monitors events and changes in circumstances that could indicate carrying amounts of the intangible assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses recoverability by determining whether the carrying value of such assets exceed the estimates of future undiscounted future cash flows expected to be generated by such assets. Should impairment exist, the impairment loss would be measured based on the excess carrying value of the asset over the asset’s estimated fair value. There was no impairment of intangible assets recorded for the three months ended March 31, 2017 and 2016. The weighted average remaining useful life of the Company’s acquired technology, customer relationships, and trade names and other intangible assets is 6.8 years, 6.7 years, and 6.7 years, respectively as of March 31, 2017.

Acquired intangible assets subject to amortization are presented as follows (in thousands):

	As of March 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Acquired Technology	$	3,753	$	(900	)	$	2,853
Customer relationships		480		(20	)		460
Trade name and other		280		(12	)		268
Total	$	4,513	$	(932	)	$	3,581
	As of December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Acquired Technology	$	11,718	$	(4,085	)	$	7,633
Customer relationships		480		-			480
Trade name and other		280		-			280
Total	$	12,478	$	(4,085	)	$	8,393

14

Acquired intangible assets are amortized over their estimated useful lives of 7 to 10 years. As of March 31, 2017, the amortization expense in future periods is expected to be as follows (in thousands):

	Acquired
Fiscal Year	Technology
2017 (remaining 9 months)	$	397
2018		528
2019		528
2020		528
2021		528
Thereafter		1,072
Total expected amortization expense	$	3,581

6. Commitments and Contingencies

(a) Operating Leases

The Company rents its facilities under operating leases with lease periods expiring through 2022. Future minimum payments under these facility operating leases and minimum rentals to be received under non-cancellable subleases are as follows as of March 31, 2017 (in thousands):

	Operating Leases		Estimated Sublease Income
Period Ending December 31:
2017 (remaining 9 months)	$	5,433	$	406
2018		8,306		424
2019		4,714		—
2020		4,446		—
2021		294		—
Thereafter		47		—
Total	$	23,240	$	830

Rent expense for the Company’s operating leases is recognized on a straight-line basis over the lease term. Rent expense for the three months ended March 31, 2017 and 2016 was $1.6 million and $1.5 million, respectively.

In connection with leases of office space, the Company has received tenant improvement allowances from the lessor for certain improvements made to the leased properties. The Company has recorded the tenant improvement allowances as a leasehold improvement within property and equipment, net, and as deferred rent within other liabilities on the condensed consolidated balance sheets. The deferred rent liability is amortized to rent expense over the term of the lease on a straight-line basis. The leasehold improvements are being amortized to expense over the period from when the improvements were placed into service until the end of their useful life, which is the end of the lease term. For the three months ending March 31, 2017 and 2016, the Company did not receive any tenant improvement allowances.

In addition, certain of the Company’s operating lease agreements for office space also include rent holidays and scheduled rent escalations during the initial lease term. The Company has recorded the rent holidays as a deferred rent within other liabilities on the condensed consolidated balance sheets. The Company recognizes the deferred rent liability and scheduled rent increase on a straight-line basis into rent expense over the lease term commencing on the date the Company takes possession of the lease space.

As of March 31, 2017 and December 31, 2016 the Company had $1.9 million and $1.9 million, respectively, in restricted deposits to secure bank guarantees provided to its lessors.

(b) Cancelable Lease Agreement

The Company leases motor vehicles under cancelable operating lease agreements. The Company has an option to cancel the lease agreements, which may result in penalties in a maximum amount of $0.1 million as of March 31, 2017. Motor vehicle lease expenses for the three months ended March 31, 2017 and 2016 were $0.7 million and $0.7 million, respectively.

15

(c) Purchase Commitments

As of March 31, 2017 and December 31, 2016, the Company had purchase commitments of $3.4 million and $3.8 million, respectively, to purchase inventory, trial units, and research and development equipment from its vendors. The purchase commitments result from the Company’s contractual obligation to order or build inventory in advance of anticipated sales. According to the Company’s agreements with its vendors, the Company committed to purchase inventory within six months from the date the inventory arrived at the vendor’s warehouse.

(d) Litigation

From time to time, the Company is subject to legal proceedings and claims in the ordinary course of business.

On April 11, 2014, a purported shareholder class action lawsuit was filed in the United States District Court for the Northern District of California against the Company and certain of its current and former officers. On August 7, 2014, the Court entered an order appointing lead plaintiff and counsel for the purported class. The lead plaintiff filed an amended complaint on October 10, 2014. The lawsuit named the Company and certain of its current and former officers and purported to bring suit on behalf of those investors who purchased the Company’s publicly traded securities between May 2, 2013 and April 9, 2014. The plaintiff alleged that defendants made false and misleading statements about the Company’s operations and business and financial results and purported to assert claims for violations of the federal securities laws. The amended complaint sought unspecified compensatory damages, interest thereon, costs incurred in the action and equitable/injunctive or other relief. On January 6, 2015, defendants filed a motion to dismiss the amended complaint. On September 17, 2015, the Court granted defendants’ motion to dismiss with leave to amend. The lead plaintiff filed an amended complaint on January 13, 2016, again naming the same current and former officers, alleging false and misleading statements about the Company’s operations and business and financial results, and seeking the same relief.  On February 10, 2016, defendants filed a motion to dismiss the amended complaint. On May 16, 2016, the Court granted the motion in part and denied the motion in part.  On September 7, 2016, defendants filed their operative answer to the amended complaint. On October 19, 2016, plaintiff filed a motion for class certification. On April 3, 2017, defendants filed an opposition to the motion for class certification.

In addition, the Company receives, and may in the future continue to receive, claims from third parties asserting, among other things, infringement of their intellectual property rights. Future litigation may be necessary to defend the Company, the Company’s channel partners and the Company’s customers by determining the scope, enforceability and validity of third-party proprietary rights or to establish our proprietary rights.

In the opinion of management, liabilities associated with these claims, while possible, are not probable at this time, and therefore the Company has not recorded any accrual for them as of March 31, 2017 and December 31, 2016. Further, any possible range of loss cannot be reasonably estimated at this time. The ultimate outcome of any litigation is uncertain and, regardless of outcome, litigation can have an adverse impact on the Company because of defense costs, potential negative publicity, diversion of management resources and other factors. Accordingly, there can be no assurance that existing or future legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on the Company’s business, consolidated financial position, results of operations or cash flows.

(e) Indemnification

Under the indemnification provisions of its standard sales contracts, the Company agrees to defend its channel partners and end customers against third-party claims asserting infringement of certain intellectual property rights, which may include patents, copyrights, trademarks, or trade secrets, and to pay judgments and settlements entered on such claims. The Company’s exposure under these indemnifications provisions is generally limited to the total amount paid under the agreement. However, certain agreements included indemnification provisions that could potentially expose the Company to losses in excess of the amount received under the agreement. To date, there have been no claims under such indemnification provisions. Accordingly, the Company has not recorded a liability on its condensed consolidated balance sheets for these indemnification provisions.

In addition to the foregoing, the Company maintains director and officer insurance, which may cover certain liabilities arising from its obligation to indemnify its directors and officers.

7. Stock Plans

(a) 2003 Stock Plan

During 2003, the Board of Directors adopted the 2003 Stock Plan (the “2003 Plan”), which allowed for the grant of both incentive stock options and non-qualified stock options and the direct award or sale of shares of the Company’s common stock

16

(including restricted common stock) to officers, employees, directors, consultants and other key persons. In connection with the Company’s initial public offering, which was completed in November 2011, the Board of Directors determined not to grant any further awards under the 2003 Plan upon completion of the public offering.  The 2011 Stock Option and Incentive Plan (the “2011 Plan”) replaced the 2003 Plan in November 2011.  Under the 2003 Plan, incentive stock options could have been granted to employees with exercise prices of no less than the fair value of the common stock on the grant date, and non-qualified options could have been granted to employees, directors, or consultants at exercise prices of no less than 85% of the fair value of the common stock on the grant date, as determined by the Board of Directors. If, at the time the Company granted an option, the optionee directly or by attribution owned stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, the option price had to have been at least 110% of the fair value. Options granted under the 2003 Plan generally expire no later than ten years from the date of grant and, in general, vest four years from the date of grant.

(b) 2011 Stock Option and Incentive Plan

In September 2011, the Board of Directors adopted the 2011 Plan which was subsequently approved by the Company’s stockholders. The 2011 Plan replaced the 2003 Plan and the Company no longer grants awards under the 2003 Plan. The Company initially reserved a total of 1,000,000 shares of common stock for issuance under the 2011 Plan. In addition, 955,568 reserved but unissued shares under the 2003 Stock Plan were added to the number of shares reserved for issuance under the 2011 Plan. The 2011 Plan also provided that the number of shares reserved and available for issuance under the plan would automatically increase each January 1, beginning in 2012 and ending in 2015, by 4% of the outstanding number of shares of common stock on the immediately preceding December 31. The last automatic increase occurred on January 1, 2015.  In April 2017 and May 2016, the Company’s stockholders approved an increase to the share reserve under the 2011 Plan by 850,000 shares and 1,300,000 shares respectively.

The 2011 Plan permits the granting of incentive stock options, non-qualified stock options, restricted stock units (“RSUs”), stock appreciation rights, restricted shares of common stock and performance share awards. The exercise price of stock options may not be less than 100% of the fair market value of the common stock on the date of grant. Options granted pursuant to the 2011 Plan generally expire no later than ten years from the date of grant. The Company also grants RSUs.  RSUs granted to new hires and merit grants to existing employees generally vest over a four-year period with 25% vesting at the end of one year and the remainder vesting quarterly thereafter. Additionally, from time to time, the Company grants performance-based RSUs (“PRSUs”).  During the quarter ended March 31, 2017, the Company granted PRSUs to its executives to align with the Company’s pay-for-performance philosophy.  The PRSUs provide for a target number of shares that generally vest over three years including a one year performance period and two years of service-based vesting.  The PRSUs vest contingent upon the Company’s achievement of an annual contract value of subscription bookings target for fiscal 2017 and total operating expenses for 2017 that are at 110% or less of the internal operating plan.  The amount of PRSUs earned may vary from zero to 200% of the target award amount depending on level of achievement, and provided the award recipient remains employed through each applicable vesting date. In addition, from the PRSUs awarded to executives during the quarter ended March 31, 2016, an aggregate of 46,619 PRSUs were issued during the quarter ended March 31, 2017, based on the Company’s achievement against its annual contract value of subscription bookings target for fiscal 2016 and achieving total operating expenses for 2016 that were 110% or less of the internal operating plan. The PRSUs are subject to vest over a two-year period and vest quarterly through February 15, 2019.

(c) 2011 Employee Stock Purchase Plan

In September 2011, the Board of Directors adopted the 2011 Employee Stock Purchase Plan (the “ESPP”) which was subsequently approved by the Company’s stockholders. The ESPP took effect on November 8, 2011, the effective date of the registration statement for the Company’s initial public offering. The ESPP permits eligible employees to acquire shares of the Company’s common stock by accumulating funds through periodic payroll deductions of up to 15% of base salary. Each offering period may run for no more than 24 months and consist of no more than five purchase periods. The purchase price for shares of the Company’s common stock purchased under the ESPP will be 85% of the lesser of the fair market value of the Company’s common stock on the first day of the offering period or the last trading day of the applicable purchase period within that offering period.

The Company initially reserved a total of 500,000 shares of common stock for future issuance under the ESPP. The number of shares reserved for issuance under the ESPP increases automatically on January 1 of each of the first eight years commencing in 2012 by the number of shares equal to 1% of the Company’s total outstanding shares as of the immediately preceding December 31. The Board of Directors or compensation committee may reduce the amount of the increase in any particular year. No more than 20,000,000 shares of common stock may be issued under the ESPP and no other shares may be added to the ESPP without the approval of the Company’s stockholders. On January 1, 2017, the share reserve under the 2011 Employee Stock Purchase Plan was automatically increased by 330,889 shares.

17

(d) Inducement Stock Option Plan and Agreement and Inducement Restricted Stock Unit Plan and Agreement

In August 2014 and August 2015, the Compensation Committee of the Board of Directors adopted Inducement Stock Option Plans and Agreements (the “Inducement Option Plans”) and Inducement Restricted Stock Unit Plans and Agreements (the “Inducement RSU Plans”), in each case created as employment inducement awards. In accordance with the terms of the Inducement Option Plans, the Company issued options to purchase an aggregate of 290,000 shares of the Company’s common stock at an exercise price equal to the fair market value of a share of the Company’s common stock on the dates of grant of the options. The options, which have a ten-year term, vest at the rate of 25% of the shares on each of the first anniversary of the vesting commencement date with an additional 6.25% of the shares subject to the option vesting each quarter thereafter so long as the participant has not been terminated. In accordance with the terms of the Inducement RSU Plans, the Company issued RSUs representing an aggregate of 290,000 shares of the Company’s common stock. The RSUs, which expire following settlement, vest at the rate of 25% of the shares on each of the first anniversary of the vesting commencement date with an additional 6.25% of the shares subject to the RSU vesting each quarter thereafter so long as the participant has not been terminated.

(e) 2015 Equity Inducement Plan

In October 2015, the Board of Directors adopted the 2015 Equity Inducement Plan, a non-stockholder approved plan that provides for the granting of stock options and RSUs as employment inducement awards and in connection with acquisitions, subject to compliance with applicable securities laws and stock exchange requirements for such plans.  The Company has reserved 100,000 shares of common stock for issuance under the 2015 Equity Inducement Plan.  No awards have been made under the 2015 Equity Inducement Plan and the entire reserve remains available for grant.  Under the terms of the 2015 Equity Inducement Plan, the exercise price of stock options may not be less than 100% of the fair market value of common stock on the date of grant and generally expire no later than ten years from the date of grant.

(f) Incapsula 2010 Share Incentive Plan

In March 2010, Incapsula’s board of directors adopted the Incapsula 2010 Share Incentive Plan (the “Incapsula Plan”), pursuant to which Incapsula was able to grant to its employees and service providers options to purchase shares of its common stock, restricted shares, or RSUs. As of November 2013, the total number of shares of common stock that could have been granted under the Incapsula Plan was not to exceed 10,263,211 shares in the aggregate, subject to certain adjustments.

In November 2013, the board of directors of Incapsula approved the grant of RSUs for 7,095,461 shares of Incapsula’s common stock (“Incapsula RSUs”). As part of the Incapsula acquisition, the Incapsula RSUs were assumed and replaced by performance-based RSUs for Company Common Stock to be issued to continuing employees of Incapsula. The Incapsula RSUs were earned upon Incapsula’s achievement of revenue targets for Incapsula and Incapsula-related products and services for fiscal year 2014 and were converted into approximately 198,825 shares of Company Common Stock at the same exchange ratio applicable to the shares of Incapsula common stock acquired in the acquisition. In addition to performance conditions, the awards were dependent on the market price of Imperva’s common stock during February 2014, which was deemed a market condition under ASC 718.

The outstanding options and RSUs under the Incapsula 2010 Stock Incentive Plan were assumed as part of the Incapsula acquisition and at the time they were assumed were equivalent to 247,184 shares of Company common stock on an as-converted basis.  As of March 31, 2017, there were 6,932 assumed Incapsula options and 483 assumed Incapsula RSUs outstanding.  The Company does not intend to grant any additional shares under the Incapsula 2010 Stock Incentive Plan.

Option Activity

The following table summarizes option activity under the Plans and related information:

	Options Outstanding					Weighted- Average Remaining
	Number of Shares			Weighted Average Exercise Price		Contractual Term (in years)		Aggregate Intrinsic Value (in thousands) (1)
Balances - January 1, 2017		1,570,765		$	39.64		6.90	$	9,226
Granted		-
Exercised		(138,126	)	$	29.14
Cancelled or forfeited		(73,595	)	$	47.34
Balances - March 31, 2017		1,359,044		$	40.29		6.51	$	9,272
Vested and expected to vest - March 31, 2017		1,359,044		$	40.29		6.51	$	9,272
Exercisable - March 31, 2017		912,169		$	38.20		5.95	$	7,527

18

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $41.05 of the Company’s common stock on March 31, 2017.

RSU Activity

The following table summarizes RSU activity under the Plans and related information:

	Number of Restricted Stock Units Outstanding			Weighted- Average Grant Date Fair Value
Unvested - January 1, 2017		1,994,790		$	51.42
Granted		875,391		$	42.14
Granted, performance RSUs		280,900		$	41.85
Released		(328,546	)	$	47.87
Cancelled or forfeited		(360,323	)	$	51.36
Unvested - March 31, 2017		2,462,212		$	47.51

The aggregate intrinsic value of options exercised under the Plans was $2.1 million for the three months ended March 31, 2017. The aggregate intrinsic value is calculated as the difference between the fair market value of the Company’s common stock on the date of the exercise and the exercise price of each option multiplied by the number of options exercised. As of March 31, 2017, total compensation cost related to unvested stock-based awards granted to employees under the Plans, but not yet recognized, was $102.5 million. As of March 31, 2017, this cost will be amortized to expense over a weighted-average remaining period of 2.9 years. Future stock-based award grants will increase the amount of compensation expense to be recorded in these periods.

There was no capitalized stock-based compensation expense during the three months ended March 31, 2017 and 2016.

(g) Stock Compensation Expense

The Company recognized stock-based compensation expense under the 2011 Stock Option and Incentive Plan, 2003 Stock Plan, Inducement Plans, 2011 Employee Stock Purchase Plan, and the Incapsula 2010 Share Incentive Plan in the condensed consolidated statements of operations as follows (in thousands):

	For the three months ended March 31
	2017		2016
Cost of revenue	$	1,269	$	1,393
Research and development		4,768		4,249
Sales and marketing		3,466		5,094
General and administrative		3,432		4,919
Restructuring charges		675		-
Total stock-based compensation expense	$	13,610	$	15,655

The Company did not issue stock option grants for the three months ended March 31, 2017. The fair value of stock option grants for the three months ended March 31, 2016 was estimated using the following weighted average assumptions:

	For the three months ended March 31
	2017	2016
Stock option grants:
Dividend rate	-		0	%
Risk-free interest rate	-		1.5	%
Expected term (in years)	-		6.1
Expected volatility	-		58	%

The fair value of the RSUs is determined using the closing price of the Company’s common stock on the date of the grant. Compensation is recognized on a straight-line basis over the requisite service period of each grant.

19

8. Accumulated Other Comprehensive Income (Loss)

The changes in the balances of accumulated other comprehensive income (loss) by component are as follows (in thousands):

	For the three months ended March 31, 2017									For the three months ended March 31, 2016
	Unrealized gain (loss) on cash flow hedges			Unrealized gain (loss) on investments			Total			Unrealized gain (loss) on cash flow hedges			Unrealized gain (loss) on investments			Total
Balance at January 1	$	(1,065	)	$	(413	)	$	(1,478	)	$	(1,021	)	$	(310	)	$	(1,331	)
Other comprehensive income (loss) before    reclassifications		1,930			28			1,958			722			169			891
Amounts reclassified to net income (loss)		(201	)		—			(201	)		194			—			194
Change in other comprehensive income (loss)		1,729			28			1,757			916			169			1,085
Balance at March 31	$	664		$	(385	)	$	279		$	(105	)	$	(141	)	$	(246	)

The following is a summary of reclassifications out of accumulated other comprehensive income (loss) for the three months ended March 31, 2017 and 2016 (in thousands):

	For the three months ended March 31, 2017									For the three months ended March 31, 2016
	Pre-Tax Amount			Tax Expense (Benefit)			After-Tax Amount			Pre-Tax Amount		Tax Expense (Benefit)			After-Tax Amount
Unrealized gains (losses) on cash flow hedges:
Current period unrealized gain (loss)	$	2,887			(957	)	$	1,930		$	1,217		(495	)	$	722
Reclassification adjustments 1		(201	)		—			(201	)		194		—			194
Unrealized gains (losses) on cash flow hedges, net		2,686			(957	)		1,729			1,411		(495	)		916
Unrealized gains (losses) on investments:
Current period unrealized gain (loss)	$	44			(16	)		28		$	260		(91	)		169
Unrealized gains (losses) on investments:		44			(16	)		28			260		(91	)		169
Other comprehensive income (loss)	$	2,730		$	(973	)	$	1,757		$	1,671	$	(586	)	$	1,085

1 Refer to note 4 for the affected line items in the condensed consolidated statement of operations.

9. Income Taxes

The Company is subject to income tax in the United States as well as other tax jurisdictions in which it conducts business. Earnings from non-U.S. activities are subject to local country income tax. The Company does not provide for federal income taxes on the undistributed earnings of its foreign subsidiaries as such earnings are to be reinvested indefinitely. For the three months ended March 31, 2017 and 2016, the Company recorded income tax expense of $1.0 million and an income tax benefit $0.1 million respectively. The income tax expense for the three months ended March 31, 2017, was primarily attributable to foreign and state income taxes including tax effects of the gain related to the sale of the Skyfence business, offset in part by an intraperiod tax benefit allocation related to unrealized gains reported in other comprehensive income. Additionally, the amount of unrecognized tax benefits increased during the three months ended March 31, 2017, which also contributed to the income tax expense for the period. The income tax benefit for the three months ended March 31, 2016 was primarily attributable to an intraperiod tax expense allocation related to unrealized gains reported in other comprehensive income, offset in part, by foreign and state income taxes.

Factors that impact the income tax provision include, but are not limited to, stock-based compensation expense, permanent tax adjustments, foreign operations and a valuation allowance against the Company’s domestic deferred tax assets.

20

10. Segment Information

The Company operates its business in one operating segment, which is the development, marketing, sales, service and support of cyber-security solutions that protect business-critical data and applications whether in cloud or on premises. Operating segments are defined as components of an enterprise that engage in business activities for which separate financial information is available and evaluated by the chief operating decision maker in deciding how to allocate resources and assessing performance. The chief operating decision maker is the Company’s Chief Executive Officer.

The Company’s net revenue by geographic region, based on the customer’s location, is summarized as follows (in thousands):

	For the three months ended March 31,
	2017		2016
United States	$	37,645	$	33,671
EMEA		13,780		11,284
APAC		13,706		11,337
Other		7,177		3,481
Total net revenue	$	72,308	$	59,773

The following table presents long-lived assets by location (in thousands):

	As of March 31,		As of December 31,
	2017		2016
United States	$	21,404	$	20,525
Israel		4,487		9,344
Other		155		20
Total long-lived assets	$	26,046	$	29,889

11. Restructuring Charges

In November 2016, we implemented a restructuring plan and cost reduction initiatives to reduce expenses, streamline the organization, and reallocate resources to align more closely with future business needs. The restructuring charge during the three months ended March 31, 2017 was $0.7 million related to stock-based compensation. During the three months ended March 31, 2017 we also paid $1.1 million of restructuring charges, which were recorded as a current liability within accrued compensation and benefits on the consolidated balance sheet as of December 31, 2016. The restructuring activity was completed during the three months ended March 31, 2017.

12. Net Income (Loss) per Share

Basic and diluted net income (loss) per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. The computation of net income (loss) per share for each period, including the number of weighted-average shares outstanding, is shown on the face of the condensed consolidated statements of operations. Diluted earnings per share is calculated using our weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method. In periods when we recognize a net loss, we exclude the impact of outstanding stock awards from the diluted loss per share calculation as their inclusion would have an antidilutive effect.

The table below shows the reconciliation of the basic and diluted shares for the three months ended March 2017, in thousands:

	For the three months ended March 31,
	2017		2016
Weighted average number of shares outstanding:
Basic		33,207		31,843
Dilutive effects of:
Employee stock options, RSU’s and share based payment awards issued to employees		564		-
Diluted		33,771		31,843

21

The following outstanding shares of common stock and potential common shares were excluded from the computation of diluted net income (loss) per share of common stock for the three months ended March 31, 2017 and 2016 because including them would have been antidilutive:

	For the three months ended March 31,
	2017		2016
Stock options to purchase common stock		761,610		1,936,453
Restricted stock units for common stock		598,503		2,553,598
Restricted stock issued in connection with Skyfence    acquisition		—		219,969

13. Disposition of Business

On February 23, 2017, the Company completed the sale of the assets of its Skyfence cloud access security broker business (“Skyfence”) to Forcepoint LLC and its Israeli subsidiary for consideration of approximately $40 million in cash. Of the total consideration, approximately $5.0 million was remitted directly to escrow to secure the Company’s indemnification obligations. This escrowed amount is recorded in other assets on our condensed consolidated balance sheet as of March 31, 2017, and represents a noncash item in our condensed consolidated statement of cash flows. As a result of the sale, we recognized a gain of $35.9 million during the first quarter of 2017 included in gain on sale of Skyfence in our condensed consolidated statement of operations.

The following table presents the carrying amounts of Skyfence immediately preceding the disposition on February 23, 2017:

	(dollarsin thousands)
Assets
Prepaid and other current assets	$	46
Property and equipment, net		219
Goodwill		1,058
Acquired intangible assets, net		4,496
Total assets	$	5,819
Liabilities
Accounts payable	$	104
Accrued and other current liabilities		117
Deferred revenue		1,454
Total liabilities	$	1,675

We evaluated the disposition of Skyfence and determined it did not meet the criteria for classification as a discontinued operation and determined that the disposition is not expected to have a material impact to our quarterly consolidated operating loss and net income. However, we determined that the disposition does represent an individually significant component of our business. The following table presents certain amounts related to Skyfence in our consolidated results of operations through its disposal on February 23, 2017:

	Forthe three months ended March 31,
	2017			2016
	(dollars in thousands)
Operating loss	$	(3,567	)	$	(5,263	)
Loss before taxes		(3,648	)		(5,263	)
Net loss		(3,659	)		(5,308	)

14. Subsequent Event

On April 26, 2017, the Company’s stockholders approved of an increase to the pool of shares available for grant under the 2011 Plan by 850,000 shares of common stock.

22

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the (1) unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and (2) the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2016 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on February 27, 2017. This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors,” set forth in Part II, Item 1A of this Form 10-Q and in our other SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2016. You should review the risk factors for a more complete understanding of the risks associated with an investment in our securities. We disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Overview

We are a leader in cyber-security solutions that protect business-critical data and applications whether in the cloud or on premises. As organizations worldwide undergo digital transformation, their day-to-day operations are increasingly dependent upon their application and data portfolios. Extortion and theft by cybercriminals, using an evolving array of sophisticated attacks, continuously threaten these applications and data. Organizations are facing numerous challenges in providing the visibility and control required to protect business-critical applications and data from these attacks. Adoption of new technologies and architectures, such as mobile applications, web applications and big data, increases the complexity of, opens access to, and increases the vulnerability of business-critical data and applications. The increasing use of virtualization technologies and cloud delivery models, including unsanctioned, employee-adopted applications, known as “shadow IT,” is forcing organizations to operate outside of the traditional security model. Additionally, organizations must comply with complex regulatory standards enacted to protect their systems and data. We believe that these challenges are driving the need for cyber-security solutions that protect applications and data, whether in the cloud or on premises.

Our cyber-security solutions directly protect the business-critical data and applications that are being attacked, and are designed to fill the gaps left by existing endpoint and network or perimeter security solutions. Our Imperva SecureSphere platform provides database, file and web application security across various physical and virtual systems in data centers, including those in traditional on-premise data centers as well as in private, public and hybrid cloud computing environments. Our Imperva Incapsula product line provides cloud-based website security, denial of service protection and performance solutions that do not require software or hardware changes. Our Imperva CounterBreach product line uses machine learning to analyze how users access data and to spotlight data breach activity. In addition, our cloud offerings are designed to protect against the unique threats created as enterprises increasingly shift to deploying their applications and storing their data in the cloud to take advantage of the flexibility and cost-efficiency offered by cloud-based solutions.

We were incorporated as a Delaware corporation in 2002 with the vision of protecting high-value applications and data assets within the enterprise. Since that time we have been investing in our cyber-security solutions to meet the rapidly evolving demands of customers. We shipped our initial web application security and data security products in 2002; in 2006, we expanded our database security product to include compliance features. In 2010, we launched our file security offering. In addition, in 2010, we launched our cloud-based initiatives with ThreatRadar and, in 2011, we introduced our cloud-based offering for mid-market enterprises and small and medium-sized businesses (“SMB”) that we provide through Incapsula, Inc., which was majority owned by us until March 2014 when we acquired the remaining portion of Incapsula that we did not already own in order to more fully integrate their operations with ours. In January 2014, we acquired certain assets and liabilities of Tomium Software, LLC to accelerate our mainframe data security solutions. In February 2014, we acquired Skyfence Networks Ltd. to further our Software as a Service (“SaaS”) delivery models for internally facing corporate applications. In December 2016, we acquired certain assets and liabilities of Camouflage Software, Inc., to further our data masking, security and compliance solutions in the cloud and on-premises. In February 2017, we sold the assets of the Skyfence business to Forcepoint LLC. We intend to continue pursuing cloud-based SaaS security offerings.  For more information about the sale of the Skyfence business see Notes 5 and 13 to the Notes to Condensed Consolidated Financial Statements.

Our research and development efforts are focused primarily on improving and enhancing our existing cyber-security solutions and services, as well as developing new products and services and conducting advanced security research. We conduct most of our research and development activities in Israel, and we believe this provides us with access to some of the best engineering talent in the

23

security industry. As of March 31, 2017, we had 283 employees dedicated to research and development, including our advanced security research group, the Imperva Defense Center (“IDC”). Our research and development expense was $17.4 million for the three months ended March 31, 2017 as compared to $16.0 million for the same period in 2016.

We derive our revenue from sales and licenses of our products and sales of our services. Products and license revenue is generated primarily from sales of perpetual software licenses installed on hardware appliances or virtual appliances for our SecureSphere product line. Services revenue consists of maintenance and support, professional services and training and subscriptions services. A majority of our revenue is derived from customers in the Americas region. In the three months ended March 31, 2017, 52% of our total revenue was generated United States, 19% from Europe, Middle East and Africa (“EMEA”), 19% from Asia Pacific (“APAC”) and 10% from other regions.

We market and sell our products through a hybrid sales model, which combines a direct touch sales organization and an overlay channel sales team that actively assist our extensive network of channel partners throughout the sales process. We also provide our channel partners with marketing assistance, technical training and support. We primarily sell our products and services through our channel partners, including distributors and resellers, which sell to end-user customers, who we refer to in this Quarterly Report on Form 10-Q as our customers. In 2016, over 500 channel partners worldwide sold our products, which included approximately 200 direct resellers and distributors and over 300 indirect resellers. In 2016, our channel partners originated over 50% of our sales and fulfilled almost 86% of our sales. We work with many of the world’s leading security value-added resellers, and our partners include some of the largest hosting companies for cloud-based deployments.

As of March 31, 2017, we had over 5,400 customers in more than 90 countries. In addition, our solutions are used to protect thousands of organizations through cloud-based deployments with our Software-as-a-Service (“SaaS”) customers and our managed security service provider (“MSSP”) and hosting partners.

Our net revenue has increased in each of the last three years, growing from $137.8 million in 2013 to $264.4 million in 2016. We earned net income attributable to our stockholders of $23.1 million in the three months ended March 31, 2017 and incurred net losses attributable to our stockholders of $70.3 million in the year ended December 31, 2016. As of March 31, 2017, we had an accumulated deficit of $256.3 million.

Opportunities, Challenges and Risks

We believe that the growth of our business and our future success are dependent upon many factors, including our ability to maintain our technology leadership, improve our sales and marketing, address the needs of smaller enterprises and compete effectively in the marketplace for cyber-security solutions. While each of these areas presents significant opportunities for us, they also pose important challenges and risks that we must successfully address in order to sustain the growth of our business and improve our results of operations.

Maintain Technology Leadership. As a result of the rise in sophisticated attacks by hackers and malicious insiders, the difficulty in complying with regulations governing business data and the growing complexity of, and open access to, data centers, we believe that enterprises are struggling to provide visibility and control over high-value business applications and data assets that they need to protect. In addition, organizations are increasingly taking advantage of cloud-based services and virtualization technologies, and these new technologies and architectures are increasing the complexity of, and accessibility to, the data center. We believe these challenges are driving the need for a new protection layer positioned closely around the applications and data assets in the data center. We expect that as enterprises recognize the growing risk to high-value business data and the need to comply with increasing regulatory compliance mandates, their spending will increase on solutions designed to control and protect such data. We believe that traditional security and compliance products do not address the evolving needs of enterprises or do not do so adequately, and that this presents us with a large market opportunity. To capitalize on this opportunity, we have introduced and expect that in the future we will need to continue to introduce innovations to our broad business security solutions, including solutions to address cyber-security opportunities that arise as enterprises pursue cloud computing initiatives. We cannot assure you that our products will achieve widespread market acceptance or that we will properly anticipate future customer needs. Moreover, if our products do not satisfy evolving customer requirements, we will not capture the increase in spending that we expect will result from enterprises seeking to secure data across various systems in the data center.

Invest in Sales and Marketing. In order to capitalize on the anticipated increase in spending in the cyber-security market, we will need to continue to invest significant resources to further strengthen our existing relationships with channel partners, extend our global network by adding new channel partners and grow our sales and marketing team. Any investments that we make in our sales and marketing will occur in advance of our experiencing any benefits from such investments, and so it may be difficult for us to determine if we are efficiently allocating our resources in this area. We cannot assure you that the investments that we intend to make to strengthen our sales and marketing efforts will enable us to capitalize on the expected increase in spending in the cyber-security market or result in an increase in revenue or an improvement in our results of operations.

24

Address Needs of Smaller Enterprises. As market awareness of the benefits of a comprehensive cyber-security solution increases, we believe there is a significant opportunity to provide cyber-security solutions to smaller enterprises as they confront increasing security threats and compliance mandates. To capitalize on this opportunity, we intend to increase our business with mid-market enterprises and SMBs by expanding our cloud-based service offerings and our distribution channel. We have made, and may in the future continue to make, significant investments in our cloud-based security products to address the business security needs of mid-market enterprises and SMBs. If our cloud-based security products, which are relatively new, fail to gain broad acceptance with mid-market enterprises and SMBs, our revenue growth, results of operations and competitive position in our industry could suffer.

Compete Effectively. We operate in an intensely competitive market that has witnessed significant consolidation in recent years with large companies acquiring many of our competitors. We track our success rate in competitive sales opportunities against certain competitors, some of which generate higher revenues and have greater market capitalizations than we do, and many of which are more established or have greater name recognition within our industry. Based upon our internal tracking of the results of such competitive sales opportunities, we believe that we have historically competed favorably against our larger competitors, and that we have a proven track record of successfully competing against such larger competitors. Nonetheless, some of our larger competitors have numerous advantages, including, but not limited to, greater financial resources, broader product offerings and more established relationships with channel partners and customers. If we are unable to compete effectively for a share of the business security market, our business, results of operations and financial condition could be materially and adversely affected.

To date, we have incurred, and continue to incur, losses from operations. However, we believe that our existing cash, cash equivalents and short-term investments will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. Further, we expect that, if we successfully execute our business plan and strategy, our loss from operations will decline, and that we will reach profitability. Should we need additional cash in the future, we may utilize existing lines of credit, enter into additional lines of credit or raise funds through the sale of equity securities.

Key Metrics of Our Business

We monitor the key financial metrics discussed below to help us evaluate growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts and assess operational efficiencies.

Net Revenue. We measure our net revenue to assess the acceptance of our products from our customers, our growth in the markets we serve and to help us establish our strategic and operating plans for future periods. We discuss the components of our net revenue in “—Financial Overview—Net Revenue” below.

Gross Margin. We monitor our gross margin to assess the impact on our current and forecasted financial results from any changes to the pricing and mix of products we are selling to our customers.

Loss from Operations. We track our loss from operations to assess how effectively we are planning and monitoring our operations as well as controlling our operational costs, which are primarily driven by headcount.

Cash, Cash Equivalents and Short-term Investments. We evaluate the level of our cash, cash equivalents and short-term investments to ensure we have sufficient liquidity to fund our operations, including the development of future products and product enhancements and the expansion into new sales channels and territories.

Number of Customers. We believe our customer count is a key indicator of our market penetration, the productivity of our sales organization and the value that our products bring to our customer base. We also believe our existing customers represent significant future revenue opportunities for us.

We discuss for the periods presented revenue, gross margin, the components of loss from operations and number of customers further below under “—Results of Operations”, as applicable, and we discuss our cash and cash equivalents under “—Liquidity and Capital Resources.”

25

We also believe that deferred revenue and net cash flow provided by operations are key financial metrics for our business. The components of deferred revenue and net cash flow provided by operations, as well as our rationale for monitoring these metrics, are discussed immediately below this table:

	Three months ended or As of March 31,
	2017			2016
	(in thousands, except number of customers and percentages)
Net revenue	$	72,308		$	59,773
Gross margin		79.3	%		78.3	%
Loss from operations	$	(11,738	)	$	(24,192	)
Total deferred revenue	$	125,149		$	108,055
Cash, cash equivalents and short-term investments	$	312,812		$	258,745
Net cash provided by operations	$	18,496		$	5,982
Number of customers		5,434			4,704

Deferred Revenue

Our deferred revenue consists of amounts that have been invoiced but that have not yet been recognized as revenue. The majority of our deferred revenue balance consists of the unamortized portion of services revenue from maintenance and support, and subscription contracts. We monitor our deferred revenue balance because it represents a significant portion of revenue to be recognized in future periods. We also assess the increase in our deferred revenue balance plus revenue we recognized in a particular period as a measure of our sales activity for that period. While the change in our deferred revenue and revenue recognized in a given period comprise the majority of our sales activity during that period, they do not constitute the entire sales activity during the period. Our total sales activity also includes sales of products and services for which we have not yet met the criteria to recognize revenue or add such amounts to our deferred revenue balance. Revenue and deferred revenue from these transactions is recognized or recorded in future periods when we have met the required criteria. We discuss for the periods presented deferred revenue further below under “—Results of Operations.”

Net Cash Flow Provided By Operations

We monitor cash flow from operations as a measure of our overall business performance. Our cash flow from operations is driven primarily by sales of our products and licenses and, to a lesser extent, from up-front payments from customers under maintenance and support contracts. Our primary uses of cash in operating activities are for personnel-related expenditures, costs of acquiring the hardware used for our appliances, marketing and promotional expenses and costs related to our facilities. Monitoring cash flow from operations enables us to analyze our financial performance without the non-cash effects of certain items such as depreciation and amortization and stock-based compensation expenses, thereby allowing us to better understand and manage the cash needs of our business.

Financial Overview

Net Revenue

We derive our revenue from sales and licenses of our products and sales of our services.

Our net revenue is comprised of the following:

• Products and License Revenue—Products and license revenue is generated primarily from sales of perpetual software licenses installed on hardware appliances or virtual appliances for our SecureSphere product line. Our SecureSphere product line consists of database security, file security and web application security. Our other product lines include CounterBreach, ThreatRadar and Camouflage. We offer multiple hardware appliance versions that accompany our SecureSphere software, each with different throughput capacities. Perpetual software license revenue is generated from sales of our appliances, licenses for additional users and add-on software modules. We also generate a small amount of hardware revenue from sales of spares or replacement appliances, demonstration units and accessories.

• Services Revenue—Services revenue consists of maintenance and support, subscription and professional services and training. Maintenance and support revenue is generated from support services that are bundled with appliances and add-on software modules. There are three levels of maintenance and support—Standard, Enhanced and Premium—and these are usually offered through agreements for one to three-year terms. Maintenance and support includes major and minor when-and-if available software updates; customer care, which includes our designated support engineer and Imperva resident

26

engineer programs; content updates from our advanced security research group, the IDC, and hardware replacement. Subscription revenue is generated from sales of our cloud-based services. Professional services revenue consists of fees we earn related to implementation and consulting services we provide our customers. Training revenue consists of fees we earn related to training customers and partners on the use of our products. We expect that the services revenue from maintenance and support contracts will continue to grow along with the increase in the size of our installed base. We also expect subscription revenue will increase as sales of our cloud-based services continue to increase.

A majority of our products and services are sold to customers in the Americas, primarily in the United States, however, a significant portion of our revenue is generated from international sales. See Note 10 of “Notes to Condensed Consolidated Financial Statements” for a discussion of our financial information by geographic region. Our revenue by geographic region is as follows (in thousands):

	For the three months ended March 31,
	2017		2016
United States	$	37,645	$	33,671
EMEA		13,780		11,284
APAC		13,706		11,337
Other		7,177		3,481
Total net revenue	$	72,308	$	59,773

Cost of Revenue

Our total cost of revenue is comprised of the following:

• Cost of Products and License Revenue—Cost of products and license revenue is comprised primarily of third-party hardware costs and royalty fees. Our cost of products and license revenue also includes personnel costs related to our operations team, shipping costs and write-offs for excess and obsolete inventory.

• Cost of Services Revenue—Cost of services revenue is primarily comprised of personnel costs of our technical support team, our professional consulting services and training teams and our Security Operations Center (“SOC”) team. Cost of services revenue also includes facilities costs, subscription fees and depreciation. We expect that our cost of services revenue will increase in absolute dollars as we increase our headcount.

Operating Expenses

Our operating expenses consist of research and development, sales and marketing, general and administrative expenses, restructuring charges and amortization of acquired intangible assets. Personnel costs are the most significant component of our operating expenses and consist of wages, benefits and bonuses and, with regard to the sales and marketing expense, sales commissions. Personnel costs also include stock-based compensation. We expect personnel costs to continue to increase in absolute dollars as we hire additional employees to continue to grow our business.

Research and Development

Our research and development is focused on maintaining and improving our existing products and on new product development. A majority of our research and development expenses are comprised of personnel costs and, to a lesser extent, facility costs, hardware prototype costs, laboratory expenses and depreciation. We expense research and development costs as incurred. We expect our research and development expenses to increase in absolute dollars as we continue to enhance our existing products and develop new products and services that address the emerging market for business security and regulatory compliance.

Sales and Marketing

Sales and marketing expense is the largest component of our operating expenses and consists primarily of personnel costs, including commissions and travel expenses. Sales and marketing expenses also include costs related to marketing and promotional activities, third-party referral fees, facilities costs and depreciation. We expect our sales and marketing expenses to increase in absolute dollars as we expand our sales and marketing efforts worldwide.

27

General and Administrative

General and administrative expense consists primarily of personnel costs, including stock-based compensation, as well as professional fees, facilities costs and depreciation. General and administrative personnel costs include our executive, finance, purchasing, order entry, human resources, information technology and legal functions. Our professional fees consist primarily of accounting, external legal, information technology and other consulting costs.

Restructuring charges

In October 2016, we initiated a business restructuring plan to reduce sales, marketing and general and administrative expenses through reductions in headcount and spending generally. The expenses incurred primarily consisted of employee severance charges and other termination-related costs. We do not expect to incur significant additional restructuring costs associated with this plan in future periods.

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets consists of amortization of intangible assets from the acquisitions of Skyfence and Tomium that occurred in the first quarter of 2014 and Camouflage in the fourth quarter of 2016. On February 23, 2017, we completed the sale of Skyfence.

Gain on sale of business

On February 23, 2017, we completed the sale of the assets of our Skyfence cloud access security broker business (“Skyfence”) to Forcepoint LLC and its Israeli subsidiary for consideration of approximately $40 million in cash. Of the total consideration, approximately $5.0 million was remitted directly to escrow to secure the indemnification obligations and for the mutual protection of the Company. As a result of the sale, we recognized a gain during the first quarter of 2017.

Other Income (Expense), net

Other income (expense), net is comprised of the following items:

• Interest Income—Interest income consists of interest earned on our cash, cash equivalents and short-term investments. We expect interest income will vary each reporting period depending on our average investment balances during the period and market interest rates.

• Interest Expense—Interest expense consists of interest accrued or paid on debt obligations.

• Foreign Currency Forward Contract Gains (Losses)—Foreign currency forward contract gains and losses pertain to the ineffective portion of derivative instruments designated as hedges that we have entered into primarily to manage our exposure to the variability in expected future expenses resulting from changes in foreign currency exchange rates. We do not use derivative financial instruments for speculative or trading purposes.

• Foreign Currency Exchange Gains (Losses)—Foreign currency exchange gains and losses relate to transactions denominated in currencies other than the U.S. Dollar.

Provision for Income Taxes

We operate in several tax jurisdictions and are subject to taxes in each country or jurisdiction in which we conduct business including the United States and Israel. Earnings from our non-U.S. activities are subject to local country income tax and may be subject to U.S. income tax if such earnings are distributed to the U.S. We have incurred net losses in each fiscal year since our inception. For the quarter ended March 31, 2017, we generated net income. We have recorded insignificant U.S. federal income tax expense. Our tax expense to date relates primarily to foreign income taxes, mainly from our Israeli and United Kingdom activities, and to a lesser extent, state income taxes.

28

Results of Operations

The following table is a summary of our condensed consolidated statements of operations in dollars and as a percentage of our total revenue. We have derived the data for the three months ended March 31, 2017 and 2016 from our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

	For the three months ended March 31,
	2017						2016
	Amount			% of Net Revenue			Amount			% of Net Revenue
	(dollars in thousands)
Statement of Operations Data:
Net revenue:
Products and license	$	19,578			27.1		$	20,841			34.9
Services:
Maintenance and support		21,980			30.4			18,861			31.6
Professional services and training		3,498			4.8			3,435			5.7
Subscriptions		27,252			37.7			16,636			27.8
Total services		52,730			72.9			38,932			65.1
Total net revenue		72,308			100.0			59,773			100.0
Cost of revenue:
Products and license		1,932			2.7			2,184			3.7
Services		13,020			18.0			10,784			18.0
Total cost of revenue		14,952			20.7			12,968			21.7
Gross profit		57,356			79.3			46,805			78.3
Operating expenses:
Research and development		17,450			24.1			16,019			26.8
Sales and marketing		37,124			51.3			40,740			68.2
General and administrative		13,536			18.7			13,886			23.2
Restructuring charges		667			0.9			-			-
Amortization of purchased intangibles		317			0.4			352			0.6
Total operating expenses		69,094			95.4			70,997			118.8
Loss from operations		(11,738	)		(16.1	)		(24,192	)		(40.5	)
Gain on sale of business		35,871			49.6			-			-
Other income (expense), net		(92	)		(0.1	)		83			0.1
Income (loss) before provision for income taxes		24,041			33.4			(24,109	)		(40.4	)
Provision (benefit) for income taxes		958			1.3			(102	)		(0.2	)
Net income (loss)	$	23,083			32.1		$	(24,007	)		(40.2	)

29

Comparison of the Three Months Ended March 31, 2017 and 2016

	Forthe three months ended March 31,
	2017			2016			Change
	Amount			Amount			Amount			%
	(dollars in thousands)
Net revenue:
Products and license	$	19,578		$	20,841		$	(1,263	)		-6.1	%
Percentage of net revenue		27.1	%		34.9	%
Services:
Maintenance and Support		21,980			18,861			3,119			16.5	%
Percentage of net revenue		30.4	%		31.6	%
Professional Services and Training		3,498			3,435			63			1.8	%
Percentage of net revenue		4.8	%		5.7	%
Subscriptions		27,252			16,636			10,616			63.8	%
Percentage of net revenue		37.7	%		27.8	%
Total Services		52,730			38,932			13,798			35.4	%
Percentage of net revenue		72.9	%		65.1	%
Total net revenue	$	72,308		$	59,773		$	12,535			21.0	%
United States	$	37,645		$	33,671		$	3,974			11.8	%
Percentage of net revenue		52.1	%		56.3	%
EMEA		13,780			11,284			2,496			22.1	%
Percentage of net revenue		19.1	%		18.9	%
APAC		13,706			11,337			2,369			20.9	%
Percentage of net revenue		19.0	%		19.0	%
Other		7,177			3,481			3,696			106.2	%
Percentage of net revenue		9.9	%		5.8	%
Total net revenue	$	72,308		$	59,773		$	12,535			21.0	%

Three Months Ended March 31, 2017 Compared with Three Months Ended March 31, 2016

Our net revenue increased by $12.5 million, or 21%, to $72.3 million during the three months ended March 31, 2017 from $59.8 million during the three months ended March 31, 2016. This revenue growth reflects the increasing demand for our subscription service offerings reflected in the addition of 730 customers since March 31, 2016 as well as a broader installed base of product and licenses which generate higher maintenance and support revenues. We had 142 orders exceeding $100,000 during the three months ended March 31, 2017, compared to 118 orders during the three months ended March 31, 2016.

All regions contributed to this growth with a $4.0 million, $2.5 million, $2.4 million and $3.5 million increase in United States, EMEA, APAC and Other respectively, over the same period in 2016. The revenue growth in the three months ended March 31, 2017 as compared to the three months ended March 31, 2016 was principally due to increasing demand for our subscription service offerings.

Products and license revenue decreased by $1.2 million, to $19.6 million during the three months ended March 31, 2017 from $20.8 million during the three months ended March 31, 2016. The decrease in products and license revenue was primarily due to extended sales cycles across all regions.

Services revenue increased by $13.8 million, to $52.7 million during the three months ended March 31, 2017 from $38.9 million during the three months ended March 31, 2016. During the three months ended March 31, 2017, our services revenue was comprised of $22.0 million in maintenance and support, $3.5 million in professional services and training and $27.2 million in subscriptions. The change in services revenue in the three months ended March 31, 2017 from the three months ended March 31, 2016 was primarily due to an increase of $10.6 million in subscription revenue resulting from our cloud-based security services and our ThreatRadar offering, in addition to an increase of $3.1 million in maintenance and support revenue from our larger installed base in all regions. Our professional services and training revenue increased by $0.1 million, primarily due to timing of projects.

30

Gross Profit

	Forthe three months ended March 31,
	2017			2016
	Amount			Amount			% Change
	(dollars in thousands)
Products and license gross profit	$	17,646		$	18,657
Gross Margin %		90.1	%		89.5	%		0.6
Services gross profit		39,710			28,148
Gross Margin %		75.3	%		72.3	%		3.0
Total gross profit	$	57,356		$	46,805
		79.3	%		78.3	%		1.0

Three Months Ended March 31, 2017 Compared with Three Months Ended March 31, 2016

Total gross margin increased 1.0 percent to 79.3% during the three months ended March 31, 2017 from 78.3% during the three months ended March 31, 2016. The services gross margin increased by 3.0% to 75.3% for the three months ended March 31, 2017 from 72.3% for the three months ended March 31, 2016. The services gross margin increase was primarily attributable to higher subscription, maintenance and support revenues and cost efficiencies driven by the higher volume of services, during the three months ended March 31, 2017 as compared to the 2016 period. The products and license gross margin increased by 0.6% to 90.1% for the three months ended March 31, 2017 from 89.5% for the three months ended March 31, 2016. The products and license gross margin increase was primarily attributable to increased sales of higher throughput appliances, which generally have higher gross margins.

Operating Expenses

	Forthe three months ended March 31,
	2017			2016			Change
	Amount			Amount			Amount			%
	(dollars in thousands)
Operating expenses:
Research and development	$	17,450		$	16,019		$	1,431			8.9	%
Percentage of net revenue		24.1	%		26.8	%
Sales and marketing		37,124			40,740			(3,616	)		-8.9	%
Percentage of net revenue		51.3	%		68.2	%
General and administrative		13,536			13,886			(350	)		-2.5	%
Percentage of net revenue		18.7	%		23.2	%
Restructuring charges		667			-			667			100.0	%
Percentage of net revenue		0.9	%		0.0	%
Amortization of acquired intangible assets		317			352			(35	)		-9.9	%
Percentage of net revenue		0.4	%		0.6	%
Total operating expenses	$	69,094		$	70,997		$	(1,903	)		-2.7	%

Results above include stock-based compensation expense of:

	For the three months ended March 31,
	2017		2016		Change
	(dollars in thousands)
Research and development	$	4,768	$	4,249	$	519
Sales and marketing		3,466		5,094		(1,628	)
General and administrative		3,432		4,919		(1,487	)
Restructuring charges		675		—		675

31

Three Months Ended March 31, 2017 Compared with Three Months Ended March 31, 2016

Research and development expenses increased by $1.4 million, or 8.9%, to $17.4 million during the three months ended March 31, 2017 from $16.0 million during the three months ended March 31, 2016. The change of $1.4 million was primarily due to modification of stock options of $2.3 million partially offset by a decrease of $0.9 million in personnel costs due to decreased headcount upon implementing our 2016 restructuring plan and cost reduction initiatives.

Sales and marketing expenses decreased by $3.6 million, or 8.9%, to $37.1 million during the three months ended March 31, 2017 from $40.7 million during the three months ended March 31, 2016. The change was principally related to a decrease of $2.2 million in personnel costs, including stock-based compensation and contractor costs due to decreased headcount upon implementing our 2016 restructuring plan and cost reduction initiatives. We also incurred decreases in direct sales expenses and travel costs totaling $1.7 million relating to the decreased headcount.

General and administrative expenses decreased by $0.3 million, or 2.5%, to $13.5 million during the three months ended March 31, 2017 from $13.9 million during the three months ended March 31, 2016. The change was primarily due to decreased headcount upon implementing our 2016 restructuring plan and cost reduction initiatives.

We incurred restructuring charges of $0.7 million during the three months ended March 31, 2017 in connection with the plan implemented in November 2016. We incurred no restructuring charges during the three months ended March 31, 2016. The restructuring charges are termination-related costs, which consist of stock-based compensation expense. The restructuring plan was initiated to reduce sales, marketing and general and administrative expenses through reductions in headcount and spending generally and to align personnel resources in our growth areas.

Amortization of purchased intangibles were consistent during the three months ended March 31, 2017 compared to the same period in 2016.

Loss from Operations

For the three months ended March 31,						Change
2017			2016			Amount		%
(dollars in thousands)
$	(11,738	)	$	(24,192	)	$	12,454		51.5	%

Three Months Ended March 31, 2017 Compared with Three Months Ended March 31, 2016

Our loss from operations decreased by $12.4 million, or 51%, to $11.8 million for the three months ended March 31, 2017 from $24.2 million for the three months ended March 31, 2016. Our gross profit increased by $10.5 million during the three months ended March 31, 2017 due to higher subscription, maintenance and support revenues. Our total operating expenses decreased by $1.9 million during the three months ended March 31, 2017 when compared to the prior year period principally due to the 2016 restructuring plan which was initiated to reduce sales, marketing and general and administrative expenses through reductions in headcount and spending generally and to align personnel resources in our growth areas.

Gain on sale of business

For the three months ended March 31,				Change
2017		2016		Amount		%
(dollars in thousands)
$	35,871	$	-	$	35,871		100.0	%

32

On February 23, 2017, we completed the sale of the assets of Skyfence to Forcepoint LLC and its Israeli subsidiary for consideration of approximately $40 million in cash. As a result of the sale, we recognized a gain of $35.9 million during the first quarter of 2017.

Other Income (Expense), net

For the three months ended March 31,					Change
2017			2016		Amount			%
(dollars in thousands)
$	(92	)	$	83	$	(175	)		210.8	%

Other income decreased by $0.2 million during the three months ended March 31, 2017 when compared to the three months ended March 31, 2016 primarily due to foreign exchange differences and bank charges offset by an increase in interest income from short-term investments.

Provision for Income Taxes

	Forthe three months ended March 30,						Change
	2017			2016			Amount		%
Provision (benefit) for income taxes	$	958		$	(102	)	$	1,060		-1039.2	%
Effective tax rate		(4.0	)%		(0.4	)%

We recorded an income tax expense of $1.0 million for the three months ended March 31, 2017 and an income tax benefit $0.1 million for the three months ended March 31, 2016. The income tax expense for the three months ended March 31, 2017, was primarily attributable to foreign and state income taxes including tax effects of the gain related to the sale of the Skyfence business, offset in part by an intraperiod tax benefit allocation related to unrealized gains reported in other comprehensive income. Additionally, the amount of unrecognized tax benefits increased during the three months ended March 31, 2017, which also contributed to the income tax expense for the period. The income tax benefit for the three months ended March 31, 2016 was primarily attributable to an intraperiod tax expense allocation related to unrealized gains reported in other comprehensive income, offset in part, by foreign and state income taxes.

Deferred Revenue

	As of March 31,				Change
	2017		2016		Amount		%
	(dollars in thousands)
Total deferred revenue	$	125,149	$	108,055	$	17,094		15.8	%

Deferred revenue increased by $17.1 million, or 15.8%, to $125.1 million as of March 31, 2017 from $108.0 million as of March 31, 2016. The growth in our deferred revenue was primarily attributable to an increase in our installed base of products and licenses worldwide and resulting renewals of maintenance and support agreements, as well as new sales of maintenance and support, and subscription revenue.

Number of Customers

	As of March 31,				Change
	2017		2016		Amount		%
Number of customers		5,434		4,704		730		15.5	%

Our number of customers increased by 730, or 15.5%, to 5,434 as of March 31, 2017 from 4,704 as of March 31, 2016. Our growth in customer count was driven by increasing market acceptance of our products.

33

Liquidity and Capital Resources

To date, we have satisfied our capital and liquidity needs through sales of our products and services, our initial and follow-on public offerings of common stock, and private placements of convertible preferred stock. We have incurred significant losses as we continue to expand our business. Our cash flows from operating activities will continue to be affected principally by the extent to which our revenue exceeds or does not exceed any increase in spending on personnel to support the growth of our business. Our largest source of operating cash flow is cash collections from our customers.

Capital Resources

As of March 31, 2017, we had $312.8 million of cash, cash equivalents and short-term investments, $13.9 million of which is currently held outside of the United States and not presently available to fund domestic operations and obligations. If we were to repatriate cash held outside of the United States, it could be subject to U.S. income taxes on such amounts, less any previously paid foreign income taxes. Our cash, cash equivalents and short-term investments have increased from $17.7 million as of December 31, 2010 to $312.8 million as of March 31, 2017. The largest increases were upon our initial public offering of common stock in November 2011 in which we raised $86.2 million, after deducting underwriters’ discounts and offering expenses, our follow-on public offering of common stock in March 2015 in which we raised $127.9 million, after deducting underwriters’ discounts and offering costs and proceeds of $35.0 million from the sale of our Skyfence business in February 2017. This amount was partially offset by our losses from operations as we continued to fund our investments in growth, including the development of future products and product enhancements, and expanded into new sales channels and geographies. In addition, we increased our use of cash through the acquisitions of certain assets of Tomium in January 2014, Skyfence Networks, Ltd. in February 2014 and Camouflage in December 2016, which included cash consideration totaling approximately $24.8 million. We believe our existing cash, cash equivalents and short-term investments will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including, among other things, market acceptance of our products, the cost of our research and development activities, the acquisition of other businesses and overall economic conditions.

Cash Flows

The following summary of our cash flows for the periods indicated has been derived from our consolidated financial statements which are included elsewhere in this Quarterly Report on Form 10-Q:

	Forthe three months ended March 31,
	2017			2016
	(dollars in thousands)
Net cash provided by operating activities	$	18,496		$	5,982
Net cash provided by (used in) investing activities	$	10,439		$	(6,792	)
Net cash used in financing activities	$	(606	)	$	(8,923	)

Cash Flows from Operating Activities

Our largest uses of cash from operating activities are for employee related expenditures. Our primary source of cash flow from operating activities is cash receipts from customers. Our cash flow from operations will continue to be affected principally by the extent to which we grow our revenues and increase our headcount, primarily in our sales and marketing and research and development functions, in order to grow our business.

Net cash provided by operating activities of $18.5 million for the three months ended March 31, 2017 reflected a net income of $23.1 million, adjusted for non-cash charges of $19.7 million primarily due to gain on sale of business of $35.9 million partially offset by stock-based compensation expense of $13.6 million, as well as a net change of $15.1 million in our net operating assets and liabilities. The net change in our operating assets and liabilities was primarily the result of a decrease in our accounts receivable of $17.7 million, an increase in both accrued compensation and benefits of $2.3 million and accrued and other liabilities of $1.2 million offset by a decrease in deferred revenue of $3.9 million, a decrease in accounts payable of $0.8 million and increase in prepaid expenses and other assets of $0.9 million.

Net cash provided by operating activities of $6.0 million for the three months ended March 31, 2016 reflected a net loss of $24.0 million, adjusted for non-cash charges of $17.5 million primarily due to stock-based compensation expense, as well as a net change of $12.5 million in our net operating assets and liabilities. The net change in our operating assets and liabilities was primarily the result of a decrease in our accounts receivable of $17.3 million.

34

Cash Flows from Investing Activities

Our investing activities consist primarily of purchases and sales of short-term investments and expenditures of purchase property and equipment.

Cash provided by investing activities during the three months ended March 31, 2017 was $10.4 million, primarily resulting from proceeds from disposition of the Skyfence business of $35.0 million, proceeds from the maturities of short-term investments of $28.5 million offset by purchases of short-term investments of $51.1 million and capital expenditures of $1.9 million.

Cash used in investing activities during the three months ended March 31, 2016 was $6.8 million, primarily resulting from purchases of short-term investments of $26.3 million and capital expenditures of $3.4 million offset by net proceeds from the maturities of short-term investments of $22.9 million.

Cash Flows from Financing Activities

Net cash used in financing activities was $0.6 million for the three months ended March 31, 2017 primarily as a result of shares withheld for tax withholding of $4.6 million offset by net proceeds from issuance of common stock of $4.0 million.

Net cash used in financing activities was $8.9 million for the three months ended March 31, 2016 primarily as a result of settlement of holdback liability as part of the consideration in connection with the acquisition of SkyFence Networks Ltd.

Contractual Obligations

The following summarizes our contractual obligations as of March 31, 2017:

	Payments Due by Period
Contractual Obligations:	2017		2018		2019		2020		2021		Thereafter		Total
	(in thousands)
Operating lease obligations(1)	$	5,433	$	8,306	$	4,714	$	4,446	$	294	$	47	$	23,240
Severance Pay Fund(2)		—		—		—		—		—		—		6,694
Purchase commitments(3)		3,358		—		—		—		—		—	$	3,358
Total	$	8,791	$	8,306	$	4,714	$	4,446	$	294	$	47	$	33,292

1 Operating lease agreements represent our obligations to make payments under our non-cancelable lease agreements for our facilities. During the three months ended March 31, 2017, we made regular lease payments of $1.8 million under the operating lease agreements.

2 Our condensed consolidated balance sheet as of March 31, 2017 includes $6.7 million of non-current liabilities for our Israeli severance pay fund. The specific timing of any cash payments relating to this obligation cannot be projected with reasonable certainty and, therefore, no amounts for this obligation are included in the annual columns of the table set forth above.

3 Purchase commitments are contractual obligations to purchase hardware appliances and related component parts from our vendors in advance of anticipated sales, generally within six months from the date the inventory arrived at the vendor’s warehouse.

Off-Balance Sheet Arrangements

Through March 31, 2017, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and include our accounts and the accounts of our wholly-owned subsidiaries. The preparation of our consolidated financial statements requires our management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the applicable periods. Management bases its estimates, assumptions and judgments on historical experience and on various other factors that they believe to be reasonable under the circumstances. Different assumptions and judgments would change the estimates used in the preparation of our consolidated financial statements, which, in turn, could change the results from those reported. Our management evaluates its estimates, assumptions and judgments on an ongoing basis.

35

We believe that the estimates, assumptions and judgments involved in revenue recognition, stock-based compensation, long-lived assets, and accounting for income taxes have the greatest potential impact on our Consolidated Financial Statements, so we consider these to be our critical accounting policies. Historically, our estimates, assumptions and judgments relative to our critical accounting policies have not differed materially from actual results. The critical accounting estimates associated with these policies are described in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2016 Annual Report on Form 10-K for the fiscal year ended December 31, 2016. Except for the adoption of ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, there have been no other material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2016.

Recent Accounting Pronouncements

See Note 1 – Basis of Presentation and Summary of Significant Accounting Policies of the Notes to Condensed Consolidated Financial Statements for further discussion.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no significant changes in our market risk exposures during the three months ended March 31, 2017 as compared to the market risk exposures disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations, set forth in Part II, Item 7A, of our Annual Report on Form 10-K for the year ended December 31, 2016.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation and supervision of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, or the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on the aforementioned evaluation, our chief executive officer and chief financial officer have concluded that as of March 31, 2017, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure and that such controls and procedures provide reasonable assurance that the financial reporting and the preparation of financial statements for external purposes are reliably prepared and reported in accordance with generally accepted accounting principles.

Changes in Internal Control over Financial Reporting

Regulations under the Exchange Act require public companies, including our company, to evaluate any change in our “internal control over financial reporting” as such term is defined in Rule 13a-15(f) and Rule 15d-15(f) of the Exchange Act. In connection with their evaluation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q, our chief executive officer and chief financial officer did not identify any changes in our internal control over financial reporting during the three months covered by this Quarterly Report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

36

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business.

On April 11, 2014, a purported shareholder class action lawsuit was filed in the United States District Court for the Northern District of California against us and certain of our current and former officers. On August 7, 2014, the Court entered an order appointing lead plaintiff and counsel for the purported class. The lead plaintiff filed an amended complaint on October 10, 2014. The lawsuit named us and certain of our current and former officers and purported to bring suit on behalf of those investors who purchased our publicly traded securities between May 2, 2013 and April 9, 2014. The plaintiff alleged that defendants made false and misleading statements about our operations and business and financial results and purported to assert claims for violations of the federal securities laws. The amended complaint sought unspecified compensatory damages, interest thereon, costs incurred in the action and equitable/injunctive or other relief. On January 6, 2015, defendants filed a motion to dismiss the amended complaint. On September 17, 2015, the Court granted defendants’ motion to dismiss with leave to amend. The lead plaintiff filed an amended complaint on January 13, 2016, again naming the same current and former officers, alleging false and misleading statements about our operations and business and financial results, and seeking the same relief.  On February 10, 2016, defendants filed a motion to dismiss the amended complaint. On May 16, 2016, the Court granted the motion in part and denied the motion in part.  On September 7, 2016, defendants filed their operative answer to the amended complaint. On October 19, 2016, plaintiff filed a motion for class certification. On April 3, 2017, defendants filed an opposition to the motion for class certification.

In addition, we have received, and may in the future continue to receive, claims from third parties asserting, among other things, infringement of their intellectual property rights. Future litigation may be necessary to defend ourselves, our channel partners and our customers by determining the scope, enforceability and validity of third-party proprietary rights or to establish our proprietary rights.

Further, the ultimate outcome of any litigation is uncertain and, regardless of outcome, litigation can have an adverse impact on us because of defense costs, potential negative publicity, diversion of management resources and other factors. Accordingly, there can be no assurance that existing or future legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on our business, consolidated financial position, results of operations or cash flows.

37

Item 1A. Risk Factors

Risks Related to Our Business

We have a history of losses, we may not become profitable and our revenue growth may not continue.

We have incurred net losses in each fiscal year since our inception, including net losses attributable to our stockholders of $(48.9) million in 2015 and $(70.3) million in 2016.  For the quarter ended March 31, 2017, we generated net income of $23.1 million. As a result, we had an accumulated deficit of $256.3 million at March 31, 2017. We may not become profitable in the future if we fail to increase revenue and manage our expenses, or if we incur unanticipated liabilities. Revenue growth may slow or revenue may decline for a number of possible reasons, including slowing demand for our products or services, increasing competition, a decrease in the growth of, or decline in, our overall market, or our failure to capitalize on growth opportunities or introduce new products and services. In addition, we have incurred, and anticipate that we will continue to incur, significant legal, accounting and other expenses relating to being a public company. If our revenue does not increase at a rate to proportionally offset these expected increases in operating expense, our operating margins will suffer. Further, in future periods, our revenue could decline and, accordingly, we may not be able to achieve profitability and our losses may increase. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a consistent basis. Any failure by us to achieve, maintain or increase profitability and continue our revenue growth could cause the price of our common stock to materially decline.

Our quarterly operating results have and are likely to continue to vary significantly and to be unpredictable, which could cause the trading price of our stock to decline.

Our revenue and operating results have and could continue to vary significantly from period to period as a result of a variety of factors, many of which are outside of our control. As a result, comparing our revenue and operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance. We may not be able to accurately predict our future revenue or results of operations. We base our current and future expense levels on our operating plans and sales forecasts, and our operating costs are relatively fixed in the short-term. As a result, we may not be able to reduce our costs sufficiently to compensate for an unexpected shortfall in revenue, and even a small shortfall in revenue could disproportionately and adversely affect financial results for that quarter. If our revenue or operating results fall below the expectations of investors or any securities analysts that cover our stock, the price of our common stock could decline substantially.

In addition to other risk factors listed in this section, factors that may individually or cumulatively affect our operating results from period to period include:

• the level of demand for our products and services, and the timing of orders from our channel partners and customers;

• the timing of sales and shipments of products during a quarter, which may depend on many factors such as inventory and logistics and our ability to ship new products on schedule and accurately forecast inventory requirements;

• the mix of products sold, the mix of revenue between products and services, including subscription services, and the degree to which products and services are bundled and sold together for a package price;

• the budgeting, procurement and work cycles of our customers, which may result in seasonal variation as our business and the market for solutions such as ours mature;

• changes in customer renewal rates for our services;

• general economic conditions, both domestically and in our foreign markets, and economic conditions specifically affecting industries in which our customers participate;

• the timing of satisfying revenue recognition criteria for our sales, including shipping and delivery terms, particularly where we accrue the associated commission expense in a different period, which may be affected by the extent to which we bring on new resellers and distributors, and our ability to establish vendor-specific objective evidence of fair value, or VSOE, for new products and maintain VSOE for maintenance and services;

• future accounting pronouncements or changes in our accounting policies; and

• increases or decreases in our expenses caused by fluctuations in foreign currency exchange rates, since a significant portion of our expenses are incurred and paid in the Israeli shekel and other currencies besides the U.S. dollar.

Reliance on a concentration of shipments at the end of the quarter could cause our revenue to fall below expected levels, resulting in a decline in our stock price.

Historically, we have received a significant majority of a quarter’s sales orders and generated a significant majority of a quarter’s revenue during the last two weeks of the quarter. The fact that so many orders arrive at the end of a quarter means that our

38

revenue may shift from one quarter to the next if we cannot fulfill all of the orders and satisfy all of the revenue recognition criteria under our accounting policies before the quarter ends.

This pattern is a result of customer buying habits and the efforts of our sales force and channel partners to meet or exceed quarterly quotas. If expected revenue at the end of any quarter is delayed because anticipated purchase orders fail to materialize, our logistics partners fail to ship or deliver products on time, we fail to manage our inventory properly, we fail to release new products on schedule, or for any other reason, then our revenue for that quarter could fall below our expectations or those of securities analysts and investors, resulting in a decline in our stock price.

We rely on third party channel partners to generate a significant portion, and to fulfill a substantial majority, of our sales, and if we fail to expand and manage our distribution channels, our revenue could decline and our growth prospects could suffer.

In 2016, our channel partners originated over 50%, and fulfilled almost 86%, of our sales, and we expect that channel sales will represent a substantial portion of our revenue for the foreseeable future. Our ability to expand our distribution channels depends in part on our ability to educate our channel partners about our products and services, which are often complex. Our agreements with our channel partners are generally non-exclusive and many of our channel partners have more established relationships with our competitors. If our channel partners choose to place greater emphasis on products and services of their own or those offered by our competitors, our ability to grow our business and sell our products may be adversely affected. If our channel partners do not effectively market and sell our products and services, or if they fail to meet the needs of our customers, then our ability to grow our business and sell our products may be adversely affected. The loss of one or more of our larger channel partners, who may cease marketing our products with limited or no notice, and our possible inability to replace them could adversely affect our sales. Our failure to recruit additional channel partners, or any reduction or delay in their sales of our products and services or conflicts between channel sales and our direct sales and marketing activities could materially and adversely affect our revenue.

We face intense competition, especially from larger, better-known companies and we may lack sufficient financial or other resources to maintain or improve our competitive position.

The market for cyber-security products is intensely competitive and we expect competition to intensify in the future. Our competitors include companies such as Akamai Technologies, Inc., F5 Networks, Inc., International Business Machines Corporation (“IBM”), Intel Security group of Intel Corporation (“Intel”), Oracle Corporation (“Oracle”), Symantec Corporation and other point solution security vendors.

Many of our existing and potential competitors may have substantial competitive advantages such as:

• greater name recognition and longer operating histories;

• larger sales and marketing budgets and resources and the capacity to leverage their sales efforts and marketing expenditures across a broader portfolio of products;

• broader, deeper or otherwise more well-established relationships with customers and potential customers;

• broader distribution networks and more established relationships with distributors;

• wider geographic presence;

• access to larger customer bases;

• greater customer support resources;

• greater resources to make acquisitions;

• greater resources to develop and introduce products that compete with our products;

• lower labor and development costs; and

• substantially greater financial, technical and other resources.

As a result, they may be able to adapt more quickly and effectively to new or emerging technologies and changing opportunities, standards or customer requirements. In addition, these companies could reduce the price of their competing products, resulting in intensified pricing pressures within the markets in which we compete. Further, some of our larger competitors have substantially broader product offerings and leverage their relationships based on other products or incorporate functionality into existing products in a manner that discourages customers from purchasing our products.

Our competitors may offer a bundled product offering, and our customers may elect to accept this offering from our competitors, even if it has more limited functionality than our product offering, instead of adding the additional appliances required to

39

implement our offering. The consolidation in our industry, such as IBM’s acquisition of Guardium, Inc., Oracle’s acquisition of Secerno, Ltd. and Intel’s acquisition of McAfee, Inc., increases the likelihood of competition based on integration or bundling, particularly where our competitors’ products and offerings are effectively integrated, and we believe that consolidation in our industry may increase the competitive pressures we face on all our products and services. If we are unable to sufficiently differentiate our products and services from the integrated or bundled products of our competitors, such as by offering enhanced functionality, performance or value, we may see a decrease in demand for those products or services, which would adversely affect our business, operating results and financial condition. Further, it is possible that continued industry consolidation may impact customers’ perceptions of the viability of smaller or even medium-sized software firms and consequently customers’ willingness to purchase from firms of our size. Similarly, if customers seek to concentrate their software purchases in the product portfolios of a few large providers or have already deployed products that are similar to ours, we may be at a competitive disadvantage notwithstanding the superior performance that we believe our products and services can deliver. Larger competitors are also often in a better position to withstand any significant reduction in capital spending by customers, and will therefore not be as susceptible to economic downturns.

Many of our smaller competitors that specialize in providing protection from a single type of cyber-security threat may deliver these specialized cyber-security products to the market more quickly than we can or may introduce innovative new products or enhancements before we do. Conditions in our markets could change rapidly and significantly as a result of technological advancements.

We may not compete successfully against our current or potential competitors. Companies competing with us may introduce products that have greater performance or functionality, are easier to implement or use, or incorporate technological advances that we have not yet developed or implemented. Our current and potential competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their resources. In addition, companies competing with us may price their products more competitively than ours, or have an entirely different pricing or distribution model. Increased competition could result in fewer customer orders, price reductions, reduced operating margins and loss of market share. Further, we may be required to make substantial additional investments in research and development and marketing and sales in order to respond to such competitive threats, and we cannot assure you that we will be able to compete successfully in the future.

We operate in an evolving market that has not yet reached widespread adoption.  New or existing technologies that may be perceived to address cyber-security risks in better ways could gain wide adoption and supplant some or all of our products and services, making analysis of trends or predictions about our business difficult and potentially weakening our sales and our financial results.

We operate in new, rapidly evolving categories in the security industry that focus on securing our customers’ business-critical data and applications. We offer database, file and web application security in an integrated, modular cyber-security solution, data breach detection and data masking technology and cloud-based security services. Because we depend in part on the market’s acceptance of our products and customers may choose to acquire technologies that are not directly comparable to ours, it is difficult to evaluate trends that may affect our business, including how large the cyber-security market will be and what products customers will adopt. For example, organizations that use other security products, such as network firewalls, security information and event management products or data loss prevention solutions, may believe that these security solutions sufficiently protect access to sensitive data. Therefore, they may continue to devote their IT security budgets to these products and may not adopt our cyber-security solutions in addition to such products. If customers do not recognize the benefits that our cyber-security solutions offer in addition to other security products, then our revenue may not grow as anticipated or may decline, and our stock price could decline.

The introduction of products and services embodying new technologies could render some or all of our existing products and services obsolete or less attractive to customers. Other cyber-security technologies exist or could be developed in the future, and our business could be materially adversely affected if such technologies are widely adopted. We may not be able to successfully anticipate or adapt to changing technology or customer requirements on a timely basis, or at all. Even if customers purchase our products, they may not make repeat purchases or purchase products across our various product families, which trend may be exacerbated by the rapid evolution of our market. As of December 31, 2016, approximately 30% of our customers had purchased products from more than one of our product families. If we are unable to sell additional products from multiple product families to our customers, then our revenue may not grow as anticipated or may decline, and our stock price could decline. If we fail to keep up with technological changes or to convince our customers and potential customers of the value of our solutions even in light of new technologies, our business, financial condition and results of operations could be materially and adversely affected.

In addition, because of our rapidly evolving market, any predictions about our revenue in future periods may not be as accurate as they would be if we operated in a more established market.

40

If we do not successfully anticipate market needs and opportunities or changes in the legal, regulatory and industry standard landscape and make timely enhancements to our products and develop new products that meet those needs, we may not be able to compete effectively and our ability to generate revenue will suffer.

The cyber-security market is characterized by rapid technological advances, changes in customer requirements, including changes driven by legal, regulatory and self-regulatory compliance mandates, frequent new product introductions and enhancements and evolving industry standards in computer hardware and software technology. Customers and industry analysts expect speedy introduction of software and new functionality to respond to new threats, requirements and risks and we may be unable to meet these expectations. As a result, we must continually improve our products and introduce new solutions in response to changes in operating systems, application software, computer and communications hardware, networking software, data center architectures, programming tools and computer language technology. Moreover, the technology in our products is especially complex because it needs to effectively identify and respond to methods of attack and theft, while minimizing the impact on network, database, file system and web application performance. In addition, our products must successfully interoperate with products from other vendors.

We cannot guarantee that we will be able to anticipate future market needs and opportunities or be able to develop product enhancements or new products to meet such needs or opportunities in a timely manner or at all. Since developing new products or new versions of, or add-ons to, existing products is complex, the timetable for their commercial release is difficult to predict and may vary from our historical experience, which could result in delays in their introduction from anticipated or announced release dates. We may not offer updates as rapidly as new threats affect our customers or our newly developed products or enhancements may have defects, errors or failures. If we do not quickly respond to the rapidly changing and rigorous needs of our customers by developing and introducing on a timely basis new and effective products, upgrades and services that can respond adequately to new security threats, our competitive position, business and growth prospects will be harmed.

Even if we are able to anticipate, develop and commercially introduce enhancements and new products, there can be no assurance that we will be successful in developing sufficient market awareness of them or that such enhancements or new products will achieve widespread market acceptance. Diversifying our product offerings will require significant investment and planning, will bring us more directly into competition with software providers that may be better established or have greater resources than we do, will require additional investments of time and resources in the development and training of our channel and strategic partners and will entail a significant risk of failure.

Further, one factor that drives demand for our products and services is the legal, regulatory and industry standard framework in which our customers operate, which we expect will continue to be a factor for the foreseeable future. For example, many of our customers purchase our web application security products to help them comply with the security standards developed and maintained by the Payment Card Industry Security Standards Council (the “PCI Council”), which apply to companies that process or store credit card information. Laws, regulations and industry standards are subject to drastic changes that, particularly in the case of industry standards, may arrive with little or no notice, and these could either help or hurt the demand for our products. If we are unable to adapt our products and services to changing regulatory standards in a timely manner, or if our products fail to assist our customers with their compliance initiatives, our customers may lose confidence in our products and could switch to competing solutions. In addition, if regulations and standards related to cyber-security are changed in a manner that makes them less onerous, our customers may view government and industry regulatory compliance as less critical to their businesses, and our customers may purchase fewer of our products and services, or none at all. In either case, our sales and financial results would suffer.

Real or perceived errors, failures or bugs in our products, particularly those that result in our customers experiencing security breaches, could adversely affect our reputation and business could be harmed.

Our products and services are very complex and have contained and may contain undetected defects or errors, especially when first introduced or when new versions are released. Defects in our products may impede or block network traffic or cause our products or services to fail to help secure business-critical data and applications. Defects in our products may lead to product returns and require us to implement design changes or software updates. Any defects or errors in our products, or the perception of such defects or errors, could result in:

• expenditure of significant financial and product development resources in efforts to analyze, correct, eliminate or work around errors or defects;

• loss of existing or potential customers or channel partners;

• delayed or lost revenue;

• delay or failure to attain market acceptance;

• delay in the development or release of new products or services;

• negative publicity, which will harm our reputation;

41

• warranty claims against us, which could result in an increase in our provision for doubtful accounts;

• an increase in collection cycles for accounts receivable or the expense and risk of litigation; and

• harm to our results of operations.

Data thieves are sophisticated, often affiliated with organized crime and operate large scale and complex automated attacks. In addition, their techniques change frequently and generally are not recognized until launched against a target. If we fail to identify and respond to new and complex methods of attack and to update our products to detect or prevent such threats in time to protect our customers’ business-critical data and applications, our business and reputation will suffer.

In addition, many of our customers use our products in applications that are critical to their businesses and may have a greater sensitivity to defects in our products than to defects in other, less critical, software products. An actual or perceived security breach or theft of the business-critical data of one of our customers, regardless of whether the breach is attributable to the failure of our products or services, could adversely affect the market’s perception of our security products. Despite our best efforts, there is no guarantee that our products will be free of flaws or vulnerabilities, and, even if we discover these weaknesses, we may be unable to correct them promptly, if at all. Our customers may also misuse our products, which could result in a breach or theft of business-critical data.

Although we have limitation of liability provisions in our standard terms and conditions of sale, they may not fully or effectively protect us from claims as a result of federal, state or local laws or ordinances or unfavorable judicial decisions in the United States or other countries. The sale and support of our products also entail the risk of product liability claims. We maintain insurance to protect against certain claims associated with the use of our products, but our insurance coverage may not adequately cover all claims asserted against us, or cover only a portion of such claims. In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation and divert management’s time and other resources.

False detection of security breaches or false identification of malicious sources could adversely affect our business.

Our cyber-security products may falsely detect threats that do not actually exist. For example, our ThreatRadar Reputation Services product relies on information on attack sources aggregated from third-party data providers who monitor global malicious activity originating from anonymous proxies, specific IP addresses, botnets and phishing sites. If the information from these data providers is inaccurate, the potential for false positives increases. These false positives, while typical in the industry, may affect the perceived reliability of our products and may therefore adversely impact market acceptance of our products. If our products and services restrict access to important databases, files or applications based on falsely identifying users or traffic as an attack or otherwise unauthorized, then our customers’ businesses could be adversely effected. Any such false identification of users or traffic could result in negative publicity, loss of customers and sales, increased costs to remedy any problem and costly litigation.

Our success in acquiring and integrating other businesses, products or technologies could impact our financial position.

In order to remain competitive, we may seek to acquire additional businesses, products or technologies, any of which could be material to our business, operating results and financial condition. For example, we acquired assets from Camouflage Software Inc. in December 2016, assets from Tomium Software, LLC in January 2014, acquired Skyfence Networks Ltd. (“Skyfence”) in February 2014 and acquired the remaining portion of Incapsula that we did not already own in March 2014. The environment for acquisitions in the markets in which we operate is very competitive and acquisition candidate purchase prices will likely exceed what we would prefer to pay, but may be required to pay in order to make an acquisition. Furthermore, we may not find suitable acquisition candidates, and acquisitions we complete may be difficult to successfully integrate into our overall business. Achieving the anticipated benefits of future acquisitions will depend in part upon whether we can integrate acquired operations, products and technology in a timely and cost-effective manner.

Acquisitions involve many risks, including the following:

• an acquisition may negatively impact our results of operations because it:

• may require us to incur charges and substantial debt or liabilities,

• may cause adverse tax consequences, substantial depreciation or deferred compensation charges,

• may result in acquired in-process research and development expenses or in the future may require the amortization, write-down or impairment of amounts related to deferred compensation, goodwill and other intangible assets, or

• may not generate sufficient financial return to offset acquisition costs;

• we may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, personnel or operations of any company that we acquire, particularly if key personnel of the acquired company decide not to work for us;

42

• an acquisition and integration process is complex, expensive and time consuming, and may disrupt our ongoing business, divert resources, increase our expenses and distract our management;

• an acquisition may result in a delay or reduction of customer purchases for both us and the company acquired due to customer uncertainty about continuity and effectiveness of service from either company;

• we may encounter difficulties in, or may be unable to, successfully sell any acquired products;

• we may obtain unanticipated or unknown liabilities or become exposed to unanticipated risks in connection with any acquisition; and

• an acquisition may involve the entry into geographic or business markets in which we have little or no prior experience.

If we are unable to effectively execute acquisitions, our business, financial condition and results of operations could be adversely affected.

From time to time, we may seek to divest or wind down portions of our business, both acquired or otherwise, that are no longer core to the business, which could materially affect our cash flows and results of operations.

On February 23, 2017, we completed the sale of the assets of our Skyfence business to Forcepoint LLC. The disposition of the Skyfence assets or any other future dispositions we make may involve risks and uncertainties, including our ability to sell these businesses on terms acceptable to us, or at all. Any such dispositions could result in disruption to other parts of our business, potential loss of employees, customers or revenue, exposure to unanticipated liabilities or result in ongoing obligations and liabilities to us following any such divestiture. For example, in connection with a disposition, we may enter into transition services agreements or other strategic relationships, including long-term research and development or sales arrangements, or agree to provide certain indemnities to the purchaser in any such transaction, which may result in additional expense and may adversely affect our financial condition and results of operations. In addition, dispositions may include the transfer or division of technology and/or the licensing of certain IP rights to third party purchasers, which could limit our IP rights or our ability to assert our IP rights against such purchasers or other third parties.

Our business and operations experienced rapid growth in 2015 and less growth in 2016.  If we do not appropriately manage any future growth, or are unable to improve our systems and processes, our operating results will be negatively affected.

We have experienced volatile growth over the last several years. We grew from 723 employees as of December 31, 2014 to 923 employees as of December 31, 2015 to 993 employees as of December 31, 2016. As of March 31, 2017, we had 936 employees. Changes in headcount have placed, and will continue to place, a strain on our employees, management systems and other resources. Managing our headcount has required, and will continue to require, significant expenditures and allocation of valuable management resources. We rely heavily on information technology systems to help manage critical functions, such as order processing, revenue recognition, financial forecasts and inventory and supply chain management. To manage any future growth effectively, we must continue to improve our information technology and financial infrastructure, operating and administrative systems and controls, and continue to manage headcount, capital and processes in an efficient manner. We may not be able to successfully implement improvements to these systems and processes in a timely manner.

In addition, we rely heavily on hosted SaaS technologies from third parties in order to operate critical functions of our business, including enterprise resource planning services from NetSuite Inc. and customer relationship management services from salesforce.com, inc. If these services become unavailable due to extended outages or interruptions or because they are no longer available on commercially reasonable terms or prices, our expenses could increase, our ability to manage our finances could be interrupted and our processes for managing sales of our products and services and supporting our customers could be impaired until equivalent services, if available, are identified, obtained and integrated, all of which could harm our business. Also, our systems and processes may not prevent or detect all errors, omissions or fraud. Our failure to improve our systems and processes, or their failure to operate in the intended manner, may result in our inability to manage the growth of our business and to accurately forecast our revenue, expenses and earnings, or to prevent certain losses. Our productivity and the quality of our products and services may also be adversely affected if we do not integrate and train our new employees quickly and effectively. Any future growth would add complexity to our organization and require effective coordination across our organization. If we fail to achieve the necessary level of efficiency in our organization as it grows or otherwise fail to manage any future growth effectively, we could incur increased costs, and experience a loss of customer and investor confidence in our internal systems and processes, any of which could result in harm to our business, results of operations and financial condition.

If we are unable to hire, retain and motivate qualified personnel, our business would suffer.

We depend on the continued contributions of our senior management and other key employees to execute on our business plan, and to identify and pursue new opportunities and product innovations. The loss of services of senior management or other key

43

employees, particularly Anthony Bettencourt, our Chairman, President and Chief Executive Officer, and Amichai Shulman, one of our founders and our Chief Technology Officer, could significantly delay or prevent the achievement of our development and strategic objectives.

Our future success depends, in part, on our ability to continue to attract and retain highly skilled technical, managerial, finance and other personnel, particularly in our sales and marketing, research and development and professional service departments. Any of our employees may terminate their employment at any time. Competition for highly skilled personnel is frequently intense, globally for sales personnel, as well as in the San Francisco Bay Area and in Tel Aviv, Israel, the locations in which we have a substantial presence and need for highly-skilled personnel. We may be unable to attract and retain suitably qualified individuals who are capable of meeting our growing technical, operational and managerial requirements, on a timely basis or at all, and we may be required to pay increased compensation in order to do so. If we are unable to attract and retain the qualified personnel we need to succeed, our business will suffer.

Volatility or lack of performance in our stock price may also affect our ability to attract and retain our key employees. Employees may be more likely to leave us if the shares or RSUs they hold have declined in value or if the exercise prices of the options that they hold exceed the market price of our common stock. If we are unable to retain our employees, our business, operating results and financial condition will be harmed.

Restructuring activities may not be as effective as anticipated.

In November 2016, we announced a restructuring plan and cost reduction initiatives to reduce expenses, streamline the organization, and reallocate resources to align more closely with future business needs. As a result of these actions, we incurred additional costs that had the effect of reducing operating margins. We cannot be sure that the cost reduction and streamlining initiatives will be successful in reducing our overall expenses as we expect, in the time frame that we expect, or that additional costs will not offset any such reductions or streamlining. If we are unable to realize the expected outcomes from the restructuring efforts, if our operating costs are higher than we expect or if we do not maintain adequate control of our costs and expenses, our business and operating results may be harmed.

Delays or interruptions in the manufacturing and delivery of SecureSphere appliances by our manufacturers may harm our business.

Our hardware appliances are built by two manufacturers in Taiwan and we rely principally on one of these two manufacturers to build the majority of our hardware appliances. We only recently began using a second manufacturer and expect the few entry level hardware products that they manufacture for us to be released in May 2017.  Our primary reliance on a single manufacturer for a majority of our hardware revenue, particularly a foreign manufacturer, involves several risks, including a potential inability to obtain an adequate supply of appliances and limited control over pricing, quality and timely delivery of products. In addition, replacing this manufacturer may be difficult and could result in an inability or delay in obtaining products. As a result, we may be unable to fulfill customer orders and our operating results may fluctuate from period to period, particularly if a disruption occurs near the end of a fiscal period.

Our manufacturers’ ability to timely manufacture and ship our appliances in large quantities depends on a variety of factors. They rely on a limited number of sources for the supply of functional components, such as semiconductors, printed circuit boards and, to a lesser extent, hard disk drives. Functional component supply shortages or delays could prevent or delay the manufacture and shipment of appliances and, in the event of shortages or delays, we may not be able to procure alternative functional components on similar pricing terms, if at all. In addition, contractual restrictions or claims for infringement of intellectual property rights may restrict our manufacturers’ use of certain components. These restrictions or claims may require our manufacturers to utilize alternative components or obtain additional licenses or technologies, and may impede their ability to manufacture and deliver appliances on a timely or cost-effective basis. If at some point, either manufacturer is no longer financially viable, we may lose our source of supply with little or no notice or recourse. Further, even if quality products are timely manufactured, delays in shipping may occur, resulting in delayed satisfaction of a primary revenue recognition criterion.

In the event of an interruption from either manufacturer or any quality control issues with a manufacturer, we may be unable to develop alternate sources in a timely manner. If we are unable to procure our appliances in quantities sufficient to meet our requirements, we will not be able to deliver products to our channel partners and customers, which would materially and adversely affect present and future sales.

44

A failure to manage excess inventories or inventory shortages could result in decreased revenue and gross margins and harm our business.

We purchase products from our manufacturing partners outside of, and in advance of, reseller or customer orders and hold our products in inventory. If we fail to accurately predict demand and as a result our manufacturers maintain insufficient hardware or component inventory or excess inventory, we may be unable to timely deliver products to our distributors or customers or may have substantial inventory expense. Because our channel partners do not purchase our products in advance of customer orders, our difficulty in accurately forecasting demand for our hardware products may be exacerbated. There is a risk we may incorrectly forecast demand and may be unable to sell excess products ordered from our manufacturing partners. Inventory levels in excess of customer demand may result in inventory write-downs, and the sale of excess inventory at discounted prices could significantly impair our brand image and have an adverse effect on our financial condition and results of operations.

Conversely, if we underestimate demand for our products or if our manufacturing partners fail to supply products we require in a timely manner, we may experience inventory shortages. Inventory shortages might delay shipments to resellers, distributors and customers or cause us to lose sales. Further, as the size of individual orders increases, the risk that we may be unable to deliver unforecasted orders also increases, particularly near the end of quarterly periods. These shortages may diminish the loyalty of our channel partners or customers.

The difficulty in forecasting demand also makes it difficult to estimate our future financial condition and results of operations from period to period. A failure to accurately predict the level of demand for our products could adversely affect our net revenue and net income, and we are unlikely to forecast such effects with any certainty in advance.

We have operations outside of the United States and a significant portion of our customers and suppliers are located outside of the United States, which subjects us to a number of risks associated with conducting international operations.

We market and sell our products throughout the world and have personnel in many parts of the world. In addition, we have sales offices and research and development facilities outside the United States and we conduct, and expect to continue to conduct, a significant amount of our business with companies that are located outside the United States, particularly in Israel, Asia, Europe and Latin America. We also source our components for our products and deliver our services from various geographical regions. Therefore, we are subject to risks associated with having international sales and worldwide operations, including:

• challenges caused by distance, language, cultural and ethical differences and the competitive environment;

• multiple and conflicting laws and regulations, including complications due to unexpected changes in these laws and regulations;

• trade and foreign exchange restrictions;

• foreign currency exchange fluctuations and foreign exchange controls;

• economic, social or political instability in foreign markets;

• greater difficulty in enforcing contracts, accounts receivable collection and longer collection periods;

• changes in regulatory requirements;

• difficulties and costs of staffing and managing foreign operations or relationships with channel partners;

• the uncertainty and limitation of protection for intellectual property rights in some countries;

• costs of complying with U.S. and foreign laws and regulations, including import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on our ability to sell our products in certain foreign markets, and the risks and costs of non-compliance or complaints of non-compliance;

• heightened risks of unethical, unfair or corrupt business practices, actual or claimed, in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, and irregularities in, financial statements;

• the potential that our operations in the U.S. may limit the acceptability of our products to some foreign customers, and that our international sourcing and operations may limit the acceptability of our products to some U.S. customers;

• the potential for acts of terrorism, hostilities or war;

• management communication and integration problems resulting from cultural differences and geographic dispersion; and

• multiple and possibly overlapping tax structures.

45

Our product and service sales may be subject to foreign governmental regulations, which vary substantially from country to country and change from time to time. Failure to comply with these regulations could adversely affect our business. Violations of laws or key control policies by our employees, contractors, channel partners or agents could result in delays in revenue recognition, financial reporting misstatements, fines, penalties or the prohibition of the importation or exportation of our products and services and could have a material adverse effect on our business and results of operations.

A portion of our revenue is generated by sales to government entities and such sales are subject to a number of challenges and risks.

Sales to U.S. and foreign federal, state and local governmental agency customers have accounted for approximately 13% of our bookings for the year ended December 31, 2015, 11% for the year ended December 31, 2016 and 12% of our bookings for the three months ended March 31, 2017, and sales to government entities may increase. Sales into government entities are subject to a number of risks. Selling to government entities can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense without any assurance that we will complete a sale. Governments and governmental agencies may delay or refrain from purchasing our products and services in the future for the following reasons, which would have an adverse effect on our business, financial condition and results of operations:

• changes in fiscal or contracting policies or decreases and uncertainties in available government funding;

• changes in government programs or applicable requirements;

• the adoption of new laws or regulations or changes to existing laws or regulations;

• changes in political or social attitudes with respect to security issues; and

• potential delays or changes in the government appropriations process, including actions such as spending freezes implemented to address political or fiscal policy concerns.

.

Most of our sales to government entities have been made indirectly through our channel partners. Government entities may have contractual or other legal rights to terminate contracts with our distributors and resellers for convenience or due to a default, and any such termination may adversely impact our results of operations.

In addition, for purchases by the U.S. federal government, we must comply with laws and regulations relating to U.S. federal government contracting, which affect how we and our channel partners do business in connection with U.S. federal agencies. These laws and regulations may impose added costs on our business, and failure to comply with these or other applicable regulations and requirements, including non-compliance in the past, could lead to claims for damages from our channel partners, penalties, termination of contracts and suspension or debarment from government contracting for a period of time. Any such damages, penalties, disruption or limitation in our ability to do business with the U.S. federal government may adversely impact our results of operations.

Our business in countries with a history of corruption and transactions with foreign governments increase the risks associated with our international activities.

As we operate and sell internationally, we are subject to the U.S. Foreign Corrupt Practices Act, or the FCPA, and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties for the purpose of obtaining or retaining business. We have operations, deal with and make sales to governmental customers in countries known to experience corruption, particularly certain emerging countries in Africa, East Asia, Eastern Europe, South America and the Middle East. Our activities in these countries create the risk of unauthorized payments or offers of payments by one of our employees, consultants, sales agents or channel partners that could be in violation of various anti-corruption laws, even though these parties may not be under our control. While we have implemented safeguards to prevent these practices by our employees, consultants, sales agents and channel partners, our existing safeguards and any future improvements to our processes may prove to be less than effective, and our employees, consultants, sales agents or channel partners may engage in conduct for which we might be held responsible. Violations of the FCPA may result in severe criminal or civil sanctions, including suspension or debarment from U.S. government contracting, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition.

46

We rely significantly on revenue from maintenance and support which may decline and, because we recognize revenue from such services over the term of the relevant service period, downturns or upturns in sales are not immediately reflected in full in our operating results.

Our maintenance and support revenue accounted for 28% of our total revenue for 2015, 30% of our total revenue for 2016 and 30% of our total revenue for the three months ended March 31, 2017. Sales of new maintenance and support contracts or renewal of such services contracts may decline or fluctuate as a result of a number of factors, including customers’ level of satisfaction with our products and services, the prices of our products and services, the prices of products and services offered by our competitors or reductions in our customers’ spending levels. If our sales of new or renewal services contracts decline, our revenue or revenue growth may decline and our business will suffer. In addition, we recognize services revenue ratably over the term of the relevant service period, which is usually one to three years. As a result, much of the revenue we report each quarter is the recognition of deferred revenue from services contracts entered into during previous quarters. Consequently, a decline in new or renewal services contracts in any one quarter will not be fully reflected in revenue in that quarter, but will negatively affect our revenue in future quarters. Accordingly, the effect of significant downturns in new or renewal sales of our services would not be reflected in full in our results of operations until future periods.

If we are unable to increase sales to large customers, our results of operations may suffer.

We continuously seek to increase sales of our products to large enterprises, managed security service providers (“MSSPs”), cloud hosting providers and government entities. Sales to large enterprises, MSSPs, cloud hosting providers and government entities involve risks that may not be present, or are present to a lesser extent, in sales to small to mid-sized entities. These risks include:

• preexisting relationships with larger, entrenched providers of security solutions who have access to key decision makers within the organization and who also have the ability to bundle competing products with a broader product offering;

• increased purchasing power and leverage held by large customers in negotiating contractual arrangements with us;

• more stringent requirements in our support service contracts, including stricter support response times, and increased penalties for any failure to meet support requirements; and

• longer sales cycles, including lengthening of sales cycles due to competitive pressures or the evaluation by customers of both our cloud security solutions from Incapsula and our on-premise products as potential alternatives, and the associated risk that substantial time and resources may be spent on a potential customer who elects not to purchase our products and services.

In addition, product purchases by large enterprises, MSSPs, cloud hosting providers and government entities are frequently subject to budget constraints, multiple approvals, and unplanned administrative, processing and other delays. Further, large enterprises, MSSPs, cloud hosting providers and government entities typically have longer implementation cycles; require greater product functionality and scalability and a broader range of services; demand that vendors take on a larger share of risks; sometimes require acceptance provisions that can lead to a delay in revenue recognition; and expect greater payment flexibility from vendors. Additionally, the ongoing increase in the number of security vendors competing for these entities’ business, who in some cases use overlapping or confusing messaging, may combine with these factors to extend the sales cycles for our products and services. All these factors can add risk to doing business with these customers. If our sales expectations for large customers do not materialize in a particular quarter or at all, then our business, financial condition and results of operations could be materially and adversely affected.

If our existing and potential customers migrate to hosted, cloud-based data centers that do not deploy our products, our revenue could suffer.

The majority of our current sales are made through a model in which our channel partners sell our cyber-security solutions to large enterprise customers that operate their own data centers and have the ability to choose the cyber-security solutions and configurations to fit their environment. If our large enterprise customers and potential customers choose to outsource the hosting of their data centers to large, multi-tenancy hosting providers like Rackspace Hosting, Inc., Amazon Web Services (“AWS”) and Savvis, Inc. (dba CenturyLink Technology Solutions), they may not be able to choose what cyber-security solutions are deployed in these hosted environments, and our current sales model may not be effective. Although we work with large hosting services providers like Rackspace Hosting, Inc., AWS and Savvis, Inc., to integrate our cyber-security solutions into their hosting environments so that our solutions may be offered to their hosting customers, we cannot guarantee that all such hosting service providers will adopt our solutions, offer them as a choice to their customers or promote our solutions over those of our competitors. Even if these large hosting services providers integrate our cyber-security solutions into their hosting environments and promote our solutions, they may be able to negotiate larger discounts than individual enterprise customers and, consequently, the average selling price of our products may decrease and our revenue would suffer. Alternatively, they may offer services based on our competitors’ products at lower cost or bundled with other services that we do not offer, and their customers may choose those services even if they would otherwise choose our products if making a decision on a stand-alone basis.

47

We are exposed to fluctuations in currency exchange rates, which could negatively affect our financial condition and results of operations.

Our functional and reporting currency is the U.S. dollar and we generate a majority of our revenue in U.S. dollars. However, in 2015, 2016 and the three months ended March 31, 2017, we incurred approximately 27%, 38% and 30%, respectively, of our expenses outside of the United States in foreign currencies, primarily the Israeli shekel, principally with respect to salaries and related personnel expenses associated with our Israeli operations. The exchange rate between the U.S. dollar and foreign currencies has fluctuated substantially in recent years and may continue to fluctuate substantially in the future. We expect that a majority of our revenue will continue to be generated in U.S. dollars for the foreseeable future and that a significant portion of our expenses, including personnel costs, as well as capital and operating expenditures, will continue to be denominated in Israeli shekels. Our results of operations may be adversely affected by foreign exchange fluctuations.

We use forward foreign exchange contracts to hedge or mitigate the effect of changes in foreign exchange rates on our operating expenses denominated in certain foreign currencies. However, this strategy cannot eliminate our exposure to foreign exchange rate fluctuations and involves costs and risks of its own, such as cash expenditures, ongoing management time and expertise, external costs to implement the strategy and potential accounting implications. Additionally, our hedging activities may contribute to increased losses as a result of volatility in foreign currency markets.

Assertions by third parties of infringement or other violations by us of their intellectual property rights could result in significant costs and substantially harm our business and operating results.

Patent and other intellectual property disputes are common in the IT security industry. Some companies in the IT security industry, including some of our competitors, own large numbers of patents, copyrights, trademarks and trade secrets, which they may use to assert claims against us. This disparity between our patent portfolio and the patent portfolios of our most significant competitors may increase the risk that they may sue us for patent infringement and may limit our ability to counterclaim for patent infringement or settle through patent cross-licenses. In addition, there are patent holding companies or other patent owners who are solely or primarily in the business of building portfolios of patents and asserting them against operating companies, often with little merit, and who have no relevant product revenue so that potential assertions of our patents (and potential patents) against such companies may provide little or no deterrence. Third parties have asserted and may in the future assert claims of infringement, misappropriation or other violations of intellectual property rights against us. For example, in May 2010, F5 Networks, Inc., an IT infrastructure company that competes with us in the web application firewall market, filed a lawsuit against us alleging patent infringement. In September 2010, we filed a counterclaim alleging patent infringement by F5 Networks, Inc. In February 2011, we entered into a settlement and license agreement with F5 Networks, Inc., which dismissed the litigation. Third parties may also assert such claims against our customers or channel partners whom we typically indemnify against claims that our products infringe, misappropriate or otherwise violate the intellectual property rights of third parties. As the numbers of products and competitors in our market increase and overlaps occur, claims of infringement, misappropriation and other violations of intellectual property rights may increase. Also, to the extent we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited or have divulged proprietary or other confidential information.

We cannot assure you that we are not infringing or otherwise violating any third-party intellectual property rights. Further, any claim of infringement, misappropriation or other violation of intellectual property rights by a third party, even those without merit, could be asserted against us, cause us to incur substantial costs defending against the claim and could distract our management from our business. An adverse outcome of an IP dispute may require us to pay substantial damages, including treble damages, if we are found to have willfully infringed a third party’s patents or copyrights; cease making, licensing or using solutions that are alleged to infringe or misappropriate the intellectual property of others; expend additional development resources to attempt to redesign our products or services or otherwise to develop non-infringing technology, which may not be successful; enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies or intellectual property rights; and indemnify our customers and partners. Royalty or licensing agreements, if required or desirable, may be unavailable on terms acceptable to us, or at all, or may require significant royalty payments and other expenditures. In addition, some licenses may be non-exclusive, and therefore our competitors may have access to the same technology licensed to us. Any of these events could seriously harm our business, financial condition and results of operations.

We rely on the availability of licenses to third-party software and other intellectual property, the loss of which could increase our costs and delay software shipments.

Many of our products and services include software or other intellectual property licensed from third parties, and we also use software and other intellectual property licensed from third parties in our business. This exposes us to risks over which we may have little or no control. For example, a licensor may have errors or defects in its products that harm our business, may have difficulties keeping up with technological changes or may stop supporting the software or other intellectual property that it licenses to us. Also, it will be necessary in the future to renew licenses, expand the scope of existing licenses or seek new licenses, relating to various aspects of these products and services, or otherwise relating to our business, which may result in increased license fees. In addition, a direct or

48

indirect licensor may assert that we or our customers are in breach of the terms of a license, which could, among other things, give such licensor the right to terminate a license or seek damages from us, or both. Moreover, the inclusion in our products and services of software or other intellectual property licensed from third parties on a nonexclusive basis could limit our ability to differentiate our products from those of our competitors.

Licensed software may not continue to be available on commercially reasonable terms, or at all. While we believe that there are currently adequate replacements for third-party software, any loss of the right to use any of this software could result in delays in producing or delivering our software until equivalent technology is identified and integrated, which delays could harm our business. Our business would be disrupted if any of the software we license from others or functional equivalents of this software were either no longer available to us or no longer offered to us on commercially reasonable terms. In either case, we would be required to either redesign our products to function with software available from other parties or to develop these components ourselves, which would result in increased costs and could result in delays in our product shipments and the release of new product offerings. Furthermore, we might be forced to limit the features available in our current or future products. If we fail to maintain or renegotiate any of these software licenses, we could face significant delays and diversion of resources in attempting to license and integrate a functional equivalent of the software. Any of these events could have a material adverse effect on our business, financial condition and results of operations.

Our products contain “open source” software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business.

Certain of our products are distributed with software licensed under “open source” licenses. Some of these licenses contain requirements that we make available source code for modifications or derivative works we create based upon the open source software, and that we license these modifications or derivative works under the terms of a particular open source license or subject to certain license requirements. If we combine our proprietary software with open source software in a certain manner, we could, under certain provisions of the open source licenses, be required to release the source code of our proprietary software. In addition to risks related to license requirements, usage of open source software can subject us to greater risks than use of third-party commercial software, as licensors of open source software generally do not provide warranties or any indemnification for infringement of third party intellectual property rights. We have established processes to help alleviate these risks, including a review process for screening requests from our development organization for the use of open source software, but we cannot be sure that all open source software is submitted for approval prior to use in our products. In addition, open source license terms may be ambiguous and many of the risks associated with use of open source software cannot be eliminated, and could, if not properly addressed, negatively affect our business. If we were found to have inappropriately used open source software, we might be required to re-engineer our products, to release proprietary source code, to discontinue the sale of our products in the event re-engineering could not be accomplished on a timely basis or to take other remedial action that may divert resources away from our development efforts, any of which could adversely affect our business, operating results and financial condition. Disclosing the source code of our proprietary software could make it easier for malicious third parties to discover vulnerabilities in our cyber-security products and allow our competitors to create similar products with decreased development effort and time. Any of these events could have a material adverse effect on our reputation, business, financial condition and results of operations.

Failure to protect our proprietary technology and intellectual property rights could substantially harm our business and operating results.

Our success depends, in part, on our ability to protect proprietary methods and technologies that we develop under the intellectual property laws of the United States and other countries, so that we can prevent others from using our inventions and proprietary information. We attempt to protect our intellectual property under patent, trademark, copyright and trade secret laws, and through a combination of confidentiality procedures, contractual provisions and other methods, all of which offer only limited protection. If we fail to protect our intellectual property rights adequately, our competitors might gain access to our technology, and our business might be harmed. In addition, defending our intellectual property rights might entail significant expenses. Any of our patents, copyrights, trademarks or other intellectual property rights may be challenged by others or invalidated through administrative process or litigation. Imperva and its subsidiaries had 33 issued patents and 17 patent applications pending as of March 31, 2017 in the United States. Our issued patents, which are limited in number compared to some of our competitors, may not provide us with any competitive advantages or may be challenged by third parties, and our patent applications may never be granted at all. Additionally, the process of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. Further, for strategic and other reasons we may choose not to seek patent protection for certain innovations and may choose not to pursue patent protection in certain jurisdictions. Even if issued, there can be no assurance that our patents will adequately protect our intellectual property, as the legal standards relating to the validity, enforceability and scope of protection of patent and other intellectual property rights are uncertain.

Any patents that are issued may subsequently be invalidated or otherwise limited, enabling other companies to better develop products that compete with ours, which could adversely affect our competitive business position, business prospects and financial condition. In addition, issuance of a patent does not guarantee that we have a right to practice the patented invention. Patent

49

applications in the United States are typically not published until 18 months after filing, or in some cases not at all, and publications of discoveries in industry-related literature lag behind actual discoveries. We cannot be certain that we were the first to make the inventions claimed in our issued patents or pending patent applications or otherwise used in our products, that we were the first to file for protection in our patent applications, or that third parties do not have blocking patents that could be used to prevent us from marketing or practicing our patented products or technology. Effective patent, trademark, copyright and trade secret protection may not be available to us in every country in which our products and services are available. The laws of some foreign countries may not be as protective of intellectual property rights as those in the United States, and mechanisms for enforcement of intellectual property rights may be inadequate. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property.

We might be required to spend significant resources to monitor and protect our intellectual property rights. We may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights. Any litigation, whether or not it is resolved in our favor, could result in significant expense to us and divert the efforts of our technical and management personnel, which may adversely affect our business, operating results and financial condition.

We may become subject to claims for remuneration or royalties for assigned service invention rights by our Israeli employees, which could result in litigation and adversely affect our business.

We have entered into assignment of invention agreements with our Israeli employees pursuant to which such individuals agree to assign to us all rights to any inventions created in the scope of their employment or engagement with us. A significant portion of our intellectual property has been developed by our Israeli employees in the course of their employment for us. Under the Israeli Patents Law, 5727-1967 (the “Patents Law”), inventions conceived by an employee during the scope of his or her employment with a company are regarded as “service inventions,” which belong to the employer, absent a specific agreement between the employee and employer giving the employee service invention rights. The Patents Law also provides that if there is no such agreement between an employer and an employee, the Israeli Compensation and Royalties Committee (the “Committee”), a body constituted under the Patents Law, shall determine whether the employee is entitled to remuneration for his or her inventions. The Committee has previously held that employees may be entitled to remuneration for intellectual property that they develop during their service for a company despite their explicit waiver of such right. In a recent decision, however, the Committee overturned its position and upheld that an employee’s waiver of his right to remuneration is valid and binding. The plaintiff in this last case filed a petition with the Israeli Supreme Court requesting to remand the case to the Committee for a second review, but the Israeli Supreme Court decided on July 8, 2015 that the Committee acted within its administrative authority and that it would not intervene in the Committee’s decision. Even though the decision still stands, the Committee’s inconsistency raises doubt as to the outcome in different sets of circumstances. Thus, although our Israeli employees have agreed to assign to us service invention rights, we may face claims demanding remuneration in consideration for assigned inventions. As a consequence of such claims, we could be required to pay additional remuneration or royalties to our current and/or former Israeli employees, or be forced to litigate such claims, which could negatively affect our business.

Confidentiality agreements with partners, employees, consultants and others may not adequately prevent disclosure of trade secrets and other proprietary information.

In order to protect our proprietary technology, processes and methods, we rely in part on confidentiality agreements and other restrictions with our customers, partners, employees, consultants and others. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. Despite our efforts to protect our proprietary technology, processes and methods, unauthorized parties may attempt to misappropriate, reverse engineer or otherwise obtain and use them. We may be unable to determine the extent of any unauthorized use or infringement of our products, technologies or intellectual property rights. In addition, others may independently develop identical or substantially similar technology and in these cases we would not be able to assert any trade secret rights against those parties. Moreover, policing unauthorized use of our technologies, products and intellectual property is difficult, expensive and time-consuming, particularly in foreign countries where the laws may not be as protective of intellectual property rights as those in the United States and where mechanisms for enforcement of intellectual property rights may be weak. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets.

Our business activities are subject to various restrictions under U.S. export controls and trade and economic sanctions laws, including the U.S. Commerce Department’s Export Administration Regulations and economic and trade sanctions regulations maintained by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”). If we fail to comply with these laws and

50

regulations, we could be subject to civil or criminal penalties and reputational harm. U.S. export control laws and economic sanctions laws also prohibit certain transactions with U.S. embargoed or sanctioned countries, governments, persons and entities.

Many of our products incorporate encryption technology and may be exported outside the U.S. only if we obtain an export license or qualify for an export license exception. Compliance with applicable regulatory requirements regarding the export of our products may prevent our customers with international operations from deploying our products throughout their global systems or, in some cases, prevent the export of our products to some countries altogether. Further, various countries regulate the import of encryption technology and appliance-based products and have enacted laws that could limit our ability to distribute products, could create delays in the introduction of our products in those countries or could limit our customers’ ability to implement our products in those countries.

U.S. export control laws and economic sanctions prohibit the shipment of certain products to U.S. embargoed or sanctioned countries, governments and persons. While we and our channel partners take precautions to prevent our products from being shipped to, downloaded or accessed by U.S. sanctions targets, our products could be shipped to, downloaded or accessed by persons located in countries that are the subject of U.S. embargoes despite our efforts. Any such shipment or access could have negative consequences, including government investigations, penalties and reputational harm. For example, in 2015, we discovered that some of our free downloadable software evaluation products may have been downloaded by a limited number of persons located in countries that are the subject of U.S. embargoes. We terminated the unauthorized accounts, filed an initial disclosure with the U.S. Commerce Department’s Bureau of Industry and Security (“BIS”) and with OFAC and filed final reports with BIS and OFAC on September 2, 2015 and September 22, 2015, respectively. We have implemented new screening measures designed to prevent users in embargoed countries and prohibited persons from purchasing, downloading or accessing our free downloadable evaluation software or other products or services. OFAC issued a cautionary letter on October 14, 2015 as a final enforcement response to the apparent violations and did not impose any monetary penalties. BIS issued a warning letter on October 5, 2016 in response to the our voluntary self-disclosure and closed the matter, having determined not to take any further action.  Even though we take precautions to prevent transactions with U.S. sanctions targets, any such precautions, or any new precautions we may implement in the future, may be ineffective. As a result, there is risk that in the future we could provide our products to or permit our products to be downloaded or accessed by such targets despite these precautions. This could result in negative consequences to us, including government investigations, penalties and reputational harm.

In the future, there may be changes in our products or changes in export and import regulations or economic sanctions. Similarly, there may be shifts in the enforcement or scope of existing regulations or restrictions or changes in the countries, governments, persons or technologies targeted by such regulations and restrictions. Such changes and shifts may create delays in the introduction and sale of our products in international markets, could result in decreased use of our products or, in some cases, prevent the sale of our products to certain countries, governments or persons altogether, including by current customers or potential customers. Any such limitation, delay, restriction or reduction could adversely affect our business, financial condition, results of operations and prospects.

Conditions in Israel may limit our ability to develop and sell our products. This could result in a decline in revenue.

Our principal research and development facilities are located in Israel. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its neighboring countries, as well as incidents of civil unrest, and a number of state and non-state actors have publicly committed to its destruction. Political, economic and military conditions in Israel could directly affect our operations. We could be adversely affected by any major hostilities involving Israel, including acts of terrorism or any other hostilities involving or threatening Israel, the interruption or curtailment of trade between Israel and its trading partners, a significant increase in inflation or a significant downturn in the economic or financial condition of Israel. Any on-going or future violence between Israel and the Palestinians, including a resumption of the conflict in Gaza, armed conflicts, terrorist activities, tension along the Israeli borders or with other countries in the region, including Iran, or political instability in the region could disrupt international trading activities in Israel and may materially and negatively affect our business and could harm our results of operations.

Certain countries, as well as certain companies and organizations, continue to participate in a boycott of Israeli firms, firms with large Israeli operations and others doing business with Israel and Israeli companies. In addition, such boycott, restrictive laws, policies or practices may change over time in unpredictable ways, and could, individually or in the aggregate, have a material adverse effect on our business in the future.

Some of our employees in Israel are obligated to perform annual military reserve duty in the Israel Defense Forces, depending on their age and position in the armed forces. Furthermore, they may be called to active reserve duty at any time under emergency circumstances for extended periods of time. For example, in 2016, approximately 90 of our employees in Israel were called for active reserve duty, each serving for an average of nine to ten days. Our operations could be disrupted by the absence, for a significant period, of one or more of our executive officers or key employees due to military service, and any significant disruption in our operations could harm our business.

51

Our internal network system and website may be subject to intentional disruption that could adversely impact our reputation and future sales.

Because we are a leading provider of cyber-security products, hackers and others may try to access our data or compromise our systems. Similarly, experienced computer programmers may attempt to penetrate our network security or the security of our website and cause interruptions of our services. Because the techniques used by hackers to access or sabotage networks change frequently and may not be recognized until launched against a target, we may be unable to anticipate these techniques. The theft and/or unauthorized use or publication of our trade secrets and other confidential business information as a result of such an event could adversely affect our competitive position, reputation, brand and future sales of our products, and could impair our ability to operate our business, including our ability to provide subscription or maintenance and support services to our customers. We could suffer monetary and other losses and reputational harm in the event of such incidents.

Outages, interruptions or delays in hosting services could impair the delivery of our cloud-based security services and harm our business.

We operate infrastructure that supports our ThreatRadar and Security Operations Center (“SOC”) services and use third party hosting facilities for certain ThreatRadar services. Despite precautions taken within our own internal network and at these third party facilities, the occurrence of a natural disaster or an act of terrorism or other unanticipated problems could result in lengthy interruptions in our services.

The cloud-based security services that we provide through our subsidiary, Incapsula, are operated from a network of third party facilities that host the software and systems that operate these security services. Any damage to, or failure of, our internal systems or systems at third party hosting facilities could result in outages or interruptions in our cloud-based services. Outages or interruptions in our cloud-based security services may cause our customers and potential customers to believe our cloud-based security services are unreliable or suffer from perceived vulnerabilities, cause us to issue credits or pay penalties, cause customers to terminate their subscriptions and adversely affect our renewal rates and our ability to attract new customers, ultimately harming our business and revenue.  Our Incapsula service has experienced outages in the past and we may continue to experience such outages in the future.

Changes in our provision for income taxes or adverse outcomes resulting from examination of our income tax returns could adversely affect our results.

We are subject to income taxation in the United States and numerous foreign jurisdictions. Determining our provision for income taxes requires significant management judgment. In addition, our provision for income taxes is subject to volatility and could be adversely affected by many factors, including, among other things, changes to our operating or holding structure, changes in the amounts of earnings in jurisdictions with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities and changes in tax laws. We are subject to ongoing tax examinations in various jurisdictions. For example, we are currently under audit by the Israeli Tax Authority. Tax authorities may disagree with our intercompany charges, cross-jurisdictional transfer pricing, determinations regarding the inclusion of stock-based compensation expense as part of a cost-plus arrangement or other matters and assess additional taxes. While we regularly assess the likely outcomes of these examinations to determine the adequacy of our provision for income taxes, there can be no assurance that the outcomes of such examinations will not have a material impact on our operating results and cash flows.

Significant judgment is required to determine the recognition and measurement attributes prescribed in Accounting Standards Codification (“ASC”) 740-25 (formerly referred to as Financial Interpretation No. 48, “Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109”). In addition, ASC 740-25 applies to all income tax positions, including the potential recovery of previously paid taxes, which if settled unfavorably could adversely impact our provision for income taxes or additional paid-in capital. In addition, we are subject to the continuous examination of our income tax returns by the U.S. Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from these continuous examinations will not have an adverse effect on our results of operations.

Our ability to use our net operating loss carryforwards may be subject to limitations and may result in increased future tax liability to us.

Generally, a change of more than 50% in the ownership of a corporation’s stock, by value, over a three-year period constitutes an ownership change for U.S. federal and applicable state income tax purposes. An ownership change may limit a company’s ability to use its net operating loss carryforwards attributable to the period prior to such change. We have not performed a detailed analysis to determine whether an ownership change under Section 382 of the Internal Revenue Code of 1986, as amended, has occurred after each of our previous private placements of preferred stock or after the issuance of shares of common stock in connection with our initial public offering and follow-on public offering. In the event we have undergone an ownership change under Section 382, if we earn net

52

taxable income, our ability to use our pre-change net operating loss carryforwards to offset U.S. federal taxable income may become subject to limitations, which could potentially result in increased future tax liability to us.

Our business is subject to the risks of earthquakes, fire, power outages, floods and other catastrophic events, and to interruption by manmade events such as terrorist attacks.

A significant natural disaster, such as an earthquake, fire or a flood, or a significant power outage could have a material adverse impact on our business, financial condition and results of operations. Our corporate headquarters are located in the San Francisco Bay Area, a region known for seismic activity, on land reclaimed from the bay that is susceptible to high liquefaction risk in the event of an earthquake. In addition, natural disasters could affect our manufacturing vendors or logistics providers’ ability to perform services such as manufacturing products on a timely basis and assisting with shipments on a timely basis. In the event our service providers’ information technology systems or manufacturing or logistics abilities are hindered by any of the events discussed above, shipments could be delayed, resulting in missing financial targets, such as revenue and shipment targets, for a particular quarter. Further, if a natural disaster occurs in a region from which we derive a significant portion of our revenue, customers in that region may delay or forego purchases of our products, which may materially and adversely impact our results of operations for a particular period. In addition, acts of terrorism could cause disruptions in our business or the business of our manufacturer, logistics providers, partners, customers or the economy as a whole. Given our typical concentration of sales at each quarter end, any disruption in the business of our manufacturer, logistics providers, partners or customers that impacts sales at the end of our quarter could have a significant adverse impact on our quarterly results. All of the aforementioned risks may be augmented if the business continuity plans for us and our suppliers prove to be inadequate. To the extent that any of the above results in delays or cancellations of customer orders, or the delay in the manufacture, deployment or shipment of our products, our business, financial condition and results of operations would be adversely affected.

Risks Related to Ownership of our Common Stock

If we fail to maintain an effective system of disclosure controls and procedures and internal controls over financial reporting, our ability to produce accurate financial statements or comply with applicable regulations could be impaired.

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the rules and regulations of the NASDAQ Stock Market LLC. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly and place strains on our personnel, systems and resources.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our current controls and any new controls that we develop may become inadequate because of changes in conditions, and the degree of compliance with the policies or procedures may deteriorate. In addition, weaknesses in our internal controls over financial reporting may be discovered in the future. Our filings with the SEC are subject to periodic review by the SEC, and our auditors are subject to periodic inspection by the Public Company Accounting Oversight Board. Any failure to maintain effective controls over financial reporting, any difficulties encountered in the implementation of additional controls or the improvement of existing controls, or any issues that emerge as a result of regulatory review, could harm our operating results or cause us to fail to meet our reporting obligations and may result in a revision or restatement of our prior period financial statements. Any failure to maintain effective internal controls also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in our annual reports filed with the SEC under Section 404 of the Sarbanes-Oxley Act. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock.

For example, in connection with the review of our unaudited interim condensed consolidated financial statements in our Form 10-Q filed with the SEC on November 7, 2014, management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our disclosure controls and procedures as of September 30, 2014. Based on that assessment, management concluded that our disclosure controls and procedures were not effective as of September 30, 2014, because of a material weakness in internal control over financial reporting related to insufficient oversight and review controls to ensure the proper determination of stock-based compensation expense for certain complex equity awards that were not issued in the ordinary course. While these control deficiencies were remediated, we continue to identify risks and make improvements to our internal controls and we cannot assure you that additional material weaknesses in our internal control over financial reporting will not be identified in the future.

In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended significant resources, and anticipate that we will continue to add personnel and provide significant

53

management oversight, which involve substantial accounting-related costs. Any failure to maintain the adequacy of our internal controls, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and could materially impair our ability to operate our business. In the event that we are not able to continue to demonstrate compliance with Section 404 of the Sarbanes-Oxley Act in a timely manner, that our internal controls are perceived as inadequate or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results and our stock price could decline. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NASDAQ Global Select Market.

We also have implemented elements of a disaster recovery/business continuity plan for our accounting and related information technology systems but we have not yet implemented a complete disaster recovery/business continuity plan that covers all of our operations. If the elements that we have developed and plan to develop in the future prove inadequate in the circumstances of a particular disaster or other business continuity event, our ability to maintain timely accounting and reporting may be materially impaired.

Market volatility may affect our stock price and the value of your investment

The trading prices of the securities of technology companies generally, and of our stock in particular, have been highly volatile. The market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot predict or control, including:

• announcements of new products, services or technologies, commercial relationships, acquisitions, dispositions, strategic partnerships, joint ventures, capital commitments or other events by us or our competitors;

• fluctuations in operating performance and in stock market prices and trading volumes of securities of other technology companies generally, or those in our industry in particular;

• general market conditions and overall price and volume fluctuations in U.S. equity markets;

• actual or anticipated variations in our operating results, or the operating results of our competitors;

• the financial and other projections we may provide to the public, any changes in these projections or our failure to meet these projections or changes in our financial guidance or securities analysts’ estimates of our financial performance;

• failure of securities analysts to maintain coverage of us, changes in financial or other estimates by any securities analysts who follow us, or our failure to meet these estimates or the expectations of our investors;

• ratings or other changes by any securities analysts who follow our company or our industry;

• announcements of restructurings, reductions in force, departure of key employees and/or consolidation of operations;

• sales or purchases of large blocks of our common stock, including by our executive officers, directors, significant stockholders and activist stockholders;

• rumors and market speculation involving Imperva or other companies in our industry, particularly with respect to strategic transactions; and

• lawsuits threatened or filed against us and changing legal or regulatory developments in the United States and other countries.

In addition, the stock market in general, and the NASDAQ Stock Market in particular, have experienced substantial price and volume volatility that is often seemingly unrelated to the operating performance of particular companies. These broad market fluctuations or factors affecting us more specifically may cause the trading price of our common stock to decline. In the past, securities class action litigation has often been brought against a company after a period of volatility in the market price of its common stock.

We face risks related to securities litigation that could result in significant legal expenses and settlement or damage awards.

We are currently and may in the future become subject to claims and litigation alleging violations of the securities laws or similar claims, which could harm our business and require us to incur significant costs. For example, on April 11, 2014, a purported stockholder class action lawsuit was filed in the United States District Court for the Northern District of California against us and certain of our officers alleging that defendants made false and misleading statements and purporting to assert claims for violations of the federal securities laws, and seeking unspecified compensatory damages and other relief. Regardless of the outcome, this matter or future litigation may require significant attention from management and could result in significant legal expenses, settlement costs or damage awards that could have a material impact on our financial position, results of operations and cash flows.

54

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our industry. If we do not establish and maintain adequate research coverage or if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

We do not intend to pay dividends on our common stock so any returns will be limited to the value of our stock.

We have never declared or paid any cash dividend on our common stock. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the value of their stock.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our restated certificate of incorporation and amended and restated bylaws may delay or prevent an acquisition of us or a change in our management. These provisions include:

• authorizing “blank check” preferred stock, which could be issued by the board without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock, which would increase the number of outstanding shares and could thwart a takeover attempt;

• a classified board of directors whose members can be dismissed only for cause;

• the prohibition on actions by written consent of our stockholders;

• the limitation on who may call a special meeting of stockholders;

• the establishment of stock ownership and advance notice requirements for stockholders who intend to submit proposals to be acted upon at stockholder meetings, including nominations of persons for election to our board of directors; and

• the requirement that at least 75% of our outstanding capital stock must approve any amendment of the foregoing second through fifth provisions.

In addition, because we are incorporated in Delaware, we are governed by the provisions of the anti-takeover provisions of the Delaware General Corporation Law, which may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders. Although we believe these provisions collectively provide for an opportunity to obtain greater value for stockholders by requiring potential acquirers to negotiate with our board of directors, they would apply even if an offer rejected by our board were considered beneficial by some stockholders. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.

The announcement that we have concluded our review of strategic alternatives and will remain a standalone company may create uncertainty about our prospects.

On August 4, 2016, we announced that we retained advisors to assist us in a comprehensive review of strategic alternatives and on November 3, 2016, we announced that we had concluded the review process.  The process did not result in a transaction or any other specific strategic action, but did result in a restructuring plan that was also announced.  These announcements may create uncertainty about our prospects as a standalone entity, and may lead to a perception of instability, irrespective of the actual circumstances, which may be exploited by our competitors, cause concern to our current or potential customers and partners, and make it more difficult to attract and retain qualified personnel. Such issues or perceptions may negatively impact our business, disrupt our operations and divert the attention of management and our employees, all of which could materially and adversely affect our operations and operating results. In addition, our stock price may experience periods of increased volatility as a result of prolonged rumors and speculation about our business. Further, while we have concluded the review of strategic alternatives, it is possible that a strategic transaction or other type of strategic action may arise in the future.

55

Our business could be negatively affected by stockholder activism, which could impact the trading price and volatility of our common stock.   

An activist investor, Elliott Associates, L.P., and its affiliates, took an ownership position in our common stock in June 2016 and disclosed in a Schedule 13D that it economically owns approximately 7% of our common stock (with additional economic exposure through derivatives of approximately 4% of our common stock).  Since then, Elliott Associates has communicated to us its opinions regarding strategic and operational opportunities that it believes would meaningfully increase value to our stockholders. In the future, Elliott Associates may take actions that could be costly and time-consuming to us, disrupt our operations and divert the attention of management and our employees, such as public proposals and requests for special meetings, potential nominations of candidates for election to our board of directors, requests to pursue a strategic combination or other transaction, or other special requests. Additionally, perceived uncertainties as to our future direction or changes to the composition of our board may be exploited by our competitors, cause concern to our current or potential customers and partners, and make it more difficult to attract and retain qualified personnel. Such uncertainties may adversely impact our business and future financial results. In addition, our stock price may experience periods of increased volatility as a result of stockholder activism, including in reaction to any future acquisition or disposition of our common stock by Elliott or other activists.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Use of Proceeds from Public Offering of Common Stock

The Form S-1 Registration Statement (Registration No. 333-175008) relating to our initial public offering (“IPO”) was declared effective by the SEC on November 8, 2011. The net proceeds to us of our IPO after deducting $6.9 million of underwriters’ discounts and $5.8 million of offering expenses were $86.2 million.  As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016 that was filed on February 27, 2017 (File No. 001-35338), through February 2017 we had used $29.4 million of the proceeds in connection with acquisitions.  Other than as disclosed in our Annual Report on Form 10-K there were no additional uses of proceeds for the three months ended March 31, 2017.  We expect to use remaining net IPO proceeds for working capital and general corporate purposes, including acquisitions. Although we may also use a portion of the net proceeds for acquisition of complementary businesses, technologies or other assets, we have no present understandings, commitments or agreements to enter into any acquisitions.

Our management will retain broad discretion in the allocation and use of the net proceeds of our IPO, and investors will be relying on the judgment of our management regarding the application of the net proceeds. Pending specific utilization of the net proceeds as described above, we have invested the net proceeds of the offering in short-term, interest-bearing obligations. The goal with respect to the investment of the net proceeds will be capital preservation and liquidity so that such funds are readily available to fund our operations.

Unregistered Sales of Equity Securities

For the quarter ended March 31, 2017, we did not sell any unregistered securities.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

See Exhibit Index.

56

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.

Date: May 5, 2017	IMPERVA, INC.
	By:	/s/ Anthony Bettencourt
		Anthony Bettencourt
		President and Chief Executive Officer
		(Principal Executive Officer)
Date: May 5, 2017
	By:	/s/ Terrence J. Schmid
		Terrence J. Schmid
		Chief Financial Officer
		(Principal Financial Officer)

57

EXHIBIT INDEX

Exhibit Number	Exhibit Description
2.01	Asset Purchase Agreement dated February 8, 2017 by and among Forcepoint LLC, Skyfence Networks Ltd., and Imperva, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on February 8, 2017 (File No. 001-35338)).
3.01	Amended and Restated Bylaws of Imperva, Inc. as currently in effect (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on February 8, 2017 (File No. 001-35338)).
10.01	2011 Stock Option and Incentive Plan, as amended, Subplan and forms of agreements thereunder.
10.02	Imperva, Inc. 2017 Senior Management Bonus Plan (incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K filed on February 27, 2017 (File No. 001-35338)).
31.01	Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a).
31.02	Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a).
32.01*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).
32.02*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

* This certification is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that Imperva, Inc. specifically incorporates it by reference.

58

EX-10.01

Exhibit 10.01

IMPERVA, INC.

2011 Stock Option and Incentive Plan

(as amended through April 26, 2017)

1. PURPOSE. The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, and any Parents and Subsidiaries that exist now or in the future, by offering them an opportunity to participate in the Company’s future performance through the grant of Awards. Capitalized terms not defined elsewhere in the text are defined in Section 27.

2. SHARES SUBJECT TO THE PLAN.

2.1 Number of Shares Available. Subject to Section 2.5 and any other applicable provisions hereof, the total number of Shares reserved and available for grant and issuance pursuant to this Plan is 8,086,237 Shares, which includes the reserved shares not issued or subject to outstanding grants under the Company’s 2003 Stock Plan (together with any subplans and addenda adopted thereunder, the “Prior Plan”) on the Effective Date that were made available for gran under this Plan on the Effective Date, plus any (a) shares that are subject to stock options granted under the Prior Plan that cease to be subject to such stock options after the Effective Date (other than by exercise and other than shares that are withheld to pay the exercise or purchase price for such shares or to satisfy any tax withholding obligations in connection with such shares), (b) shares issued under the Prior Plan before or after the Effective Date pursuant to the exercise of stock options that are, after the Effective Date, forfeited, and (c) shares issued under the Prior Plan that are repurchased by the Company at the original issue price.

2.2 Lapsed, Returned Awards. Shares subject to Awards, and Shares issued under this Plan under any Award, will again be available for grant and issuance in connection with subsequent Awards under this Plan to the extent such Shares: (a) are subject to issuance upon exercise of an Option or SAR granted under this Plan but which cease to be subject to the Option or SAR for any reason other than exercise of the Option or SAR; (b) are subject to Awards granted under this Plan that are forfeited or are repurchased by the Company at the original issue price; (c) are subject to Awards granted under this Plan that otherwise terminate without such Shares being issued; or (d) are surrendered pursuant to an Exchange Program and permitted to be returned to the Plan. The following Shares may not again be made available for future grant and issuance as Awards under the Plan: (i) Shares that are withheld to pay the exercise or purchase price of an Option or SAR or to satisfy any tax withholding obligations in connection with an Option or SAR, (ii) Shares not issued or delivered as a result of the net settlement of an outstanding Option or SAR or (iii) shares of the Company’s Common Stock repurchased on the open market with the proceeds of an Option exercise price. To the extent an Award under this Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under this Plan. Shares used to satisfy the tax withholding obligations related to an Award that is not an Option or SAR will become available for future grant or sale under this Plan. For the avoidance of doubt, Shares that otherwise become available for grant and issuance because of the provisions of this Section 2.2 shall not include Shares subject to Awards that initially became available because of the substitution clause in Section 21.2 hereof.

2.3 Minimum Share Reserve. At all times the Company shall reserve and keep available a sufficient number of Shares as shall be required to satisfy the requirements of all outstanding Awards granted under this Plan.

2.4 Limitations. No more than 20,000,000 Shares shall be issued pursuant to the exercise of ISOs.

1

2.5 Adjustment of Shares.If the number of outstanding Shares is changed by a stock dividend, an extraordinary cash dividend, recapitalization, spin-off, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company, without consideration, then (a) the number of Shares reserved for issuance and future grant under this Plan set forth in Section 2.1, (b) the Exercise Prices of and number of Shares subject to outstanding Options and SARs, (c) the number of Shares subject to other outstanding Awards, (d) the maximum number of shares that may be issued as ISOs set forth in Section 2.4, (e) the maximum number of Shares that may be issued to an individual or to a new Employee in any one calendar year set forth in Section 3 and (f) the number of Shares that are granted as Awards to Non-Employee Directors as set forth in Section 12, shall be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and in compliance with applicable securities laws; provided that fractions of a Share will not be issued.

3. ELIGIBILITY. ISOs may be granted only to Employees. All other Awards may be granted to Employees, Consultants, Directors and Non-Employee Directors of the Company or any Parent or Subsidiary of the Company; provided such Consultants, Directors and Non‑Employee Directors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction. No Participant will be eligible to receive or be granted more than 500,000 Shares in any calendar year under this Plan pursuant to the grant of Awards except that new Employees of the Company or of a Parent or Subsidiary of the Company (including new Employees who are also officers and directors of the Company or any Parent or Subsidiary of the Company) are eligible to receive or be granted up to a maximum of 1,000,000 Shares in the calendar year in which they commence their employment.

4. ADMINISTRATION.

4.1 Committee Composition; Authority. This Plan will be administered by the Committee or by the Board acting as the Committee. Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan, except, however, the Board shall establish the terms for the grant of an Award to Non-Employee Directors. The Committee will have the authority to:

(a) construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan;

(b) prescribe, amend and rescind rules and regulations relating to this Plan or any Award;

(c) select persons to receive Awards;

(d) subject to Section 4.6, determine the form and terms and conditions, not inconsistent with the terms of this Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised or settled (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, the method to satisfy tax withholding obligations or any other tax liability legally due and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Committee will determine;

(e) determine the number of Shares or other consideration subject to Awards;

(f) determine the Fair Market Value in good faith, if necessary;

(g) determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or any other incentive or compensation plan of the Company or any Parent or Subsidiary of the Company;

(h) grant waivers of Plan or Award conditions;

(i) subject to Section 4.6, determine the vesting, exercisability and payment of Awards;

(j) correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement;

(k) determine whether an Award has been earned;

(l) determine the terms and conditions of any, and to institute any Exchange Program approved by shareholders;

2

(m) reduce or waive any criteria with respect to Performance Factors;

(n) adjust Performance Factors to take into account changes in law and accounting or tax rules as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships provided that such adjustments are consistent with the regulations promulgated under Section 162(m) of the Code with respect to persons whose compensation is subject to Section 162(m) of the Code; and

(o) delegate any of the foregoing to a subcommittee consisting of one or more officers pursuant to a specific delegation as permitted by applicable law; and

(p) make all other determinations necessary or advisable for the administration of this Plan.

4.2 Committee Interpretation and Discretion. Any determination made by the Committee with respect to any Award shall be made in its sole discretion at the time of grant of the Award or, unless in contravention of any express term of this Plan or Award, at any later time, and such determination shall be final and binding on the Company and all persons having an interest in any Award under this Plan. Any dispute regarding the interpretation of this Plan or any Award Agreement shall be submitted by the Participant or Company to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on the Company and the Participant. The Committee may delegate to one or more executive officers the authority to review and resolve disputes with respect to Awards held by Participants who are not Insiders, and such resolution shall be final and binding on the Company and the Participant.

4.3 Section 162(m) of the Code and Section 16 of the Exchange Act. When necessary or desirable for an Award to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee shall include at least two persons who are “outside directors” (as defined under Section 162(m) of the Code) and at least two (or a majority if more than two then serve on the Committee) such “outside directors” shall approve the grant of such Award and timely determine (as applicable) the Performance Period and any Performance Factors upon which vesting or settlement of any portion of such Award is to be subject. When required by Section 162(m) of the Code, prior to settlement of any such Award at least two (or a majority if more than two then serve on the Committee) such “outside directors” then serving on the Committee shall determine and certify in writing the extent to which such Performance Factors have been timely achieved and the extent to which the Shares subject to such Award have thereby been earned. Awards granted to Participants who are subject to Section 16 of the Exchange Act must be approved by two or more “non-employee directors” (as defined in the regulations promulgated under Section 16 of the Exchange Act). With respect to Participants whose compensation is subject to Section 162(m) of the Code, and provided that such adjustments are consistent with the regulations promulgated under Section 162(m) of the Code, the Committee may adjust the performance goals to account for changes in law and accounting and to make such adjustments as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships, including without limitation (i) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (ii) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, or (iii) a change in accounting standards required by generally accepted accounting principles.

4.4 Foreign Award Recipients. Notwithstanding any provision of this Plan to the contrary, in order to comply with the laws in other countries in which the Company and its Subsidiaries operate or have employees or other individuals eligible for Awards, the Committee, in its sole discretion, shall have the power and authority to: (a) determine which Subsidiaries shall be covered by this Plan; (b) determine which individuals outside the United States are eligible to participate in this Plan; (c) modify the terms and conditions of any Award granted to individuals outside the United States to comply with applicable foreign laws; (d) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Committee determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to this Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in this Plan; and (e) take any action, before or afteran Award is made, that the Committee determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act or any other applicable United States securities law, the Code, or any other applicable United States governing statute or law.

3

4.5 Documentation.The Award Agreement for a given Award, this Plan and any other documents may be delivered to, and accepted by, a Participant or any other person in any manner (including electronic distribution or posting) that meets applicable legal requirements.

4.6 Vesting Limitations. Awards granted to Participants shall not provide for any vesting prior to at least twelve (12) months from grant. Notwithstanding the foregoing, the Committee may permit (i) acceleration of vesting of Awards in the event of the Participant’s death or Disability, or in the event of a Corporate Transaction and (ii) the vesting of Awards prior to twelve (12) months from grant provided Shares subject to such Awards do not exceed an aggregate of five percent (5%) of the Shares authorized for grant under the Plan.

5. OPTIONS. The Committee may grant Options to Participants and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ISOs”) or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may be exercised, and all other terms and conditions of the Option, subject to the following:

5.1 Option Grant. Each Option granted under this Plan will identify the Option as an ISO or an NQSO. An Option may be, but need not be, awarded or vested upon satisfaction of such Performance Factors during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the Option is being earned upon the satisfaction of Performance Factors, then the Committee will: (a) determine the nature, length and starting date of any Performance Period for each Option; and (b) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to Options that are subject to different performance goals and other criteria.

5.2 Date of Grant. The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, or a specified future date. The Award Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option.

5.3 Exercise Period. Options may be exercisable within the times or upon the conditions as set forth in the Award Agreement governing such Option; provided, however, that no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; and provided further that no ISO granted to a person who, at the time the ISO is granted, directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary of the Company (“Ten Percent Stockholder”) will be exercisable after the expiration of five (5) years from the date the ISO is granted. The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines.

5.4 Exercise Price. The Exercise Price of an Option will be determined by the Committee when the Option is granted; provided that: (i) the Exercise Price of an ISO will be not less than one hundred percent (100%) of the Fair Market Value of the Shares on the date of grant and (ii) the Exercise Price of any ISO granted to a Ten Percent Stockholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased must be made in accordance with Section 11 and the Award Agreement and in accordance with any procedures established by the Company. The Exercise Price of a NQSO may not be less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

5.5 Method of Exercise. Any Option granted hereunder will be exercisable according to the terms of this Plan and at such times and under such conditions as determined by the Committee and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. An Option will be deemed exercised when the Company receives: (a) notice of exercise (in such form as the Committee may specify from time to time) from the person entitled to exercise the Option, and (b) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Committee and permitted by the Award Agreement and this Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 2.5 of this Plan. Exercising an Option in any manner will decrease

4

the number of Shares thereafter available, both for purposes of this Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

5.6 Termination. The exercise of an Option will be subject to the following (except as may be otherwise provided in an Award Agreement):

(a) If the Participant is Terminated for any reason except for Cause or the Participant’s death or Disability, then the Participant may exercise such Participant’s Options only to the extent that such Options would have been exercisable by the Participant on the Termination Date no later than three (3) months after the Termination Date (or such shorter time period orlonger time period not exceeding five (5) years as may be determined by the Committee, with any exercise beyond three (3) months after the Termination Date deemed to be the exercise of an NQSO), but in any event no later than the expiration date of the Options.

(b) If the Participant is Terminated because of the Participant’s death (or the Participant dies within three (3) months after a Termination other than for Cause or because of the Participant’s Disability), then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the Termination Date and must be exercised by the Participant’s designee or in the absence of a designee, in the manner set forth in Section 14, no later than twelve (12) months after the Termination Date (or such shorter time period not less than six (6) months or longer time period not exceeding five (5) years as may be determined by the Committee), but in any event no later than the expiration date of the Options.

(c) If the Participant is Terminated because of the Participant’s Disability, then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the Termination Date and must be exercised by the Participant (or the Participant’s legal representative or guardian) no later than twelve (12) months after the Termination Date (with any exercise beyond (a) three (3) months after the Termination Date when the Termination is for a Disability that is not a “permanent and total disability” as defined in Section 22(e)(3) of the Code, or (b) twelve (12) months after the Termination Date when the Termination is for a Disability that is a “permanent and total disability” as defined in Section 22(e)(3) of the Code, deemed to be exercise of an NQSO), but in any event no later than the expiration date of the Options.

(d) If the Participant is terminated for Cause, then Participant’s Options shall expire on such Participant’s Termination Date, or at such later time and on such conditions as are determined by the Committee, but in any no event later than the expiration date of the Options.

5.7 Limitations on Exercise. The Committee may specify a minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent any Participant from exercising the Option for the full number of Shares for which it is then exercisable.

5.8 Limitations on ISOs. With respect to Awards granted as ISOs, to the extent that the aggregate Fair Market Value of the Shares with respect to which such ISOs are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as NQSOs. For purposes of this Section 5.8, ISOs will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.

5.9 Modification, Extension or Renewal. The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code. Subject to Section 18 of this Plan, by written notice to affected Participants, the Committee may reduce the Exercise Price of outstanding Options without the consent of such Participants; provided, however, that the Exercise Price may not be reduced below the Fair Market Value on the date the action is taken to reduce the Exercise Price.

5

5.10 No Disqualification.Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code.

6. RESTRICTED STOCK AWARDS.

6.1 Awards of Restricted Stock. A Restricted Stock Award is an offer by the Company to sell to a Participant Shares that are subject to restrictions (“Restricted Stock”). The Committee will determine to whom an offer will be made, the number of Shares the Participant may purchase, the Purchase Price, the restrictions under which the Shares will be subject and all other terms and conditions of the Restricted Stock Award, subject to this Plan.

6.2 Restricted Stock Purchase Agreement. All purchases under a Restricted Stock Award will be evidenced by an Award Agreement. Except as may otherwise be provided in an Award Agreement, a Participant accepts a Restricted Stock Award by signing and delivering to the Company an Award Agreement with full payment of the Purchase Price, within thirty (30) days from the date the Award Agreement was delivered to the Participant. If the Participant does not accept such Award within thirty (30) days, then the offer of such Restricted Stock Award will terminate, unless the Committee determines otherwise.

6.3 Purchase Price. The Purchase Price for a Restricted Stock Award will be determined by the Committee, may be less than Fair Market Value on the date the Restricted Stock Award is granted, and may be zero. Payment of the Purchase Price must be made in accordance with Section 11 of this Plan, and the Award Agreement and in accordance with any procedures established by the Company.

6.4 Terms of Restricted Stock Awards. Restricted Stock Awards will be subject to such restrictions as the Committee may impose or are required by law. These restrictions may be based on completion of a specified number of years of service with the Company or upon completion of Performance Factors, if any, during any Performance Period as set out in advance in the Participant’s Award Agreement. Prior to the grant of a Restricted Stock Award, the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Restricted Stock Award; (b) select from among the Performance Factors to be used to measure performance goals, if any; and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Restricted Stock Awards that are subject to different Performance Periods and having different performance goals and other criteria.

6.5 Termination of Participant. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

7. STOCK BONUS AWARDS

7.1 Awards of Stock Bonuses. A Stock Bonus Award is an award to an eligible person of Shares for services to be rendered or for past services already rendered to the Company or any Parent or Subsidiary. All Stock Bonus Awards shall be made pursuant to an Award Agreement. Except as otherwise determined by the Committee, no payment from the Participant will be required for Shares awarded pursuant to a Stock Bonus Award. If the Committee requires payment for Shares awarded pursuant to a Stock Bonus Award, the Purchase Price will be determined by the Committee and may be less than Fair Market Value on the date the Stock Bonus Award is granted. Payment of the Purchase Price must be made in accordance with Section 11 of this Plan, and the Award Agreement and in accordance with any procedures established by the Company.

7.2 Terms of Stock Bonus Awards. The Committee will determine the number of Shares to be awarded to the Participant under a Stock Bonus Award and the restrictions thereon (if any). These restrictions may be based upon completion of a specified number of years of service with the Company or upon satisfaction of performance goals based on Performance Factors during any Performance Period as set out in advance in the Participant’s Stock Bonus Agreement. Prior to the grant of any Stock Bonus Award subject to restrictions or performance goals, the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Stock Bonus Award; (b) select from among the Performance Factors to be used to measure performance goals; and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Stock Bonus Awards that are subject to different Performance Periods and different performance goals and other criteria.

6

7.3 Form of Payment to Participant.Payment may be made in the form of cash, whole Shares, or a combination thereof, based on the Fair Market Value of the Shares earned under a Stock Bonus Award on the date of payment, as determined in the sole discretion of the Committee.

7.4 Termination of Participation. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

8. STOCK APPRECIATION RIGHTS.

8.1 Awards of SARs. A Stock Appreciation Right (“SAR”) is an award to a Participant that may be settled in cash, or Shares (which may consist of Restricted Stock), having a value equal to (a) the difference between the Fair Market Value on the date of exercise over the Exercise Price multiplied by (b) the number of Shares with respect to which the SAR is being settled (subject to any maximum number of Shares that may be issuable as specified in an Award Agreement). All SARs shall be made pursuant to an Award Agreement.

8.2 Terms of SARs. The Committee will determine the terms of each SAR including, without limitation: (a) the number of Shares subject to the SAR; (b) the Exercise Price and the time or times during which the SAR may be settled; (c) the consideration to be distributed on settlement of the SAR; and (d) the effect of the Participant’s Termination on each SAR. The Exercise Price of the SAR will be determined by the Committee when the SAR is granted, and may not be less than Fair Market Value. A SAR may be awarded upon satisfaction of Performance Factors, if any, during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the SAR is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each SAR; and (y) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to SARs that are subject to different Performance Factors and other criteria.

8.3 Exercise Period and Expiration Date. A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the Award Agreement governing such SAR. The SAR Agreement shall set forth the expiration date; provided that no SAR will be exercisable after the expiration of ten (10) years from the date the SAR is granted. The Committee may also provide for SARs to become exercisable at one time or from time to time, periodically or otherwise (including, without limitation, upon the attainment during a Performance Period of performance goals based on Performance Factors), in such number of Shares or percentage of the Shares subject to the SAR as the Committee determines. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee). Notwithstanding the foregoing, the rules of Section 5.6 also will apply to SARs.

8.4 Form of Settlement. Upon exercise of a SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying (i) the difference between the Fair Market Value of a Share on the date of exercise over the Exercise Price; times (ii) the number of Shares with respect to which the SAR is exercised. At the discretion of the Committee, the payment from the Company for the SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof. The portion of a SAR being settled may be paid currently or on a deferred basis with such interest or dividend equivalent, if any, as the Committee determines, provided that the terms of the SAR and any deferral satisfy the requirements of Section 409A of the Code.

8.5 Termination of Participation. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

7

9. RESTRICTED STOCK UNITS.

9.1 Awards of Restricted Stock Units. A Restricted Stock Unit (“RSU”) is an award to a Participant covering a number of Shares that may be settled in cash, or by issuance of those Shares (which may consist of Restricted Stock). All RSUs shall be made pursuant to an Award Agreement.

9.2 Terms of RSUs. The Committee will determine the terms of an RSU including, without limitation: (a) the number of Shares subject to the RSU; (b) the time or times during which the RSU may be settled; and (c) the consideration to be distributed on settlement, and the effect of the Participant’s Termination on each RSU. An RSU may be awarded upon satisfaction of such performance goals based on Performance Factors during any Performance Period as are set out in advance in the Participant’s Award Agreement. If the RSU is being earned upon satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for the RSU; (y) select from among the Performance Factors to be used to measure the performance, if any; and (z) determine the number of Shares deemed subject to the RSU. Performance Periods may overlap and participants may participate simultaneously with respect to RSUs that are subject to different Performance Periods and different performance goals and other criteria.

9.3 Form and Timing of Settlement. Payment of earned RSUs shall be made as soon as practicable after the date(s) determined by the Committee and set forth in the Award Agreement. The Committee, in its sole discretion, may settle earned RSUs in cash, Shares, or a combination of both. The Committee also may permit a Participant to defer payment under a RSU to a date or dates after the RSU is earned provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code.

9.4 Termination of Participant. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

10. PERFORMANCE SHARES.

10.1 Awards of Performance Shares. A Performance Share Award is an award to a Participant denominated in Shares that may be settled in cash, or by issuance of those Shares (which may consist of Restricted Stock). Grants of Performance Shares shall be made pursuant to an Award Agreement.

10.2 Terms of Performance Shares. The Committee will determine, and each Award Agreement shall set forth, the terms of each award of Performance Shares including, without limitation: (a) the number of Shares deemed subject to such Award; (b) the Performance Factors and Performance Period that shall determine the time and extent to which each award of Performance Shares shall be settled; (c) the consideration to be distributed on settlement, and the effect of the Participant’s Termination on each award of Performance Shares. In establishing Performance Factors and the Performance Period the Committee will: (x) determine the nature, length and starting date of any Performance Period; (y) select from among the Performance Factors to be used; and (z) determine the number of Shares deemed subject to the award of Performance Shares. Prior to settlement the Committee shall determine the extent to which Performance Shares have been earned. Performance Periods may overlap and Participants may participate simultaneously with respect to Performance Shares that are subject to different Performance Periods and different performance goals and other criteria.

10.3 Value, Earning and Timing of Performance Shares. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant. After the applicable Performance Period has ended, the holder of Performance Shares will be entitled to receive a payout of the number of Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Factors or other vesting provisions have been achieved. The Committee, in its sole discretion, may pay earned Performance Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Shares at the close of the applicable Performance Period) or in a combination thereof.

10.4 Termination of Participant. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).

8

11. PAYMENT FOR SHARE PURCHASES.

Payment from a Participant for Shares purchased pursuant to this Plan may be made in cash or by check or, where expressly approved for the Participant by the Committee and where permitted by law (and to the extent not otherwise set forth in the applicable Award Agreement):

(a) by cancellation of Participant’s indebtedness to the Company;

(b) by surrender of shares of the Company held by the Participant that have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Award will be exercised or settled;

(c) by waiver of compensation due or accrued to the Participant for services rendered or to be rendered to the Company or a Parent or Subsidiary of the Company;

(d) by consideration received by the Company pursuant to a broker-assisted or other cashless exercise program implemented by the Company in connection with this Plan;

(e) by any combination of the foregoing; or

(f) by any other method of payment as is permitted by applicable law.

12. GRANTS to Non-Employee directors.

12.1 Types of Awards. Non-Employee Directors are eligible to receive any type of Award offered under this Plan except ISOs. Awards pursuant to this Section 12 may be automatically made pursuant to policy adopted by the Board, or made from time to time as determined in the discretion of the Board. The aggregate number of Shares subject to Awards granted to a Non-Employee Director pursuant to this Section 12 in any calendar year shall not exceed 250,000 shares.

12.2 Eligibility. Awards pursuant to this Section 12 shall be granted only to Non‑Employee Directors. A Non-Employee Director who is elected or re-elected as a member of the Board will be eligible to receive an Award under this Section 12.

12.3 Vesting, Exercisability and Settlement. Except as set forth in Section 21, Awards shall vest, become exercisable and be settled as determined by the Board. With respect to Options and SARs, the exercise price granted to Non-Employee Directors shall not be less than the Fair Market Value of the Shares at the time that such Option or SAR is granted.

13. WITHHOLDING TAXES.

13.1 Withholding Generally. Whenever Shares are to be issued in satisfaction of Awards granted under this Plan, the Company may require the Participant to remit to the Company an amount sufficient to satisfy applicable federal, state, local and international withholding tax requirements prior to the delivery of Shares pursuant to exercise or settlement of any Award. Whenever payments in satisfaction of Awards granted under this Plan are to be made in cash, such payment will be net of an amount sufficient to satisfy applicable federal, state, local and international withholding tax requirements.

13.2 Stock Withholding. The Committee, in its sole discretion and pursuant to such procedures as it may specify from time to time, may require or permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld, (iii) delivering to the Company already‑owned Shares having a Fair Market Value equal to the minimum amount required to be withheld , or (iv) withholding from the proceeds of the sale of otherwise deliverable Shares acquired pursuant to an Award either through a voluntary sale or through a mandatory sale arranged by the Company. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.

9

14. TRANSFERABILITY.Unless determined otherwise by the Committee, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution.If the Committee makes an Award transferable, such Award will contain such additional terms and conditions as the Committee deems appropriate.All Awards shall be exercisable: (i) during the Participant’s lifetime only by (A) the Participant, or (B) the Participant’s guardian or legal representative; and (ii) after the Participant’s death, by the Participant’s designee, provided that such designee has been designated prior to the Participant’s death on a form prescribed by the Company.In the absence of any such effective designation, such Awards may be exercised only by the beneficiary designated by the Participant with the largest beneficial interest; or, if there is no single beneficiary with a majority or plurality of interest, the then-acting trustee of the latest revocable trust established by the Participant of which Participant was a beneficiary or, if none, the executors or administrators of the Participant’s estate.No transfer by will or the laws of descent and distribution of any Award shall be effective to bind the Company unless the Committee shall have been furnished with (a) written notice thereof and with a copy of the will and/or such evidence as the Committee may deem necessary to establish the validity of the transfer and (b) an agreement by the transferee to comply with all the terms and conditions of the Award that are or would have been applicable to the Participant and to be bound by the acknowledgements made by the Participant in connection with the grant of the Award.

15. PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES.

15.1 Voting and Dividends. No Participant will have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Participant except for any Dividend Equivalent Rights permitted by an applicable Award Agreement. After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock; provided, further, that the Participant will have no right to retain such stock dividends or stock distributions with respect to Shares that are repurchased at the Participant’s Purchase Price or Exercise Price, as the case may be, pursuant to Section 15.2. The Committee, in its discretion, may provide in the Award Agreement evidencing any Award that the Participant shall be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on Shares subject to such Award during the period beginning on the date the Award is granted and ending, with respect to each Share subject to the Award, on the earlier of the date on which the Award is exercised or settled or the date on which they are forfeited; provided, that under no circumstances may Dividend Equivalent Rights be granted for any Option or SAR. Such Dividend Equivalent Rights, if any, shall be credited to the Participant in the form of additional whole Shares as of the date of payment of such cash dividends on Shares.

15.2 Restrictions on Shares. At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) a right to repurchase (a “Right of Repurchase”) a portion of any or all Unvested Shares held by a Participant following such Participant’s Termination at any time within ninety (90) days after the later of the Participant’s Termination Date and the date the Participant purchases Shares under this Plan, for cash and/or cancellation of purchase money indebtedness, at the Participant’s Purchase Price or Exercise Price, as the case may be. The Company’s Right of Repurchase shall be automatic with respect to Unvested Shares awarded to the Participant for no Purchase Price.

16. CERTIFICATES. All certificates for Shares or other securities delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted.

10

17. ESCROW; PLEDGE OF SHARES.To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates.Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of the Participant’s obligation to the Company under the promissory note; provided, however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral.In connection with any pledge of the Shares, the Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve.The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid.

18. REPRICING; EXCHANGE AND BUYOUT OF AWARDS. An Exchange Program, including but not limited to any repricing of Options or SARs, is not permitted without prior stockholder approval.

19. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be effective unless such Award is in compliance with all applicable federal and state securities laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and/or (b) completion of any registration or other qualification of such Shares under any state or federal law or ruling of any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any state securities laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so.

20. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent or Subsidiary of the Company or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Participant’s employment or other relationship at any time.

21. CORPORATE TRANSACTIONS.

21.1 Assumption or Replacement of Awards by Successor. In the event of a Corporate Transaction any or all outstanding Awards may be assumed or replaced by the successor corporation, which assumption or replacement shall be binding on all Participants. In the alternative, the successor corporation may substitute equivalent Awards or provide substantially similar consideration to Participants as was provided to stockholders (after taking into account the existing provisions of the Awards). The successor corporation may also issue, in place of outstanding Shares of the Company held by the Participant, substantially similar shares or other property subject to repurchase restrictions no less favorable to the Participant. In the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, then notwithstanding any other provision in this Plan to the contrary, such Awards will expire on such transaction at such time and on such conditions as the Board will determine; the Board (or, the Committee, if so designated by the Board) may, in its sole discretion, accelerate the vesting of such Awards in connection with a Corporate Transaction, provided that if Awards subject to performance-based vesting are accelerated, the performance shall be deemed achieved at the greater of (x) target performance or (y) the actual performance achieved as of the Corporate Transaction as determined by the Committee, and the resulting number of shares shall accelerate in full as of the time of the consummation of the Corporate Transaction. In addition, in the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, the Committee will notify the Participant in writing or electronically

11

that such Award will be exercisable for a period of time determined by the Committee in its sole discretion, and such Award will terminate upon the expiration of such period.Awards need not be treated similarly in a Corporate Transaction.

Notwithstanding anything to the contrary in this Section 21.1, the Committee, in its sole discretion, may grant Awards that provide for acceleration upon a Corporate Transaction or in other events in the specific Award Agreements.

21.2 Assumption of Awards by the Company. The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in substitution of such other company’s award; or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan. Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged (except that the Purchase Price or the Exercise Price, as the case may be, and the number and nature of Shares issuable upon exercise or settlement of any such Award will be adjusted appropriately pursuant to Section 424(a) of the Code). In the event the Company elects to grant a new Option in substitution rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price. Substitute Awards shall not reduce the number of Shares authorized for grant under this Plan or authorized for grant to a Participant in a calendar year.

21.3 Non-Employee Directors’ Awards. Notwithstanding any provision to the contrary herein, in the event of a Corporate Transaction, the vesting of all Awards granted to Non‑Employee Directors shall accelerate and such Awards shall become exercisable (as applicable) in full prior to the consummation of such event at such times and on such conditions as the Committee determines.

22. ADOPTION AND STOCKHOLDER APPROVAL. This Plan shall be submitted for the approval of the Company’s stockholders, consistent with applicable laws, within twelve (12) months before or after the date this Plan is adopted by the Board.

23. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided herein, this Plan will become effective on the Effective Date and will terminate ten (10) years from the date this Plan is adopted by the Board. This Plan and all Awards granted hereunder shall be governed by and construed in accordance with the laws of the State of Delaware.

24. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate or amend this Plan in any respect, including, without limitation, amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan; provided, however, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval; providedfurther, that a Participant’s Award shall be governed by the version of this Plan then in effect at the time such Award was granted.

25. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock awards and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

26. INSIDER TRADING POLICY. Each Participant who receives an Award shall comply with any policy adopted by the Company from time to time covering transactions in the Company’s securities by Employees, officers and/or directors of the Company.

27. ALL AWARDS SUBJECT TO COMPANY CLAWBACK OR RECOUPMENT POLICY. All Awards issued or paid under this Plan will be subject to clawback or recoupment in accordance with any clawback policy adopted by the Board, required by the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is required by other applicable law, including, but not limited to, the cancellation of outstanding awards and the recoupment of any gains realized with respect to awards issued under the

12

Plan. No recovery of compensation under such policy or applicable law will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company.

28. DEFINITIONS. As used in this Plan, and except as elsewhere defined herein, the following terms will have the following meanings:

“Award” means any award under this Plan, including any Option, Restricted Stock, Stock Bonus, Stock Appreciation Right, Restricted Stock Unit or award of Performance Shares.

“Award Agreement” means, with respect to each Award, the written or electronic agreement between the Company and the Participant setting forth the terms and conditions of the Award, which shall be in substantially a form (which need not be the same for each Participant) that the Committee has from time to time approved, and will comply with and be subject to the terms and conditions of this Plan.

“Board” means the Board of Directors of the Company.

“Cause” means (except as may otherwise be defined in Participant’s employment or services agreement or Award Agreement) (a) the commission of an act of theft, embezzlement, fraud or dishonesty, (b) a breach of fiduciary duty to the Company or a Parent or Subsidiary, or (c) a failure to materially perform the customary duties of Employee’s employment.

“Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

“Common Stock” means the common stock of the Company.

“Committee” means the Compensation Committee of the Board or those persons to whom administration of this Plan, or part of this Plan, has been delegated as permitted by law.

“Company” means Imperva, Inc., or any successor corporation.

“Consultant” means any person, including an advisor or independent contractor, engaged by the Company or a Parent or Subsidiary to render services to such entity.

“Corporate Transaction” means the occurrence of any of the following events: (a) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) or “group” (two or more persons acting as a partnership, limited partnership, syndicate or other group for the purpose of acquiring, holding, or disposing of the applicable securities referred to herein) becomes the “beneficial owner” (as defined in Rule 13d‑3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then‑outstanding voting securities; (b) the consummation of the sale or other disposition by the Company of all or substantially all of the Company’s assets; (c) the consummation of a merger, reorganization, consolidation or similar transaction or series of related transactions of the Company with any other corporation, other than a merger, reorganization, consolidation or similar transaction (or series of related transactions) which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least a majority of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger, reorganization, consolidation or similar transaction (or series of related transactions), or (d) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the Code wherein the stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the Company).

Notwithstanding the foregoing, to the extent that any amount constituting deferred compensation (as defined in Section 409A of the Code) would become payable under this Plan by reason of a Corporate Transaction, such amount shall become payable only if the event constituting a Corporate Transaction would also qualify as a

13

change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, each as defined within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and IRS guidance that has been promulgated or may be promulgated thereunder from time to time.

“Director” means a member of the Board.

“Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided, however, that except with respect to Awards granted as ISOs, the Committee in its discretion may determine whether a total and permanent disability exists in accordance with non-discriminatory and uniform standards adopted by the Committee from time to time, whether temporary or permanent, partial or total, as determined by the Committee.

“Dividend Equivalent Right” means the right of a Participant, granted at the discretion of the Committee or as otherwise provided by the Plan, to receive a credit for the account of such Participant in an amount equal to the cash dividends paid on one Share for each Share represented by an Award held by such Participant.

“Effective Date” means the date of the underwritten initial public offering of the Company’s Common Stock pursuant to a registration statement that is declared effective by the SEC.

“Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

“Exchange Program” means a program pursuant to which outstanding Awards are surrendered, cancelled or exchanged for cash, the same type of Award or a different Award (or combination thereof).

“Exercise Price” means, with respect to an Option, the price at which a holder may purchase the Shares issuable upon exercise of an Option, and with respect to a SAR, the price at which the SAR is granted to the holder thereof.

“Fair Market Value” means, as of any date, the value of a share of the Company’s Common Stock determined as follows:

(a) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal or such other source as the Board or the Committee deems reliable;

(b) if such Common Stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal or such other source as the Board or the Committee deems reliable;

(c) in the case of an Option or SAR grant made on the Effective Date, the price per share at which shares of the Company’s Common Stock are initially offered for sale to the public by the Company’s underwriters in the initial public offering of the Company’s Common Stock pursuant to a registration statement filed with the SEC under the Securities Act; or

(d) if none of the foregoing is applicable, by the Board or the Committee in good faith.

“Insider” means an officer or director of the Company or any other person whose transactions in the Company’s Common Stock are subject to Section 16 of the Exchange Act.

“Non-Employee Director” means a Director who is not an Employee of the Company or any Parent or Subsidiary.

14

“Option” means an award of an option to purchase Shares pursuant to Section 5.

“Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

“Participant” means a person who holds an Award under this Plan.

“Performance Factors” means the factors selected by the Committee, which may include, but are not limited to the, the following measures (whether or not in comparison to other peer companies) to determine whether the performance goals established by the Committee and applicable to Awards have been satisfied:

• bookings and/or bookings growth;

• net revenue and/or net revenue growth;

• earnings per share and/or earnings per share growth;

• earnings before income taxes and amortization and/or earnings before income taxes and amortization growth;

• operating income and/or operating income growth;

• net income and/or net income growth;

• total stockholder return and/or total stockholder return growth;

• return on equity;

• operating cash flow return on income;

• adjusted operating cash flow return on income;

• economic value added;

• control of expenses;

• cost of goods sold;

• profit margin;

• stock price;

• debt or debt-to-equity;

• liquidity;

• intellectual property (e.g., patents)/product development;

• mergers and acquisitions or divestitures;

• individual business objectives;

• company-specific operational metrics; and

• any other factor (such as individual business objectives or unit-specific operational metrics) the Committee so designates.

“Performance Period” means the period of service determined by the Committee, not to exceed five (5) years, during which years of service or performance is to be measured for the Award.

“Performance Share” means an Award granted pursuant to Section 10 or Section 12 of this Plan.

“Plan” means this Imperva, Inc.2011 Stock Option and Incentive Plan.

15

“Purchase Price” means the price to be paid for Shares acquired under this Plan, other than Shares acquired upon exercise of an Option or SAR.

“Restricted Stock Award” means an award of Shares pursuant to Section 6 or Section 12 of this Plan, or issued pursuant to the early exercise of an Option.

“Restricted Stock Unit” means an Award granted pursuant to Section 9 or Section 12 of this Plan.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the United States Securities Act of 1933, as amended.

“Shares” means shares of the Company’s Common Stock, as adjusted pursuant to Sections 2 and other applicable provisions hereof, and any successor security.

“Stock Appreciation Right” means an Award granted pursuant to Section 8 or Section 12 of this Plan.

“Stock Bonus” means an Award granted pursuant to Section 7 or Section 12 of this Plan.

“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

“Termination” or “Terminated” means, for purposes of this Plan with respect to a Participant, that the Participant has for any reason ceased to provide services as an employee, officer, director, consultant, independent contractor or advisor to the Company or a Parent or Subsidiary of the Company. An employee will not be deemed to have ceased to provide services in the case of (i) sick leave, (ii) military leave, or (iii) any other leave of absence approved by the Committee; provided, that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute or unless provided otherwise pursuant to formal policy adopted from time to time by the Company and issued and promulgated to employees in writing. In the case of any employee on a leave of absence or a reduction in hours worked (for illustrative purposes only, a change in schedule from that of full-time to part-time), the Committee may make such provisions respecting suspension of or modification of vesting of the Award while on leave from the employ of the Company or a Parent or Subsidiary of the Company or during such change in working hours as it may deem appropriate, except that in no event may an Award be exercised after the expiration of the term set forth in the applicable Award Agreement. The Committee will have sole discretion to determine whether a Participant has ceased to provide services and the effective date on which the Participant ceased to provide services (the “Termination Date”).

“Unvested Shares” means Shares that have not yet vested or are subject to a right of repurchase in favor of the Company (or any successor thereto).

16

APPENDIX A– ISRAEL

TO THE 2011 STOCKOPTIONANDINCENTIVEPLAN

1. GENERAL

1.1 Thisappendix(the“Appendix”)shallapplyonlytoParticipantswhoareresidentsofthestateofIsraelorthosewhoaredeemedtoberesidentsofthestateofIsraelforthepaymentoftax(the“IsraeliParticipant(s)”).

1.2 ThisAppendixisinaccordancewithandincontinuationofSection4.4ofthe2011StockOptionandIncentivePlan(the"Plan")ofImperva,Inc.(the"Company").Alltheprovisionsspecified hereunder shall form an integral part of the Plan.

1.3 ThisAppendixiseffectivewithrespecttoAwardsgrantedaftertheenactmentofAmendmentno. 132 ofthe Israeli TaxOrdinance, enteringinto force as of January1, 2003.

1.4 ThisAppendixistobereadasacontinuationofthePlanandmodifiesonly AwardsgrantedtoIsraeliParticipantssothattheycomplywiththerequirementssetbytheIsraelilawingeneral,andinparticularwiththeprovisionsofSection102(as specified herein), as maybe amended orreplacedfromtimetotime.Fortheavoidanceofdoubt,thisAppendixdoesnotaddtoormodifythe Plan in respect of anyothercategoryof Participants.

1.5 ThePlanandthisAppendixarecomplimentarytoeachotherandshallbedeemedasone.Inany caseofcontradiction,whetherexplicitorimplied,betweentheprovisionsofthisAppendixand the Plan, the provisions set out inthis Appendixshall prevail.

1.6 Anycapitalizedtermsnotspecifically definedinthisAppendixshallbeconstruedaccordingtothe interpretation given to it in thePlan.

2. ISSUANCE OFAWARDS

2.1 The persons eligible for participation in the Plan as Israeli Participants shall include any Employees and/or Non-Employees of the Company or of any Affiliate; provided, however, that

(i) Employees may only be granted 102 Awards; and (ii) Non-Employees and/or Controlling Shareholders may only be granted 3(i) Awards.

2.2 The Company may designate Awards granted to Employees pursuant to Section 102 as Unapproved 102 Awards or Approved 102 Awards.

2.3 The grant of Approved 102 Awards shall be made under this Appendix, and shall be conditioned upon the approval of this Appendix by the ITA.

2.4 Approved 102 Awards may either be classified as CGAs or OIAs.

2.5 No Approved 102 Awards may be granted under this Appendix to any eligible Employee unless and until the Company’s election of the type of Approved 102 Awards as CGA or OIA granted to Employees (the “Election”) is appropriately filed with the ITA. The Election shall become effective beginning the first grant date of an Approved 102 Award under this Appendix and shall remain in effect at least until the end of the year following the year during which the Company first granted Approved 102 Awards. The Election shall obligate the Company to grant only the type of Approved 102 Award it has elected, and shall apply to all Israeli Participants who were granted Approved 102 Awards during the period indicated herein, all in accordance with the provisions of Section 102(g) of the Ordinance. For the avoidance of doubt, the Election shall not prevent the Company from granting Unapproved 102 Awards simultaneously.

2.6 All Approved 102 Awards must be held in trust by a Trustee, as described in Section 3 below.

2.7 For the avoidance of doubt, the designation of Unapproved 102 Awards and Approved 102 Awards shall be subject to the terms and conditions set forth in Section 102.

3. TRUSTEE

3.1 Approved 102 Awards which shall be granted under this Appendix and/or any shares of Common Stock allocated or issued upon exercise of such Approved 102 Awards and/or other shares of Common Stock received subsequently following any realization of rights, including without limitation bonus shares, shall be allocated or issued to the Trustee and held for the benefit of the Employees for such period of time as required by Section 102 (the “Holding Period”). In the case the requirements for Approved 102 Awards are not met, then the Approved 102 Awards are to be regarded as Unapproved 102 Awards, all in accordance with the provisions of Section 102.

3.2 Notwithstanding anything to the contrary, the Trustee shall not release any shares of Common Stock allocated or issued upon exercise of Approved 102 Awards prior to the full payment of the Employee’s tax liabilities arising from Approved 102 Awards which were granted to him and/or any shares of Common Stock allocated or issued upon exercise of such Awards.

3.3 With respect to any Approved 102 Award, subject to the provisions of Section 102, an Employee shall not sell or release from trust any Share received upon the exercise of an Approved 102 Award and/or any share received subsequently following any realization of rights, including without limitation, bonus shares, until the lapse of the Holding Period required under Section 102. Notwithstanding the above, if any such sale or release occurs during the Holding Period, the sanctions under Section 102 shall apply to and shall be borne by such Employee.

3.4 Upon receipt of Approved 102 Award, the Employee will sign an undertaking to release the Trustee from any liability in respect of any action or decision duly taken and bona fide executed in relation with this Appendix, or any Approved 102 Award or Ordinary Share granted to him thereunder.

4. THE AWARDS

ThetermsandconditionsuponwhichtheAwardsshallbeissuedandexercisedshallbeasspecifiedintheAwardAgreementtobeexecutedpursuanttothePlanandtothisAppendix.EachAwardAgreementshallstate,interalia,thenumberofsharesofCommonStocktowhichtheAwardrelates,thetypeofAwardgrantedthereunder(whether aCGA,OIA,Unapproved102Awardora3(i)Award),the vestingprovisions and the exercise price.

5. FAIR MARKET VALUE

Solelyforthepurposeofdetermining thetaxliabilitypursuanttoSection102(b)(3)oftheOrdinance,ifatthedateofgranttheCompany’ssharesarelistedonanyestablishedstockexchangeoranationalmarket system oriftheCompany’sshares willberegisteredfortradingwithinninety(90)daysfollowingthedateofgrantoftheCGAs,thefairmarketvalueofthesharesofCommonStockatthedateofgrantshallbedeterminedinaccordancewiththeaveragevalueoftheCompany’ssharesonthethirty (30)tradingdaysprecedingthedateofgrantoronthethirty(30)tradingdaysfollowingthedateofregistrationfortrading,asthecasemaybe.

6. EXERCISE OFAWARDS

AwardsshallbeexercisedbytheIsraeliParticipantbygivingawrittennoticetotheCompanyand/ortoanythirdpartydesignatedbytheCompany(the“Representative”),insuchformandmethodasmaybedeterminedbytheCompanyand,whenapplicable,bytheTrustee,inaccordancewiththerequirementsofSection102,whichexerciseshallbeeffectiveuponreceiptofsuchnoticebythe Company and/ortheRepresentativeandthepaymentoftheexercisepriceforthenumberofCommonStockwithrespecttowhichtheAwardisbeingexercised,attheCompany’sortheRepresentative’sprincipaloffice.ThenoticeshallspecifythenumberofCommonStockwithrespecttowhichtheAward is beingexercised.

7. ASSIGNABILITYAND SALE OFAWARDS

7.1. Notwithstanding any other provision of the Plans, no Award or any right with respect thereto, purchasable hereunder, whether fully paid or not, shall be assignable, transferable or given as collateral or any right with respect to them given to any third party whatsoever, and during the lifetime of the Israeli Participant each and all of such Israeli Participant's rights to purchase Common Stock hereunder shall be exercisable only by the Israeli Participant. Any such action made directly or indirectly, for an immediate validation or for a future one, shall be void.

7.2 As long as Awards or shares of Common Stock purchased pursuant to thereto are held by the Trustee on behalf of the Israeli Participant, all rights of the Israeli Participant over the shares are personal, cannot be transferred, assigned, pledged or mortgaged, other than by will or laws of descent and distribution.

8. INTEGRATION OFSECTION 102 AND TAXASSESSINGOFFICER’S PERMIT

8.1 With regards to Approved 102 Awards, the provisions of the Plans and/or the Appendix and/or the Award Agreement shall be subject to the provisions of Section 102 and the Tax Assessing Officer’s permit, and the said provisions and permit shall be deemed an integral part of the Plans, the Appendix and the Award Agreement.

8.2 Any provision of Section 102 and/or the said permit which is necessary in order to receive and/or to keep any tax benefit pursuant to Section 102, which is not expressly specified in the Plan or the Appendix or the Award Agreement, shall be considered binding upon the Company and the Israeli Participants.

9. DIVIDEND

WithrespecttoallsharesofCommonStock(butexcluding,foravoidanceofanydoubt,anyunexercisedAwards)allocatedorissuedupontheexerciseofAwardspurchasedbytheIsraeliParticipantandheldbytheIsraeliParticipantorbytheTrustee,asthecasemaybe,theIsraeliParticipantshallbeentitledtoreceivedividendsinaccordancewiththequantityofsuchsharesofCommonStock,subjecttotheprovisionsoftheCompany’sCertificateofIncorporation(andallamendmentsthereto)andsubjecttoanyapplicabletaxationondistributionofdividends,andwhenapplicable subject to the provisions of Section 102.

10. TAX CONSEQUENCES

10.1 Any tax consequences arising from the grant or exercise of any Award, from the payment for shares of Common Stock covered thereby or from any other event or act (of the Company, and/or its Affiliates, and the Trustee or the Israeli Participant), hereunder, shall be borne solely by the Israeli Participant. The Company and/or its Affiliates and/or the Trustee shall withhold taxes according to the requirements under the applicable laws, rules, and regulations, including withholding taxes at source. Furthermore, the Israeli Participant shall agree to indemnify the Company and/or its Affiliates and/or the Trustee and hold them harmless against and from any and all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax from any payment made to the Israeli Participant.

10.2 The Company and/or, when applicable, the Trustee shall not be required to release any share certificate to an Israeli Participant until all required payments have been fully made.

10.3 With respect to Unapproved 102 Award, if the Israeli Participant ceases to be employed by the Company or any Affiliate, the Israeli Participant shall extend to the Company and/or its Affiliate a security or guarantee for the payment of tax due at the time of sale of Shares, all in accordance with the provisions of Section 102.

11. GOVERNINGLAW &JURISDICTION

ThisAppendixshallbegovernedbyandconstruedandenforcedinaccordancewiththelawsoftheStateofDelawareapplicabletocontractsmadeandtobeperformedtherein,withoutgivingeffecttotheprinciplesofconflictoflaws.ThecompetentcourtsoftheStateofDelawareshallhavesolejurisdiction in anymatters pertainingto this Appendix.

12. DEFINITION

12.1 “Affiliate”meansany“employingcompany”withinthemeaningofSection102(a)oftheOrdinance.

12.2 “Approved102Award”meansanAwardgrantedpursuanttoSection102(b)oftheOrdinanceand held in trust bya Trusteefor the benefit of theIsraeli Participant.

12.3 “Award”meansanyawardunderthePlanthatmaybegrantedtoanIsraeliParticipant,includinganyOption,RestrictedStock,StockBonus,StockAppreciationRight,RestrictedStock Unit or awards ofPerformance Shares.

12.4 “102Award”meansanyAwardgrantedtoEmployeespursuanttoSection102oftheOrdinance.

12.5 “3(i)Award”meansanoptiongrantedpursuanttoSection3(i)oftheOrdinancetoanypersonwho is a Non- Employee.

12.6 “CapitalGainAward”or“CGA”meansanApproved102AwardelectedanddesignatedbytheCompanytoqualifyunder thecapital gain taxtreatment in accordance with the provisions ofSection 102(b)(2)of theOrdinance.

12.7 “ControllingShareholder”shallhavethemeaningascribedtoitinSection32(9)oftheOrdinance.

12.8 “Employee”meansapersonwhoisemployedbytheCompanyoritsAffiliates,includinganindividualwhoisservingasadirectororanofficeholder,butexcludinganyControllingShareholder.

12.9 “ITA” means theIsraeli TaxAuthorities.

12.10 “Non-Employee”meansaconsultant,adviser,serviceprovider,Controlling Shareholder oranyotherperson who is not an Employee.

12.11 “OrdinaryIncomeAward”or“OIA”meansanApproved102AwardelectedanddesignatedbytheCompanytoqualifyundertheordinaryincometaxtreatmentinaccordancewiththeprovisions of Section 102(b)(1)of theOrdinance.

12.12 “Ordinance”meanstheIsraeliIncomeTaxOrdinance[NewVersion]1961,as now in effect oras hereafter amended.

12.13 “Section102”meanssection102oftheOrdinanceandanyregulations,rules,ordersorprocedurespromulgatedthereunderasnowineffectorashereafteramendedoranyregulations,rules or orders orprocedures promulgated thereunder.

12.14 “Trustee”meansanyindividualappointedbytheCompanytoserveasatrusteeandapprovedbythe ITA, all in accordance with the provisions of Section 102(a) ofthe Ordinance.

12.15 “Unapproved102Award”meansanAwardgrantedpursuanttoSection102(c)oftheOrdinance and not held in trust bya Trustee

*****

IMPERVA, INC.

2011 STOCK OPTION AND INCENTIVE PLAN

NOTICE OF RESTRICTED STOCK UNIT AWARD

Unless otherwise defined herein, the terms defined in the Imperva, Inc. (the “Company”) 2011 Stock Option and Incentive Plan (the “Plan”) shall have the same meanings in this Notice of Restricted Stock Unit Award (the “Notice”).

Name:

Address:

You (“Participant”) have been granted an award of Restricted Stock Units (“RSUs”) under the Plan subject to the terms and conditions of the Plan, this Notice and the attached Award Agreement (Restricted Stock Units), including any country‑specific terms and conditions contained in the attached Appendix (together, the “Agreement”).

Number of RSUs:
Date of Grant:
Vesting Commencement Date:
Expiration Date:	The date on which settlement of all RSUs granted hereunder occurs, with earlier expiration upon the Termination Date.
Vesting Schedule:	Subject to the limitations set forth in this Notice, the Plan and the Agreement, the RSUs will vest in accordance with the following schedule: [INSERT VESTING SCHEDULE]

You acknowledge that the vesting of the RSUs pursuant to this Notice is earned only by continuing service as an active Employee, Director or Consultant of the Company.  You also understand that this Notice is subject to the terms and conditions of both the Agreement and the Plan, both of which are incorporated herein by reference.  By signing below or electronically accepting the Agreement, you confirm you have read and agreed to the terms and conditions of this Notice, the Agreement and the Plan.

PARTICIPANT	IMPERVA, INC.
Signature:	By:
Print Name:	Its:
Date:	Date:

IMPERVA, INC.

2011 STOCK OPTION AND INCENTIVE PLAN

AWARD AGREEMENT (RESTRICTED STOCK UNITS)

Unless otherwise defined herein, the terms defined in the Imperva, Inc. (the “Company”) 2011 Stock Option and Incentive Plan (the “Plan”) shall have the same defined meanings in this Award Agreement (Restricted Stock Units), including any country‑specific terms and conditions contained in the attached Appendix (together, the “Agreement”).

Participant has been granted Restricted Stock Units (“RSUs”) subject to the terms, restrictions and conditions of the Plan, the Notice of Restricted Stock Unit Award (the “Notice”) and this Agreement.

1. Settlement.  Settlement of RSUs shall be made within 30 days following the applicable date of vesting under the vesting schedule set forth in the Notice.  Settlement of RSUs shall be in Shares, unless provided otherwise in the Appendix.

2. No Stockholder Rights.  Unless and until such time as Shares are issued in settlement of vested RSUs, Participant shall have no ownership of the Shares allocated to the RSUs and shall have no right to dividends or to vote such Shares.

3. Dividend Equivalents.  Dividends, if any (whether in cash or Shares), shall not be credited to Participant until he or she has acquired Shares in the Company.

4. No Transfer.  The RSUs and any interest therein shall not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of in any manner other than as permitted under the Plan and this Agreement.  For any such transfer to be binding, the transferee must furnish the Company with (A) written notice of his or her or its status as transferee, (B) a copy of the will and/or such evidence as the Committee may deem necessary to establish the validity of the transfer, and (C) an agreement by the transferee to comply with all the terms and conditions of the RSUs that are or would be applicable to the Participant and to be bound by the acknowledgments made by the Participant hereunder.

5. Termination.  Upon Participant’s Termination (for any reason whatsoever, whether or not later to be found invalid or in breach of employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any), all unvested RSUs shall be forfeited to the Company forthwith, and all rights of Participant to such unvested RSUs shall immediately terminate and will not be extended by any notice period (e.g., active services would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any).  In case of any dispute as to whether Termination has occurred (including whether Participant may still be considered to be providing services while on an approved leave of absence), the Committee shall have sole discretion to determine whether such Termination has occurred and the effective date of such Termination.  In the event that Participant’s Termination is a result of the Participant’s death, then any delivery of Shares to be made to the Participant will be made to the Participant’s designee, provided that such designee has been designated prior to the Participant’s death on a form prescribed by the Company; in the absence of any such effective designation, the shares will be delivered to the beneficiary designated by the Participant with the largest beneficial interest; or, if there is no single beneficiary with a majority or plurality of interest, then to the latest revocable trust established by the Participant of which the Participant was a beneficiary or, if none, to the Participant’s estate.

6. Tax Obligations.  Participant acknowledges that, regardless of any action taken by the Company or, if different, Participant’s employer (the “Employer”) the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax‑related items related to Participant’s participation in the Plan and legally applicable to Participant (“Tax‑Related Items”), is and remains Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer.  Participant further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax‑Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant, vesting or settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such settlement and the receipt of any dividends and/or any dividend equivalents; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate Participant’s liability for Tax‑Related Items or achieve any particular tax result.  Further, if Participant is subject to Tax‑Related Items in more than one jurisdiction, Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax‑Related Items in more than one jurisdiction.

Prior to any relevant taxable or tax withholding event, as applicable, Participant agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax‑Related Items.  In this regard, Participant

1

authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax‑Related Items by one or a combination of the following:

(i) withholding from Participant’s wages or other cash compensation paid to Participant by the Company and/or the Employer; or

(ii) withholding from proceeds of the sale of Shares acquired upon vesting/settlement of the RSUs either through a voluntary sale or through a mandatory sale arranged by the Company (on Participant’s behalf pursuant to this authorization); or

(iii) withholding in Shares to be issued upon settlement of the RSUs, provided, however that if Participant is a Section 16 officer of the Company under the Exchange Act, then the Committee shall establish the method of withholding from alternatives (i)‑(iii) herein and, if the Committee does not exercise its discretion prior to the Tax‑Related Items withholding event, then Participant shall be entitled to elect the method of withholding from the alternatives above.

Depending on the withholding method, the Company may withhold or account for Tax‑Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates, in which case Participant will receive a refund of any over‑withheld amount in cash and will have no entitlement to the Common Stock equivalent.  If the obligation for Tax‑Related Items is satisfied by withholding in Shares, for tax purposes, Participant is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax‑Related Items.

Finally, Participant agrees to pay to the Company or the Employer any amount of Tax‑Related Items that the Company or the Employer may be required to withhold or account for as a result of Participant’s participation in the Plan that cannot be satisfied by the means previously described.  The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if Participant fails to comply with Participant’s obligations in connection with the Tax‑Related Items.

7. U.S. Tax Consequences.  If Participant is a U.S. taxpayer, Participant acknowledges that there will be tax consequences upon the vesting and/or settlement of the RSUs or disposition of the Shares, if any, received in connection therewith, and Participant should consult a tax adviser regarding Participant’s tax obligations prior to such vesting, settlement or disposition.  Upon vesting of the RSUs, the Fair Market Value of the Shares subject to the RSUs is subject to payroll taxes (e.g., FICA), and when the Shares are released following vesting, the Fair Market Value of the Shares is subject to U.S. federal, state and local income taxes.  Upon disposition of the Shares, any subsequent increase or decrease in value will be treated as short‑term or long‑term capital gain or loss, depending on whether the Shares are held for more than 12 months from the date of settlement.  Further, an RSU may be considered a deferral of compensation that may be subject to Section 409A of the Code.  Section 409A of the Code imposes special rules to the timing of making and effecting certain amendments of this RSU with respect to distribution of any deferred compensation.  Participant should consult his or her personal tax advisor for more information on the actual and potential tax consequences of this RSU.

8. Acknowledgement of Nature of the Grant.  The Company and Participant agree that the RSUs are granted under and governed by the Notice, this Agreement and the provisions of the Plan.  Participant acknowledges receipt of a copy of the Plan and the Plan prospectus, represents that Participant has carefully read and is familiar with their provisions, and hereby accepts the RSUs subject to all of the terms and conditions set forth herein and those set forth in the Plan and the Notice.  Participant further acknowledges, understands and agrees that:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;

(b) the grant of the RSUs is voluntary and occasional and does not create any contractual or other right to receive future grants of RSUs, or benefits in lieu of RSUs, even if RSUs have been granted in the past;

(c) all decisions with respect to future RSUs or other grants, if any, will be at the sole discretion of the Company;

(d) the RSU grant and Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or services contract with the Company, the Employer, its Parent, Subsidiary or affiliate of the Company and shall not interfere with the ability of the Company, the Employer, its Parent, Subsidiary or affiliate of the Company, as applicable, to terminate Participant’s employment or service relationship (if any) for any reason;

(e) Participant is voluntarily participating in the Plan;

(f) the RSUs and the Shares subject to the RSUs, and the income and value of same, are not intended to replace any pension rights or compensation;

2

(g) the RSUs and the Shares subject to the RSUs, and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end‑of‑service payments, bonuses, long‑service awards, pension or retirement or welfare benefits or similar payments;

(h) the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;

(i) except for RSUs granted to Non-Employee Directors and Shares subject to such RSUs, unless otherwise agreed with the Company in writing, the RSUs and the Shares subject to the RSUs, and the income and value of same, are not granted as consideration for, or in connection with, any service Participant may provide as a director of the Company or any Subsidiary or affiliate;

(j) no claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs resulting from Participant’s Termination (for any reason whatsoever whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any), and in consideration of the grant of the RSUs to which Participant is otherwise not entitled, Participant irrevocably agrees never to institute any claim against the Company, its Parent, any of its Subsidiaries, affiliates or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Company, its Parent,  Subsidiaries and affiliates and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(k) unless otherwise provided in the Plan or by the Company in its discretion, the RSUs and the benefits evidenced by this Agreement do not create any entitlement to have the RSUs or any such benefits transferred to, or assumed by, another company nor be exchanged, cashed out or substituted for, in connection with any Corporate Transaction affecting the Shares of the Company; and

(l) the following additional provisions apply only if Participant is providing services outside the United States:

(i) the RSUs and the Shares subject to the RSUs, and the income and value of same, are not part of normal or expected compensation or salary for any purpose;

(ii) neither the Company, the Employer, its Parent, nor any Subsidiary or affiliate of the Company shall be liable for any foreign exchange rate fluctuation between Participant’s local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to Participant pursuant to the settlement of the RSUs or the subsequent sale of any Shares of acquired upon settlement.

9. No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Participant’s participation in the Plan, or Participant’s acquisition or sale of the underlying Shares.  Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

10. Data Privacy.  Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Participant’s personal data as described in this Agreement and any other RSU grant materials by and among, as applicable, the Employer, the Company, its Parent, Subsidiaries and affiliates for the exclusive purpose of implementing, administering and managing Participant’s participation in the Plan.

Participant understands that the Company and the Employer may hold certain personal information about Participant, including, but not limited to, Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all RSUs or any other entitlement to Shares awarded, canceled, vested, unvested or outstanding in Participant’s favor(“Data”), for the exclusive purpose of implementing, administering and managing the Plan.

Participant understands that Data will be transferred to a designated Plan broker or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan.  Participant understands that the recipients of Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than Participant’s country.  Participant understands that if he or she resides outside the United States, he or she may request a list with the names and addresses of any potential recipients of Data by contacting his or her local human resources representative.  Participant authorizes the Company, its designated Plan broker, and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for

3

the sole purpose of implementing, administering and managing his or her participation in the Plan.  Participant understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan.  Participant understands if he or she resides outside the United States, he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative.  Further, Participant understands that he or she is providing the consents herein on a purely voluntary basis.  If Participant does not consent, or if Participant later seeks to revoke his or her consent, Participant’s employment status and/or career with the Employer will not be adversely affected; the only consequence of refusing or withdrawing Participant’s consent is that the Company would not be able to grant Participant RSUs or other Awards or administer or maintain such Awards.  Therefore, Participant understands that refusing or withdrawing his or her consent may affect Participant’s ability to participate in the Plan.  For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, Participant understands that he or she may contact his or her local human resources representative.

11. Entire Agreement; Enforcement of Rights.  This Agreement, the Plan and the Notice constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them.  Any prior agreements, commitments or negotiations concerning the purchase of the Shares hereunder are superseded.  No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing and signed by the parties to this Agreement.  Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by Participant or any other Plan participant.

12. Compliance with Laws and Regulations.  Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Shares, the Company shall not be required to deliver any Shares issuable upon settlement of the RSUs prior to the completion of any registration or qualification of the Shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the U.S. SEC or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable.  Participant understands that the Company is under no obligation to register or qualify the Shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares.  Further, Participant agrees that the Company shall have unilateral authority to amend the Plan and the Agreement without Participant’s consent to the extent necessary to comply with securities or other laws applicable to issuance of Shares.

13. Governing Law and Venue; Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith.  In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of this Agreement shall be interpreted as if such provision were so excluded and (c) the balance of this Agreement shall be enforceable in accordance with its terms.  This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law.  For purposes of any action, lawsuit or other proceedings brought to enforce this Agreement, relating to it, or arising from it, the parties hereby submit to and consent to the sole and exclusive jurisdiction of the courts of San Mateo County, California, or the federal courts for the United States for the Northern District of California, and no other courts, where this grant is made and/or to be performed.

14. Electronic Delivery and Acceptance.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means.  Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on‑line or electronic system established and maintained by the Company or a third party designated by the Company.

15. Language.  If Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

16. Appendix.  Notwithstanding any provisions in this Agreement, the RSU grant shall be subject to any special terms and conditions set forth in any Appendix to this Agreement for Participant’s country.  Moreover, if Participant relocates to one of the countries included in the Appendix, the special terms and conditions for such country will apply to Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons.  The Appendix constitutes part of this Agreement.

4

17. Imposition of Other Requirements.  The Company reserves the right to impose other requirements on Participant’s participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

18. Insider Trading/Market Abuse Laws.  Participant acknowledges that, depending on his or her country, Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect his or her ability to acquire or sell Shares or rights to Shares (e.g., RSUs) under the Plan during such times as Participant is considered to have “inside information” regarding the Company (as defined by the laws in his or her country).  Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under the Company’s insider trading policy.  Participant acknowledges that it is his or her responsibility to comply with any applicable restrictions, including those imposed under the Company’s insider trading policy, and Participant should consult with his or her own personal legal and financial advisors on this matter before taking any action related to the Plan.

19. Foreign Asset/Account Reporting Requirements.  Participant acknowledges that there may be certain foreign asset and/or account reporting requirements which may affect his or her ability to acquire or hold Shares acquired under the Plan or cash received from participating in the Plan (including from any dividends received or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside his or her country.  Participant understands that he or she may be required to report such accounts, assets or transactions to the tax or other authorities in his or her country.  Participant also may be required to repatriate sale proceeds or other funds received as a result of his or her participation in the Plan to his or her country through a designated bank or broker and/or within a certain time after receipt.  Participant acknowledges that it is his or her responsibility to comply with all such requirements, and that Participant should consult his or her personal legal and tax advisors, as applicable, to ensure compliance.

[For employees that participate in the Company’s Change in Control Plan:

20.Corporate Transaction.  In the event of a Corporate Transaction (as defined in the Plan), any acceleration of a performance-based vesting schedule shall be in accordance with Section 21 of the Plan on Corporate Transactions.  Participant expressly agrees that the terms of the Plan, the Notice and this Agreement supersede and replace the terms of the Company’s Change in Control Plan for purposes of determining the acceleration of performance-based vesting in the event of a Corporate Transaction, including (for the avoidance of doubt) Section 5(i) of the Change in Control Plan.]

By the signature on, or electronic acceptance of, the Notice by each of the Participant and the Company’s representative, Participant and the Company agree that this RSU is granted under and governed by the terms and conditions of the Plan, the Notice and this Agreement.  Participant has reviewed the Plan, the Notice and this Agreement in its entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement, and fully understands all provisions of the Plan, the Notice and this Agreement.  Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice and this Agreement.  Participant further agrees to notify the Company upon any change in Participant’s residence address.

AWARD AGREEMENT (RESTRICTED STOCK UNITS) – INTERNATIONAL

APPENDIX A

IMPERVA, INC. 2011 STOCK OPTION AND INCENTIVE PLAN

Special Terms and Conditions for Participants Outside the U.S.

This Appendix includes additional country-specific terms and conditions that apply to Participants who reside and/or work in countries listed below. This Appendix is part of the Agreement and contains terms and conditions material to participation in the Plan. Unless otherwise provided below, capitalized terms used but not defined herein shall have the same meanings assigned to them in the Plan and the Agreement.

This Appendix includes information regarding exchange controls and certain other issues of which Participant should be aware, and is current as of April 2017. Participant acknowledges that local exchange control laws may apply to Participant as a result of the acquisition of Shares, opening of an off-shore bank or brokerage account and acquisition of foreign currency. By accepting the RSUs, Participant agrees to comply with applicable exchange control laws associated with participation in the Plan. Participant further acknowledges that if he or she has any questions regarding his or her responsibilities in this regard, Participant will seek advice from his or her personal legal advisor, at Participant’s own cost, and further agrees that neither the Company, its Parent, any Subsidiary or affiliate or the Employer will be liable for any fines or penalties resulting from Participant’s failure to comply with applicable laws concerning the acquisition and disposition of Shares.

If Participant is a citizen or resident of a country other than the one in which Participant currently resides and/or works, transfers employment and/or residency after the RSUs are granted or is considered resident of another country for local law purposes, the terms and conditions contained herein may not be applicable to Participant, and the Company shall, in its discretion, determine to what extent the terms and conditions contained herein shall apply to Participant.

Argentina

Securities Law Information.

Neither the RSUs nor the underlying Shares are publicly offered or listed on any stock exchange in Argentina. The offer is private and not subject to the supervision of any Argentine governmental authority.

Exchange Control Information.

Participant is solely responsible for complying with the exchange control rules that may apply in connection with participation in the Plan and/or transfer of proceeds from any dividends or the sale of Shares acquired under the Plan into Argentina. Prior to transferring proceeds from any dividends or the sale of Shares into Argentina, Participant should consult his or her local bank and/or exchange control advisor to confirm what will be required by the bank as interpretations of the applicable Argentine Central Bank regulations vary by bank and exchange control rules and regulations are subject to change without notice.

Tax Reporting Information.

If Participant holds Shares as of December 31 of any year, Participant is required to report the holding of the Shares on his or her tax return for the relevant year.

Australia

Securities Law Information.

If Participant acquires Shares pursuant to the RSUs and Participant offers the Shares for sale to a person or entity resident in Australia, the offer may be subject to disclosure requirements under Australian law. Participant should obtain legal advice on disclosure obligations prior to making any such offer.

Exchange Control Information.

Exchange control reporting is required for cash transactions exceeding A$10,000 and for international fund transfers. If an Australian bank is assisting with the transaction, the bank will file the report on Participant’s behalf.

Brazil

Compliance with Law.

By accepting the RSUs, Participant acknowledges that he or she agrees to comply with applicable Brazilian laws and to pay any and all applicable taxes associated with the vesting of the RSUs, the sale of the Shares acquired pursuant thereto, and the receipt of any dividends.

Acknowledgement of Nature of the Grant.

This provision supplements section 8 of the Agreement:

By accepting the RSUs, Participant agrees that he or she is making an investment decision, the Shares will be issued to Participant only if the vesting conditions are met and any necessary services are rendered by Participant over the vesting period, and the value of the underlying Shares is not fixed and may increase or decrease in value over the vesting period without compensation to Participant.

Exchange Control Information.

If Participant is a resident of or domiciled in Brazil, he or she will be required to submit an annual declaration of assets and rights held outside of Brazil to the Central Bank of Brazil if the aggregate value of the assets and rights is equal to or greater than US$100,000. Assets and rights that must be reported include Shares acquired under the Plan.

Tax on Financial Transactions (IOF).

Repatriation of funds (e.g., sale proceeds) into Brazil and the conversion of USD into BRL associated with such fund transfers may be subject to the Tax on Financial Transactions. It is Participant’s responsibility to comply with any applicable Tax on Financial Transactions arising from Participant’s participation in the Plan. Participant should consult with his or her personal tax advisor for additional details.

Canada

Securities Law Information.

Participant acknowledges that he or she is permitted to sell the Shares acquired under the Plan through the designated broker appointed by the Company, provided the sale of the Shares takes place outside of Canada through facilities of a stock exchange on which the Shares are listed (i.e., the NASDAQ Global Select Market).

Termination of Service.

The following provision replaces section 5 of the Agreement:

Upon Participant’s Termination (for any reason and whether or not later found to be invalid or in breach of Canadian laws or the terms of the Participant’s employment agreement, if any), all unvested RSUs shall be immediately forfeited without consideration. For purposes of the preceding sentence, Participant’s right to vest in the RSUs will terminate effective as of the date that is the earlier of (i) the date of Participant’s Termination, (ii) the date Participant receives notice of Termination as an active Employee, Director or Consultant of the Company, or (iii) the date Participant is no longer actively providing service and will not be extended by any notice period (e.g., active service would not include any contractual notice period or any period of “garden leave” or similar period mandated under Canadian laws or the terms of Participant’s employment agreement, if any); the Company shall have the exclusive discretion to determine when Participant is no longer actively providing service for purposes of the RSUs.

Foreign Asset/Account Reporting Information.

Canadian residents are required to report to the tax authorities any foreign specified property on form T1135 (Foreign Income Verification Statement) if the total cost of the foreign specified property exceeds C$100,000 at any time in the year. The form must be filed by April 30 of the following year. The RSUs must be reported -generally at a nil cost - if the C$100,000 cost threshold is exceeded because of other foreign specified property Participant holds. If Shares are acquired, their cost generally is the adjusted cost base (“ACB”) of the Shares. The ACB would normally equal the fair market value of the Shares at vesting, but if Participant owns other shares, this ACB may have to be averaged with the ACB of the other shares. Participant should consult with his or her personal legal advisor to ensure compliance with applicable reporting obligations.

The Following Provisions Apply for Participants Resident in Quebec:

Consent to Receive Information in English.

Participant acknowledges that it is the express wish of the parties that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be written in English.

Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présente convention.

Authorization to Release and Transfer Necessary Personal Information.

The following provision supplements section 10 of the Agreement:

Participant hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Plan. Participant further authorizes the Company, any Parent, Subsidiary or affiliate and the administrator of the Plan to disclose and discuss the Plan with their advisors. Participant further authorizes the Company and any Parent, Subsidiary or affiliate to record such information and to keep such information in Participant’s Employee file.

Colombia

Labor Law Acknowledgement.

Participant acknowledges that pursuant to Article 128 of the Colombian Labor Code, the Plan and related benefits do not constitute a component of “salary” for any legal purpose. Therefore, they will not be included and / or considered for purposes of calculating any and all labor benefits, such as legal / fringe benefits, vacations, indemnities, payroll taxes, social insurance contributions and / or any other labor-related amount which may be payable.

Securities Law Information.

The Shares are not and will not be registered in the Colombian registry of publicly traded securities (Registro Nacional de Valores y Emisores) and therefore the Shares may not be offered to the public in Colombia. Nothing in this document should be construed as the making of a public offer of securities in Colombia.

Exchange Control Information.

Investments in assets located abroad (including Shares) are subject to registration by Participant with the Central Bank (Banco de la República) if Participant’s aggregate investments held abroad (as of December 31 of the applicable calendar year) equal or exceed US$500,000. When Participant sells Shares acquired under the Plan (or other investments) held abroad, Participant may either choose to keep the resulting sums abroad, or to repatriate them to Colombia. If Participant chooses to repatriate funds to Colombia and has not registered the investment with Banco de la República, Participant will need to file with Banco de la República Form No. 5 upon conversion of funds into local currency, which should be duly completed to reflect the nature of the transaction. If Participant has registered the investment with Banco de la República, then Participant will need to file with Banco de la República Form No. 4 upon conversion of funds into local currency, which should be duly completed to reflect the nature of the transaction. If Participant receives Shares at vesting and immediately sells such Shares, then no registration is required because no Shares are held abroad. Participant should obtain proper legal advice in order to ensure compliance with applicable Colombian regulations.

France

Type of Grant

The RSUs are not intended to qualify for the specific tax and social security treatment under Sections L. 225-197-1 to L. 225-197-6 of the French Commercial Code, as amended.

Consent to Receive Information in English.

By accepting the grant of the RSUs, Participant confirms having read and understood the Plan and the Agreement, which were provided in English language. Participant accepts the terms of these documents accordingly.

En acceptant cette attribution gratuite d’actions, le Participant confirme avoir lu et compris le Plan et ce Contrat, incluant tous leurs termes et conditions, qui ont été transmis en langue anglaise. Le Participant accepte les dispositions de ces documents en connaissance de cause.

Foreign Asset/Account Reporting Information.

Participant may hold Shares acquired under the Plan outside of France provided that Participant annually declares all foreign bank and stock accounts, whether open, current or closed, together on Participant’s personal income tax return. Participant must also declare to the customs and excise authorities any cash or securities that Participant imports or exports without the use of a financial institution when the value of the cash or securities is equal to or exceeds €10,000.

Germany

Exchange Control Information.

Cross-border payments in excess of €12,500, including any cross-border payments received in connection with the sale of Shares acquired under the Plan or any dividends paid on such Shares, must be reported monthly to the German Federal Bank (Bundesbank). For payments made in connection with securities or financial derivatives (including any proceeds from the sale of Shares acquired under the Plan), the report must be made by the 5th day of the month following the month in which the payment was received. The report must be filed electronically. The form of report (“Allgemeines Meldeportal Statistik”) can be accessed via the Bundesbank’s website (www.bundesbank.de) and is available in both German and English. In addition, in the unlikely event that Participant holds Shares exceeding 10% of the total capital of the Company, Participant must report such holdings in the Company on an annual basis. Participant is responsible for complying with applicable reporting requirements.

Hong Kong

WARNING:The contents of this document have not been reviewed by any regulatory authority in Hong Kong. Participant should exercise caution in relation to the offer. If Participant is in any doubt about any of the contents of the Plan, the Agreement, including this Appendix, or other incidental communication materials, Participant should obtain independent professional advice. The RSUs and any Shares acquired upon vesting do not constitute a public offering of securities under Hong Kong law and are available only to eligible individuals employed or engaged by the Company, its Parent, or its Subsidiaries and affiliates. The Plan, the Agreement, including this Appendix, and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong. The RSUs are intended only for the personal use of each Participant and may not be distributed to any other person.

Settlement.

This provision supplements section 1 of the Agreement:

Shares received at vesting are accepted as a personal investment. Notwithstanding anything to the contrary in the Plan, the RSUs do not entitle Participant to receive a cash payment, and will only be settled in Shares. Further, in the event the RSUs vest and Shares are issued within six (6) months of the Date of Grant, Participant agrees not to sell or otherwise dispose of the Shares prior to the six (6) month anniversary of the Date of Grant.

India

Settlement.

The following provision supplements section 1 of the Agreement:

Due to local regulatory requirements, upon the settlement of the RSUs, Participant agrees to the immediate sale of any Shares issued to Participant. Participant further agrees that the Company is authorized to instruct its designated broker to assist with the mandatory sale of such Shares (on Participant’s behalf pursuant to this authorization) and Participant expressly authorizes the Company’s designated broker to complete the sale of such Shares. Participant acknowledges that the Company’s designated broker is under no obligation to arrange for the sale of the Shares at any particular price. Upon the sale of the Shares, the Company agrees to pay to Participant the cash proceeds from the sale of the Shares, less any brokerage fees or commissions, and subject to any obligation to satisfy Tax-Related Items (see below).

Exchange Control Information.

Participant understands that the RSUs are subject to compliance with the exchange control requirements of the Reserve Bank of India. Participant understands that Participant must repatriate any proceeds from the sale of Shares acquired under the Plan to India within 90 days of receipt and any dividends within 180 days of receipt, or within such other period of time as may be required under applicable regulations. Participant must obtain a foreign inward remittance certificate (“FIRC”) from the bank where Participant deposits the funds and must maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India or the Company or any Parent, Subsidiary or affiliate requests proof of repatriation.

Tax Obligations.

The following provision replaces section 6 of the Agreement for independent contractors:

If Participant is serving as an independent contractor, not an Employee, he or she acknowledges and agrees to accept all liability for income tax, social insurance, payroll tax, fringe benefits, payment on account or other tax related items arising out of Participant’s participation in the Plan and the acquisition of Shares (“Tax-Related Items”). Participant agrees that the Company and any Parent, Subsidiary or affiliate to which Participant provides services have no obligation to withhold or otherwise satisfy any Tax-Related Items due as a result of Participant’s participation in the Plan and the acquisition of Shares. Participant further acknowledges that the Company and/or any Parent, Subsidiary or affiliate retaining Participant (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the award of Shares, including, but not limited to, the issuance of the Shares, the sale of Shares and the receipt of any dividends or any distributions paid on such Shares; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Shares to reduce or eliminate Participant’s liability for Tax-Related Items or achieve any particular tax result.

Participant agrees to pay or make adequate arrangements to satisfy all Tax-Related Items. If, notwithstanding this agreement, the Company and/or any Parent, Subsidiary or affiliate are held liable for any Tax-Related Items due on the Shares resulting from a determination that Participant is not an independent contractor or any other reason, Participant agrees to indemnify and hold harmless the Company and any Parent, Subsidiary or affiliate to the extent of any obligation imposed on the Company or any Parent, Subsidiary or affiliate to pay any Tax-Related Items due on the Shares.

Foreign Asset/Account Reporting Information.

Participant is required to declare any foreign bank accounts and any foreign financial assets (including Shares held outside India) in Participant’s annual tax return. Participant is responsible for complying with this reporting obligation and should confer with his or her personal tax advisor in this regard.

Israel

Trust Arrangement.

Participant understands and agrees that the RSUs awarded under the Agreement are awarded subject to and in accordance with the terms and conditions of the Plan, the Appendix A to the Plan for Israel (the “Sub-Plan”), the Trust Agreement (the “Trust Agreement”) between the Company and the Company’s trustee appointed by the

Company or its Subsidiary in Israel (the “Trustee”) and the Agreement, or any successor trustee. In the event of any inconsistencies between the Sub-Plan, the Agreement and/or the Plan, the Sub-Plan will govern.

Nature of Grant.

The following provisions supplement section 8 of the Agreement:

The RSUs are intended to qualify for favorable tax treatment in Israel as a “Capital Gain Award” (as defined in the Sub-Plan) subject to the terms and conditions of Section 102(b)(2) of the Income Tax Ordinance (New Version) – 1961 (“Section 102”) (as defined in the Sub-Plan) and the rules promulgated therunder. Notwithstanding the foregoing, by accepting the RSUs, Participant acknowledges that the Company cannot guarantee or represent that the favorable tax treatment under Section 102 will apply to the RSUs.

By accepting the RSUs, Participant: (a) acknowledges receipt of and represents that Participant has read and is familiar with the terms and provisions of Section 102, the Plan, the Sub-Plan, the Trust Agreement and the Agreement; (b) accepts the RSUs subject to all of the terms and conditions of the Agreement, the Plan, the Sub-Plan, the Trust Agreement and Section 102 and the rules promulgated thereunder; and (c) agrees that the RSUs and/or any Shares issued in connection therewith, will be registered for the benefit of Participant in the name of the Trustee as required to qualify under Section 102.

Participant hereby undertakes to release the Trustee from any liability in respect of any action or decision duly taken and bona fide executed in relation to the Plan, or any RSUs or Share granted thereunder. Participant agrees to execute any and all documents which the Company or the Trustee may reasonably determine to be necessary in order to comply with Section 102 and the Income Tax Ordinance (New Version) – 1961 (“ITO”).

Payment.

Notwithstanding the Vesting Schedule set forth on the Notice, if the vesting of the RSUs occurs during the “Holding Period” (as defined in the Sub-Plan), the Shares issued upon the vesting of the RSUs shall be issued to and deposited with the Trustee for the benefit of Participant and shall be held in trust for the Holding Period. After termination of the Holding Period, the Trustee may release the RSUs and any Shares issued with respect thereto under the terms set forth in the Sub-Plan, and in accordance with the terms and conditions of Section 102, the ITO and any approval by the Israeli Tax Authority (“ITA”).

In the event that such vesting occurs after the end of the Holding Period, the Shares issued upon the vesting of the RSUs shall either (i) be deposited with the Trustee, or (ii) be transferred to Participant directly or into a brokerage account in his or her name, provided that Participant first complies with his or her obligations for Tax-Related Items.

In the event that Participant elects to have the Shares transferred to Participant without selling such Shares, Participant shall become liable to pay Tax-Related Items immediately in accordance with the provisions of the ITO. Participant will not be entitled to receive the Shares prior to the full payment of Tax-Related Items and neither the Company not the Trustee shall be required to release any Shares to Participant until all payments required to be made under the ITO have been fully satisfied.

Data Privacy.

The following provision supplements section 10 of the Agreement:

Without derogating from the scope of section 10 of the Agreement, Participant hereby explicitly consents to the transfer of Data between the Company, the Trustee, and/or a designated Plan broker, including any requisite transfer of such Data outside of the Participant’s country and further transfers thereafter as may be required to a broker or other third party.

Electronic Delivery and Acceptance.

The following provision supplements section 15 of the Agreement.

To the extent required pursuant to Israeli tax law and/or by the Trustee, Participant consents and agrees to deliver hard-copy written notices and/or actual copies of any notices or confirmations provided by Participant related to his or her participation in the Plan.

Securities Law Information.

The RSUs are offered in accordance with an exemption from the requirement to publish a prospectus which the Company received from the Israel Securities Authority on January 26, 2012, under Section 15D of the Israeli Securities Law, 1968.

The Shares available under the Plan are registered in the U.S. pursuant to the Form S-8 registration statement which was filed with the U.S. Securities and Exchange Commission on February 21, 2013.

Participant may obtain a copy of the Plan and the Forms S-8, including the documents referenced therein, from the Company’s intranet site located at:

https://compass.imperva.com/community/legal/stock_plan_prospectuses. These documents are also available at Participant’s local office.

Italy

Authorization to Release and Transfer Necessary Personal Information.

The following provision replaces in its entirety section 10 of the Agreement:

Participant understands that the Employer and/or the Company may hold certain personal information about Participant, including, but not limited to, Participant’s name, home address, email address and telephone number, date of birth, social security number, passport number (or any other social or national identification number), salary, nationality, job title, number of Shares held and the details of all RSUs or any other entitlement to Shares awarded, cancelled, exercised, vested, unvested or outstanding (the “Data”) for the purpose of implementing, administering and managing Participant’s participation in the Plan. Participant is aware that providing the Company with Participant’s Data is necessary for the performance of the Agreement and that Participant’s refusal to provide such Data would make it impossible for the Company to perform its contractual obligations and may affect Participant’s ability to participate in the Plan.

The Controller of personal data processing is Imperva, Inc., 1194 3400 Bridge Parkway, Suite 200, Redwood Shores, CA 94065, U.S.A., and, pursuant to D.lgs 196/2003, its representative in Italy is Imperva Italy s.r.l., c/o Regus Business Center, Via Senigallia, 18/2 Torre A, 20161 Milano, Italy. Participant understands that the Data may be transferred to the Company or any of its Parent, Subsidiaries or affiliates, or to any third parties assisting in the implementation, administration and management of the Plan, including any transfer required to a broker or other third party with whom Shares acquired pursuant to the vesting of the RSUs or cash from the sale of such Shares may be deposited. Furthermore, the recipients that may receive, possess, use, retain and transfer such Data for the above mentioned purposes may be located in Italy or elsewhere, including outside of the European Union and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than Participant’s country. The processing activity, including the transfer of Participant’s personal data abroad, outside of the European Union, as herein specified and pursuant to applicable laws and regulations, does not require Participant’s consent thereto as the processing is necessary for the performance of contractual obligations related to the implementation, administration and management of the Plan. Participant understands that Data processing relating to the purposes above specified shall take place under automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Data are collected and with confidentiality and security provisions as set forth by applicable laws and regulations, with specific reference to D.lgs. 196/2003.

Participant understands that Data will be held only as long as is required by law or as necessary to implement, administer and manage Participant’s participation in the Plan. Participant understands that pursuant to art.7 of D.lgs 196/2003, Participant has the right, including but not limited to, access, delete, update, request the rectification of Participant’s Data and cease, for legitimate reasons, the Data processing. Furthermore, Participant is aware that Participant’s Data will not be used for direct marketing purposes. In addition, the Data provided can be reviewed and questions or complaints can be addressed by contacting a local human resources representative.

Plan Document Acknowledgement.

In accepting the RSUs, Participant acknowledges that Participant has received a copy of the Plan and the Agreement and has reviewed the Plan and the Agreement, including this Appendix, in their entirety and fully understands and accepts all provisions of the Plan and the Agreement, including this Appendix. Participant further acknowledges that Participant has read and specifically and expressly approves the following sections of the Agreement: section 1: Settlement, section 4: No Transfer; section 5: Termination, section 6: Tax Obligations, section 8: Acknowledgement of Nature of the Grant; section 9: No Advice Regarding Grant, section 11: Entire Agreement; Enforcement of Rights, section 12: Compliance with Laws and Regulations; section 13: Governing Law and Venue; Severability, section 14: Electronic Delivery and Acceptance; section 15: Language, section 16: Appendix, section 17: Imposition of Other Requirements and the Data Privacy provisions above.

Foreign Asset/Account Reporting Information.

Italian residents who, during the fiscal year, hold investments abroad or foreign financial assets (e.g., cash, Shares and RSUs) which may generate income taxable in Italy are required to report such on their annual tax returns (UNICO form, RW Schedule) or on a special form if no tax return is due. The same reporting obligations apply to Italian residents who, even if they do not directly hold investments abroad or foreign financial assets (e.g., cash, Shares and RSUs), are beneficial owners of the investment pursuant to Italian money laundering provisions.

Tax on Foreign Financial Assets.

The value of the financial assets held outside of Italy by Italian residents is subject to a foreign asset tax at an annual rate of 2 per thousand (0.2%) . The taxable amount will be the fair market value of the financial assets (including Shares) assessed at the end of the calendar year. No tax payment duties arise if the amount of the foreign assets tax calculated on all financial assets held abroad does not exceed €12.

Japan

Foreign Asset/Account Reporting Information.

Participant is required to report details of any assets held outside of Japan as of December 31 (including Shares acquired under the Plan), to the extent such assets have a total net fair market value exceeding ¥50 million. Such report will be due by March 15 each year. Participant should consult with his or her personal tax advisor to determine if the reporting obligation applies to his or her personal situation.

Korea

Exchange Control Information.

Exchange control laws require Korean residents who realize US$500,000 or more from the sale of Shares or the receipt of dividends in a single transaction to repatriate the sale proceeds back to Korea within three years of the sale/receipt.

Foreign Asset/Account Reporting Information.

If Participant is a Korean resident, Participant must declare all of his or her foreign financial accounts (including any brokerage account) to the Korean tax authority and file a report with respect to such accounts if the value of such accounts exceeds KRW 1 billion (or an equivalent amount in foreign currency). Participant should consult with his or her personal tax advisor as to whether the reporting obligation applies.

Mexico

Acknowledgements.

This provision supplements section 8 of the Agreement:

By accepting the RSUs, Participant acknowledges that he or she has received a copy of the Plan and the Agreement, including this Appendix, which he or she has reviewed. Participant further acknowledges that he or she accepts all the provisions of the Plan and the Agreement, including this Appendix. Participant also acknowledges that he or she has read and specifically and expressly approves the terms and conditions set forth in section 8 of the Agreement, which clearly provide as follows:

1. Participant’s participation in the Plan does not constitute an acquired right;

2. The Plan and Participant’s participation in it are offered by the Company on a wholly discretionary basis;

3. Participant’s participation in the Plan is voluntary; and

4. The Company and its Subsidiaries are not responsible for any decrease in the value of any Shares acquired upon exercise of the RSUs.

Labor Law Acknowledgement and Policy Statement.

By accepting the RSUs, Participant acknowledges that Imperva, Inc. with registered offices at 3400 Bridge Parkway, Suite 200, Redwood Shores, CA 94065, U.S.A, is solely responsible for the administration of the Plan. Participant further acknowledges that his or her participation in the Plan, the grant of the RSUs and any acquisition of Shares under the Plan do not constitute an employment relationship between Participant and the Company because Participant is participating in the Plan on a wholly commercial basis. Based on the foregoing, Participant expressly acknowledges that the Plan and the benefits that he or she may derive from participation in the Plan do not establish any rights between Participant and the Company, and do not form part of any employment agreement between the Participant and the Company or any Parent or Subsidiary of the Company, and any modification of the Plan or its termination shall not constitute a change or impairment of the terms and conditions of Participant’s employment.

Participant further understands that his or her participation in the Plan is the result of a unilateral and discretionary decision of the Company and, therefore, the Company reserves the absolute right to amend and/or discontinue Participant’s participation in the Plan at any time, without any liability to Participant.

Finally, Participant hereby declares that he or she does not reserve to him or herself any action or right to bring any claim against the Company for any compensation or damages regarding any provision of the Plan or the benefits derived under the Plan, and that he or she therefore grants a full and broad release to the Company, any Parent or Subsidiaries, affiliates, branches, representation offices, shareholders, officers, agents and legal representatives, with respect to any claim that may arise.

Reconocimientos.

Esta disposición suplementa la sección 8 del Contrato:

Al aceptar las Unidades de Acciones Restringidas, el Partícipe reconoce que ha recibido una copia del Plan y del Contrato, incluyendo este Anexo, que ha sido revisado por el Partícipe. El Partícipe reconoce, además, que acepta todas las disposiciones del Plan y del Contrato, incluyendo este Anexo. El Partícipe también reconoce que ha leído la sección 8 del Contrato y específica y expresamente aprueba los términos y condiciones establecidos en dicha Sección, que claramente establece lo siguiente:

1. La participación del Partícipe en el Plan no constituye un derecho adquirido;

2. El Plan y la participación del Partícipe en el Plan se ofrecen por la Compañía de manera totalmente discrecional;

3. La participación del Partícipe en el Plan es voluntaria; y

4. La Compañía y sus Subsidiarias no son responsables por cualquier disminución en el valor de las Acciones adquiridas al ejercer las Unidades de Acciones Restringidas.

Reconocimiento de Ley Laboral y Declaración de Política.

Al aceptar las Unidades de Acciones Restringidas, el Partícipe reconoce que Imperva, Inc., con oficinas registradas en 3400 Bridge Parkway, Suite 200, Redwood Shores, CA 94065, EE.UU., es únicamente responsable por la administración del Plan. Además, el Partícipe reconoce que su participación en el Plan, el otorgamiento de las Unidades de Acciones Restringidas y cualquier adquisición de Acciones de conformidad con el Plan no constituyen una relación labora entre el Partícipe y la Compañía, toda vez que el Partícipe está participando en el Plan sobre una base exclusivamente comercial. Con base en lo anterior, el Partícipe expresamente reconoce que el Plan y los beneficios que deriven de la participación en el Plan no establecen derecho alguno entre el Partícipe y la Compañía y no forman parte de ningún contrato laboral entre el Participe y la Compañía o Matriz o Subsidiaria de la Compañía, y cualquier modificación del Plan o su terminación no constituirá un cambio o deterioro de los términos y condiciones del contrato laboral del Partícipe.

Además, el Partícipe entiende que su participación en el Plan es resultado de una decisión unilateral y discrecional de la Compañía y, por lo tanto, la Compañía se reserva el derecho absoluto de modificar y/o discontinuar la participación del Partícipe en el Plan en cualquier momento, sin responsabilidad alguna para con el Partícipe.

Finalmente, el Partícipe en este acto manifiesta que no se reserva ninguna acción o derecho para interponer una demanda o reclamación en contra de la Compañía por cualquier compensación o daño o perjuicio en relación con cualquier disposición del Plan o de los beneficios derivados del Plan y, en consecuencia, otorga un amplio y total finiquito a la Compañía, Matriz o Subsidiaria de la Compañía,, afiliadas, sucursales, oficinas de representación, accionistas, directores, funcionarios, agentes y representantes legales con respecto a cualquier demanda o reclamación que pudiera surgir.

Netherlands

No special provisions.

Panama

Securities Law Information.

The RSUs and any Shares which may be issued to Participant upon vesting and settlement are not subject to registration under Panamanian law as they are not intended for the public, but solely offered in a private transaction for Participant’s benefit.

Poland

Foreign Asset/Account Reporting Information.

Polish residents holding foreign securities (including Shares) and maintaining accounts abroad (including any brokerage account) must report information to the National Bank of Poland on transactions and balances of the securities and cash deposited in such accounts if the value of such securities and cash (calculated individually or together with all other assets/liabilities held abroad) exceeds a specified threshold (currently PLN7,000,000). If required, the reports are due on a quarterly basis on special forms available on the website of the National Bank of Poland.

Exchange Control Information.

Any transfer of funds in excess of a specified threshold (currently PLN15,000) must be effected through a bank account in Poland. Participant should maintain evidence of such foreign exchange transactions for five (5) years, in case of a request for their production by the National Bank of Poland.

Russia

U.S. Transaction.

Participant understands that the grant of the RSUs is a right to receive Shares if certain conditions are met and that the offer is made by the Company in the United States. Upon vesting of the RSUs, any Shares to be issued to Participant shall be delivered to Participant through a brokerage account in the United States.

Exchange Control Information.

Upon the sale of Shares acquired under the Plan or the receipt of dividends, Participant must repatriate the proceeds back to Russia within a reasonably short time after receipt. Participant may remit proceeds to Participant’s foreign currency account at an authorized bank in Russia or in a foreign bank account opened in accordance with Russian exchange control laws. Participant should contact Participant’s personal advisor before remitting Participant’s sale proceeds or dividends to Russia.

Securities Law Information.

Participant is not permitted to sell Shares directly to other Russian legal entities or residents.

The grant of the RSUs and the distribution of the Plan and all other materials Participant may receive regarding participation in the Plan do not constitute an offering or the advertising of securities in Russia. The issuance of

Shares pursuant to the Plan has not and will not be registered in Russia and, therefore, the Shares may not be used for an offering or public circulation in Russia. In no event will Shares be delivered to Participant in Russia; all Shares acquired under the Plan will be maintained on Participant’s behalf in the United States.

Data Privacy Acknowledgement.

Participant hereby acknowledges that he or she has read and understands the terms regarding collection, processing and transfer of Data contained in the Agreement and by participating in the Plan, Participant agrees to such terms. In this regard, upon request of the Company or the Employer, Participant agrees to provide an executed data privacy consent form to the Company or the Employer (or any other agreements or consents that may be required by the Company or the Employer) that the Company and/or the Employer may deem necessary to obtain under the data privacy laws of Russia, either now or in the future.

Labor Law Information.

If Participant continues to hold Shares after involuntary Termination, Participant may not be eligible to receive unemployment benefits in Russia.

Anti-Corruption Information.

Anti-corruption laws prohibit certain public servants, their spouses, and their dependent children from owning any foreign-source financial instruments (e.g., shares for foreign companies such as the Company). Accordingly, Participant should inform the Company if he or she is covered by these laws because Participant should not hold Shares acquired under the Plan.

Singapore

Restriction on Sale of Shares. Shares acquired under the Plan may not be sold or otherwise offered for sale in Singapore prior to the six (6) month anniversary of the Date of Grant, unless such sale or offer in Singapore is made pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the Singapore Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”).

Securities Law Information.

The RSUs are being granted pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the SFA under which the grant is exempt from prospectus and registration requirements and is not made with a view to the underlying Shares being subsequently offered for sale to any other party. The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore.

Chief Executive Officer and Director Reporting Notice.

If Participant is the chief executive officer (“CEO”), a director, associate director or shadow director of a Singapore Subsidiary or affiliate of the Company, as the terms are used in the Singapore Companies Act (the “SCA”), Participant agrees to comply with notification requirements under the SCA. Among these requirements is an obligation to notify the Singapore Subsidiary or affiliate in writing when Participant receives an interest (e.g., RSUs, Shares) in the Company or any related companies (including when Participant sells Shares acquired from the RSUs). In addition, Participant must notify the Singapore Subsidiary or affiliate when Participant sells or receives Shares of the Company or any related company (including when Participant sells or receives Shares acquired under the Plan). These notifications must be made within two business days of (i) acquiring or disposing of any interest in the Company or any related company, (ii) any change in the previously disclosed interest (e.g., when the RSUs vest), or (iii) becoming CEO or a director, associate director or shadow director if such an interest exists that that time. Participant should consult with his or her personal legal advisor regarding his or her notification obligations under the SCA.

South Africa

Securities Law Information.

In compliance with South African securities laws, the documents listed below are available for review on the Company’s “Investor Relations” website at http://www.imperva.com/company/investors.

(i)a copy of the Company’s most recent annual report (i.e., Form 10-K); and

(ii)a copy of the Plan Prospectus.

A copy of the above documents will be sent to Participant free of charge on written request to: Imperva, Inc., Stock Plan Administrator, 3400 Bridge Parkway, Suite 200, Redwood Shores, California 94065, U.S.A.

Participant should read the materials provided before making a decision whether to participate in the Plan. In addition, Participant should contact Participant’s tax advisor for specific information concerning his or her personal tax situation with regard to the Plan participation.

Tax Obligations.

The following provision supplements section 6 of the Agreement:

If Participant is an Employee, he or she must notify the Employer of the amount of any gain realized upon vesting of the RSUs. If Participant fails to advise the Employer of the gain realized upon vesting, then Participant may be liable for a fine. Participant will be responsible for paying any difference between the actual tax liability and the amount withheld.

Exchange Control Information.

Participant should consult his or her personal advisor prior to the acquisition or sale of Shares under the Plan or the receipt of dividends to ensure compliance with applicable exchange control regulations in South Africa, as such regulations are subject to frequent change. Participant is solely responsible for complying with all exchange control laws in South Africa, and neither the Company nor any Parent or Subsidiary will be liable for any fines or penalties resulting from Participant’s failure to comply with South African exchange control laws.

Spain

No Entitlement for Claims or Compensation.

The following provisions replace section 5 of the Agreement:

By accepting the RSUs, Participant consents to participation in the Plan and acknowledges that Participant has received a copy of the Plan document.

Participant understands and agrees that, as a condition of the grant of the RSUs, if Participant’s service Terminates (for any reason whatsoever, whether or not later to be found invalid or in breach of employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any), all unvested RSUs shall be forfeited to the Company forthwith, and all rights of Participant to such RSUs shall immediately terminate and will not be extended by any notice period (e.g., active services would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any). In particular, Participant understands and agrees that any unvested RSUs shall be forfeited without entitlement to the underlying Shares or to any amount as indemnification in the event of a Termination, including, but not limited to: resignation, disciplinary dismissal adjudged to be with Cause, disciplinary dismissal adjudged or recognized to be without Cause, individual or collective layoff on objective grounds, whether adjudged to be with Cause or adjudged or recognized to be without Cause, material modification of the terms of employment under Article 41 of the Workers’ Statute, relocation under Article 40 of the Workers’ Statute, Article 50 of the Workers’ Statute, unilateral withdrawal by the Employer, and under Article 10.3 of Royal Decree 1382/1985. In case of any dispute as to whether Termination has occurred (including whether Participant may still be considered to be providing services while on an approved leave

of absence), the Committee shall have sole discretion to determine whether such Termination has occurred and the effective date of such Termination.

Participant understands that the Company has unilaterally, gratuitously and in its sole discretion decided to grant RSUs under the Plan to individuals who may be Employees, Directors or Consultants throughout the world. The decision is limited and entered into based upon the express assumption and condition that any RSUs will not economically or otherwise bind the Company or any Parent, Subsidiary or affiliate, including the Employer, on an ongoing basis, other than as expressly set forth in the Agreement. Consequently, Participant understands that the RSUs are granted on the assumption and condition that the RSUs shall not become part of any employment contract (whether with the Company or any Parent, Subsidiary or affiliate, including the Employer) and shall not be considered a mandatory benefit, salary for any purpose (including severance compensation) or any other right whatsoever. Furthermore, Participant understands and freely accepts that there is no guarantee that any benefit whatsoever shall arise from the grant of RSUs, which is gratuitous and discretionary, since the future value of the RSUs and the underlying Shares is unknown and unpredictable. Participant also understands that the grant of RSUs would not be made but for the assumptions and conditions set forth hereinabove; thus, Participant understands, acknowledges and freely accepts that, should any or all of the assumptions be mistaken or any of the conditions not be met for any reason, the RSUs and any right to the underlying Shares shall be null and void.

Securities Law Information.

No “offer of securities to the public”, as defined under Spanish law, has taken place or will take place in the Spanish territory with respect to the RSUs. No public offering prospectus has been nor will be registered with the Comisión Nacional del Mercado de Valores (Spanish Securities Exchange Commission) (“CNMV”). Neither the Plan nor the Agreement constitute a public offering prospectus and they have not been, nor will they be, registered with the CNMV.

Exchange Control Information.

It is Participant’s responsibility to comply with exchange control regulations in Spain. Participant must declare the acquisition of Shares for statistical purposes to the Spanish Direccion General de Comercio e Inversiones (the “DGCI”) of the Ministry of Economy and Competitiveness. In addition, Participant must also file a Form D-6 with the Directorate of Foreign Transaction each January in which the Shares are owned. The sale of Shares also must be declared on Form D-6 filed with the DGCI in January, unless the sale proceeds exceed the applicable threshold (currently €1,502,530), in which case, the filing is due within one month after the sale.

Foreign Asset/Account Reporting Information. Participant is required to declare electronically to the Bank of Spain any securities accounts (including brokerage accounts held abroad), as well as the Shares held in such accounts if the value of the transactions during the prior tax year or the balances in such accounts as of December 31 of the prior tax year exceed €1,000,000.

Further, to the extent that Participant holds Shares and/or has bank accounts outside Spain with a value in excess of €50,000 (for each type of asset) as of December 31, Participant will be required to report information on such assets on his or her tax return (tax form 720) for such year. After such Shares and/or accounts are initially reported, the reporting obligation will apply for subsequent years only if the value of any previously-reported Shares or accounts increases by more than €20,000 or if Participant sells or otherwise disposes of any previously-reported Shares or accounts.

Sweden

No special provisions.

Switzerland

Securities Law Information.

The grant of the RSUs under the Plan is considered a private offering in Switzerland and is, therefore, not subject to registration in Switzerland. Neither this document nor any other material related to the RSUs constitutes a prospectus as such term is understood pursuant to Article 652a of the Swiss Code of Obligations, and neither this document nor any other materials related to the RSUs may be publicly distributed or otherwise made publicly

available in Switzerland. Neither this document not any other offering or marketing material has been or will be filed with, approved or supervised by any Swiss regulatory authority (in particular, the Swiss Financial Supervisory Authority (FINMA)).

Taiwan

Data Privacy Acknowledgement.

Participant hereby acknowledges that he or she has read and understands the terms regarding collection, processing and transfer of Data contained in section 10 of the Agreement and by participating in the Plan, Participant agrees to such terms. In this regard, upon request of the Company or the Employer, Participant agrees to provide an executed data privacy consent form to the Employer or the Company (or any other agreements or consents that may be required by the Employer or the Company) that the Company and/or the Employer may deem necessary to obtain under the data privacy laws in Participant’s country, either now or in the future. Participant understands that he or she will not be able to participate in the Plan if he or she fails to execute any such consent or agreement.

Securities Law Information.

The RSUs and the Shares to be issued pursuant to RSUs are available only for select individuals providing services to the Company and its Parents, Subsidiaries and affiliates. The grant of RSUs is not a public offer of securities by a Taiwanese company.

Exchange Control Information.

Participant may acquire and remit foreign currency (including proceeds from the sale of Shares and any cash dividends) up to US$5,000,000 per year without justification. If the transaction amount is TWD500,000 or more in a single transaction, Participant must submit a Foreign Exchange Transaction Form to the remitting bank and may also be required to provide additional supporting documentation to the satisfaction of the remitting bank.

Turkey

Securities Law Information.

The RSUs are made available only to Employees or Consultants of the Company, its Parent, Subsidiaries or affiliates, and the offer of participation in the Plan is a private offering. The grant of RSUs and the issuance of Shares at vesting take place outside of Turkey. Participant must sell Shares acquired under the Plan outside Turkey. The Shares are currently traded on the NASDAQ Global Select Market in the U.S. under the ticker symbol “IMPV” and may be sold on this exchange.

Financial Intermediary Obligation. Any activity related to investments in foreign securities (e.g., the sale of Shares) should be conducted through a bank or financial intermediary institution licensed by the Turkey Capital Markets Board and should be reported to the Turkish Capital Markets Board. Participant is solely responsible for complying with this requirement and should consult with his or her personal legal advisor for further information regarding any obligations in this respect.

United Arab Emirates

Securities Law Information.

The RSUs under the Plan are granted only to select Employees of the Company and its Parent, Subsidiaries and affiliates and are in the nature of providing employee equity incentives in the United Arab Emirates, including the Dubai Creative Clusters Authority. The Plan and the Agreement are intended for distribution only to such Employees and must not be delivered to, or relied on by, any other person. Prospective purchasers of the securities offered should conduct their own due diligence on the securities. If Participant does not understand the contents of the Plan and the Agreement, he or she should consult an authorized financial adviser. The Emirates Securities and Commodities Authority and the Dubai Financial Services Authority have no responsibility for reviewing or verifying any documents in connection with the Plan. Neither the Ministry of Economy, the Dubai Department of Economic Development nor the Dubai Financial Services Authority have approved the Plan or the Agreement nor taken steps to verify the information set out therein, and have no responsibility for such documents.

This statement also relates to any Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority.

United Kingdom

Employees Only.

In the United Kingdom, only Employees are eligible to be granted RSUs pursuant to the following additional terms:

Joint Election.

As a condition of the vesting of the RSUs under the Plan, Participant agrees to accept any liability for secondary Class 1 National Insurance contributions (“Employer NICs”) which may be payable by the Company or the Employer with respect to the vesting of the RSUs or otherwise payable in connection with the issuance of Shares. To accomplish the foregoing, Participant agrees to execute a joint election with the Company and/or the Employer (the “Election”), the form of such Election being formally approved by HM Revenue and Customs (“HMRC”), and any other consent or elections required to accomplish the transfer of the Employer NICs to Participant. Participant further agrees to execute such other joint elections as may be required between Participant and any successor to the Company and/or the Employer. Participant agrees to enter into an Election prior to the vesting of the RSUs. Participant further agrees that the Company and/or the Employer may collect the Employer NICs by any of the means set forth in section 6 of the Agreement.

Tax Obligations.

The following supplements section 6 of the Agreement:

Without limitation to Section 6 of the Agreement, Participant agrees that Participant is liable for all Tax-Related Items and hereby covenants to pay all such Tax-Related Items as and when requested by the Company or the Employer or by Her Majesty’s Revenue and Customs (“HMRC”) (or any other tax authority or any other relevant authority). Participant also agrees to indemnify and keep indemnified the Company and the Employer against any Tax–Related Items that they are required to pay or withhold on Participant’s behalf or have paid or will pay to HMRC (or any other tax authority or any other relevant authority).

IMPERVA, INC.

2011 STOCK OPTION AND INCENTIVE PLAN

NOTICE OF STOCK OPTION GRANT

Unless otherwise defined herein, the terms defined in the Imperva, Inc. (the “Company”) 2011 Stock Option and Incentive Plan (the “Plan”) shall have the same meanings in this Notice of Stock Option Grant (the “Notice”).

Name:

Address:

You (“Participant”) have been granted an option to purchase Shares of Common Stock of the Company under the Plan subject to the terms and conditions of the Plan, this Notice and the Stock Option Award Agreement, including any country‑specific terms and conditions contained in the attached Appendix (together, the “Agreement”).

Date of Grant:
Vesting Commencement Date:
Exercise Price per Share:
Total Number of Shares:
Type of Option:	_____ Non‑Qualified Stock Option (________ Options)
	_____ Incentive Stock Option (________ Options)
Expiration Date:
Post‑Termination Exercise Period:	Termination for Cause = None
	Voluntary Termination = 3 Months
	Termination without Cause = 3 Months
	Disability = 12 Months
	Death = 12 Months
Vesting Schedule:	Subject to the limitations set forth in this Notice, the Plan and the Agreement, the Option will vest and may be exercised, in whole or in part, in accordance with the following schedule: [INSERT VESTING SCHEDULE]

You acknowledge that the vesting of the Options pursuant to this Notice is earned only by continuing service as an active Employee, Director or Consultant of the Company. You also understand that this Notice is subject to the terms and conditions of both the Agreement and the Plan, both of which are incorporated herein by reference. By signing below or electronically accepting the Agreement, you confirm you have read and agreed to the terms and conditions of this Notice, the Agreement and the Plan.

PARTICIPANT:	IMPERVA, INC.
Signature:	By:
Print Name:	Its:
Date:	Date:

IMPERVA, INC.

2011 STOCK OPTION AND INCENTIVE PLAN

STOCK OPTION AWARD AGREEMENT

Unless otherwise defined herein, the terms defined in the Imperva, Inc. (the “Company”) 2011 Stock Option and Incentive Plan (the “Plan”) shall have the same defined meanings in this Stock Option Award Agreement, including any country‑specific terms and conditions contained in the attached Appendix (together, the “Agreement”).

Participant has been granted an option to purchase Shares (the “Option”), subject to the terms and conditions of the Plan, the Notice of Stock Option Grant (the “Notice”) and this Agreement.

1.Vesting Rights. Subject to the applicable provisions of the Plan and this Agreement, this Option may be exercised, in whole or in part, in accordance with the schedule set forth in the Notice. In the event Participant’s Termination (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any), Participant’s right to vest in the Option under the Plan, if any, will terminate effective as of the date that Participant is no longer actively providing services and will not be extended by any notice period (e.g., active services would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any); the Committee shall have the exclusive discretion to determine when Participant is no longer actively providing services for purposes of his or her Option grant (including whether Participant may still be considered to be providing services while on an approved leave of absence).

2. Termination Period.

(a) General Rule. Except as provided below, and subject to the Plan, this Option may be exercised for three months after Participant’s Termination with the Company or any Parent or Subsidiary. In no event shall this Option be exercised later than the Expiration Date set forth in the Notice.

(b) Death; Disability. Unless provided otherwise in the Notice, upon Participant’s Termination by reason of his or her Disability or death, or if a Participant dies within three months of the Termination Date, this Option may be exercised for twelve months, provided that in no event shall this Option be exercised later than the Expiration Date set forth in the Notice.

(c) Cause. Upon Participant’s Termination for Cause, the Option shall expire on such date of Participant’s Termination Date.

(d) Measurement Date. In the event of Participant’s Termination (whether or not in breach of local labor laws), Participant’s right to exercise the Option after Termination, if any, will be measured by the date of termination of Participant’s active services and will not be extended by any notice period mandated under employment laws in the jurisdiction where Participant is employed or terms of Participant’s employment agreement, if any).

3. Grant of Option. The Participant named in the Notice has been granted an Option for the number of Shares set forth in the Notice at the exercise price per Share set forth in the Notice (the “Exercise Price”). In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan shall prevail. If designated in the Notice as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option under Section 422 of the Code. However, if this Option is intended to be an ISO, to the extent that it exceeds the $100,000 rule of Code Section 422(d) it shall be treated as a Nonqualified Stock Option (“NSO”).

4. Exercise of Option.

(a) Right to Exercise. This Option is exercisable during its term in accordance with the Vesting Schedule set forth in the Notice and the applicable provisions of the Plan and this Agreement. In the event of Participant’s death, Disability, Termination for Cause or other Termination, the exercisability of the Option is governed by the applicable provisions of the Plan, the Notice and this Agreement.

(b) Method of Exercise. This Option is exercisable by delivery of an exercise notice (the “Exercise Notice”), which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan. The Exercise Notice shall be delivered in person, by mail, via electronic mail or facsimile or by other authorized method to the Secretary of the Company or other person designated by the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by such aggregate Exercise Price.

(c) Compliance with Laws. No Shares shall be issued pursuant to the exercise of this Option unless such issuance and exercise complies with all relevant provisions of securities law and the requirements of any stock exchange or quotation service upon which the Shares are then listed. Assuming such compliance, for tax purposes the Exercised Shares shall be considered transferred to the Participant on the date the Option is exercised with respect to such Exercised Shares.

(d) Death of Participant. In the event that the Participant ceases to be employed by, or ceases to provide services to, the Company as a result of the Participant’s death, then the Option may be exercised up to twelve months after Participant’s death by the Participant’s designee, provided that such designee has been designated prior to the Participant’s death on a form prescribed by Company; in the absence of any such effective designation, the Option may be exercised by the beneficiary designated by the Participant with the largest beneficial interest; or, if there is no single beneficiary with a majority or plurality of interest, then the Option may be exercised by the then‑acting trustee of the latest revocable trust established by Participant of which Participant was a beneficiary or, if none, by the administrator or executor of the Participant’s estate.

5. Method of Payment. Unless provided otherwise by the Company, in its sole discretion, or in the Appendix, payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Participant:

(a) cash;

(b) check;

(c) a “broker‑assisted” or “same‑day sale” (as described in Section 11(d) of the Plan); or

(d) other method authorized by the Company.

6. Non‑Transferability of Option. This Option may not be transferred in any manner other than by will or by the laws of descent or distribution or court order and may be exercised during the lifetime of Participant only by the Participant unless otherwise permitted by the Committee on a case‑by‑case basis. The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Participant. For any transfer by will or the laws of descent or distribution or court order to be binding, the transferee must furnish the Company with (A) written notice of his or her status as transferee, (B) a copy of the will and/or such evidence as the Committee may deem necessary to establish the validity of the transfer, and (C) an agreement by the transferee to comply with all the terms and conditions of the Option that are or would be applicable to the Participant and to be bound by the acknowledgments made by the Participant hereunder.

7. Term of Option. This Option shall in any event expire on the expiration date set forth in the Notice, which date is 10 years after the Date of Grant (five years after the Date of Grant if this Option is designated as an ISO in the Notice of Stock Option Grant and Section 5.3 of the Plan applies).

8. Tax Obligations. Participant acknowledges that, regardless of any action taken by the Company or, if different, Participant’s employer (the “Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax related items related to Participant’s participation in the Plan and legally applicable to Participant (“Tax‑Related Items”), is and remains Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. Participant further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax‑Related Items in connection with any aspect of the Option, including, but not limited to, the grant, vesting or exercise of the Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of

the Option to reduce or eliminate Participant’s liability for Tax‑Related Items or achieve any particular tax result. Further, if Participant is subject to Tax‑Related Items in more than one jurisdiction between the Date of Grant and the date of any relevant taxable or tax withholding event, as applicable, Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax‑Related Items in more than one jurisdiction.

Prior to the relevant taxable or tax withholding event, as applicable, Participant agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax‑Related Items. In this regard, Participant authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax‑Related Items by one or a combination of the following:

(a) withholding from Participant’s wages or other cash compensation paid to Participant by the Company and/or the Employer; or

(b) withholding from proceeds of the sale of Shares acquired at exercise of the Option either through a voluntary sale or through a mandatory sale arranged by the Company (on Participant’s behalf pursuant to this authorization) without further consent.

Depending on the withholding method, the Company may withhold or account for Tax‑Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates, in which case Participant will receive a refund of any over‑withheld amount in cash and will have no entitlement to the Common Stock equivalent.

Finally, Participant agrees to pay to the Company or the Employer any amount of Tax‑Related Items that the Company or the Employer may be required to withhold or account for as a result of Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares if Participant fails to comply with his or her obligations in connection with the Tax‑Related Items.

9. Acknowledgement of Nature of the Grant. The Company and Participant agree that the Option is granted under and governed by this Agreement and by the provisions of the Plan (incorporated herein by reference). Participant acknowledges receipt of a copy of the Plan and the Plan prospectus, represents that Participant has carefully read and is familiar with their provisions and hereby accepts the Option subject to all of the terms and conditions set forth herein and those set forth in the Plan and the Notice. Participant further acknowledges, understands and agrees that:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature, and may be amended, suspended or Terminated by the Company at any time, to the extent permitted by the Plan;

(b) the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of Options, or benefits in lieu of Options, even if Options have been granted in the past;

(c) all decisions with respect to future Option or other grants, if any, will be at the sole discretion of the Company;

(d) the Option grant and Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or service contract with the Company, the Employer or any Parent, Subsidiary or affiliate of the Company, and shall not interfere with the ability of the Company, the Employer or any Parent, Subsidiary or affiliate of the Company, as applicable, to terminate Participant’s employment or service relationship (if any);

(e) Participant is voluntarily participating in the Plan;

(f) the Option and any Shares acquired under the Plan are not intended to replace any pension rights or compensation;

(g) the Option and any Shares acquired under the Plan and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end‑of‑service payments, bonuses, long‑service awards, pension or retirement or welfare benefits or similar payments;

(h) the future value of the Shares underlying the Option is unknown, indeterminable, and cannot be predicted with certainty;

(i) if the underlying Shares do not increase in value, the Option will have no value;

(j) if Participant exercises the Option and acquires Shares, the value of such Shares of may increase or decrease in value, even below the Exercise Price;

(k) no claim or entitlement to compensation or damages shall arise from forfeiture of the Option resulting from Participant’s Termination (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Participant is employed or the terms of Participant’s employment agreement, if any), and in consideration of the grant of the Option to which Participant is otherwise not entitled, Participant irrevocably agrees never to institute any claim against the Company, its Parent, or any of its Subsidiaries or affiliates or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Company, its Parent, Subsidiaries and affiliates and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Participant shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(l) unless otherwise provided in the Plan or by the Company in its discretion, the Option and the benefits evidenced by this Agreement do not create any entitlement to have the Option or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any Corporate Transaction affecting the Shares; and

(m) the following additional provisions apply only if Participant is providing services outside the United States:

(i) the Option and the Shares subject to the Option are not part of normal or expected compensation or salary for any purpose;

(ii) Participant acknowledges and agrees that neither the Company, the Employer nor any Parent, Subsidiary or affiliate of the Company shall be liable for any foreign exchange rate fluctuation between Participant’s local currency and the United States Dollar that may affect the value of the Option or of any amounts due to Participant pursuant to the exercise of the Option or the subsequent sale of any Shares acquired upon exercise.

10. No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Participant’s participation in the Plan, or Participant’s acquisition or sale of the underlying Shares. Participant understands and agrees that Participant should consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

11. Data Privacy. Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Participant’s personal data as described in this Agreement and any other Option grant materials by and among, as applicable, the Employer, the Company and its Parent, Subsidiaries and affiliates for the purpose of implementing, administering and managing Participant’s participation in the Plan.

Participant understands that the Company and the Employer may hold certain personal information about Participant, including, but not limited to, Participant’s name, home address, email address, telephone number, date of birth, social insurance number, passport or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all Options or any other entitlement to Shares or equivalent benefits awarded, canceled, exercised, purchased, vested, unvested or outstanding in Participant’s favor (“Data”), for the purpose of implementing, administering and managing the Plan.

Participant understands that Data will be transferred to a designated Plan broker or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than Participant’s country. Participant understands that if he or she resides outside the United States, he or she may request a list with the names and addresses of any

potential recipients of the Data by contacting his or her local human resources representative. Participant authorizes the Company, its designed Plan broker and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Participant’s participation in the Plan. Participant understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan. Participant understands that if he or she resides outside the United States, he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Further, Participant understands that he or she is providing the consents herein on a purely voluntary basis. If Participant does not consent, or if Participant later seeks to revoke his or her consent, his or her employment status or service with the Employer will not be affected; the only adverse consequence of refusing or withdrawing Participant’s consent is that the Company would not be able to grant Options or other Awards to Participant or administer or maintain such Awards. Therefore, Participant understands that refusing or withdrawing his or her consent may affect Participant’s ability to participate in the Plan. For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, Participant understands that he or she may contact his or her local human resources representative.

12. Entire Agreement; Enforcement of Rights. This Agreement, the Plan and the Notice constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between the parties. Any prior agreements, commitments or negotiations concerning the purchase of the Shares hereunder are superseded. Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by Participant or any other Plan participant.

13. Compliance with Laws and Regulations. Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Shares, the Company shall not be required to deliver any Shares issuable upon exercise of the Option prior to the completion of any registration or qualification of the Shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the U.S. SEC or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable. Participant understands that the Company is under no obligation to register or qualify the Shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Further, Participant agrees that the Company shall have unilateral authority to amend the Plan and the Agreement without Participant’s consent to the extent necessary to comply with securities or other laws applicable to issuance of Shares.

14. Governing Law and Venue; Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this Agreement shall be enforceable in accordance with its terms. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law. The Option grant and the provisions of this Agreement are governed by, and subject to, the laws of the State of Delaware, without regard to the conflict of law provisions. For purposes of any action, lawsuit or other proceedings brought to enforce this Agreement, relating to it, or arising from it, the parties hereby submit to and consent to the sole and exclusive jurisdiction of the courts of San Mateo County, California, or the federal courts for the United States for the Northern District of California, and no other courts, where this grant is made and/or to be performed.

15. Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on‑line or electronic system established and maintained by the Company or a third party designated by the Company.

16. Language. Participant acknowledges that Participant is sufficiently proficient in English to understand the terms and conditions of this Agreement.Furthermore, if Participant has received this Agreement, or any other document related to the Option and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

17. Appendix. Notwithstanding any provisions in this Agreement, the Option grant shall be subject to any special terms and conditions set forth in any Appendix to this Agreement for Participant’s country. Moreover, if Participant relocates to one of the countries included in the Appendix, the special terms and conditions for such country will apply to Participant to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix constitutes part of this Agreement.

18. Imposition of Other Requirements. The Company reserves the right to impose other requirements on Participant’s participation in the Plan, on the Option and on any Shares acquired upon exercise of the Option, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

By the signature on, or electronic acceptance of, the Notice by each of the Participant and the Company’s representative, Participant and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan, the Notice and this Agreement. Participant has reviewed the Plan, the Notice and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing the Notice, and fully understands all provisions of the Plan, the Notice and this Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice and the Agreement. Participant further agrees to notify the Company upon any change in the residence address indicated on the Notice.

IMPERVA, INC.

2011 STOCK OPTION AND INCENTIVE PLAN

NOTICE OF STOCK BONUS AWARD

Unless otherwise defined herein, the terms defined in the Imperva, Inc. (the “Company”) 2011 Stock Option and Incentive Plan (the “Plan”) shall have the same meanings in this Notice of Stock Bonus Award (the “Notice”).

Name:

Address:

You (“Participant”) have been granted an award of Shares under the Plan subject to the terms and conditions of the Plan, this Notice, and the attached Stock Bonus Award Agreement (the “Stock Bonus Agreement”) to the Plan.

Number of Shares:
Date of Grant:
Vesting Commencement Date:
Expiration Date:	The date on which all the Shares granted hereunder become vested, with earlier expiration upon the Termination Date
Vesting Schedule:	Subject to the limitations set forth in this Notice, the Plan and the Stock Bonus Agreement, the Shares will vest in accordance with the following schedule:  [INSERT VESTING SCHEDULE]

You understand that your employment or consulting relationship or service with the Company is for an unspecified duration, can be terminated at any time (i.e., is “at-will”), and that nothing in this Notice, the Stock Bonus Agreement or the Plan changes the at-will nature of that relationship. You acknowledge that the vesting of the Shares pursuant to this Notice is earned only by continuing service as an Employee, Director or Consultant of the Company. You also understand that this Notice is subject to the terms and conditions of both the Stock Bonus Agreement and the Plan, both of which are incorporated herein by reference. You have read both the Stock Bonus Agreement and the Plan.

PARTICIPANT	IMPERVA, INC.
Signature:	By:
Print Name:	Its:
Date:	Date:

IMPERVA, INC.

2011 STOCK OPTION AND INCENTIVE PLAN

STOCK BONUS AWARD AGREEMENT

Unless otherwise defined herein, the terms defined in the Imperva, Inc. (the “Company”) 2011 Stock Option and Incentive Plan (the “Plan”) shall have the same defined meanings in this Stock Bonus Agreement (the “Agreement”).

Participant has been granted a Stock Bonus Award (“Stock Bonus Award”) subject to the terms, restrictions and conditions of the Plan, the Notice of Stock Bonus Award (the “Notice”) and this Agreement.

1. Issuance. Stock Bonus Awards shall be issued in Shares, and the Company’s transfer agent shall record ownership of such Shares in Participant’s name as soon as reasonably practicable.

2. Stockholder Rights. Participant shall have no right to dividends or to vote Shares until Participant is recorded as the holder of such Shares on the stock records of the Company and its transfer agent.

3. No-Transfer. Unvested Shares, and unvested Stock Bonus Awards, and any interest in either shall not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of by Participant or any person whose interest derives from Participant’s interest. “Unvested Shares” are Shares that have not yet vested pursuant to the terms of the vesting schedule set forth in the Notice.

4. Termination. Upon Participant’s Termination for any reason, all Unvested Shares shall immediately be forfeited to the Company, and all rights of Participant to such Unvested Shares shall immediately terminate as of Participant’s Termination Date. In case of any dispute as to whether Termination has occurred, the Committee shall have sole discretion to determine whether such Termination has occurred and the effective date of such Termination.

5. U.S. Tax Consequences. Upon vesting of Shares, Participant will include in taxable income the difference between the fair market value of the vesting Shares, as determined on the date of their vesting, and the price paid for the Shares. This will be treated as ordinary income by Participant and will be subject to withholding by the Company when required by applicable law. Before any Shares subject to this Agreement are issued the Company shall withhold a number of Shares with a fair market value (determined on the date the Shares are issued) equal to the minimum amount the Company is required to withhold for income and employment taxes. Upon disposition of the Shares, any subsequent increase or decrease in value will be treated as short-term or long-term capital gain or loss, depending on whether the Shares are held for more than one year from the date of settlement.

6. Acknowledgement. The Company and Participant agree that the Stock Bonus Award is granted under and governed by the Notice, this Agreement and by the provisions of the Plan (incorporated herein by reference). Participant: (a) acknowledges receipt of a copy of the Plan and the Plan prospectus, (b) represents that Participant has carefully read and is familiar with their provisions, and (c) hereby accepts the Stock Bonus Award subject to all of the terms and conditions set forth herein and those set forth in the Plan, this Agreement and the Notice.

7. Entire Agreement; Enforcement of Rights. This Agreement, the Plan and the Notice constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning the purchase of the Shares hereunder are superseded. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing and signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.

8. Compliance with Laws and Regulations. The issuance of Shares will be subject to and conditioned upon compliance by the Company and Participant with all applicable state and federal laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer.

1

9. Governing Law; Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of this Agreement shall be interpreted as if such provision were so excluded, and (c) the balance of this Agreement shall be enforceable in accordance with its terms. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law.

10. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate Purchaser^’s service, for any reason, with or without cause.

By the signature on, or electronic acceptance of, the Notice by each of the Participant and the Company’s representative, Participant and the Company agree that this Stock Bonus Award is granted under and governed by the terms and conditions of the Plan, the Notice and this Agreement. Participant has reviewed the Plan, the Notice and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement, and fully understands all provisions of the Plan, the Notice and this Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice and this Agreement. Participant further agrees to notify the Company upon any change in Participant’s residence address.

2

IMPERVA, INC.

2011 STOCK OPTION AND INCENTIVE PLAN

NOTICE OF RESTRICTED STOCK AWARD

Unless otherwise defined herein, the terms defined in the Imperva, Inc. (the “Company”) 2011 Stock Option and Incentive Plan (the “Plan”) shall have the same meanings in this Notice of Restricted Stock Award (the “Notice”).

Name:

Address:

You (“Participant”) have been granted an award of Restricted Shares of Common Stock of Imperva, Inc. (the “Company”) under the Plan subject to the terms and conditions of the Plan, this Notice and the attached Restricted Stock Agreement (the “Restricted Stock Purchase Agreement”).

Total Number of Restricted Shares Awarded:
Fair Market Value per Restricted Share:	$
Total Fair Market Value of Award:	$
Purchase Price per Restricted Share:	$
Total Purchase Price for all Restricted Shares:	$
Date of Grant:
Vesting Commencement Date:
	Vesting Schedule: Subject to the limitations set forth in this Notice, the Plan and the Restricted Stock Purchase Agreement, the Restricted Shares will vest and the right of repurchase shall lapse, in whole or in part, in accordance with the following schedule: [INSERT VESTING SCHEDULE]

You understand that your employment or consulting relationship with the Company is for an unspecified duration, can be terminated at any time (i.e., is “at-will”), and that nothing in this Notice, the Restricted Stock Agreement or the Plan changes the at-will nature of that relationship. You acknowledge that the vesting of the Restricted Shares pursuant to this Notice is earned only by continuing service as an Employee, Director or Consultant of the Company. You also understand that this Notice is subject to the terms and conditions of both the Restricted Stock Agreement and the Plan, both of which are incorporated herein by reference. You have read both the Restricted Stock Agreement and the Plan. If the Restricted Stock Purchase Agreement is not executed or accepted electronically by you within thirty (30) days of the Date of Grant above, then this grant shall be void.

RECIPIENT	IMPERVA, INC.
Signature:	By:
Print Name:	Its:
Date:	Date:

IMPERVA, INC.

2011 STOCK OPTION AND INCENTIVE PLAN

RESTRICTED STOCK AGREEMENT

THIS RESTRICTED STOCK AGREEMENT (this “Agreement”) is made as of , 20 by and between Imperva, Inc., a Delaware corporation (the “Company”), and (“Participant”) pursuant to the Company’s 2011 Stock Option and Incentive Plan (the “Plan”). Unless otherwise defined herein, the terms defined in the Plan shall have the same meanings in this Agreement.

1. Sale of Stock. Subject to the terms and conditions of this Agreement, on the Purchase Date (as defined below) the Company will issue and sell to Participant, and Participant agrees to purchase from the Company the number of Shares shown on the Notice of Restricted Stock Award (the “Notice”) at a purchase price of $            per Share. The per Share purchase price of the Shares shall be not less than the par value of the Shares as of the date of the offer of such Shares to the Participant. The term “Shares” refers to the purchased Shares and all securities received in replacement of or in connection with the Shares pursuant to stock dividends or splits, all securities received in replacement of the Shares in a recapitalization, merger, reorganization, exchange or the like, and all new, substituted or additional securities or other properties to which Participant is entitled by reason of Participant’s ownership of the Shares.

2. Time and Place of Purchase. The purchase and sale of the Shares under this Agreement shall occur at the principal office of the Company simultaneously with the execution of this Agreement by the parties, or on such other date as the Company and Participant shall agree (the “Purchase Date”). On the Purchase Date, the Company will issue in Participant’s name a stock certificate representing the Shares to be purchased by Participant against payment of the purchase price therefor by Participant by (a) check made payable to the Company, (b) cancellation of indebtedness of the Company to Participant, (c) Participant’s personal services that the Committee has determined have already been rendered to the Company and have a value not less than aggregate par value of the Shares to be issued Participant, or (d) a combination of the foregoing.

3. Restrictions on Resale. By signing this Agreement, Participant agrees not to sell any Shares acquired pursuant to the Plan and this Agreement at a time when applicable laws, regulations or Company or underwriter trading policies prohibit exercise or sale. This restriction will apply as long as Participant is providing service to the Company or a Subsidiary of the Company.

3.1 Repurchase Right on Termination Other Than for Cause. For the purposes of this Agreement, a “Repurchase Event” shall mean an occurrence of one of the following:

(i) termination of Participant’s service, whether voluntary or involuntary and with or without cause;

(ii) resignation, retirement or death of Participant; or

(iii) any attempted transfer by Participant of the Shares, or any interest therein, in violation of this Agreement.

Upon the occurrence of a Repurchase Event, the Company shall have the right (but not an obligation) to purchase the Shares of Participant at a price equal to the Purchase Price per Share (the “Repurchase Right”). The Repurchase Right shall lapse in accordance with the vesting schedule set forth in the Notice. For purposes of this Agreement, “Unvested Shares” means Stock pursuant to which the Company’s Repurchase Right has not lapsed.

1

3.2Exercise of Repurchase Right. Unless the Company provides written notice to Participant within 90 days from the date of termination of Participant’s service to the Company that the Company does not intend to exercise its Repurchase Right with respect to some or all of the Unvested Shares, the Repurchase Right shall be deemed automatically exercised by the Company as of the 90th day following such termination, provided that the Company may notify Participant that it is exercising its Repurchase Right as of a date prior to such 90th day. Unless Participant is otherwise notified by the Company pursuant to the preceding sentence that the Company does not intend to exercise its Repurchase Right as to some or all of the Unvested Shares, execution of this Agreement by Participant constitutes written notice to Participant of the Company’s intention to exercise its Repurchase Right with respect to all Unvested Shares to which such Repurchase Right applies at the time of Termination of Participant. The Company, at its choice, may satisfy its payment obligation to Participant with respect to exercise of the Repurchase Right by either (a) delivering a check to Participant in the amount of the purchase price for the Unvested Shares being repurchased, or (b) in the event Participant is indebted to the Company, canceling an amount of such indebtedness equal to the purchase price for the Unvested Shares being repurchased, or (c) by a combination of (a) and (b) so that the combined payment and cancellation of indebtedness equals such purchase price. In the event of any deemed automatic exercise of the Repurchase Right by canceling an amount of such indebtedness equal to the purchase price for the Unvested Shares being repurchased, such cancellation of indebtedness shall be deemed automatically to occur as of the 90th day following termination of Participant’s employment or consulting relationship unless the Company otherwise satisfies its payment obligations. As a result of any repurchase of Unvested Shares pursuant to the Repurchase Right, the Company shall become the legal and beneficial owner of the Unvested Shares being repurchased and shall have all rights and interest therein or related thereto, and the Company shall have the right to transfer to its own name the number of Unvested Shares being repurchased by the Company, without further action by Participant.

3.3 Acceptance of Restrictions. Acceptance of the Shares shall constitute Participant’s agreement to such restrictions and the legending of his or her certificates with respect thereto. Notwithstanding such restrictions, however, so long as Participant is the holder of the Shares, or any portion thereof, he or she shall be entitled to receive all dividends declared on and to vote the Shares and to all other rights of a stockholder with respect thereto.

3.4 Non-Transferability of Unvested Shares. In addition to any other limitation on transfer created by applicable securities laws or any other agreement between the Company and Participant, Participant may not transfer any Unvested Shares, or any interest therein, unless consented to in writing by a duly authorized representative of the Company. Any purported transfer is void and of no effect, and no purported transferee thereof will be recognized as a holder of the Unvested Shares for any purpose whatsoever. Should such a transfer purport to occur, the Company may refuse to carry out the transfer on its books, set aside the transfer, or exercise any other legal or equitable remedy. In the event the Company consents to a transfer of Unvested Shares, all transferees of Shares or any interest therein will receive and hold such Shares or interest subject to the provisions of this Agreement, including, insofar as applicable, the Repurchase Right. In the event of any purchase by the Company hereunder where the Shares or interest are held by a transferee, the transferee shall be obligated, if requested by the Company, to transfer the Shares or interest to the Participant for consideration equal to the amount to be paid by the Company hereunder. In the event the Repurchase Right is deemed exercised by the Company, the Company may deem any transferee to have transferred the Shares or interest to Participant prior to their purchase by the Company, and payment of the purchase price by the Company to such transferee shall be deemed to satisfy Participant’s obligation to pay such transferee for such Shares or interest, and also to satisfy the Company’s obligation to pay Participant for such Shares or interest.

3.5 Assignment. The Repurchase Right may be assigned by the Company in whole or in part to any persons or organization.

4. Restrictive Legends and Stop Transfer Orders.

4.1 Legends. The certificate or certificates representing the Shares shall bear the following legend (as well as any legends required by applicable state and federal corporate and securities laws):

THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

2

4.2Stop-Transfer Notices. Participant agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

4.3 Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as the owner or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

5. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate Participant^’s service, for any reason, with or without cause.

6. Miscellaneous.

6.1 Acknowledgement. The Company and Participant agree that the Restricted Shares are granted under and governed by the Notice, this Agreement and by the provisions of the Plan (incorporated herein by reference). Participant: (a) acknowledges receipt of a copy of the Plan and the Plan prospectus, (b) represents that Participant has carefully read and is familiar with their provisions, and (c) hereby accepts the Restricted Shares subject to all of the terms and conditions set forth herein and those set forth in the Plan and the Notice.

6.2 Entire Agreement; Enforcement of Rights. This Agreement, the Plan and the Notice constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning the purchase of the Shares hereunder are superseded. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing and signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.

6.3 Compliance with Laws and Regulations. The issuance of Shares will be subject to and conditioned upon compliance by the Company and Participant with all applicable state and federal laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer.

6.4 Governing Law; Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of this Agreement shall be interpreted as if such provision were so excluded and (c) the balance of this Agreement shall be enforceable in accordance with its terms. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law.

6.5 Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against any one of the parties hereto.

6.6 Notices. Any notice to be given under the terms of the Plan shall be addressed to the Company in care of its principal office, and any notice to be given to the Participant shall be addressed to such Participant at the address maintained by the Company for such person or at such other address as the Participant may specify in writing to the Company.

6.7 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall he deemed an original and all of which together shall constitute one instrument.

3

6.8U.S. Tax Consequences. Upon vesting of Shares, Participant will include in taxable income the difference between the fair market value of the vesting Shares, as determined on the date of their vesting, and the price paid for the Shares. This will be treated as ordinary income by Participant and will be subject to withholding by the Company when required by applicable law. In the absence of an Election (defined below), the Company shall withhold a number of vesting Shares with a fair market value (determined on the date of their vesting) equal to the minimum amount the Company is required to withhold for income and employment taxes. If Participant makes an Election, then Participant must, prior to making the Election, pay in cash (or check) to the Company an amount equal to the amount the Company is required to withhold for income and employment taxes.

7. Section 83(b) Election. Participant hereby acknowledges that he or she has been informed that, with respect to the purchase of the Shares, an election may be filed by the Participant with the Internal Revenue Service, within 30 days of the purchase of the Shares, electing pursuant to Section 83(b) of the Code to be taxed currently on any difference between the purchase price of the Shares and their Fair Market Value on the date of purchase (the “Election”). Making the Election will result in recognition of taxable income to the Participant on the date of purchase, measured by the excess, if any, of the Fair Market Value of the Shares over the purchase price for the Shares. Absent such an Election, taxable income will be measured and recognized by Participant at the time or times on which the Company’s Repurchase Right lapses. Participant is strongly encouraged to seek the advice of his or her own tax consultants in connection with the purchase of the Shares and the advisability of filing of the Election. PARTICIPANT ACKNOWLEDGES THAT IT IS SOLELY PARTICIPANT’S RESPONSIBILITY, AND NOT THE COMPANY’S RESPONSIBILITY, TO TIMELY FILE THE ELECTION UNDER SECTION 83(b) OF THE CODE, EVEN IF PARTICIPANT REQUESTS THE COMPANY, OR ITS REPRESENTATIVE, TO MAKE THIS FILING ON PARTICIPANT’S BEHALF.  

The parties have executed or electronically accepted this Agreement as of the date first set forth above.

IMPERVA, INC.

By:

Its:

RECIPIENT:

Signature

Please Print Name

4

RECEIPT

Imperva, Inc. hereby acknowledges receipt of (check as applicable):

☐  A check in the amount of $                

☐  The cancellation of indebtedness in the amount of $                

given by                 as consideration for Certificate No. -            for             shares of Common Stock of Imperva, Inc.

Dated:                     

IMPERVA, INC.

By:

Its:

RECEIPT AND CONSENT

The undersigned Participant hereby acknowledges receipt of a photocopy of Certificate No. - for shares of Common Stock of Imperva, Inc. (the “Company”)

The undersigned further acknowledges that the Secretary of the Company, or his or her designee, is acting as escrow holder pursuant to the Restricted Stock Agreement that Participant has previously entered into with the Company. As escrow holder, the Secretary of the Company, or his or her designee, holds the original of the aforementioned certificate issued in the undersigned’s name. To facilitate any transfer of Shares to the Company pursuant to the Restricted Stock Agreement, Participant has executed the attached Assignment Separate from Certificate.

Dated:

Signature:

Please Print Name:

STOCK POWER AND ASSIGNMENT

SEPARATE FROM STOCK CERTIFICATE

FOR VALUE RECEIVED and pursuant to that certain Restricted Stock Agreement dated as of             ,             , [COMPLETE AT THE TIME OF PURCHASE] (the “Agreement”), the undersigned Participant hereby sells, assigns and transfers unto             ,             shares of the Common Stock $0.0001, par value per share, of Imperva, Inc., a Delaware corporation (the “Company”), standing in the undersigned’s name on the books of the Company represented by Certificate No(s).              [COMPLETE AT THE TIME OF PURCHASE]  delivered herewith, and does hereby irrevocably constitute and appoint the Secretary of the Company as the undersigned’s attorney-in-fact, with full power of substitution, to transfer said stock on the books of the Company. THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND ANY EXHIBITS THERETO.

Dated:             ,             

PARTICIPANT

(Signature)

(Please Print Name)

Instructions to Participant: Please do not fill in any blanks other than the signature line. The purpose of this document is to enable the Company and/or its assignee(s) to acquire the shares upon exercise of its “Repurchase Right” set forth in the Agreement without requiring additional action by the Participant.

IMPERVA, INC.

2011 STOCK OPTION AND INCENTIVE PLAN

NOTICE OF PERFORMANCE SHARES AWARD

Unless otherwise defined herein, the terms defined in the Imperva, Inc. (the “Company”) 2011 Stock Option and Incentive Plan (the “Plan”) shall have the same meanings in this Notice of Performance Shares Award (the “Notice”).

Name:

Address:

You (“Participant”) have been granted an award of Performance Shares under the Plan subject to the terms and conditions of the Plan, this Notice and the attached Performance Shares Award Agreement (hereinafter “Performance Shares Agreement” ).

Number of Shares:
Date of Grant:
Vesting Commencement Date:
Expiration Date:	The date on which all the Shares granted hereunder become vested, with earlier expiration upon the Termination Date
Vesting Schedule:	Subject to the limitations set forth in this Notice, the Plan and the Performance Shares Agreement, the Shares will vest in accordance with the following schedule:  [INSERT VESTING SCHEDULE]

You understand that your employment or consulting relationship or service with the Company is for an unspecified duration, can be terminated at any time (i.e., is “at-will”), and that nothing in this Notice, the Performance Shares Agreement or the Plan changes the at-will nature of that relationship. You acknowledge that the vesting pursuant to this Notice is earned only upon the applicable certification of attainment of the requisite Performance Factors enumerated above while still in service as an Employee, Director or Consultant of the Company. You also understand that this Notice is subject to the terms and conditions of both the Performance Shares Award Agreement and the Plan, both of which are incorporated herein by reference. You also have read both the Performance Shares Agreement and the Plan.

PARTICIPANT	IMPERVA, INC.
Signature:	By:
Print Name:	Its:
Date:	Date:

IMPERVA, INC.

2011 STOCK OPTION AND INCENTIVE PLAN

PERFORMANCE SHARES AGREEMENT

Unless otherwise defined herein, the terms defined in the Imperva, Inc. (the “Company”) 2011 Stock Option and Incentive Plan (the “Plan”) shall have the same defined meanings in this Performance Shares Agreement (the “ Agreement ”).

Participant has been granted a Performance Shares Award (“Performance Shares Award”) subject to the terms, restrictions and conditions of the Plan, the Notice of Performance Shares Award (“Notice”) and this Agreement.

1. Settlement. Performance Shares shall be settled in Shares and the Company’s transfer agent shall record ownership of such Shares in Participant’s name as soon as reasonably practicable after achievement of the Performance Factors enumerated in the Notice.

2. Stockholder Rights. Participant shall have no right to dividends or to vote Shares until Participant is recorded as the holder of such Shares on the stock records of the Company and its transfer agent.

3. No-Transfer. Participant’s interest in this Performance Shares Award shall not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of.

4. Termination. Upon Participant’s Termination for any reason, all of Participant’s rights under the Plan, this Agreement and the Notice in respect of this Award shall immediately terminate. In case of any dispute as to whether Termination has occurred, the Committee shall have sole discretion to determine whether such Termination has occurred and the effective date of such Termination.

5. U.S. Tax Consequences. Participant acknowledges that there will be tax consequences upon issuance of the Shares, and Participant should consult a tax adviser regarding Participant’s tax obligations prior to such settlement or disposition. Upon vesting of the Shares, Participant will include in income the fair market value of the Shares. The included amount will be treated as ordinary income by Participant and will be subject to withholding by the Company when required by applicable law. Before any Shares subject to this Agreement are issued the Company shall withhold a number of Shares with a fair market value (determined on the date the Shares are issued) equal to the minimum amount the Company is required to withhold for income and employment taxes. Upon disposition of the Shares, any subsequent increase or decrease in value will be treated as short-term or long-term capital gain or loss, depending on whether the Shares are held for more than one year from the date of issuance.

6. Acknowledgement. The Company and Participant agree that the Performance Shares Award is granted under and governed by the Notice, this Agreement and by the provisions of the Plan (incorporated herein by reference). Participant: (a) acknowledges receipt of a copy of the Plan and the Plan prospectus, (b) represents that Participant has carefully read and is familiar with their provisions, and (c) hereby accepts the Performance Shares Award subject to all of the terms and conditions set forth herein and those set forth in the Plan, this Agreement and the Notice.

7. Entire Agreement; Enforcement of Rights. This Agreement, the Plan and the Notice constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning the purchase of the Shares hereunder are superseded. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing and signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.

8. Compliance with Laws and Regulations. The issuance of Shares will be subject to and conditioned upon compliance by the Company and Participant with all applicable state and federal laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer.

9. Governing Law; Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of this Agreement shall be interpreted as if such provision were so excluded and (c) the balance of this Agreement shall be enforceable in accordance with its terms. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law.

10. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate Purchaser ^’ s service, for any reason, with or without cause.

By the signature on, or electronic acceptance of, the Notice by each of the Participant and the Company’s representative, Participant and the Company agree that this Performance Shares Award is granted under and governed by the terms and conditions of the Plan, the Notice and this Agreement. Participant has reviewed the Plan, the Notice and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement, and fully understands all provisions of the Plan, the Notice and this Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice and this Agreement. Participant further agrees to notify the Company upon any change in Participant’s residence address.

IMPERVA, INC.

2011 STOCK OPTION AND INCENTIVE PLAN

NOTICE OF STOCK APPRECIATION RIGHT AWARD

Unless otherwise defined herein, the terms defined in the Imperva, Inc. (the “Company”) 2011 Stock Option and Incentive Plan (the “Plan”) shall have the same meanings in this Notice of Stock Appreciation Right Award (the “Notice”).

Name:

Address:

You (“Participant”) have been granted an award of Stock Appreciation Rights (“SARs”) of the Company under the Plan subject to the terms and conditions of the Plan, this Notice and the Stock Appreciation Right Award Agreement (the “SAR Agreement”).

Date of Grant:

Vesting Commencement Date:

Fair Market Value on Date of Grant:

Total Number of Shares:

Expiration Date:

Post-Termination Exercise Period:	Termination for Cause = None
	Voluntary Termination = 3 Months
	Termination without Cause = 3 Months
	Disability = 12 Months
	Death = 12 Months

Vesting Schedule: Subject to the limitations set forth in this Notice, the Plan and the Stock Appreciation Right Agreement, the SAR will vest and may be exercised, in whole or in part, in accordance with the following schedule:  [INSERT VESTING SCHEDULE]

You understand that your employment or consulting relationship or service with the Company is for an unspecified duration, can be terminated at any time (i.e., is “at-will”), and that nothing in this Notice, the SAR Agreement or the Plan changes the at-will nature of that relationship. You acknowledge that the vesting of the SARs pursuant to this Notice is earned only by continuing service as an Employee, Director or Consultant of the Company. You also understand that this Notice is subject to the terms and conditions of both the SAR Agreement and the Plan, both of which are incorporated herein by reference. You have read both the SAR Agreement and the Plan.

PARTICIPANT	IMPERVA, INC.
Signature:	By:
Print Name:	Its:
Date:	Date:

IMPERVA, INC.

2011 STOCK OPTION AND INCENTIVE PLAN

STOCK APPRECIATION RIGHT AWARD AGREEMENT

Unless otherwise defined herein, the terms defined in the Imperva, Inc. (the “Company”) 2011 Stock Option and Incentive Plan (the “Plan”) shall have the same meanings in this Stock Appreciation Right Award Agreement (the “Agreement”).

Participant has been granted Stock Appreciation Rights (“SARs”), subject to the terms and conditions of the Plan, the Notice of Stock Appreciation Right Award (the “Notice”) and this Agreement.

1. Vesting Rights. Subject to the applicable provisions of the Plan and this Agreement, this SAR may be exercised, in whole or in part, in accordance with the schedule set forth in the Notice.

2. Termination Period.

(a) General Rule. Except as provided below, and subject to the Plan, this SAR may be exercised for 3 months after Participant’s Termination. In no event shall this SAR be exercised later than the Expiration Date set forth in the Notice.

(b) Death; Disability. Unless provided otherwise in the Notice, upon Participant’s Termination by reason of his or her Disability or death, or if a Participant dies within three months of the Termination Date, this SAR may be exercised for twelve months, provided that in no event shall this SAR be exercised later than the Expiration Date set forth in the Notice.

(c) Cause. Upon Participant’s Termination for Cause, the SAR shall expire on such date of Participant’s Termination Date.

3. Grant of SAR. The Participant named in the Notice has been granted a SAR for the number of Shares set forth in the Notice at the fair market value set forth in the Notice. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan shall prevail.

4. Exercise of SAR.

(a) Right to Exercise. This SAR is exercisable during its term in accordance with the Vesting Schedule set forth in the Notice and the applicable provisions of the Plan and this Agreement. In the event of Participant’s death, Disability, Termination for Cause or other Termination, the exercisability of the SAR is governed by the applicable provisions of the Plan, the Notice and this Agreement.

(b) Method of Exercise. This SAR is exercisable by delivery of an exercise notice (the “Exercise Notice”), which shall state the election to exercise the SAR, the number of SARS to be exercised (the “Exercised SARs”), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan. The Exercise Notice shall be delivered in person, by mail, via electronic mail or facsimile or by other authorized method to the Secretary of the Company or other person designated by the Company. This SAR shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice.

(c) No Shares shall be issued pursuant to the exercise of this SAR unless such issuance and exercise complies with all relevant provisions of law and the requirements of any stock exchange or quotation service upon which the Shares are then listed. Assuming such compliance, for income tax purposes the Exercised Shares shall be considered transferred to the Participant on the date the SAR is exercised with respect to such Exercised Shares.

5. Non-Transferability of SAR. This SAR may not be transferred in any manner other than by will or by the laws of descent or distribution or court order and may be exercised during the lifetime of Participant only by the Participant unless otherwise permitted by the Committee on a case-by-case basis. The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Participant.

6. Term of SAR. This SAR shall in any event expire on the expiration date set forth in the Notice, which date is 10 years after the Date of Grant.

7. U.S. Tax Consequences. For Participants subject to U.S. income tax, some of the federal tax consequences relating to this SAR, as of the date of this SAR, are set forth below. All other Participants should consult a tax advisor for tax consequences relating to this SAR in their respective jurisdiction. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS SAR. The Participant will incur federal ordinary income tax liability upon exercise of the SAR. The Participant will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Exercised Shares on the date of exercise over their Fair Market Value on the date of grant. If the Participant is an Employee or a former Employee, the Company will be required to withhold from his or her compensation an amount equal to the minimum amount the Company is required to withhold for income and employment taxes or collect from Participant and pay to the applicable taxing authorities an amount in cash equal to a percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise. If the Participant holds the Shares received upon exercise of the SAR for at least one year, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes.

8. Acknowledgement. The Company and Participant agree that the SAR is granted under and governed by the Notice, this Agreement and the provisions of the Plan (incorporated herein by reference). Participant: (a) acknowledges receipt of a copy of the Plan and the Plan prospectus, (b) represents that Participant has carefully read and is familiar with their provisions, and (c) hereby accepts the SAR subject to all of the terms and conditions set forth herein and those set forth in the Plan and the Notice.

9. Entire Agreement; Enforcement of Rights. This Agreement, the Plan and the Notice constitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them. Any prior agreements, commitments or negotiations concerning the purchase of the Shares hereunder are superseded. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing and signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.

10. Compliance with Laws and Regulations. The issuance of Shares will be subject to and conditioned upon compliance by the Company and Participant with all applicable state and federal laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer.

11. Governing Law; Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this Agreement shall be enforceable in accordance with its terms. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law.

12. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate Participant’s service, for any reason, with or without cause.

By the signature on, or electronic acceptance of, the Notice by each of the Participant and the Company’s representative, Participant and the Company agree that this SAR is granted under and governed by the terms and conditions of the Plan, the Notice and this Agreement. Participant has reviewed the Plan, the Notice and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing or electronically accepting the Notice, and fully understands all provisions of the Plan, the Notice and this Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan, the Notice and the Agreement. Participant further agrees to notify the Company upon any change in the residence address indicated on the Notice.

EX-31.01

Exhibit 31.01

CERTIFICATION OF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(a) OF THE SECURITIES

EXCHANGE ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Anthony Bettencourt, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Imperva, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 5, 2017	By:	/s/ Anthony Bettencourt
		Anthony Bettencourt
		President and Chief Executive Officer

EX-31.02

Exhibit 31.02

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13A-14(a) OF THE

SECURITIES EXCHANGE ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Terrence J. Schmid, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Imperva, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 5, 2017	By:	/s/ Terrence J. Schmid
		Terrence J. Schmid
		Chief Financial Officer

EX-32.01

Exhibit 32.01

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350

The undersigned, Anthony Bettencourt, the Chief Executive Officer of Imperva, Inc. (the “Company”), pursuant to 18 U.S.C. §1350, hereby certifies that:

(i) the Quarterly Report on Form 10-Q for the period ended March 31, 2017 of the Company (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934.

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 5, 2017	By:	/s/ Anthony Bettencourt
		Anthony Bettencourt
		President and Chief Executive Officer
		(Principal Executive Officer)

EX-32.02

Exhibit 32.02

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350

The undersigned, Terrence J. Schmid, the Chief Financial Officer of Imperva, Inc. (the “Company”), pursuant to 18 U.S.C. §1350, hereby certifies that:

(i) the Quarterly Report on Form 10-Q for the period ended March 31, 2017 of the Company (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934.

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 5, 2017	By:	/s/ Terrence J. Schmid
		Terrence J. Schmid
		Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	Apr. 28, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Trading Symbol	IMPV
Entity Registrant Name	IMPERVA INC
Entity Central Index Key	0001364962
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		33,461,592

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016	[1]
CURRENT ASSETS:
Cash and cash equivalents	$ 136,318	$ 107,343
Short-term investments	176,494	153,749
Restricted cash	72	68
Accounts receivable, net of allowance of $1,605 and $ 1,784 as of March 31, 2017 and December 31, 2016, respectively	44,882	62,571
Inventory	496	590
Prepaid expenses and other current assets	10,804	7,922
Total current assets	369,066	332,243
Property and equipment, net	22,465	21,496
Goodwill	36,389	37,448
Acquired intangible assets, net	3,581	8,393
Severance pay fund	5,773	5,070
Restricted cash	1,898	1,884
Deferred tax assets	1,460	1,220
Other assets	6,094	1,065
TOTAL ASSETS	446,726	408,819
CURRENT LIABILITIES:
Accounts payable	4,047	5,529
Accrued compensation and benefits	19,981	20,840
Accrued and other current liabilities	9,979	7,683
Deferred revenue	100,971	104,042
Total current liabilities	134,978	138,094
Other liabilities	7,932	6,637
Deferred revenue	24,178	26,429
Accrued severance pay	6,694	5,696
TOTAL LIABILITIES	173,782	176,856
Commitments and Contingencies (Note 6)
STOCKHOLDERS' EQUITY:
Preferred stock, $0.0001 par value - 5,000,000 shares authorized, no shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively	0	0
Common stock, $0.0001 par value - 145,000,000 shares authorized, 33,454,542 and 33,088,990 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively	3	3
Additional paid-in capital	528,985	510,257
Accumulated deficit	(256,323)	(276,819)
Accumulated other comprehensive income (loss)	279	(1,478)
TOTAL STOCKHOLDERS' EQUITY	272,944	231,963
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 446,726	$ 408,819

[1] The Condensed Consolidated Balance Sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Statement Of Financial Position [Abstract]
Allowance for doubtful accounts	$ 1,605	$ 1,784
Preferred stock, par value, per share	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value, per share	$ 0.0001	$ 0.0001
Common stock, shares authorized	145,000,000	145,000,000
Common stock, shares issued	33,454,542	33,088,990
Common stock, shares outstanding	33,454,542	33,088,990

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Net revenue:
Products and license	$ 19,578	$ 20,841
Services	52,730	38,932
Total net revenue	72,308	59,773
Cost of revenue:
Products and license	1,932	2,184
Services	13,020	10,784
Total cost of revenue	14,952	12,968
Gross profit	57,356	46,805
Operating expenses:
Research and development	17,450	16,019
Sales and marketing	37,124	40,740
General and administrative	13,536	13,886
Restructuring charges	667	0
Amortization of acquired intangible assets	317	352
Total operating expenses	69,094	70,997
Loss from operations	(11,738)	(24,192)
Gain on sale of business	35,871	0
Other income (expense), net	(92)	83
Income (loss) before provision for income taxes	24,041	(24,109)
Provision (benefit) for income taxes	958	(102)
Net income (loss)	$ 23,083	$ (24,007)
Earnings per share:
Basic	$ 0.70	$ (0.75)
Diluted	$ 0.68	$ (0.75)
Shares used in computing earnings per share:
Basic	33,207	31,843
Diluted	33,771	31,843

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Statement Of Income And Comprehensive Income [Abstract]
Net Income (loss)	$ 23,083	$ (24,007)
Other comprehensive gain (loss) (net of tax):
Net change in net unrealized gain (loss) on investments	28	169
Net change in unrealized gain (loss) on hedging instruments	1,729	916
Other comprehensive income (loss)	1,757	1,085
Comprehensive income (loss)	$ 24,840	$ (22,922)

XML

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total		Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning balance at Dec. 31, 2015	$ 240,201		$ 3	$ 448,069	$ (206,540)	$ (1,331)
Beginning balance, shares at Dec. 31, 2015			31,837,144
Issuance of common stock under employee equity plans, net of repurchases	590			590
Issuance of common stock under employee equity plans, net of repurchases, shares			215,958
Issuance of holdback shares in connection with acquisitions, shares			206,499
Stock-based compensation	15,655			15,655
Income tax deficiencies from employee stock option exercises	(4)			(4)
Shares withheld for tax withholding on vesting of restricted stock units	(2,352)			(2,352)
Components of other comprehensive income (loss), net of tax
Change in unrealized gain (loss) on investments	169					169
Change in unrealized gain (loss) on hedging instruments	916					916
Net income (loss)	(24,007)				(24,007)
Comprehensive income (loss)	(22,922)
Ending balance at Mar. 31, 2016	231,168		$ 3	461,958	(230,547)	(246)
Ending balance, shares at Mar. 31, 2016			32,259,601
Beginning balance at Dec. 31, 2016	231,963	[1]	$ 3	510,257	(276,819)	(1,478)
Beginning balance, shares at Dec. 31, 2016			33,088,990
Cumulative effect of a change in accounting principle	14			2,601	(2,587)
Issuance of common stock under employee equity plans, net of repurchases	7,149			7,149
Issuance of common stock under employee equity plans, net of repurchases, shares			365,552
Stock-based compensation	13,610			13,610
Shares withheld for tax withholding on vesting of restricted stock units	(4,632)			(4,632)
Components of other comprehensive income (loss), net of tax
Change in unrealized gain (loss) on investments	28					28
Change in unrealized gain (loss) on hedging instruments	1,729					1,729
Net income (loss)	23,083				23,083
Comprehensive income (loss)	24,840
Ending balance at Mar. 31, 2017	$ 272,944		$ 3	$ 528,985	$ (256,323)	$ 279
Ending balance, shares at Mar. 31, 2017			33,454,542

[1] The Condensed Consolidated Balance Sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017		Mar. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss)	$ 23,083		$ (24,007)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	2,376		1,308
Stock-based compensation	13,610		15,655
Amortization of acquired intangibles	317		352
Amortization of premiums/accretion of discounts on short-term investments	(91)		136
Excess tax deficiencies from share-based compensation	0		4
Gain on sale of business	(35,871)		0
Other	(646)		(172)
Changes in operating assets and liabilities:
Accounts receivable, net	17,689		17,481
Inventory	110		(45)
Prepaid expenses and other assets	(910)		(809)
Accounts payable	(804)		(2,302)
Accrued compensation and benefits	2,265		(3,064)
Accrued and other liabilities	1,169		(169)
Severance pay (net)	295		311
Deferred revenue	(3,869)		1,398
Deferred tax assets	(227)		(95)
Net cash provided by operating activities	18,496		5,982
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales/maturities of short-term investments	28,521		22,909
Purchase of short-term investments	(51,130)		(26,285)
Proceeds from sale of business	35,015		0
Net purchases of property and equipment	(1,949)		(3,426)
Change in restricted cash	(18)		10
Net cash provided by (used in) investing activities	10,439		(6,792)
CASH FLOWS FROM FINANCING ACTIVITIES:
Settlement of holdback liability	0		(7,157)
Proceeds from issuance of common stock, net of repurchases	4,026		590
Shares withheld for tax withholding on vesting of restricted stock units	(4,632)		(2,352)
Excess tax deficiencies from share-based compensation	0		(4)
Net cash used in financing activities	(606)		(8,923)
Effect of exchange rate changes on cash and cash equivalents	646		172
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	28,975		(9,561)
CASH AND CASH EQUIVALENTS - Beginning of period	107,343	[1]	168,252
CASH AND CASH EQUIVALENTS - End of period	136,318		158,691
NONCASH INVESTING AND FINANCING ACTIVITIES:
Property and equipment acquired but not yet paid	$ 2,205		$ 3,721

[1] The Condensed Consolidated Balance Sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

XML

Basis of Presentation and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Basis of Presentation and Summary of Significant Accounting Policies

1. Basis of Presentation and Summary of Significant Accounting Policies

Business

Imperva, Inc. (together with its subsidiaries, the “Company”) was incorporated in April 2002 in Delaware. The Company is headquartered in Redwood Shores, California and has subsidiaries located throughout the world including Israel, Asia and Europe. The Company is engaged in the development, marketing, sales, service and support of cyber-security solutions that protect business-critical data and applications whether in the cloud or on premises.

Basis of Presentation

The Company has prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with Article 10 of Regulation S-X and pursuant to the rules and regulations for Form 10-Q of the Securities and Exchange Commission (the “SEC”). Pursuant to those rules and regulations, the Company has condensed or omitted certain information and footnote disclosure it normally includes in its annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). In management’s opinion, the Company has made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present its consolidated financial position, results of operations, and cash flows. The Company’s interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, which was filed with the SEC on February 27, 2017 (the “Annual Report”).

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Concentration of Revenue and Accounts Receivable

Significant customers are those which represent 10% or more of the Company’s total revenue or gross accounts receivable balance at each respective balance sheet date. For the three months ended March 31, 2017 and 2016, the Company had one customer that represented 11% and 14% of the Company’s total revenue, respectively. The same customer represented 11% and 18% of accounts receivable as of March 31, 2017 and December 31, 2016, respectively. A different customer represented 10% and 9% of accounts receivable as of March 31, 2017 and December 31, 2016, respectively.

Significant Accounting Policies

The Company adopted the guidance in Accounting Standards Update (“ASU”) 2016-09, Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting, on January 1, 2017. Under this ASU, entities are permitted to make an accounting policy election to either estimate forfeitures on share-based payment awards, as previously required, or to recognize forfeitures as they occur. The Company has elected to recognize forfeitures as they occur and the impact of that change in accounting policy has been recorded as a $2.6 million cumulative effect adjustment to increase our accumulated deficit as of January 1, 2017. Additionally, the Company has elected to use a prospective transition method for presentation of excess tax benefits on the statement of cash flows. The remaining provisions of ASU 2016-09 did not have a material impact on the accompanying condensed consolidated financial statements.

There have been no other material changes to the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

Recent Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment (Topic 350), which simplifies the measurement of goodwill impairment by removing the second step of the goodwill impairment test, which requires the determination of the fair value of individual assets and liabilities of a reporting unit. Under this guidance, goodwill impairment is to be measured as the amount by which a reporting unit’s carrying value exceeds its fair value with the loss recognized not to exceed the total amount of goodwill allocated to the reporting unit. The guidance is effective beginning January 1, 2020 on a prospective basis, with early adoption permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The standard is to be applied on a prospective basis. The Company does not anticipate a material impact to the consolidated financial statements once implemented.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The new standard provides a screen to determine when a set of activities and assets, or “set,” is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated.

If the screen is not met, the amendments in this ASU:

(1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output, and

(2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for a set to be a business, outputs generally, are a key element of a business; therefore, the Board has developed more stringent criteria for sets without outputs.

Lastly, the amendments in this ASU narrow the definition of the term output so that the term is consistent with how outputs are described in Topic 606.

The standard will be effective for the Company beginning January 1, 2018, with early application permitted. The standard will require adoption on a prospective basis. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The new standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The standard will be effective for the Company beginning January 1, 2018, with early application permitted. The standard will require adoption on a retrospective basis. The new accounting pronouncements will not have a significant impact on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The standard will be effective for the Company beginning January 1, 2018, with early application permitted. The standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In June 2016, the FASB Issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new standard requires financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The standard will be effective for the Company beginning January 1, 2020, with early application permitted. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02 regarding ASC Topic 842 “Leases.” The amendments in this guidance require balance sheet recognition of lease assets and lease liabilities by lessees for leases classified as operating leases, with an optional policy election to not recognize lease assets and lease liabilities for leases with a term of 12 months or less. The amendments also require new disclosures, including qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. The standard will be effective for the Company beginning January 1, 2019. The amendments require a modified retrospective approach with optional practical expedients. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09—Revenue (Topic 606): Revenue from Contracts with Customers. The standard will replace most existing U.S. GAAP guidance on this topic. The standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The standard defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation, among others. The standard also provides guidance on the recognition of costs related to obtaining customer contracts.

The standard will be effective for the Company beginning January 1, 2018 using either of two methods: (1) retrospective application of the standard to each prior reporting period presented with the option to elect certain practical expedients as defined within the standard, or (2) retrospective application of the standard with the cumulative effect of initially applying the standard recognized at the date of initial application and providing certain additional disclosures as defined per the standard. Adoption as of the original effective date of January 1, 2017 is permitted. The Company is considering adopting the standard under the modified retrospective method effective January 1, 2018; however, a final decision regarding the adoption method has not been finalized at this time. The Company’s ability to adopt using the modified retrospective method is dependent on several factors such as the significance of the impact of the new standard on the Company’s financial results, and system readiness.

The Company has developed a project plan for this transition, which includes necessary changes to accounting policies, processes, and system requirements. The Company expects to implement the plan in time to report in accordance with ASC 606 for the first quarterly filing on Form 10-Q for the period ended March 31, 2018.

As part of its preliminary evaluation, the Company has considered the impact of the standard’s requirements with respect to capitalization and amortization of incremental costs of obtaining a contract, primarily sales commissions. Under the Company’s current accounting policy, contract origination costs are expensed as incurred. The new standard requires the capitalization of all incremental costs that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained, provided the Company expects to recover the costs.

While the Company continues to assess the potential impacts of the new standard, the Company does not know or cannot reasonably estimate quantitative information related to the impact of the new standard on the financial statements at this time.

XML

Cash, Cash Equivalents, and Short-Term Investments

3 Months Ended

Mar. 31, 2017

Cash And Cash Equivalents [Abstract]

Cash, Cash Equivalents, and Short-Term Investments

2. Cash, Cash Equivalents, and Short-Term Investments

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of cash on hand, highly liquid investments in commercial paper, money market funds and various deposit accounts.

The Company considers all high quality investments purchased with original maturities at the date of purchase greater than three months to be short-term investments. Investments are available to be used for current operations and are, therefore, classified as current assets even though maturities may extend beyond one year. Cash equivalents and short-term investments are classified as available-for-sale and are, therefore, recorded at fair value on the condensed consolidated balance sheets, with any unrealized gains and losses reported in accumulated other comprehensive income (loss), which is reflected as a separate component of stockholders’ equity in its condensed consolidated balance sheets, until realized. The Company uses the specific-identification method to compute gains and losses on the investments. The amortized cost of securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion is included as a component of other income (expense), net in the condensed consolidated statements of operations.

Cash, cash equivalents and short-term investments consist of the following (in thousands):

	As of March 31, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Cash and cash equivalents:
Cash	$	65,293	$	—	$	—	$	65,293
Commercial paper		4,996		—		2		4,994
Money market funds		66,031		—		—		66,031
Total	$	136,320	$	—	$	2	$	136,318
Short-term investments:
Commercial paper	$	20,175	$	—	$	8	$	20,167
Corporate debt obligations		137,200		1		310		136,891
US government agencies		18,998		—		42		18,956
Bank deposits		480		—		—		480
Total	$	176,853	$	1	$	360	$	176,494

	As of December 31, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Cash and cash equivalents:
Cash	$	63,642	$	—	$	—	$	63,642
Commercial paper		6,995		—		2		6,993
Money market funds		36,708		—		—		36,708
Total	$	107,345	$	—	$	2	$	107,343
Short-term investments:
Commercial paper	$	14,245	$	—	$	8	$	14,237
Corporate debt obligations		110,062		—		347		109,715
US government agencies		18,998		2		50		18,950
Bank deposits		10,846		1		—		10,847
Total	$	154,151	$	3	$	405	$	153,749

The following table summarizes the cost and estimated fair value of short-term investments based on stated effective maturities as of March 31, 2017 (in thousands):

	As of March 31, 2017
			Estimated
	Amortized		Fair
	Cost		Value
Short-term investments:
Due within one year	$	89,856	$	89,696
Due within two years		86,997		86,798
Total	$	176,853	$	176,494

The gross unrealized loss related to these securities was due primarily to changes in interest rates. The Company reviews its short-term investments on a regular basis to evaluate whether or not any security has experienced an other-than-temporary decline in fair value. The Company considers factors such as the length of time and extent to which the market value has been less than the cost, the financial condition and near-term prospects of the issuer and its intent to sell, or whether it is more likely than not the Company will be required to sell, the investment before recovery of the investment’s amortized cost basis. If the Company believes that an other-than-temporary decline exists in one of these securities, the Company writes down these investments to fair value. For debt securities, the portion of the write-down related to credit loss would be recorded to other income (expense), net, in the Company’s condensed consolidated statements of operations. Any portion not related to credit loss would be recorded to accumulated other comprehensive income (loss), which is reflected as a separate component of stockholders’ equity in the Company’s condensed consolidated balance sheets. During the three months ended March 31, 2017 and 2016, the Company did not consider any of its investments to be other-than-temporarily impaired.

The following tables show the short-term investments in an unrealized loss position and the related gross unrealized losses and fair value and length of time that the short-term investments have been in a continuous unrealized loss position (in thousands):

	As of March 31, 2017
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Commercial paper	$	14,215	$	8	$	—	$	—	$	14,215	$	8
Corporate debt obligations		108,446		271		25,948		38		134,394	$	309
US government agencies		11,459		38		7,496		4		18,955		42
Bank deposits		240		1		-		-		240	$	1
	$	134,360	$	318	$	33,444	$	42	$	167,804	$	360

	As of December 31, 2016
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Commercial paper	$	14,237	$	8	$	—	$	—	$	14,237	$	8
Corporate debt obligations		78,821		323		29,689		24		108,510	$	347
US government agencies		11,451		46		3,496		4		14,947		50
	$	104,509	$	377	$	33,185	$	28	$	137,694	$	405

XML

Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

3. Fair Value of Financial Instruments

The Company evaluates assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level to classify them for each reporting period. There have been no transfers between fair value measurement levels during the three months ended March 31, 2017.

The Company’s cash equivalents and short-term investment instruments are classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The types of instruments valued based on quoted market prices in active markets include mutual funds and money market securities, and are generally classified within Level 1 of the fair value hierarchy. The types of instruments valued based on quoted prices in less active markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability include U.S. agency securities, investment-grade corporate bonds, bank deposits, and commercial paper. Such instruments are generally classified within Level 2 of the fair value hierarchy.

The Company executes its foreign currency contracts primarily in the retail market in an over-the-counter environment with a relatively high level of price transparency. The market participants usually are large multi-national and regional banks. The Company’s foreign currency contracts valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. These contracts are typically classified within Level 2 of the fair value hierarchy.

The following table sets forth the Company’s assets and liabilities that were measured at fair value as of March 31, 2017 and December 31, 2016, by level within the fair value hierarchy (in thousands):

	As of March 31, 2017
	Level I		Level II		Level III		FairValue
Financial Assets:
Cash equivalents:
Commercial paper	$	—	$	4,994	$	—	$	4,994
Money market funds		66,031		—		—		66,031
Short-term investments:
Commercial paper		—		20,167		—		20,167
Corporate debt obligations		—		136,891		—		136,891
US government agencies		—		18,956		—		18,956
Bank deposits		—		480		—		480
Prepaid expenses and other current assets - Forward foreign exchange    contracts		—		2,047		—		2,047
Total financial assets	$	66,031	$	183,535	$	—	$	249,566

	As of December 31, 2016
	Level I		Level II		Level III		Fair Value
Financial Assets:
Cash equivalents:
Commercial paper	$	—	$	6,993	$	—	$	6,993
Money market funds		36,708		—		—		36,708
Short-term investments:
Commercial paper		—		14,237		—		14,237
Corporate debt obligations		—		109,715		—		109,715
US government agencies		—		18,950		—		18,950
Bank deposits		—		10,847		—		10,847
Total financial assets	$	36,708	$	160,742	$	-	$	197,450
Financial Liability:
Accrued and other current liabilities - Forward foreign exchange    contracts	$	—	$	639	$	—	$	639

In addition to the amounts disclosed in the above table, the fair value of the Company’s Israeli severance pay assets, which were comprised of Level II assets, was $5.8 million and $5.1 million as of March 31, 2017 and December 31, 2016, respectively.

XML

Derivative Instruments

3 Months Ended

Mar. 31, 2017

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Instruments

4. Derivative Instruments

The Company’s primary objective for holding derivative instruments is to reduce its exposure to foreign currency rate changes. The Company reduces its exposure by entering into forward foreign exchange contracts with respect to operating expenses that are forecast to be incurred in currencies other than U.S. dollars. Substantially all of the Company’s revenue and capital purchasing activities and a majority of its operating expenditures are transacted in U.S. dollars. However, certain operating expenditures are incurred in or exposed to other currencies, primarily the Israeli shekel and the Euro.

The Company has established forecasted transaction currency risk management programs to protect against fluctuations in fair value and the volatility of future cash flows caused by changes in exchange rates. The Company’s currency risk management program includes forward foreign exchange contracts designated as cash flow hedges. These forward foreign exchange contracts generally mature within 12 months. The Company does not enter into derivative financial instruments for trading purposes.

Derivative instruments measured at fair value and their classification on the condensed consolidated balance sheets are presented in the following tables (in thousands):

	As of March 31, 2017				As of December 31, 2016
	Notional Amount		Fair Value		Notional Amount		Fair Value
Foreign exchange forward contract derivatives in cash flow hedging    relationships -  included in prepaid expenses and other current    assets (accrued and other current liabilities)	$	44,368	$	2,047	$	60,756	$	(639	)

Gains (losses) on derivative instruments and their classification on the condensed consolidated statement of operations are presented in the following table (in thousands):

	For the three months ended March 31
	2017			2016
Foreign Exchange Forward Contract Derivatives in    cash flow hedging relationships:
Gains recognized in OCI (a)	$	2,887		$	1,316
Losses recognized in OCI (a)	$	—		$	(99	)
Gains recognized from accumulated OCI into net income (b)	$	206		$	—
Losses recognized from accumulated OCI into net income (b)	$	(5	)	$	(194	)

(a) Net change in the fair value of the effective portion classified in other comprehensive income (loss) (“OCI”).

(b) Effective portion of cash flow hedges reclassified from accumulated other comprehensive income (loss) into net income, of which $14 and $187 were recognized within cost of sales and operating expenses, respectively, for the three months ended March 31, 2017; $(13) and $(181) were recognized within cost of sales and operating expenses, respectively, for the three months ended March 31, 2016. All amounts are reflected within the respective condensed consolidated statement of operations.

XML

Goodwill and Acquired Intangible Assets

3 Months Ended

Mar. 31, 2017

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Acquired Intangible Assets

5. Goodwill and Acquired Intangible Assets

In February 2017, the Company completed the sale of its assets related to the Skyfence cloud access security broker business (“Skyfence”) to Forcepoint LLC and its Israeli subsidiary, of which we allocated goodwill of $1.1 million to the business being disposed of. Additionally, the acquired intangible assets with the carrying value of $4.5 million were derecognized in connection with this transaction. The Company did not have any goodwill impairments during three months ended March 31, 2017 and 2016.

The changes in the carrying amount of goodwill for the periods ended March 31, 2017 and December 31, 2016 were as follows (in thousands):

Balance as of December 31, 2016	$	37,448
Goodwill disposed with sale of Skyfence		(1,059	)
Balance as of March 31, 2017	$	36,389

The Company amortizes intangible assets, which consist of purchased technologies that have estimated useful lives ranging from 7 to 10 years, using the straight-line method when the consumption pattern of the asset is not apparent. The Company reviews such assets for impairment whenever an impairment indicator exists and continually monitors events and changes in circumstances that could indicate carrying amounts of the intangible assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses recoverability by determining whether the carrying value of such assets exceed the estimates of future undiscounted future cash flows expected to be generated by such assets. Should impairment exist, the impairment loss would be measured based on the excess carrying value of the asset over the asset’s estimated fair value. There was no impairment of intangible assets recorded for the three months ended March 31, 2017 and 2016. The weighted average remaining useful life of the Company’s acquired technology, customer relationships, and trade names and other intangible assets is 6.8 years, 6.7 years, and 6.7 years, respectively as of March 31, 2017.

Acquired intangible assets subject to amortization are presented as follows (in thousands):

	As of March 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Acquired Technology	$	3,753	$	(900	)	$	2,853
Customer relationships		480		(20	)		460
Trade name and other		280		(12	)		268
Total	$	4,513	$	(932	)	$	3,581
	As of December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Acquired Technology	$	11,718	$	(4,085	)	$	7,633
Customer relationships		480		-			480
Trade name and other		280		-			280
Total	$	12,478	$	(4,085	)	$	8,393

Acquired intangible assets are amortized over their estimated useful lives of 7 to 10 years. As of March 31, 2017, the amortization expense in future periods is expected to be as follows (in thousands):

	Acquired
Fiscal Year	Technology
2017 (remaining 9 months)	$	397
2018		528
2019		528
2020		528
2021		528
Thereafter		1,072
Total expected amortization expense	$	3,581

XML

Commitments and Contingencies

3 Months Ended

Mar. 31, 2017

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

6. Commitments and Contingencies

(a) Operating Leases

The Company rents its facilities under operating leases with lease periods expiring through 2022. Future minimum payments under these facility operating leases and minimum rentals to be received under non-cancellable subleases are as follows as of March 31, 2017 (in thousands):

	Operating Leases		Estimated Sublease Income
Period Ending December 31:
2017 (remaining 9 months)	$	5,433	$	406
2018		8,306		424
2019		4,714		—
2020		4,446		—
2021		294		—
Thereafter		47		—
Total	$	23,240	$	830

Rent expense for the Company’s operating leases is recognized on a straight-line basis over the lease term. Rent expense for the three months ended March 31, 2017 and 2016 was $1.6 million and $1.5 million, respectively.

In connection with leases of office space, the Company has received tenant improvement allowances from the lessor for certain improvements made to the leased properties. The Company has recorded the tenant improvement allowances as a leasehold improvement within property and equipment, net, and as deferred rent within other liabilities on the condensed consolidated balance sheets. The deferred rent liability is amortized to rent expense over the term of the lease on a straight-line basis. The leasehold improvements are being amortized to expense over the period from when the improvements were placed into service until the end of their useful life, which is the end of the lease term. For the three months ending March 31, 2017 and 2016, the Company did not receive any tenant improvement allowances.

In addition, certain of the Company’s operating lease agreements for office space also include rent holidays and scheduled rent escalations during the initial lease term. The Company has recorded the rent holidays as a deferred rent within other liabilities on the condensed consolidated balance sheets. The Company recognizes the deferred rent liability and scheduled rent increase on a straight-line basis into rent expense over the lease term commencing on the date the Company takes possession of the lease space.

As of March 31, 2017 and December 31, 2016 the Company had $1.9 million and $1.9 million, respectively, in restricted deposits to secure bank guarantees provided to its lessors.

(b) Cancelable Lease Agreement

The Company leases motor vehicles under cancelable operating lease agreements. The Company has an option to cancel the lease agreements, which may result in penalties in a maximum amount of $0.1 million as of March 31, 2017. Motor vehicle lease expenses for the three months ended March 31, 2017 and 2016 were $0.7 million and $0.7 million, respectively.

(c) Purchase Commitments

As of March 31, 2017 and December 31, 2016, the Company had purchase commitments of $3.4 million and $3.8 million, respectively, to purchase inventory, trial units, and research and development equipment from its vendors. The purchase commitments result from the Company’s contractual obligation to order or build inventory in advance of anticipated sales. According to the Company’s agreements with its vendors, the Company committed to purchase inventory within six months from the date the inventory arrived at the vendor’s warehouse.

(d) Litigation

From time to time, the Company is subject to legal proceedings and claims in the ordinary course of business.

On April 11, 2014, a purported shareholder class action lawsuit was filed in the United States District Court for the Northern District of California against the Company and certain of its current and former officers. On August 7, 2014, the Court entered an order appointing lead plaintiff and counsel for the purported class. The lead plaintiff filed an amended complaint on October 10, 2014. The lawsuit named the Company and certain of its current and former officers and purported to bring suit on behalf of those investors who purchased the Company’s publicly traded securities between May 2, 2013 and April 9, 2014. The plaintiff alleged that defendants made false and misleading statements about the Company’s operations and business and financial results and purported to assert claims for violations of the federal securities laws. The amended complaint sought unspecified compensatory damages, interest thereon, costs incurred in the action and equitable/injunctive or other relief. On January 6, 2015, defendants filed a motion to dismiss the amended complaint. On September 17, 2015, the Court granted defendants’ motion to dismiss with leave to amend. The lead plaintiff filed an amended complaint on January 13, 2016, again naming the same current and former officers, alleging false and misleading statements about the Company’s operations and business and financial results, and seeking the same relief.  On February 10, 2016, defendants filed a motion to dismiss the amended complaint. On May 16, 2016, the Court granted the motion in part and denied the motion in part.  On September 7, 2016, defendants filed their operative answer to the amended complaint. On October 19, 2016, plaintiff filed a motion for class certification. On April 3, 2017, defendants filed an opposition to the motion for class certification.

In addition, the Company receives, and may in the future continue to receive, claims from third parties asserting, among other things, infringement of their intellectual property rights. Future litigation may be necessary to defend the Company, the Company’s channel partners and the Company’s customers by determining the scope, enforceability and validity of third-party proprietary rights or to establish our proprietary rights.

In the opinion of management, liabilities associated with these claims, while possible, are not probable at this time, and therefore the Company has not recorded any accrual for them as of March 31, 2017 and December 31, 2016. Further, any possible range of loss cannot be reasonably estimated at this time. The ultimate outcome of any litigation is uncertain and, regardless of outcome, litigation can have an adverse impact on the Company because of defense costs, potential negative publicity, diversion of management resources and other factors. Accordingly, there can be no assurance that existing or future legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on the Company’s business, consolidated financial position, results of operations or cash flows.

(e) Indemnification

Under the indemnification provisions of its standard sales contracts, the Company agrees to defend its channel partners and end customers against third-party claims asserting infringement of certain intellectual property rights, which may include patents, copyrights, trademarks, or trade secrets, and to pay judgments and settlements entered on such claims. The Company’s exposure under these indemnifications provisions is generally limited to the total amount paid under the agreement. However, certain agreements included indemnification provisions that could potentially expose the Company to losses in excess of the amount received under the agreement. To date, there have been no claims under such indemnification provisions. Accordingly, the Company has not recorded a liability on its condensed consolidated balance sheets for these indemnification provisions.

In addition to the foregoing, the Company maintains director and officer insurance, which may cover certain liabilities arising from its obligation to indemnify its directors and officers.

XML

Stock Plans

3 Months Ended

Mar. 31, 2017

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Plans

7. Stock Plans

(a) 2003 Stock Plan

During 2003, the Board of Directors adopted the 2003 Stock Plan (the “2003 Plan”), which allowed for the grant of both incentive stock options and non-qualified stock options and the direct award or sale of shares of the Company’s common stock (including restricted common stock) to officers, employees, directors, consultants and other key persons. In connection with the Company’s initial public offering, which was completed in November 2011, the Board of Directors determined not to grant any further awards under the 2003 Plan upon completion of the public offering.  The 2011 Stock Option and Incentive Plan (the “2011 Plan”) replaced the 2003 Plan in November 2011.  Under the 2003 Plan, incentive stock options could have been granted to employees with exercise prices of no less than the fair value of the common stock on the grant date, and non-qualified options could have been granted to employees, directors, or consultants at exercise prices of no less than 85% of the fair value of the common stock on the grant date, as determined by the Board of Directors. If, at the time the Company granted an option, the optionee directly or by attribution owned stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, the option price had to have been at least 110% of the fair value. Options granted under the 2003 Plan generally expire no later than ten years from the date of grant and, in general, vest four years from the date of grant.

(b) 2011 Stock Option and Incentive Plan

In September 2011, the Board of Directors adopted the 2011 Plan which was subsequently approved by the Company’s stockholders. The 2011 Plan replaced the 2003 Plan and the Company no longer grants awards under the 2003 Plan. The Company initially reserved a total of 1,000,000 shares of common stock for issuance under the 2011 Plan. In addition, 955,568 reserved but unissued shares under the 2003 Stock Plan were added to the number of shares reserved for issuance under the 2011 Plan. The 2011 Plan also provided that the number of shares reserved and available for issuance under the plan would automatically increase each January 1, beginning in 2012 and ending in 2015, by 4% of the outstanding number of shares of common stock on the immediately preceding December 31. The last automatic increase occurred on January 1, 2015.  In April 2017 and May 2016, the Company’s stockholders approved an increase to the share reserve under the 2011 Plan by 850,000 shares and 1,300,000 shares respectively.

The 2011 Plan permits the granting of incentive stock options, non-qualified stock options, restricted stock units (“RSUs”), stock appreciation rights, restricted shares of common stock and performance share awards. The exercise price of stock options may not be less than 100% of the fair market value of the common stock on the date of grant. Options granted pursuant to the 2011 Plan generally expire no later than ten years from the date of grant. The Company also grants RSUs.  RSUs granted to new hires and merit grants to existing employees generally vest over a four-year period with 25% vesting at the end of one year and the remainder vesting quarterly thereafter. Additionally, from time to time, the Company grants performance-based RSUs (“PRSUs”).  During the quarter ended March 31, 2017, the Company granted PRSUs to its executives to align with the Company’s pay-for-performance philosophy.  The PRSUs provide for a target number of shares that generally vest over three years including a one year performance period and two years of service-based vesting.  The PRSUs vest contingent upon the Company’s achievement of an annual contract value of subscription bookings target for fiscal 2017 and total operating expenses for 2017 that are at 110% or less of the internal operating plan.  The amount of PRSUs earned may vary from zero to 200% of the target award amount depending on level of achievement, and provided the award recipient remains employed through each applicable vesting date. In addition, from the PRSUs awarded to executives during the quarter ended March 31, 2016, an aggregate of 46,619 PRSUs were issued during the quarter ended March 31, 2017, based on the Company’s achievement against its annual contract value of subscription bookings target for fiscal 2016 and achieving total operating expenses for 2016 that were 110% or less of the internal operating plan. The PRSUs are subject to vest over a two-year period and vest quarterly through February 15, 2019.

(c) 2011 Employee Stock Purchase Plan

In September 2011, the Board of Directors adopted the 2011 Employee Stock Purchase Plan (the “ESPP”) which was subsequently approved by the Company’s stockholders. The ESPP took effect on November 8, 2011, the effective date of the registration statement for the Company’s initial public offering. The ESPP permits eligible employees to acquire shares of the Company’s common stock by accumulating funds through periodic payroll deductions of up to 15% of base salary. Each offering period may run for no more than 24 months and consist of no more than five purchase periods. The purchase price for shares of the Company’s common stock purchased under the ESPP will be 85% of the lesser of the fair market value of the Company’s common stock on the first day of the offering period or the last trading day of the applicable purchase period within that offering period.

The Company initially reserved a total of 500,000 shares of common stock for future issuance under the ESPP. The number of shares reserved for issuance under the ESPP increases automatically on January 1 of each of the first eight years commencing in 2012 by the number of shares equal to 1% of the Company’s total outstanding shares as of the immediately preceding December 31. The Board of Directors or compensation committee may reduce the amount of the increase in any particular year. No more than 20,000,000 shares of common stock may be issued under the ESPP and no other shares may be added to the ESPP without the approval of the Company’s stockholders. On January 1, 2017, the share reserve under the 2011 Employee Stock Purchase Plan was automatically increased by 330,889 shares.

(d) Inducement Stock Option Plan and Agreement and Inducement Restricted Stock Unit Plan and Agreement

In August 2014 and August 2015, the Compensation Committee of the Board of Directors adopted Inducement Stock Option Plans and Agreements (the “Inducement Option Plans”) and Inducement Restricted Stock Unit Plans and Agreements (the “Inducement RSU Plans”), in each case created as employment inducement awards. In accordance with the terms of the Inducement Option Plans, the Company issued options to purchase an aggregate of 290,000 shares of the Company’s common stock at an exercise price equal to the fair market value of a share of the Company’s common stock on the dates of grant of the options. The options, which have a ten-year term, vest at the rate of 25% of the shares on each of the first anniversary of the vesting commencement date with an additional 6.25% of the shares subject to the option vesting each quarter thereafter so long as the participant has not been terminated. In accordance with the terms of the Inducement RSU Plans, the Company issued RSUs representing an aggregate of 290,000 shares of the Company’s common stock. The RSUs, which expire following settlement, vest at the rate of 25% of the shares on each of the first anniversary of the vesting commencement date with an additional 6.25% of the shares subject to the RSU vesting each quarter thereafter so long as the participant has not been terminated.

(e) 2015 Equity Inducement Plan

In October 2015, the Board of Directors adopted the 2015 Equity Inducement Plan, a non-stockholder approved plan that provides for the granting of stock options and RSUs as employment inducement awards and in connection with acquisitions, subject to compliance with applicable securities laws and stock exchange requirements for such plans.  The Company has reserved 100,000 shares of common stock for issuance under the 2015 Equity Inducement Plan.  No awards have been made under the 2015 Equity Inducement Plan and the entire reserve remains available for grant.  Under the terms of the 2015 Equity Inducement Plan, the exercise price of stock options may not be less than 100% of the fair market value of common stock on the date of grant and generally expire no later than ten years from the date of grant.

(f) Incapsula 2010 Share Incentive Plan

In March 2010, Incapsula’s board of directors adopted the Incapsula 2010 Share Incentive Plan (the “Incapsula Plan”), pursuant to which Incapsula was able to grant to its employees and service providers options to purchase shares of its common stock, restricted shares, or RSUs. As of November 2013, the total number of shares of common stock that could have been granted under the Incapsula Plan was not to exceed 10,263,211 shares in the aggregate, subject to certain adjustments.

In November 2013, the board of directors of Incapsula approved the grant of RSUs for 7,095,461 shares of Incapsula’s common stock (“Incapsula RSUs”). As part of the Incapsula acquisition, the Incapsula RSUs were assumed and replaced by performance-based RSUs for Company Common Stock to be issued to continuing employees of Incapsula. The Incapsula RSUs were earned upon Incapsula’s achievement of revenue targets for Incapsula and Incapsula-related products and services for fiscal year 2014 and were converted into approximately 198,825 shares of Company Common Stock at the same exchange ratio applicable to the shares of Incapsula common stock acquired in the acquisition. In addition to performance conditions, the awards were dependent on the market price of Imperva’s common stock during February 2014, which was deemed a market condition under ASC 718.

The outstanding options and RSUs under the Incapsula 2010 Stock Incentive Plan were assumed as part of the Incapsula acquisition and at the time they were assumed were equivalent to 247,184 shares of Company common stock on an as-converted basis.  As of March 31, 2017, there were 6,932 assumed Incapsula options and 483 assumed Incapsula RSUs outstanding.  The Company does not intend to grant any additional shares under the Incapsula 2010 Stock Incentive Plan.

Option Activity

The following table summarizes option activity under the Plans and related information:

	Options Outstanding					Weighted- Average Remaining
	Number of Shares			Weighted Average Exercise Price		Contractual Term (in years)		Aggregate Intrinsic Value (in thousands) (1)
Balances - January 1, 2017		1,570,765		$	39.64		6.90	$	9,226
Granted		-
Exercised		(138,126	)	$	29.14
Cancelled or forfeited		(73,595	)	$	47.34
Balances - March 31, 2017		1,359,044		$	40.29		6.51	$	9,272
Vested and expected to vest - March 31, 2017		1,359,044		$	40.29		6.51	$	9,272
Exercisable - March 31, 2017		912,169		$	38.20		5.95	$	7,527

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $41.05 of the Company’s common stock on March 31, 2017.

RSU Activity

The following table summarizes RSU activity under the Plans and related information:

	Number of Restricted Stock Units Outstanding			Weighted- Average Grant Date Fair Value
Unvested - January 1, 2017		1,994,790		$	51.42
Granted		875,391		$	42.14
Granted, performance RSUs		280,900		$	41.85
Released		(328,546	)	$	47.87
Cancelled or forfeited		(360,323	)	$	51.36
Unvested - March 31, 2017		2,462,212		$	47.51

The aggregate intrinsic value of options exercised under the Plans was $2.1 million for the three months ended March 31, 2017. The aggregate intrinsic value is calculated as the difference between the fair market value of the Company’s common stock on the date of the exercise and the exercise price of each option multiplied by the number of options exercised. As of March 31, 2017, total compensation cost related to unvested stock-based awards granted to employees under the Plans, but not yet recognized, was $102.5 million. As of March 31, 2017, this cost will be amortized to expense over a weighted-average remaining period of 2.9 years. Future stock-based award grants will increase the amount of compensation expense to be recorded in these periods.

There was no capitalized stock-based compensation expense during the three months ended March 31, 2017 and 2016.

(g) Stock Compensation Expense

The Company recognized stock-based compensation expense under the 2011 Stock Option and Incentive Plan, 2003 Stock Plan, Inducement Plans, 2011 Employee Stock Purchase Plan, and the Incapsula 2010 Share Incentive Plan in the condensed consolidated statements of operations as follows (in thousands):

	For the three months ended March 31
	2017		2016
Cost of revenue	$	1,269	$	1,393
Research and development		4,768		4,249
Sales and marketing		3,466		5,094
General and administrative		3,432		4,919
Restructuring charges		675		-
Total stock-based compensation expense	$	13,610	$	15,655

The Company did not issue stock option grants for the three months ended March 31, 2017. The fair value of stock option grants for the three months ended March 31, 2016 was estimated using the following weighted average assumptions:

	For the three months ended March 31
	2017	2016
Stock option grants:
Dividend rate	-		0	%
Risk-free interest rate	-		1.5	%
Expected term (in years)	-		6.1
Expected volatility	-		58	%

The fair value of the RSUs is determined using the closing price of the Company’s common stock on the date of the grant. Compensation is recognized on a straight-line basis over the requisite service period of each grant.

XML

Accumulated Other Comprehensive Income (Loss)

3 Months Ended

Mar. 31, 2017

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

8. Accumulated Other Comprehensive Income (Loss)

The changes in the balances of accumulated other comprehensive income (loss) by component are as follows (in thousands):

	For the three months ended March 31, 2017									For the three months ended March 31, 2016
	Unrealized gain (loss) on cash flow hedges			Unrealized gain (loss) on investments			Total			Unrealized gain (loss) on cash flow hedges			Unrealized gain (loss) on investments			Total
Balance at January 1	$	(1,065	)	$	(413	)	$	(1,478	)	$	(1,021	)	$	(310	)	$	(1,331	)
Other comprehensive income (loss) before    reclassifications		1,930			28			1,958			722			169			891
Amounts reclassified to net income (loss)		(201	)		—			(201	)		194			—			194
Change in other comprehensive income (loss)		1,729			28			1,757			916			169			1,085
Balance at March 31	$	664		$	(385	)	$	279		$	(105	)	$	(141	)	$	(246	)

The following is a summary of reclassifications out of accumulated other comprehensive income (loss) for the three months ended March 31, 2017 and 2016 (in thousands):

	For the three months ended March 31, 2017									For the three months ended March 31, 2016
	Pre-Tax Amount			Tax Expense (Benefit)			After-Tax Amount			Pre-Tax Amount		Tax Expense (Benefit)			After-Tax Amount
Unrealized gains (losses) on cash flow hedges:
Current period unrealized gain (loss)	$	2,887			(957	)	$	1,930		$	1,217		(495	)	$	722
Reclassification adjustments 1		(201	)		—			(201	)		194		—			194
Unrealized gains (losses) on cash flow hedges, net		2,686			(957	)		1,729			1,411		(495	)		916
Unrealized gains (losses) on investments:
Current period unrealized gain (loss)	$	44			(16	)		28		$	260		(91	)		169
Unrealized gains (losses) on investments:		44			(16	)		28			260		(91	)		169
Other comprehensive income (loss)	$	2,730		$	(973	)	$	1,757		$	1,671	$	(586	)	$	1,085

1 Refer to note 4 for the affected line items in the condensed consolidated statement of operations.

XML

Income Taxes

3 Months Ended

Mar. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

9. Income Taxes

The Company is subject to income tax in the United States as well as other tax jurisdictions in which it conducts business. Earnings from non-U.S. activities are subject to local country income tax. The Company does not provide for federal income taxes on the undistributed earnings of its foreign subsidiaries as such earnings are to be reinvested indefinitely. For the three months ended March 31, 2017 and 2016, the Company recorded income tax expense of $1.0 million and an income tax benefit $0.1 million respectively. The income tax expense for the three months ended March 31, 2017, was primarily attributable to foreign and state income taxes including tax effects of the gain related to the sale of the Skyfence business, offset in part by an intraperiod tax benefit allocation related to unrealized gains reported in other comprehensive income. Additionally, the amount of unrecognized tax benefits increased during the three months ended March 31, 2017, which also contributed to the income tax expense for the period. The income tax benefit for the three months ended March 31, 2016 was primarily attributable to an intraperiod tax expense allocation related to unrealized gains reported in other comprehensive income, offset in part, by foreign and state income taxes.

Factors that impact the income tax provision include, but are not limited to, stock-based compensation expense, permanent tax adjustments, foreign operations and a valuation allowance against the Company’s domestic deferred tax assets.

XML

Segment Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment Information

10. Segment Information

The Company operates its business in one operating segment, which is the development, marketing, sales, service and support of cyber-security solutions that protect business-critical data and applications whether in cloud or on premises. Operating segments are defined as components of an enterprise that engage in business activities for which separate financial information is available and evaluated by the chief operating decision maker in deciding how to allocate resources and assessing performance. The chief operating decision maker is the Company’s Chief Executive Officer.

The Company’s net revenue by geographic region, based on the customer’s location, is summarized as follows (in thousands):

	For the three months ended March 31,
	2017		2016
United States	$	37,645	$	33,671
EMEA		13,780		11,284
APAC		13,706		11,337
Other		7,177		3,481
Total net revenue	$	72,308	$	59,773

The following table presents long-lived assets by location (in thousands):

	As of March 31,		As of December 31,
	2017		2016
United States	$	21,404	$	20,525
Israel		4,487		9,344
Other		155		20
Total long-lived assets	$	26,046	$	29,889

XML

Restructuring Charges

3 Months Ended

Mar. 31, 2017

Restructuring Charges [Abstract]

Restructuring Charges

11. Restructuring Charges

In November 2016, we implemented a restructuring plan and cost reduction initiatives to reduce expenses, streamline the organization, and reallocate resources to align more closely with future business needs. The restructuring charge during the three months ended March 31, 2017 was $0.7 million related to stock-based compensation. During the three months ended March 31, 2017 we also paid $1.1 million of restructuring charges, which were recorded as a current liability within accrued compensation and benefits on the consolidated balance sheet as of December 31, 2016. The restructuring activity was completed during the three months ended March 31, 2017.

XML

Net Income (Loss) per Share

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Net Income (Loss) per Share

12. Net Income (Loss) per Share

Basic and diluted net income (loss) per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. The computation of net income (loss) per share for each period, including the number of weighted-average shares outstanding, is shown on the face of the condensed consolidated statements of operations. Diluted earnings per share is calculated using our weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method. In periods when we recognize a net loss, we exclude the impact of outstanding stock awards from the diluted loss per share calculation as their inclusion would have an antidilutive effect.

The table below shows the reconciliation of the basic and diluted shares for the three months ended March 2017, in thousands:

	For the three months ended March 31,
	2017		2016
Weighted average number of shares outstanding:
Basic		33,207		31,843
Dilutive effects of:
Employee stock options, RSU’s and share based payment awards issued to employees		564		-
Diluted		33,771		31,843

The following outstanding shares of common stock and potential common shares were excluded from the computation of diluted net income (loss) per share of common stock for the three months ended March 31, 2017 and 2016 because including them would have been antidilutive:

	For the three months ended March 31,
	2017		2016
Stock options to purchase common stock		761,610		1,936,453
Restricted stock units for common stock		598,503		2,553,598
Restricted stock issued in connection with Skyfence    acquisition		—		219,969

XML

Disposition of Business

3 Months Ended

Mar. 31, 2017

Discontinued Operations And Disposal Groups [Abstract]

Disposition of Business

13. Disposition of Business

On February 23, 2017, the Company completed the sale of the assets of its Skyfence cloud access security broker business (“Skyfence”) to Forcepoint LLC and its Israeli subsidiary for consideration of approximately $40 million in cash. Of the total consideration, approximately $5.0 million was remitted directly to escrow to secure the Company’s indemnification obligations. This escrowed amount is recorded in other assets on our condensed consolidated balance sheet as of March 31, 2017, and represents a noncash item in our condensed consolidated statement of cash flows. As a result of the sale, we recognized a gain of $35.9 million during the first quarter of 2017 included in gain on sale of Skyfence in our condensed consolidated statement of operations.

The following table presents the carrying amounts of Skyfence immediately preceding the disposition on February 23, 2017:

	(dollarsin thousands)
Assets
Prepaid and other current assets	$	46
Property and equipment, net		219
Goodwill		1,058
Acquired intangible assets, net		4,496
Total assets	$	5,819
Liabilities
Accounts payable	$	104
Accrued and other current liabilities		117
Deferred revenue		1,454
Total liabilities	$	1,675

We evaluated the disposition of Skyfence and determined it did not meet the criteria for classification as a discontinued operation and determined that the disposition is not expected to have a material impact to our quarterly consolidated operating loss and net income. However, we determined that the disposition does represent an individually significant component of our business. The following table presents certain amounts related to Skyfence in our consolidated results of operations through its disposal on February 23, 2017:

	Forthe three months ended March 31,
	2017			2016
	(dollars in thousands)
Operating loss	$	(3,567	)	$	(5,263	)
Loss before taxes		(3,648	)		(5,263	)
Net loss		(3,659	)		(5,308	)

XML

Subsequent Event

3 Months Ended

Mar. 31, 2017

Subsequent Events [Abstract]

Subsequent Event

14. Subsequent Event

On April 26, 2017, the Company’s stockholders approved of an increase to the pool of shares available for grant under the 2011 Plan by 850,000 shares of common stock.

XML

Basis of Presentation and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Business

Business

Imperva, Inc. (together with its subsidiaries, the “Company”) was incorporated in April 2002 in Delaware. The Company is headquartered in Redwood Shores, California and has subsidiaries located throughout the world including Israel, Asia and Europe. The Company is engaged in the development, marketing, sales, service and support of cyber-security solutions that protect business-critical data and applications whether in the cloud or on premises.

Basis of Presentation

Basis of Presentation

The Company has prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with Article 10 of Regulation S-X and pursuant to the rules and regulations for Form 10-Q of the Securities and Exchange Commission (the “SEC”). Pursuant to those rules and regulations, the Company has condensed or omitted certain information and footnote disclosure it normally includes in its annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). In management’s opinion, the Company has made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present its consolidated financial position, results of operations, and cash flows. The Company’s interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, which was filed with the SEC on February 27, 2017 (the “Annual Report”).

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Concentration of Revenue and Accounts Receivable

Concentration of Revenue and Accounts Receivable

Significant customers are those which represent 10% or more of the Company’s total revenue or gross accounts receivable balance at each respective balance sheet date. For the three months ended March 31, 2017 and 2016, the Company had one customer that represented 11% and 14% of the Company’s total revenue, respectively. The same customer represented 11% and 18% of accounts receivable as of March 31, 2017 and December 31, 2016, respectively. A different customer represented 10% and 9% of accounts receivable as of March 31, 2017 and December 31, 2016, respectively.

Significant Accounting Policies

Significant Accounting Policies

The Company adopted the guidance in Accounting Standards Update (“ASU”) 2016-09, Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting, on January 1, 2017. Under this ASU, entities are permitted to make an accounting policy election to either estimate forfeitures on share-based payment awards, as previously required, or to recognize forfeitures as they occur. The Company has elected to recognize forfeitures as they occur and the impact of that change in accounting policy has been recorded as a $2.6 million cumulative effect adjustment to increase our accumulated deficit as of January 1, 2017. Additionally, the Company has elected to use a prospective transition method for presentation of excess tax benefits on the statement of cash flows. The remaining provisions of ASU 2016-09 did not have a material impact on the accompanying condensed consolidated financial statements.

There have been no other material changes to the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment (Topic 350), which simplifies the measurement of goodwill impairment by removing the second step of the goodwill impairment test, which requires the determination of the fair value of individual assets and liabilities of a reporting unit. Under this guidance, goodwill impairment is to be measured as the amount by which a reporting unit’s carrying value exceeds its fair value with the loss recognized not to exceed the total amount of goodwill allocated to the reporting unit. The guidance is effective beginning January 1, 2020 on a prospective basis, with early adoption permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The standard is to be applied on a prospective basis. The Company does not anticipate a material impact to the consolidated financial statements once implemented.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The new standard provides a screen to determine when a set of activities and assets, or “set,” is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated.

If the screen is not met, the amendments in this ASU:

(1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output, and

(2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for a set to be a business, outputs generally, are a key element of a business; therefore, the Board has developed more stringent criteria for sets without outputs.

Lastly, the amendments in this ASU narrow the definition of the term output so that the term is consistent with how outputs are described in Topic 606.

The standard will be effective for the Company beginning January 1, 2018, with early application permitted. The standard will require adoption on a prospective basis. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The new standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The standard will be effective for the Company beginning January 1, 2018, with early application permitted. The standard will require adoption on a retrospective basis. The new accounting pronouncements will not have a significant impact on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The standard will be effective for the Company beginning January 1, 2018, with early application permitted. The standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In June 2016, the FASB Issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new standard requires financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The standard will be effective for the Company beginning January 1, 2020, with early application permitted. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02 regarding ASC Topic 842 “Leases.” The amendments in this guidance require balance sheet recognition of lease assets and lease liabilities by lessees for leases classified as operating leases, with an optional policy election to not recognize lease assets and lease liabilities for leases with a term of 12 months or less. The amendments also require new disclosures, including qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. The standard will be effective for the Company beginning January 1, 2019. The amendments require a modified retrospective approach with optional practical expedients. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09—Revenue (Topic 606): Revenue from Contracts with Customers. The standard will replace most existing U.S. GAAP guidance on this topic. The standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The standard defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation, among others. The standard also provides guidance on the recognition of costs related to obtaining customer contracts.

The standard will be effective for the Company beginning January 1, 2018 using either of two methods: (1) retrospective application of the standard to each prior reporting period presented with the option to elect certain practical expedients as defined within the standard, or (2) retrospective application of the standard with the cumulative effect of initially applying the standard recognized at the date of initial application and providing certain additional disclosures as defined per the standard. Adoption as of the original effective date of January 1, 2017 is permitted. The Company is considering adopting the standard under the modified retrospective method effective January 1, 2018; however, a final decision regarding the adoption method has not been finalized at this time. The Company’s ability to adopt using the modified retrospective method is dependent on several factors such as the significance of the impact of the new standard on the Company’s financial results, and system readiness.

The Company has developed a project plan for this transition, which includes necessary changes to accounting policies, processes, and system requirements. The Company expects to implement the plan in time to report in accordance with ASC 606 for the first quarterly filing on Form 10-Q for the period ended March 31, 2018.

As part of its preliminary evaluation, the Company has considered the impact of the standard’s requirements with respect to capitalization and amortization of incremental costs of obtaining a contract, primarily sales commissions. Under the Company’s current accounting policy, contract origination costs are expensed as incurred. The new standard requires the capitalization of all incremental costs that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained, provided the Company expects to recover the costs.

While the Company continues to assess the potential impacts of the new standard, the Company does not know or cannot reasonably estimate quantitative information related to the impact of the new standard on the financial statements at this time.

XML

Cash, Cash Equivalents, and Short-Term Investments (Tables)

3 Months Ended

Mar. 31, 2017

Cash And Cash Equivalents [Abstract]

Summary of Cash, Cash Equivalents and Short-Term Investments

Cash, cash equivalents and short-term investments consist of the following (in thousands):

	As of March 31, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Cash and cash equivalents:
Cash	$	65,293	$	—	$	—	$	65,293
Commercial paper		4,996		—		2		4,994
Money market funds		66,031		—		—		66,031
Total	$	136,320	$	—	$	2	$	136,318
Short-term investments:
Commercial paper	$	20,175	$	—	$	8	$	20,167
Corporate debt obligations		137,200		1		310		136,891
US government agencies		18,998		—		42		18,956
Bank deposits		480		—		—		480
Total	$	176,853	$	1	$	360	$	176,494

	As of December 31, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Cash and cash equivalents:
Cash	$	63,642	$	—	$	—	$	63,642
Commercial paper		6,995		—		2		6,993
Money market funds		36,708		—		—		36,708
Total	$	107,345	$	—	$	2	$	107,343
Short-term investments:
Commercial paper	$	14,245	$	—	$	8	$	14,237
Corporate debt obligations		110,062		—		347		109,715
US government agencies		18,998		2		50		18,950
Bank deposits		10,846		1		—		10,847
Total	$	154,151	$	3	$	405	$	153,749

Summary of Cost and Estimated Fair Value of Short-Term Investments

The following table summarizes the cost and estimated fair value of short-term investments based on stated effective maturities as of March 31, 2017 (in thousands):

	As of March 31, 2017
			Estimated
	Amortized		Fair
	Cost		Value
Short-term investments:
Due within one year	$	89,856	$	89,696
Due within two years		86,997		86,798
Total	$	176,853	$	176,494

Schedule of Short-Term Investments at Fair Value and Length of Continuous Unrealized Loss Position

The following tables show the short-term investments in an unrealized loss position and the related gross unrealized losses and fair value and length of time that the short-term investments have been in a continuous unrealized loss position (in thousands):

	As of March 31, 2017
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Commercial paper	$	14,215	$	8	$	—	$	—	$	14,215	$	8
Corporate debt obligations		108,446		271		25,948		38		134,394	$	309
US government agencies		11,459		38		7,496		4		18,955		42
Bank deposits		240		1		-		-		240	$	1
	$	134,360	$	318	$	33,444	$	42	$	167,804	$	360

	As of December 31, 2016
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Commercial paper	$	14,237	$	8	$	—	$	—	$	14,237	$	8
Corporate debt obligations		78,821		323		29,689		24		108,510	$	347
US government agencies		11,451		46		3,496		4		14,947		50
	$	104,509	$	377	$	33,185	$	28	$	137,694	$	405

XML

Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Assets and Liabilities Subject to Fair Value Measurements on Recurring Basis

The following table sets forth the Company’s assets and liabilities that were measured at fair value as of March 31, 2017 and December 31, 2016, by level within the fair value hierarchy (in thousands):

	As of March 31, 2017
	Level I		Level II		Level III		FairValue
Financial Assets:
Cash equivalents:
Commercial paper	$	—	$	4,994	$	—	$	4,994
Money market funds		66,031		—		—		66,031
Short-term investments:
Commercial paper		—		20,167		—		20,167
Corporate debt obligations		—		136,891		—		136,891
US government agencies		—		18,956		—		18,956
Bank deposits		—		480		—		480
Prepaid expenses and other current assets - Forward foreign exchange    contracts		—		2,047		—		2,047
Total financial assets	$	66,031	$	183,535	$	—	$	249,566

	As of December 31, 2016
	Level I		Level II		Level III		Fair Value
Financial Assets:
Cash equivalents:
Commercial paper	$	—	$	6,993	$	—	$	6,993
Money market funds		36,708		—		—		36,708
Short-term investments:
Commercial paper		—		14,237		—		14,237
Corporate debt obligations		—		109,715		—		109,715
US government agencies		—		18,950		—		18,950
Bank deposits		—		10,847		—		10,847
Total financial assets	$	36,708	$	160,742	$	-	$	197,450
Financial Liability:
Accrued and other current liabilities - Forward foreign exchange    contracts	$	—	$	639	$	—	$	639

XML

Derivative Instruments (Tables)

3 Months Ended

Mar. 31, 2017

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Instruments Measured at Fair Value and Classification on Condensed Consolidated Balance Sheets

Derivative instruments measured at fair value and their classification on the condensed consolidated balance sheets are presented in the following tables (in thousands):

	As of March 31, 2017				As of December 31, 2016
	Notional Amount		Fair Value		Notional Amount		Fair Value
Foreign exchange forward contract derivatives in cash flow hedging    relationships -  included in prepaid expenses and other current    assets (accrued and other current liabilities)	$	44,368	$	2,047	$	60,756	$	(639	)

Gains (Losses) on Derivative Instruments and Classification on Condensed Consolidated Statement of Operations

Gains (losses) on derivative instruments and their classification on the condensed consolidated statement of operations are presented in the following table (in thousands):

	For the three months ended March 31
	2017			2016
Foreign Exchange Forward Contract Derivatives in    cash flow hedging relationships:
Gains recognized in OCI (a)	$	2,887		$	1,316
Losses recognized in OCI (a)	$	—		$	(99	)
Gains recognized from accumulated OCI into net income (b)	$	206		$	—
Losses recognized from accumulated OCI into net income (b)	$	(5	)	$	(194	)

(a) Net change in the fair value of the effective portion classified in other comprehensive income (loss) (“OCI”).

(b) Effective portion of cash flow hedges reclassified from accumulated other comprehensive income (loss) into net income, of which $14 and $187 were recognized within cost of sales and operating expenses, respectively, for the three months ended March 31, 2017; $(13) and $(181) were recognized within cost of sales and operating expenses, respectively, for the three months ended March 31, 2016. All amounts are reflected within the respective condensed consolidated statement of operations.

XML

Goodwill and Acquired Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2017

Goodwill And Intangible Assets Disclosure [Abstract]

Changes in the Carrying Amount of Goodwill

The changes in the carrying amount of goodwill for the periods ended March 31, 2017 and December 31, 2016 were as follows (in thousands):

Balance as of December 31, 2016	$	37,448
Goodwill disposed with sale of Skyfence		(1,059	)
Balance as of March 31, 2017	$	36,389

Summary of Acquired Intangible Assets Subject to Amortization

Acquired intangible assets subject to amortization are presented as follows (in thousands):

	As of March 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Acquired Technology	$	3,753	$	(900	)	$	2,853
Customer relationships		480		(20	)		460
Trade name and other		280		(12	)		268
Total	$	4,513	$	(932	)	$	3,581
	As of December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Acquired Technology	$	11,718	$	(4,085	)	$	7,633
Customer relationships		480		-			480
Trade name and other		280		-			280
Total	$	12,478	$	(4,085	)	$	8,393

Schedule of Expected Amortization Expense in Future Periods

As of March 31, 2017, the amortization expense in future periods is expected to be as follows (in thousands):

	Acquired
Fiscal Year	Technology
2017 (remaining 9 months)	$	397
2018		528
2019		528
2020		528
2021		528
Thereafter		1,072
Total expected amortization expense	$	3,581

XML

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2017

Commitments And Contingencies Disclosure [Abstract]

Future Minimum Payments Under Operating Leases and Minimum Rentals to be Received Under Non-Cancellable Subleases

Future minimum payments under these facility operating leases and minimum rentals to be received under non-cancellable subleases are as follows as of March 31, 2017 (in thousands):

	Operating Leases		Estimated Sublease Income
Period Ending December 31:
2017 (remaining 9 months)	$	5,433	$	406
2018		8,306		424
2019		4,714		—
2020		4,446		—
2021		294		—
Thereafter		47		—
Total	$	23,240	$	830

XML

Stock Plans (Tables)

3 Months Ended

Mar. 31, 2017

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Option Activity under Plans and Related Information

The following table summarizes option activity under the Plans and related information:

	Options Outstanding					Weighted- Average Remaining
	Number of Shares			Weighted Average Exercise Price		Contractual Term (in years)		Aggregate Intrinsic Value (in thousands) (1)
Balances - January 1, 2017		1,570,765		$	39.64		6.90	$	9,226
Granted		-
Exercised		(138,126	)	$	29.14
Cancelled or forfeited		(73,595	)	$	47.34
Balances - March 31, 2017		1,359,044		$	40.29		6.51	$	9,272
Vested and expected to vest - March 31, 2017		1,359,044		$	40.29		6.51	$	9,272
Exercisable - March 31, 2017		912,169		$	38.20		5.95	$	7,527

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $41.05 of the Company’s common stock on March 31, 2017.

Summary of RSU Activity Outstanding and Weighted Average Grant Date Fair Value

The following table summarizes RSU activity under the Plans and related information:

	Number of Restricted Stock Units Outstanding			Weighted- Average Grant Date Fair Value
Unvested - January 1, 2017		1,994,790		$	51.42
Granted		875,391		$	42.14
Granted, performance RSUs		280,900		$	41.85
Released		(328,546	)	$	47.87
Cancelled or forfeited		(360,323	)	$	51.36
Unvested - March 31, 2017		2,462,212		$	47.51

Stock-Based Compensation Expense

The Company recognized stock-based compensation expense under the 2011 Stock Option and Incentive Plan, 2003 Stock Plan, Inducement Plans, 2011 Employee Stock Purchase Plan, and the Incapsula 2010 Share Incentive Plan in the condensed consolidated statements of operations as follows (in thousands):

	For the three months ended March 31
	2017		2016
Cost of revenue	$	1,269	$	1,393
Research and development		4,768		4,249
Sales and marketing		3,466		5,094
General and administrative		3,432		4,919
Restructuring charges		675		-
Total stock-based compensation expense	$	13,610	$	15,655

Weighted Average Assumptions for Fair Value of Stock Options Grants

The Company did not issue stock option grants for the three months ended March 31, 2017. The fair value of stock option grants for the three months ended March 31, 2016 was estimated using the following weighted average assumptions:

	For the three months ended March 31
	2017	2016
Stock option grants:
Dividend rate	-		0	%
Risk-free interest rate	-		1.5	%
Expected term (in years)	-		6.1
Expected volatility	-		58	%

XML

Accumulated Other Comprehensive Income (Loss) (Tables)

3 Months Ended

Mar. 31, 2017

Equity [Abstract]

Changes in Balances of Accumulated Other Comprehensive Income (Loss)

The changes in the balances of accumulated other comprehensive income (loss) by component are as follows (in thousands):

	For the three months ended March 31, 2017									For the three months ended March 31, 2016
	Unrealized gain (loss) on cash flow hedges			Unrealized gain (loss) on investments			Total			Unrealized gain (loss) on cash flow hedges			Unrealized gain (loss) on investments			Total
Balance at January 1	$	(1,065	)	$	(413	)	$	(1,478	)	$	(1,021	)	$	(310	)	$	(1,331	)
Other comprehensive income (loss) before    reclassifications		1,930			28			1,958			722			169			891
Amounts reclassified to net income (loss)		(201	)		—			(201	)		194			—			194
Change in other comprehensive income (loss)		1,729			28			1,757			916			169			1,085
Balance at March 31	$	664		$	(385	)	$	279		$	(105	)	$	(141	)	$	(246	)

Summary of Reclassifications Out of Accumulated Other Comprehensive Income (Loss)

The following is a summary of reclassifications out of accumulated other comprehensive income (loss) for the three months ended March 31, 2017 and 2016 (in thousands):

	For the three months ended March 31, 2017									For the three months ended March 31, 2016
	Pre-Tax Amount			Tax Expense (Benefit)			After-Tax Amount			Pre-Tax Amount		Tax Expense (Benefit)			After-Tax Amount
Unrealized gains (losses) on cash flow hedges:
Current period unrealized gain (loss)	$	2,887			(957	)	$	1,930		$	1,217		(495	)	$	722
Reclassification adjustments 1		(201	)		—			(201	)		194		—			194
Unrealized gains (losses) on cash flow hedges, net		2,686			(957	)		1,729			1,411		(495	)		916
Unrealized gains (losses) on investments:
Current period unrealized gain (loss)	$	44			(16	)		28		$	260		(91	)		169
Unrealized gains (losses) on investments:		44			(16	)		28			260		(91	)		169
Other comprehensive income (loss)	$	2,730		$	(973	)	$	1,757		$	1,671	$	(586	)	$	1,085

1 Refer to note 4 for the affected line items in the condensed consolidated statement of operations.

XML

Segment Information (Tables)

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Company's Revenue by Geographic Region, Based on Customer's Location

The Company’s net revenue by geographic region, based on the customer’s location, is summarized as follows (in thousands):

	For the three months ended March 31,
	2017		2016
United States	$	37,645	$	33,671
EMEA		13,780		11,284
APAC		13,706		11,337
Other		7,177		3,481
Total net revenue	$	72,308	$	59,773

Long-Lived Assets by Location

The following table presents long-lived assets by location (in thousands):

	As of March 31,		As of December 31,
	2017		2016
United States	$	21,404	$	20,525
Israel		4,487		9,344
Other		155		20
Total long-lived assets	$	26,046	$	29,889

XML

Net Income (Loss) per Share (Tables)

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Reconciliation of Basic and Diluted Shares

The table below shows the reconciliation of the basic and diluted shares for the three months ended March 2017, in thousands:

	For the three months ended March 31,
	2017		2016
Weighted average number of shares outstanding:
Basic		33,207		31,843
Dilutive effects of:
Employee stock options, RSU’s and share based payment awards issued to employees		564		-
Diluted		33,771		31,843

Antidilutive Securities Excluded from Computation of Diluted Net Income (Loss) Per Share of Common Stock

The following outstanding shares of common stock and potential common shares were excluded from the computation of diluted net income (loss) per share of common stock for the three months ended March 31, 2017 and 2016 because including them would have been antidilutive:

	For the three months ended March 31,
	2017		2016
Stock options to purchase common stock		761,610		1,936,453
Restricted stock units for common stock		598,503		2,553,598
Restricted stock issued in connection with Skyfence    acquisition		—		219,969

XML

Disposition of Business (Tables)

3 Months Ended

Mar. 31, 2017

Discontinued Operations And Disposal Groups [Abstract]

Schedule of Carrying Amounts Immediately Preceding Disposition and Consolidated Results of Operations Through Disposal

The following table presents the carrying amounts of Skyfence immediately preceding the disposition on February 23, 2017:

	(dollarsin thousands)
Assets
Prepaid and other current assets	$	46
Property and equipment, net		219
Goodwill		1,058
Acquired intangible assets, net		4,496
Total assets	$	5,819
Liabilities
Accounts payable	$	104
Accrued and other current liabilities		117
Deferred revenue		1,454
Total liabilities	$	1,675

The following table presents certain amounts related to Skyfence in our consolidated results of operations through its disposal on February 23, 2017:

	Forthe three months ended March 31,
	2017			2016
	(dollars in thousands)
Operating loss	$	(3,567	)	$	(5,263	)
Loss before taxes		(3,648	)		(5,263	)
Net loss		(3,659	)		(5,308	)

XML

Basis of Presentation and Summary of Significant Accounting Policies - Additional Information (Detail) $ in Thousands		3 Months Ended		12 Months Ended
	Jan. 01, 2017 USD ($)	Mar. 31, 2017 USD ($) Customer	Mar. 31, 2016 Customer	Dec. 31, 2016 Customer
Revenue, Major Customer [Line Items]
Cumulative effect adjustment to accumulated deficit | $		$ 14
ASU 2016-09 [Member]
Revenue, Major Customer [Line Items]
Cumulative effect adjustment to accumulated deficit | $	$ 2,600
Credit Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Number of customers representing 11% or more of gross accounts receivable		1
Number of customers representing 18% or more of accounts receivable				1
Revenue [Member] | Customer Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Minimum percentage of revenue or gross accounts receivable balance required to be significant customers		11.00%	14.00%
Number of customers representing 10% or more of revenue		1	1
Accounts Receivable [Member] | Credit Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Minimum percentage of revenue or gross accounts receivable balance required to be significant customers		11.00%		18.00%
Accounts Receivable [Member] | Credit Concentration Risk [Member] | Customer Two [Member]
Revenue, Major Customer [Line Items]
Minimum percentage of revenue or gross accounts receivable balance required to be significant customers		10.00%		9.00%

XML

Cash, Cash Equivalents, and Short-Term Investments - Summary of Cash, Cash Equivalents and Short-Term Investments (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Schedule of Investments [Line Items]
Cash and cash equivalents, Amortized Cost	$ 136,320	$ 107,345
Cash and cash equivalents, Gross Unrealized Gains	0	0
Cash and cash equivalents, Gross Unrealized Losses	2	2
Cash and cash equivalents, Fair Value	136,318	107,343
Short-term investments, Amortized Cost	176,853	154,151
Short-term investments, Gross Unrealized Gains	1	3
Short-term investments, Gross Unrealized Losses	360	405
Short-term investments, Estimated Fair Value	176,494	153,749	[1]
Cash [Member]
Schedule of Investments [Line Items]
Cash and cash equivalents, Amortized Cost	65,293	63,642
Cash and cash equivalents, Gross Unrealized Gains	0	0
Cash and cash equivalents, Gross Unrealized Losses	0	0
Cash and cash equivalents, Fair Value	65,293	63,642
Commercial Paper [Member]
Schedule of Investments [Line Items]
Cash and cash equivalents, Amortized Cost	4,996	6,995
Cash and cash equivalents, Gross Unrealized Gains	0	0
Cash and cash equivalents, Gross Unrealized Losses	2	2
Cash and cash equivalents, Fair Value	4,994	6,993
Short-term investments, Amortized Cost	20,175	14,245
Short-term investments, Gross Unrealized Gains	0	0
Short-term investments, Gross Unrealized Losses	8	8
Short-term investments, Estimated Fair Value	20,167	14,237
Money Market Funds [Member]
Schedule of Investments [Line Items]
Cash and cash equivalents, Amortized Cost	66,031	36,708
Cash and cash equivalents, Gross Unrealized Gains	0	0
Cash and cash equivalents, Gross Unrealized Losses	0	0
Cash and cash equivalents, Fair Value	66,031	36,708
Corporate Debt Obligations [Member]
Schedule of Investments [Line Items]
Short-term investments, Amortized Cost	137,200	110,062
Short-term investments, Gross Unrealized Gains	1	0
Short-term investments, Gross Unrealized Losses	310	347
Short-term investments, Estimated Fair Value	136,891	109,715
US Government Agencies [Member]
Schedule of Investments [Line Items]
Short-term investments, Amortized Cost	18,998	18,998
Short-term investments, Gross Unrealized Gains	0	2
Short-term investments, Gross Unrealized Losses	42	50
Short-term investments, Estimated Fair Value	18,956	18,950
Bank Deposits [Member]
Schedule of Investments [Line Items]
Short-term investments, Amortized Cost	480	10,846
Short-term investments, Gross Unrealized Gains	0	1
Short-term investments, Gross Unrealized Losses	0	0
Short-term investments, Estimated Fair Value	$ 480	$ 10,847

[1] The Condensed Consolidated Balance Sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

XML

Cash, Cash Equivalents, and Short-Term Investments - Summary of Cost and Estimated Fair Value of Short-Term Investments (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Short Term Investments [Abstract]
Amortized Cost of short-term investments, Due within one year	$ 89,856
Amortized Cost of short-term investments, Due within two years	86,997
Short-term investments, Amortized Cost	176,853	$ 154,151
Estimated fair value of short-term investments, Due within one year	89,696
Estimated fair value of short-term investments, Due within two years	86,798
Short-term investments, Estimated Fair Value	$ 176,494	$ 153,749	[1]

[1] The Condensed Consolidated Balance Sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

XML

Cash, Cash Equivalents, and Short-Term Investments - Schedule of Short-Term Investments at Fair Value and Length of Continuous Unrealized Loss Position (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	$ 134,360	$ 104,509
Less than 12 Months, Unrealized Losses	318	377
12 Months or Greater, Fair Value	33,444	33,185
12 Months or Greater, Unrealized Losses	42	28
Total, Fair Value	167,804	137,694
Total, Unrealized Losses	360	405
Commercial Paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	14,215	14,237
Less than 12 Months, Unrealized Losses	8	8
12 Months or Greater, Fair Value	0	0
12 Months or Greater, Unrealized Losses	0	0
Total, Fair Value	14,215	14,237
Total, Unrealized Losses	8	8
Corporate Debt Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	108,446	78,821
Less than 12 Months, Unrealized Losses	271	323
12 Months or Greater, Fair Value	25,948	29,689
12 Months or Greater, Unrealized Losses	38	24
Total, Fair Value	134,394	108,510
Total, Unrealized Losses	309	347
US Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	11,459	11,451
Less than 12 Months, Unrealized Losses	38	46
12 Months or Greater, Fair Value	7,496	3,496
12 Months or Greater, Unrealized Losses	4	4
Total, Fair Value	18,955	14,947
Total, Unrealized Losses	42	$ 50
Bank Deposits [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	240
Less than 12 Months, Unrealized Losses	1
12 Months or Greater, Fair Value	0
12 Months or Greater, Unrealized Losses	0
Total, Fair Value	240
Total, Unrealized Losses	$ 1

XML

Fair Value of Financial Instruments - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair value transfers between level 1 to level 2	$ 0
Fair value transfers between level 2 to level 1	0
Fair value transfers into level 3	0
Fair value transfers out of level 3	0
Level II [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Severance pay assets	$ 5,800,000	$ 5,100,000

XML

Fair Value of Financial Instruments - Assets and Liabilities Subject to Fair Value Measurements on Recurring Basis (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	$ 136,318	$ 107,343
Short-term investments	176,494	153,749	[1]
Commercial Paper [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	4,994	6,993
Short-term investments	20,167	14,237
Money Market Funds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	66,031	36,708
Corporate Debt Obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	136,891	109,715
US Government Agencies [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	18,956	18,950
Bank Deposits [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	480	10,847
Fair Value, Measurements, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	249,566	197,450
Fair Value, Measurements, Recurring [Member] | Commercial Paper [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	4,994	6,993
Short-term investments	20,167	14,237
Fair Value, Measurements, Recurring [Member] | Money Market Funds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	66,031	36,708
Fair Value, Measurements, Recurring [Member] | Corporate Debt Obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	136,891	109,715
Fair Value, Measurements, Recurring [Member] | US Government Agencies [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	18,956	18,950
Fair Value, Measurements, Recurring [Member] | Bank Deposits [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	480	10,847
Fair Value, Measurements, Recurring [Member] | Level I [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	66,031	36,708
Fair Value, Measurements, Recurring [Member] | Level I [Member] | Commercial Paper [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Short-term investments	0	0
Fair Value, Measurements, Recurring [Member] | Level I [Member] | Money Market Funds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	66,031	36,708
Fair Value, Measurements, Recurring [Member] | Level I [Member] | Corporate Debt Obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	0	0
Fair Value, Measurements, Recurring [Member] | Level I [Member] | US Government Agencies [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	0	0
Fair Value, Measurements, Recurring [Member] | Level I [Member] | Bank Deposits [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	0	0
Fair Value, Measurements, Recurring [Member] | Level II [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	183,535	160,742
Fair Value, Measurements, Recurring [Member] | Level II [Member] | Commercial Paper [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	4,994	6,993
Short-term investments	20,167	14,237
Fair Value, Measurements, Recurring [Member] | Level II [Member] | Money Market Funds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Fair Value, Measurements, Recurring [Member] | Level II [Member] | Corporate Debt Obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	136,891	109,715
Fair Value, Measurements, Recurring [Member] | Level II [Member] | US Government Agencies [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	18,956	18,950
Fair Value, Measurements, Recurring [Member] | Level II [Member] | Bank Deposits [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	480	10,847
Fair Value, Measurements, Recurring [Member] | Level III [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial assets	0	0
Fair Value, Measurements, Recurring [Member] | Level III [Member] | Commercial Paper [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Short-term investments	0	0
Fair Value, Measurements, Recurring [Member] | Level III [Member] | Money Market Funds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Fair Value, Measurements, Recurring [Member] | Level III [Member] | Corporate Debt Obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	0	0
Fair Value, Measurements, Recurring [Member] | Level III [Member] | US Government Agencies [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	0	0
Fair Value, Measurements, Recurring [Member] | Level III [Member] | Bank Deposits [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Short-term investments	0	0
Fair Value, Measurements, Recurring [Member] | Forward Foreign Exchange Contracts [Member] | Prepaid Expenses and Other Current Assets [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Prepaid expenses and other current assets - Forward foreign exchange contracts	2,047
Fair Value, Measurements, Recurring [Member] | Forward Foreign Exchange Contracts [Member] | Accrued and Other Current Liabilities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Accrued and other current liabilities - Forward foreign exchange contracts		639
Fair Value, Measurements, Recurring [Member] | Forward Foreign Exchange Contracts [Member] | Level I [Member] | Prepaid Expenses and Other Current Assets [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Prepaid expenses and other current assets - Forward foreign exchange contracts	0
Fair Value, Measurements, Recurring [Member] | Forward Foreign Exchange Contracts [Member] | Level I [Member] | Accrued and Other Current Liabilities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Accrued and other current liabilities - Forward foreign exchange contracts		0
Fair Value, Measurements, Recurring [Member] | Forward Foreign Exchange Contracts [Member] | Level II [Member] | Prepaid Expenses and Other Current Assets [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Prepaid expenses and other current assets - Forward foreign exchange contracts	2,047
Fair Value, Measurements, Recurring [Member] | Forward Foreign Exchange Contracts [Member] | Level II [Member] | Accrued and Other Current Liabilities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Accrued and other current liabilities - Forward foreign exchange contracts		639
Fair Value, Measurements, Recurring [Member] | Forward Foreign Exchange Contracts [Member] | Level III [Member] | Prepaid Expenses and Other Current Assets [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Prepaid expenses and other current assets - Forward foreign exchange contracts	$ 0
Fair Value, Measurements, Recurring [Member] | Forward Foreign Exchange Contracts [Member] | Level III [Member] | Accrued and Other Current Liabilities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Accrued and other current liabilities - Forward foreign exchange contracts		$ 0

[1] The Condensed Consolidated Balance Sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

XML

Derivative Instruments - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2017
Forward Foreign Exchange Contracts [Member]
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative contracts maturity	12 months

XML

Derivative Instruments - Derivative Instruments Measured at Fair Value and Classification on Condensed Consolidated Balance Sheets (Detail) - Forward Foreign Exchange Contracts [Member] - Designated As Hedging Instrument [Member] - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Prepaid Expenses and Other Current Assets [Member]
Derivatives, Fair Value [Line Items]
Derivative Notional Amount	$ 44,368,000	$ 60,756,000
Derivative Fair Value	$ 2,047,000
Accrued and Other Current Liabilities [Member]
Derivatives, Fair Value [Line Items]
Derivative Fair Value		$ (639,000)

XML

Derivative Instruments - Gains (Losses) on Derivative Instruments and Classification on Condensed Consolidated Statement of Operations (Detail) - Designated As Hedging Instrument [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Derivatives, Fair Value [Line Items]
Gains recognized in OCI	$ 2,887	$ 1,316
Losses recognized in OCI	0	(99)
Gains recognized from accumulated OCI into net income	206	0
Losses recognized from accumulated OCI into net income	$ (5)	$ (194)

XML

Derivative Instruments - Gains (Losses) on Derivative Instruments and Classification on Condensed Consolidated Statement of Operations (Parenthetical) (Detail) - Designated As Hedging Instrument [Member] - Unrealized Gain (Loss) on Cash Flow Hedges [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cost of Sales [Member]
Derivatives, Fair Value [Line Items]
Cash flow hedge Gain (loss) reclassified	$ 14	$ (13)
Operating Expenses [Member]
Derivatives, Fair Value [Line Items]
Cash flow hedge Gain (loss) reclassified	$ 187	$ (181)

XML

Goodwill and Acquired Intangible Assets - Additional Information (Detail) - USD ($)	1 Months Ended	3 Months Ended
	Feb. 28, 2017	Mar. 31, 2017	Mar. 31, 2016
Finite Lived Intangible Assets [Line Items]
Goodwill allocated to disposal of assets		$ 1,059,000
Goodwill impairments		0	$ 0
Impairment of intangible assets		$ 0	$ 0
Minimum [Member]
Finite Lived Intangible Assets [Line Items]
Estimated useful life		7 years
Maximum [Member]
Finite Lived Intangible Assets [Line Items]
Estimated useful life		10 years
Acquired Technology [Member]
Finite Lived Intangible Assets [Line Items]
Weighted average remaining useful life		6 years 9 months 18 days
Customer Relationships [Member]
Finite Lived Intangible Assets [Line Items]
Weighted average remaining useful life		6 years 8 months 12 days
Trade Name and Other [Member]
Finite Lived Intangible Assets [Line Items]
Weighted average remaining useful life		6 years 8 months 12 days
Skyfence Cloud Access Security Broker Business [Member]
Finite Lived Intangible Assets [Line Items]
Goodwill allocated to disposal of assets	$ 1,100,000
Intangible assets derecognized in connection with disposal of assets	$ 4,500,000

XML

Goodwill and Acquired Intangible Assets - Changes in the Carrying Amount of Goodwill (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
Balance as of December 31, 2016	$ 37,448	[1]
Goodwill disposed with sale of Skyfence	(1,059)
Balance as of March 31, 2017	$ 36,389

[1] The Condensed Consolidated Balance Sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

XML

Goodwill and Acquired Intangible Assets - Summary of Acquired Intangible Assets Subject to Amortization (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 4,513	$ 12,478
Accumulated Amortization	(932)	(4,085)
Net Book Value	3,581	8,393	[1]
Acquired Technology [Member]
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	3,753	11,718
Accumulated Amortization	(900)	(4,085)
Net Book Value	2,853	7,633
Customer Relationships [Member]
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	480	480
Accumulated Amortization	(20)	0
Net Book Value	460	480
Trade Name and Other [Member]
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	280	280
Accumulated Amortization	(12)	0
Net Book Value	$ 268	$ 280

[1] The Condensed Consolidated Balance Sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

XML

Goodwill and Acquired Intangible Assets - Schedule of Expected Amortization Expense in Future Periods (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016	[1]
Goodwill And Intangible Assets Disclosure [Abstract]
2017 (remaining 9 months)	$ 397
2018	528
2019	528
2020	528
2021	528
Thereafter	1,072
Net Book Value	$ 3,581	$ 8,393

[1] The Condensed Consolidated Balance Sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

XML

Commitments and Contingencies - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Loss Contingencies [Line Items]
Operating lease expiration year	2022
Rent expense	$ 1,600,000	$ 1,500,000
Tenant improvement allowances	0	0
Restricted cash	1,898,000		$ 1,884,000	[1]
Purchase commitments	$ 3,400,000		3,800,000
Period of purchase commitment of inventory from specified date	6 months
Loss contingency accrual	$ 0		$ 0
Cancelable Lease Agreement [Member]
Loss Contingencies [Line Items]
Motor vehicle lease expenses	700,000	$ 700,000
Maximum [Member] | Cancelable Lease Agreement [Member]
Loss Contingencies [Line Items]
Penalties	$ 100,000

[1] The Condensed Consolidated Balance Sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

XML

Commitments and Contingencies - Future Minimum Payments Under Operating Leases and Minimum Rentals to be Received Under Non-Cancellable Subleases (Detail) $ in Thousands	Mar. 31, 2017 USD ($)
Operating Leases
2017 (remaining 9 months)	$ 5,433
2018	8,306
2019	4,714
2020	4,446
2021	294
Thereafter	47
Total	23,240
Estimated Sublease Income
2017 (remaining 9 months)	406
2018	424
2019	0
2020	0
2021	0
Thereafter	0
Total	$ 830

XML

Stock Plans - Additional Information (Detail)			1 Months Ended						3 Months Ended
	Apr. 26, 2017 shares	Jan. 01, 2017 shares	May 31, 2016 shares	Oct. 31, 2015 shares	Aug. 31, 2014 shares	Nov. 30, 2013 shares	Jan. 31, 2012	Sep. 30, 2011 Period shares	Mar. 31, 2017 USD ($) shares	Mar. 31, 2016 USD ($)	Dec. 31, 2016 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance-based restricted stock units granted									875,391
Number of stock option outstanding, granted									0
Number of options outstanding									1,359,044		1,570,765
Number of restricted stock units outstanding									2,462,212		1,994,790
Intrinsic value of options exercised | $									$ 2,100,000
Compensation cost related to unvested stock-based awards granted, but not yet recognized | $									$ 102,500,000
Nonvested awards, compensation cost not yet recognized, period for recognition									2 years 10 months 24 days
Capitalized stock-based compensation expense | $									$ 0	$ 0
Restricted Stock Units for Common Stock [Member] | Incapsula [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issuable, as-converted to common stock-basis						198,825
Restricted Stock Units And Outstanding Options [Member] | Incapsula [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issuable, as-converted to common stock-basis									247,184
2003 Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserve of common stock for future issuance									955,568
2003 Stock Plan [Member] | Stock options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum percentage of fair value of common stock on grant date									85.00%
2003 Stock Plan [Member] | Stock options [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period									10 years
2003 Stock Plan [Member] | Stock options [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period									4 years
2003 Stock Plan [Member] | Stock options [Member] | Greater 10% Ownership [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum percentage of fair value of common stock on grant date									110.00%
Minimum percentage of combined voting power									10.00%
2011 Stock Option and Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserve of common stock for future issuance								1,000,000
Increase percentage of common stock outstanding									4.00%
Increase in reserve share			1,300,000
2011 Stock Option and Incentive Plan [Member] | Subsequent Event [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Increase in reserve share	850,000
2011 Stock Option and Incentive Plan [Member] | Stock options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum percentage of fair value of common stock on grant date									100.00%
Expiration period									10 years
2011 Stock Option and Incentive Plan [Member] | Restricted Stock Units for Common Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period									4 years
Description of vesting terms									The Company also grants RSUs. RSUs granted to new hires and merit grants to existing employees generally vest over a four-year period with 25% vesting at the end of one year and the remainder vesting quarterly thereafter.
2011 Stock Option and Incentive Plan [Member] | Restricted Stock Units for Common Stock [Member] | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage at the end of period									25.00%
2011 Stock Option and Incentive Plan [Member] | Performance-based RSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period									3 years
Vesting performance period									1 year
Vesting service period									2 years
Description of vesting terms									The PRSUs provide for a target number of shares that generally vest over three years including a one year performance period and two years of service-based vesting. The PRSUs vest contingent upon the Company’s achievement of an annual contract value of subscription bookings target for fiscal 2017 and total operating expenses for 2017 that are at 110% or less of the internal operating plan.
Vest contingent upon the company’s achievement of total operating expenses at the internal operating plan, percentage									110.00%
Award expiration date									Feb. 15, 2019
2011 Stock Option and Incentive Plan [Member] | Performance-based RSUs [Member] | Executives [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance-based restricted stock units granted									46,619
2011 Stock Option and Incentive Plan [Member] | Performance-based RSUs [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Earned percentage on target award amount, depending on level of achievement									200.00%
2011 Stock Option and Incentive Plan [Member] | Performance-based RSUs [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Earned percentage on target award amount, depending on level of achievement									0.00%
2011 Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserve of common stock for future issuance								500,000
Increase percentage of common stock outstanding							1.00%
Increase in reserve share		330,889
Program effective date								Nov. 08, 2011
Percentage in payroll of deduction base salary to acquire shares of common stock								15.00%
Offering period								24 months
Percentage of fair value of common stock on offering period								85.00%
Number of years, shares reserved for issuance increase							8 years
2011 Employee Stock Purchase Plan [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserve of common stock for future issuance								20,000,000
Number of purchase periods for offering | Period								5
Inducement Stock Option Plan And Agreement [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Description of vesting terms									In accordance with the terms of the Inducement Option Plans, the Company issued options to purchase an aggregate of 290,000 shares of the Company’s common stock at an exercise price equal to the fair market value of a share of the Company’s common stock on the dates of grant of the options. The options, which have a ten-year term, vest at the rate of 25% of the shares on each of the first anniversary of the vesting commencement date with an additional 6.25% of the shares subject to the option vesting each quarter thereafter so long as the participant has not been terminated.
Number of stock option outstanding, granted					290,000
Inducement Stock Option Plan And Agreement [Member] | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage at the end of period					25.00%
Inducement Stock Option Plan And Agreement [Member] | Quarterly Vesting [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage at the end of period					6.25%
Inducement Restricted Stock Unit Plan and Agreement [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Description of vesting terms									In accordance with the terms of the Inducement RSU Plans, the Company issued RSUs representing an aggregate of 290,000 shares of the Company’s common stock. The RSUs, which expire following settlement, vest at the rate of 25% of the shares on each of the first anniversary of the vesting commencement date with an additional 6.25% of the shares subject to the RSU vesting each quarter thereafter so long as the participant has not been terminated.
Shares available for grant					290,000
Inducement Restricted Stock Unit Plan and Agreement [Member] | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage at the end of period					25.00%
Inducement Restricted Stock Unit Plan and Agreement [Member] | Quarterly Vesting [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage at the end of period					6.25%
2015 Equity Inducement Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserve of common stock for future issuance				100,000
2015 Equity Inducement Plan [Member] | Stock options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum percentage of fair value of common stock on grant date				100.00%
Expiration period				10 years
Incapsula 2010 Share Incentive Plan [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserve of common stock for future issuance						10,263,211
Incapsula 2010 Share Incentive Plan [Member] | Restricted Stock Units for Common Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance-based restricted stock units granted						7,095,461
Incapsula 2010 Share Incentive Plan [Member] | Assumed Outstanding Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding									6,932
Incapsula 2010 Share Incentive Plan [Member] | Assumed RSUs Outstanding [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of restricted stock units outstanding									483

XML

Stock Plans - Summary of Option Activity under Plans and Related Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Number of Stock Options Outstanding, Beginning balance	1,570,765
Number of Stock Options Outstanding, Granted	0
Number of Stock Options Outstanding, Exercised	(138,126)
Number of Stock Options Outstanding, Cancelled or forfeited	(73,595)
Number of Stock Options Outstanding, Ending balance	1,359,044	1,570,765
Number of Shares, Vested and expected to vest	1,359,044
Number of Shares, Exercisable	912,169
Weighted Average Exercise Price of Stock Options Outstanding	$ 40.29	$ 39.64
Weighted Average Exercise Price, Granted	0
Weighted Average Exercise Price, Exercised	29.14
Weighted Average Exercise Price, Cancelled or forfeited	47.34
Weighted Average Exercise Price, Vested and expected to vest	40.29
Weighted Average Exercise Price, Exercisable	$ 38.20
Weighted-Average Remaining Contractual Term (in years)	6 years 6 months 4 days	6 years 10 months 24 days
Weighted-Average Remaining Contractual Term (in years), Vested and expected to vest	6 years 6 months 4 days
Weighted-Average Remaining Contractual Term (in years), Exercisable	5 years 11 months 12 days
Aggregate Intrinsic Value	$ 9,272	$ 9,226
Aggregate Intrinsic Value, Vested and expected to vest	9,272
Aggregate Intrinsic Value, Exercisable	$ 7,527

XML

Stock Plans - Summary of Option Activity under Plans and Related Information (Parenthetical) (Detail)	Mar. 31, 2017 $ / shares
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Closing stock price	$ 41.05

XML

Stock Plans - Summary of RSU Activity Outstanding and Weighted Average Grant Date Fair Value (Detail) - $ / shares	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Number of Restricted Stock Units Outstanding, Unvested - Beginning Balance	1,994,790
Number of Restricted Stock Units Outstanding, Granted	875,391
Number of Restricted Stock Units Outstanding, Granted, performance RSUs	280,900
Number of Restricted Stock Units Outstanding, Released	(328,546)
Number of Restricted Stock Units Outstanding, Cancelled or forfeited	(360,323)
Number of Restricted Stock Units Outstanding, Unvested - Ending Balance	2,462,212
Weighted-Average Grant Date Fair Value, Unvested	$ 47.51	$ 51.42
Weighted-Average Grant Date Fair Value, Granted	42.14
Weighted-Average Grant Date Fair Value, Granted, performance RSUs	41.85
Weighted-Average Grant Date Fair Value, Released	47.87
Weighted-Average Grant Date Fair Value, Cancelled or forfeited	$ 51.36

XML

Stock Plans - Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 13,610	$ 15,655
Cost of revenues [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	1,269	1,393
Research and Development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	4,768	4,249
Sales and Marketing [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	3,466	5,094
General and Administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	3,432	4,919
Restructuring Charges [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 675	$ 0

XML

Stock Plans - Weighted Average Assumptions for Fair Value of Stock Options Grants (Detail) - Stock options [Member]	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend rate	0.00%	0.00%
Risk-free interest rate	0.00%	1.50%
Expected term (in years)	0 years	6 years 1 month 6 days
Expected volatility	0.00%	58.00%

XML

Accumulated Other Comprehensive Income (Loss) - Changes in Balances of Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017		Mar. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	$ 231,963	[1]	$ 240,201
Other comprehensive income (loss) before reclassifications	1,958		891
Amounts reclassified to net income (loss)	(201)		194
Other comprehensive income (loss)	1,757		1,085
Ending balance	272,944		231,168
Unrealized Gain (Loss) on Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(1,065)		(1,021)
Other comprehensive income (loss) before reclassifications	1,930		722
Amounts reclassified to net income (loss)	(201)		194
Other comprehensive income (loss)	1,729		916
Ending balance	664		(105)
Unrealized Gain (Loss) on Investments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(413)		(310)
Other comprehensive income (loss) before reclassifications	28		169
Amounts reclassified to net income (loss)	0		0
Other comprehensive income (loss)	28		169
Ending balance	(385)		(141)
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(1,478)		(1,331)
Ending balance	$ 279		$ (246)

[1] The Condensed Consolidated Balance Sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

XML

Accumulated Other Comprehensive Income (Loss) - Summary of Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other comprehensive income (loss), Pre-Tax Amount	$ 2,730	$ 1,671
Other comprehensive income (loss), Tax Expense (Benefit)	(973)	(586)
Other comprehensive income (loss) before reclassification adjustments, After-Tax Amount	1,958	891
Other comprehensive income (loss), Reclassification adjustments, After-Tax Amount	(201)	194
Other comprehensive income (loss)	1,757	1,085
Unrealized Gains (Losses) on Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other comprehensive income (loss) before reclassification adjustments, Pre-Tax Amount	2,887	1,217
Other comprehensive income (loss), Reclassification adjustments, Pre-Tax Amount	(201)	194
Other comprehensive income (loss), Pre-Tax Amount	2,686	1,411
Other comprehensive income (loss) before reclassification adjustments, Tax Expense (Benefit)	(957)	(495)
Other comprehensive income (loss), Reclassification adjustments, Tax Expense (Benefit)	0	0
Other comprehensive income (loss), Tax Expense (Benefit)	(957)	(495)
Other comprehensive income (loss) before reclassification adjustments, After-Tax Amount	1,930	722
Other comprehensive income (loss), Reclassification adjustments, After-Tax Amount	(201)	194
Other comprehensive income (loss)	1,729	916
Unrealized Gains (Losses) on Investments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other comprehensive income (loss) before reclassification adjustments, Pre-Tax Amount	44	260
Other comprehensive income (loss), Pre-Tax Amount	44	260
Other comprehensive income (loss) before reclassification adjustments, Tax Expense (Benefit)	(16)	(91)
Other comprehensive income (loss), Tax Expense (Benefit)	(16)	(91)
Other comprehensive income (loss) before reclassification adjustments, After-Tax Amount	28	169
Other comprehensive income (loss), Reclassification adjustments, After-Tax Amount	0	0
Other comprehensive income (loss)	$ 28	$ 169

XML

Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ 958	$ (102)

XML

Segment Information - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2017 Segment
Segment Reporting [Abstract]
Number of operating segments	1

XML

Segment Information - Company's Revenue by Geographic Region, Based on Customer's Location (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net revenue	$ 72,308	$ 59,773
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net revenue	37,645	33,671
EMEA [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net revenue	13,780	11,284
APAC [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net revenue	13,706	11,337
Other [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net revenue	$ 7,177	$ 3,481

XML

Segment Information - Long-Lived Assets by Location (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived assets	$ 26,046	$ 29,889
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived assets	21,404	20,525
Israel [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived assets	4,487	9,344
Other [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived assets	$ 155	$ 20

XML

Restructuring Charges - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Restructuring And Related Activities [Abstract]
Restructuring plan approval date by board of directors	2016-11
Restructuring charges	$ 667	$ 0
Payments for restructuring charges	$ 1,100

XML

Net Income (Loss) per Share - Reconciliation of Basic and Diluted Shares (Detail) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Weighted average number of shares outstanding:
Basic	33,207	31,843
Dilutive effects of:
Employee stock options, RSU’s and share based payment awards issued to employees	564	0
Diluted	33,771	31,843

XML

Net Income (Loss) per Share - Antidilutive Securities Excluded from Computation of Diluted Net Income (Loss) Per Share of Common Stock (Detail) - shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Stock options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per share	761,610	1,936,453
Restricted Stock Units for Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per share	598,503	2,553,598
Restricted Stock Issued In Connection with Skyfence Acquisition [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per share	0	219,969

XML

Disposition of Business - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Feb. 23, 2017
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Recognized gain on sale of Skyfence	$ 35,871	$ 0
Skyfence Cloud Access Security Broker Business [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Cash consideration on sale of assets			$ 40,000
Escrow to secure indemnification obligations			$ 5,000
Recognized gain on sale of Skyfence	$ 35,900

XML

Disposition of Business - Schedule of Carrying Amounts Immediately Preceding Disposition (Detail) - Skyfence Networks Ltd. [Member] $ in Thousands	Feb. 23, 2017 USD ($)
Assets
Prepaid and other current assets	$ 46
Property and equipment, net	219
Goodwill	1,058
Acquired intangible assets, net	4,496
Total assets	5,819
Liabilities
Accounts payable	104
Accrued and other current liabilities	117
Deferred revenue	1,454
Total liabilities	$ 1,675

XML

Disposition of Business - Schedule of Consolidated Results of Operations Through Disposal (Detail) - Skyfence Cloud Access Security Broker Business [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Operating loss	$ (3,567)	$ (5,263)
Loss before taxes	(3,648)	(5,263)
Net loss	$ (3,659)	$ (5,308)

XML

Subsequent Event - Additional Information (Detail) - 2011 Stock Option and Incentive Plan [Member] - shares		1 Months Ended
	Apr. 26, 2017	May 31, 2016
Subsequent Event [Line Items]
Increased by number of shares available for grant		1,300,000
Subsequent Event [Member]
Subsequent Event [Line Items]
Increased by number of shares available for grant	850,000