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Internal Security Drives Imperva Growth

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Aug. 18 2020, Updated 9:23 a.m. ET

Opportunity for customer growth

As we saw in the previous part of this series, Imperva (IMPV) has shown a tremendous increase in share price by generating impressive returns of 182.59% in the trailing 12-month (or TTM) period. Factors that have positively impacted the company’s stock price include a fast-growing market at more than 25%, productivity improvements with respect to sales force, addition of customers, upselling, and cross-selling of products to existing clients.

Imperva comprises 3.43% of the PureFunds ISE Cyber Security ETF (HACK) and 0.06% of the iShares Russell 2000 ETF (IWM).

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According to Summit Research analyst Srini Nandury, a secular shift is expected with respect to internal security measures to drive company growth. Nandury stated, “We believe Imperva has a lot of room to grow, given that it currently only has 3,900 customers worldwide, rendering its sales scope wide open. Even within the supposedly hacking-aware Fortune 1000 enterprises, Imperva still only counts 9% as its customers. Clearly, the company has a large and enviable runway for growth.”

Even though most large-cap companies worldwide have network firewalls in place, a majority is yet to deploy applications or Web firewalls. This gives Imperva a market opportunity to increase market share and revenues in the long term. Impreva’s data center security currently provides tools required to fight cyberattacks related to theft and fraud that mitigate risk and also streamline regulatory compliance.

Imperva looks to get back lost business from IBM

Anthony Bettencourt, Imperva’s chief executive officer appointed last August, believes the company’s technical expertise is well above IBM’s. He further said that between 2010 and 1Q15, Imperva has lost more than 200 deals to IBM.

In the last 18 months, Imperva has won 39 contracts over IBM. These were spurred by an increase in global high-profile hack cases, forcing companies to invest heavily in better cybersecurity to prevent similar attacks in the future. Buoyed by the recent spike in deals, Bettencourt now aims to get back contracts previously lost to IBM.

Imperva has gained 182.59% in the TTM period. In comparison, peer companies such as Fortinet (FTNT) and FireEye (FEYE) have gained 85.51% and 31.58%, respectively, in the same period.

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