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1. Company Snapshot

1.a. Company Description

Varonis Systems, Inc.provides software products and services that allow enterprises to manage, analyze, alert, and secure enterprise data in North America, Europe, the Middle East, Africa, and internationally.Its software enables enterprises to protect data stored on premises and in the cloud, including sensitive files and emails; confidential personal data belonging to customers, and patients and employees' data; financial records; strategic and product plans; and other intellectual property.


The company offers DatAdvantage that captures, aggregates, normalizes, and analyzes every data access event for users on Windows and UNIX/Linux servers, storage devices, email systems, Intranet servers, cloud applications, and data stores; and DatAlert that profiles users, devices, and their behaviors related to systems and data, detects and alerts on deviations that indicate compromise, and provides a Web-based dashboard and investigative interface.It also provides Data Classification Engine that identifies and tags data based on criteria set in various metadata dimensions, as well as provides business and information technology (IT) personnel with actionable intelligence about data; and DataPrivilege, which offers a self-service Web portal that allows users to request access to data necessary for their business functions, and owners to grant access without IT intervention.In addition, the company provides Data Transport Engine, which provides an execution engine that unifies the manipulation of data and metadata, translating business decisions, and instructions into technical commands, such as data migration or archiving; and DatAnswers that offers search functionality for enterprise data.


Varonis Systems, Inc.sells products and services through a network of distributors and resellers.The company serves IT, security, and business personnel.


Varonis Systems, Inc.was incorporated in 2004 and is headquartered in New York, New York.

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1.b. Last Insights on VRNS

Varonis Systems, Inc.'s recent performance was negatively impacted by a reduction in full-year ARR guidance due to underperformance in its on-prem subscription business. The company's Q3 earnings met estimates, but SaaS revenue growth of 117.7% year-over-year was overshadowed by declines in other segments amid macro uncertainty. Investigations into potential securities law violations by Holzer & Holzer, LLC and other law firms may have added to investor concerns. DA Davidson lowered its price target on the stock from $55.00 to $40.00, citing a neutral rating.

1.c. Company Highlights

2. Varonis Systems' Q3 2025 Earnings: SaaS Growth Masks On-Prem Weakness

Varonis Systems reported revenue growth, with ARR increasing 18% year-over-year to $718.6 million, driven by strong demand for its SaaS platform. The company's SaaS business now represents 76% of total ARR, exceeding its transition target in under 3 years. EPS came in at $0.06, beating estimates of $0.0542. The company's guidance for 2025 has been updated, with ARR expected to be between $730 million and $738 million, representing growth of 14% to 15%, and free cash flow expected to be between $120 million and $125 million.

Publication Date: Nov -09

📋 Highlights
  • SaaS Dominance: SaaS now accounts for 76% of total ARR ($546.1 million), surpassing the transition target ahead of schedule.
  • ARR Growth: Annual Recurring Revenue (ARR) rose 18% YoY to $718.6 million, driven by strong SaaS demand.
  • On-Prem Challenges: On-prem renewals declined unexpectedly, leading to a 5% workforce reduction to reallocate resources.
  • Share Repurchase Program: $150 million authorization announced, leveraging strong cash flow and a 14–15% ARR growth outlook for 2025.
  • Guidance Adjustments: 2025 ARR guidance reduced to $730–738 million (14–15% growth) amid on-prem uncertainty and end-of-life planning.

Segment Performance

The on-prem subscription business experienced weaker-than-expected renewals, particularly in the federal and non-federal sectors, resulting in a reduction in gross renewal rates. This was attributed to various factors, including sales process issues, budgetary scrutiny, and federal underperformance. In contrast, the SaaS business remains healthy, driven by new customer demand and increased focus on SaaS upsell.

Operational Adjustments

To address the weakness in the on-prem business, Varonis is implementing a 5% reduction in headcount to reallocate resources to areas with the highest return on investment. The company is also taking a cautious approach to guidance, baking in additional conservatism to account for the end-of-life announcement for its self-hosted solution.

Valuation and Growth Prospects

With a P/S Ratio of 6.34 and an EV/EBITDA of -55.85, the market is pricing in significant growth expectations. Analysts estimate next year's revenue growth at 15.7%. Varonis is confident in its long-term target of 85% gross margin and expects its SaaS business to continue growing at a rate of 20-plus percent. The company's strong balance sheet and healthy free cash flow generation have enabled it to announce a $150 million share repurchase program.

Outlook and Challenges

Varonis faces challenges in its on-prem subscription business, but the company's transition to SaaS is largely complete. The executives are confident in the strength of the SaaS business, which is expected to drive growth going forward. The company's expansion into adjacent use cases and its recent acquisitions, such as SlashNext, are expected to provide additional growth opportunities.

3. NewsRoom

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VRNS Investigation Reminder: Kessler Topaz Meltzer & Check, LLP Encourages Varonis Systems, Inc. (NASDAQ: VRNS) Investors with Significant Losses to Contact the Firm

Dec -04

Source: prnewswire.com

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VRNS Notice of Investigation: Kessler Topaz Meltzer & Check, LLP Encourages Varonis Systems, Inc. (NASDAQ: VRNS) Investors with Significant Losses to Contact the Firm

Dec -02

Source: globenewswire.com

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Varonis Announces Integration With AWS Security Hub

Dec -02

Source: globenewswire.com

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Varonis Systems, Inc. (VRNS) Presents at UBS Global Technology and AI Conference 2025 Transcript

Dec -01

Source: seekingalpha.com

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VRNS Investigation Alert: Kessler Topaz Meltzer & Check, LLP Encourages Varonis Systems, Inc. (NASDAQ: VRNS) Investors with Significant Losses to Contact the Firm

Nov -28

Source: prnewswire.com

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VRNS Investigation: Kessler Topaz Meltzer & Check, LLP Encourages Varonis Systems, Inc. (NASDAQ: VRNS) Investors with Significant Losses to Contact the Firm

Nov -24

Source: globenewswire.com

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VRNS Investigation: Kessler Topaz Meltzer & Check, LLP Encourages Varonis Systems, Inc. (NASDAQ: VRNS) Investors with Significant Losses to Contact the Firm

Nov -22

Source: prnewswire.com

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NASDAQ: VRNS Investigation Reminder: Kessler Topaz Meltzer & Check, LLP Encourages Varonis Systems, Inc. (NASDAQ: VRNS) Investors with Significant Losses to Contact the Firm

Nov -20

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (11.61%)

6. Segments

Subscriptions

Expected Growth: 12%

Varonis Systems' 12% subscription growth is driven by increasing demand for data security and compliance solutions, particularly in the finance and healthcare sectors. The company's innovative products, such as DatAdvantage and DataPrivilege, are attracting new customers and expanding existing relationships. Additionally, the shift to cloud-based services and the need for real-time threat detection are contributing to the growth.

Maintenance and Services

Expected Growth: 10%

Varonis Systems' Maintenance and Services segment growth is driven by increasing demand for cybersecurity and data protection, expansion of existing customer relationships, and a growing need for compliance and auditing services. Additionally, the company's subscription-based model and high customer retention rates contribute to steady revenue growth, resulting in a 10% growth rate.

7. Detailed Products

DatAdvantage

A data governance and security platform that provides real-time monitoring and analytics for data access and usage

DataPrivilege

A solution that provides least privilege access to sensitive data and reduces the attack surface

DatAlert

A real-time threat detection and alerting system that identifies and responds to security threats

Varonis Edge

A solution that provides real-time threat detection and response for cloud-based data

Automated Remediation

A solution that automates the remediation of security threats and vulnerabilities

Data Classification

A solution that provides automated data classification and categorization

8. Varonis Systems, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Varonis Systems, Inc. operates in a niche market with a unique product offering, reducing the threat of substitutes.

Bargaining Power Of Customers

Varonis Systems, Inc. has a diverse customer base, reducing the bargaining power of individual customers.

Bargaining Power Of Suppliers

Varonis Systems, Inc. has a diversified supply chain, reducing the bargaining power of suppliers.

Threat Of New Entrants

The cybersecurity industry is rapidly evolving, and new entrants can easily disrupt the market with innovative solutions.

Intensity Of Rivalry

The cybersecurity industry is highly competitive, with many established players and new entrants vying for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 38.91%
Debt Cost 3.95%
Equity Weight 61.09%
Equity Cost 8.11%
WACC 6.49%
Leverage 63.69%

11. Quality Control: Varonis Systems, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Dropbox

A-Score: 6.1/10

Value: 5.9

Growth: 7.9

Quality: 7.4

Yield: 0.0

Momentum: 7.5

Volatility: 7.7

1-Year Total Return ->

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Qualys

A-Score: 5.5/10

Value: 2.3

Growth: 7.9

Quality: 9.2

Yield: 0.0

Momentum: 6.0

Volatility: 7.7

1-Year Total Return ->

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Okta

A-Score: 5.0/10

Value: 2.1

Growth: 9.1

Quality: 6.7

Yield: 0.0

Momentum: 7.5

Volatility: 4.3

1-Year Total Return ->

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Stock-Card
WEX

A-Score: 4.6/10

Value: 5.7

Growth: 6.9

Quality: 6.8

Yield: 0.0

Momentum: 2.0

Volatility: 6.0

1-Year Total Return ->

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Squarespace

A-Score: 3.9/10

Value: 4.5

Growth: 5.3

Quality: 5.6

Yield: 0.0

Momentum: 5.0

Volatility: 2.7

1-Year Total Return ->

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Stock-Card
Varonis Systems

A-Score: 3.8/10

Value: 4.7

Growth: 6.9

Quality: 4.0

Yield: 0.0

Momentum: 4.0

Volatility: 3.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

31.11$

Current Price

31.11$

Potential

-0.00%

Expected Cash-Flows