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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. faces scrutiny over its recent performance, with allegations of concealed renewal softness within its Federal vertical and legacy on-premises business. A securities class action lawsuit has been filed, claiming executives misrepresented the company's Software-as-a-Service (SaaS) transition, leading to a significant decline in shares. The firm's term license revenue plummeted 63.9%, sparking concerns over the company's cloud migration strategy. Investors are investigating potential violations of federal securities laws. Hagens Berman and Kessler Topaz Meltzer & Check, LLP are probing into the matter.

1.c. Company Highlights

2. Varonis Systems' SaaS Business Continues to Drive Growth

Varonis Systems reported a strong financial performance in Q4 2025, with total revenues increasing 9% year over year to $173.4 million, driven by the growth of its SaaS business. SaaS revenues were $142.3 million, and gross profit for the fourth quarter was $138.7 million, representing a gross margin of 80%. The company's actual EPS came out at $0.08, beating estimates of $0.03. The strong revenue growth and beat on EPS are positive indicators for the company's financial health.

Publication Date: Feb -16

📋 Highlights
  • SaaS ARR Growth:: Increased 32% YoY to $638.5M (86% of total ARR), driven by automation and customer satisfaction.
  • 2026 SaaS Transition:: $65M of non-SaaS ARR converted in Q4; expects $50–75M remaining conversions by year-end, aiming for 100% SaaS transition.
  • Acquisition of Altu:: Strengthened AI security with $30M–$50M headwind expected on free cash flow from government customer non-conversions.
  • 2026 Guidance:: SaaS ARR growth of 27–28% excluding conversions, total revenues $164M–$166M, non-GAAP net loss of 5¢–6¢ per share.
  • Cash Position:: $1.1B in cash/cash equivalents and $147.4M cash from operations for 2025, with 80% gross margin in Q4.

Transition to SaaS and ARR Growth

The company's SaaS ARR increased 32% year over year to $638.5 million, or 86% of total ARR, driven by the conversion of non-SaaS ARR to SaaS ARR. Total ARR increased 16% year over year to $745.4 million. The company is making significant progress in transitioning its business to be 100% SaaS by the end of 2026, with approximately $65 million of non-SaaS ARR converted in Q4. As Guy Melamed stated, "we believe that between $50 to $75 million of the remaining self-hosted customers will convert by the end of the year."

Guidance and Valuation

For 2026, the company expects SaaS ARR growth of 27% to 28% excluding conversions, total revenues of $164 million to $166 million, representing growth of 20% to 22%. The company's guidance implies a revenue growth rate of 21%, which is slightly higher than the analyst estimates of 17.5%. With a P/S Ratio of 4.8, the company's valuation appears reasonable, considering its growth prospects. Additionally, the EV/EBITDA ratio of -32.3 suggests that the company's valuation is largely dependent on its future growth prospects.

Key Drivers and Challenges

The company's SaaS business is driven by the automated value proposition it delivers to customers, and the acquisition of Altu is expected to strengthen its ability to protect enterprises from emerging AI risks. However, the company faces a headwind from the remaining non-SaaS ARR, particularly from federal and state government customers, which is expected to have a $30 million to $50 million impact on free cash flow and ARR contribution margin in 2026. The company's focus on selling to new customers and expanding its existing customer base is expected to drive growth.

3. NewsRoom

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VRNS FINAL DEADLINE: ROSEN, A LEADING INVESTOR RIGHTS LAW FIRM, Encourages Varonis Systems, Inc. Investors to Secure Counsel Before Important March 9 Deadline in Securities Class Action - VRNS

Mar -06

Source: newsfilecorp.com

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This Small-Cap Manager Just Sold Its Entire $110 Million Stake in a Data Security Company

Mar -06

Source: fool.com

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VRNS Federal Sector Collapse: Hagens Berman Investigating Varonis (VRNS) Over Alleged SaaS Transition Failure and Undisclosed Renewal Softness in Securities Class Action

Mar -06

Source: globenewswire.com

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Bronstein, Gewirtz & Grossman LLC Urges Varonis Systems, Inc. Investors to Act: Class Action Filed Alleging Investor Harm

Mar -06

Source: globenewswire.com

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Deadline Soon: Varonis Systems, Inc. (VRNS) Shareholders Who Lost Money Urged to Contact the Law Offices of Frank R. Cruz About Securities Fraud Lawsuit

Mar -06

Source: businesswire.com

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CLASS ACTION DEADLINE APPROACHING: Berger Montague Advises Varonis Systems, Inc. (VRNS) Investors to Inquire About a Securities Fraud Class Action by March 9, 2026

Mar -06

Source: newsfilecorp.com

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Elo Mutual Pension Insurance Co Buys New Holdings in Varonis Systems, Inc. $VRNS

Mar -06

Source: defenseworld.net

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VRNS Investors Have Opportunity to Lead Varonis Systems, Inc. Securities Fraud Lawsuit with the Schall Law Firm

Mar -06

Source: prnewswire.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

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Dropbox

A-Score: 5.9/10

Value: 6.2

Growth: 7.9

Quality: 7.3

Yield: 0.0

Momentum: 7.0

Volatility: 7.0

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Okta

A-Score: 4.9/10

Value: 1.9

Growth: 9.0

Quality: 7.1

Yield: 0.0

Momentum: 6.0

Volatility: 5.3

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Qualys

A-Score: 4.8/10

Value: 1.9

Growth: 7.9

Quality: 9.2

Yield: 0.0

Momentum: 4.0

Volatility: 5.7

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WEX

A-Score: 4.7/10

Value: 5.8

Growth: 6.9

Quality: 6.8

Yield: 0.0

Momentum: 3.0

Volatility: 6.0

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Squarespace

A-Score: 4.1/10

Value: 4.5

Growth: 5.2

Quality: 5.6

Yield: 0.0

Momentum: 6.0

Volatility: 3.0

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Varonis Systems

A-Score: 3.4/10

Value: 5.0

Growth: 6.9

Quality: 4.1

Yield: 0.0

Momentum: 1.5

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

24.39$

Current Price

24.39$

Potential

-0.00%

Expected Cash-Flows