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Varonis Systems
(NASDAQ:VRNS)
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Rating:64Neutral
Price Target:
$54.00
▲(32.29% Upside)
Action:Reiterated
Date:08/18/26
VRNS scores in the mid-range primarily due to strong and consistent free cash flow generation and a positive, guidance-raising earnings call that supports the growth outlook. Technicals add support with the stock trading above major moving averages and moderate bullish momentum. The main constraints are ongoing net losses (negative P/E) and balance-sheet leverage that is relatively high for an unprofitable company, plus near-term margin and conversion volatility highlighted on the call.
Positive Factors
SaaS ARR growth and raised outlook
Strong recurring-revenue growth indicates continued customer adoption and expansion of Varonis’ data-security platform. The raised full-year SaaS ARR outlook supports a durable growth trajectory, while subscription economics can improve visibility and deepen customer relationships over time.
Negative Factors
Persistent accounting losses
Ongoing losses show that revenue growth has not yet translated into consistent GAAP profitability. This limits retained capital generation, leaves the business more dependent on operating execution, and makes the durability of future earnings contingent on controlling expenses as the platform scales.
Read all positive and negative factors
Positive Factors
Negative Factors
SaaS ARR growth and raised outlook
Strong recurring-revenue growth indicates continued customer adoption and expansion of Varonis’ data-security platform. The raised full-year SaaS ARR outlook supports a durable growth trajectory, while subscription economics can improve visibility and deepen customer relationships over time.
Read all positive factors
Varonis Systems Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyVaronis Systems (VRNS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.76B
Dividend YieldN/A
Average Volume (3M)1.80M
Price to Earnings (P/E)―
Beta (1Y)0.93
Revenue Growth15.86%
EPS Growth-33.39%
CountryUS
Employees2,658
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-1.22
Shares Outstanding114,860,480
10 Day Avg. Volume1,391,024
30 Day Avg. Volume1,798,765
Financial Highlights & Ratios
PEG Ratio-0.92
Price to Book (P/B)7.08
Price to Sales (P/S)6.79
P/FCF Ratio31.43
Enterprise Value/Market Cap0.81
Enterprise Value/Revenue6.75
Enterprise Value/Gross Profit8.76
Enterprise Value/Ebitda-40.51
Forecast
1Y Price Target
$52.25Price Target Upside28.00% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering22
EPS Forecast (FY)0.15
Revenue Forecast (FY)$737.44M
Varonis Systems Business Overview & Revenue Model
Company Description
Varonis Systems, Inc. specializes in delivering software solutions and associated services designed to help large organizations oversee, analyze, identify threats in, and protect their critical digital information across North America, Europe, the...
How the Company Makes Money
Varonis primarily makes money by selling subscriptions to its data security software platform and related capabilities, typically priced on a recurring basis (e.g., annual or multi-year contracts) rather than one-time perpetual licenses. The compa...
Varonis Systems Earnings Call Summary
Earnings Call Date:Jul 28, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 02, 2026
Earnings Call Sentiment Positive
The call conveyed a net positive tone: strong underlying SaaS ARR growth (25% excl. conversions), healthy revenue growth (+18% YoY), improved GAAP/non‑GAAP profitability, substantial cash reserves and clear product momentum (Atlas, Interceptor, DAM) with meaningful customer wins. Offsets include margin pressure (gross margin and ARR contribution margin declines), a year‑to‑date drop in free cash flow (partly due to acquisition accounting costs), conversion uncertainty related to the on‑prem EOL transition, and some quarter‑end deal slippage tied to media rumors. On balance, management raised guidance and emphasized a robust pipeline and early July deal closures, indicating the positives materially outweigh the negatives.Positive Updates
Strong SaaS ARR Growth
SaaS ARR (excluding conversions) increased 25% year‑over‑year to $598.1M in Q2; total SaaS ARR including conversions was $726M. SaaS ARR from new logos grew more than 20% in the quarter. Management raised full‑year SaaS ARR outlook (total SaaS ARR $819M–$850M, +28%–33%; SaaS ARR excl. conversions growth ~20%–21%).
Negative Updates
Gross Margin Pressure
Non‑GAAP gross margin declined to 77.7% in Q2 from 80.6% a year ago (down ~290 basis points YoY). Management said gross margins are tracking to plan but the year‑over‑year decline is notable.
Read all updates
Q2-2026 Updates
Positive
Negative
Strong SaaS ARR Growth
SaaS ARR (excluding conversions) increased 25% year‑over‑year to $598.1M in Q2; total SaaS ARR including conversions was $726M. SaaS ARR from new logos grew more than 20% in the quarter. Management raised full‑year SaaS ARR outlook (total SaaS ARR $819M–$850M, +28%–33%; SaaS ARR excl. conversions growth ~20%–21%).
Read all positive updates
Company Guidance
Varonis guided Q3 SaaS ARR growth (ex‑conversions) of 22%–23%, total revenues of $185M–$188M (↑14%–16%), non‑GAAP operating income of $2.5M–$3.5M and non‑GAAP net income per diluted share of $0.02–$0.03 (assumes 131.1M diluted shares), noting the quarter‑to‑quarter bridge to total SaaS ARR assumes zero conversions. For full‑year 2026 it raised the outlook to total SaaS ARR $819M–$850M (↑28%–33%) and SaaS ARR ex‑conversions $769M–$775M (↑20%–21%), free cash flow $105M–$110M (a $5M raise), total revenues $735M–$739M (↑18%–19%), non‑GAAP operating income $11M–$13M and non‑GAAP diluted EPS $0.14–$0.15 (assumes 131.5M shares). Management also reiterated Q2 operational baselines used in the guidance: Q2 SaaS ARR ex‑conversions $598.1M (↑25% y/y), total SaaS ARR $726M, Q2 conversion ARR $11.4M, ~$59.3M non‑SaaS ARR remaining, YTD free cash flow $69.1M (or ~$81M adjusting for ~$11.9M acquisition‑related costs), and $911.5M in cash/cash equivalents and marketable securities as of June 30.Varonis Systems Financial Statement Overview
Summary
Income Statement
46
Neutral
Balance Sheet
52
Neutral
Cash Flow
74
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 688.10M | 623.53M | 550.95M | 499.16M | 473.63M | 390.13M |
| Gross Profit | 530.31M | 493.44M | 457.10M | 427.41M | 403.80M | 330.74M |
| EBITDA | -114.73M | -104.01M | -63.58M | -70.55M | -82.04M | -80.15M |
| Net Income | -141.38M | -129.32M | -95.77M | -100.92M | -124.52M | -116.86M |
Balance Sheet | ||||||
| Total Assets | 1.65B | 1.79B | 1.66B | 1.10B | 1.04B | 1.11B |
| Cash, Cash Equivalents and Short-Term Investments | 660.12M | 920.97M | 568.42M | 533.72M | 732.49M | 807.61M |
| Total Debt | 516.13M | 571.76M | 754.41M | 311.84M | 316.46M | 302.82M |
| Total Liabilities | 1.21B | 1.19B | 1.21B | 614.26M | 541.61M | 511.94M |
| Stockholders Equity | 444.49M | 598.66M | 455.66M | 489.65M | 502.13M | 596.59M |
Cash Flow | ||||||
| Free Cash Flow | 121.94M | 134.80M | 108.51M | 54.32M | 475.00K | -3.31M |
| Operating Cash Flow | 138.21M | 147.43M | 115.20M | 59.42M | 11.87M | 7.18M |
| Investing Cash Flow | 53.75M | -837.00K | -532.25M | -143.08M | -374.25M | 54.38M |
| Financing Cash Flow | -157.54M | -129.70M | 371.90M | -53.40M | -75.58M | 510.11M |
Varonis Systems Technical Analysis
Positive
40.82
Price Trends
45.20
Positive
41.95
Positive
34.40
Positive
Market Momentum
1.08
Negative
64.55
Neutral
88.90
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VRNS, the sentiment is Positive. The current price of 40.82 is below the 20-day moving average (MA) of 47.90, below the 50-day MA of 45.20, and above the 200-day MA of 34.40, indicating a bullish trend. The MACD of 1.08 indicates Negative momentum. The RSI at 64.55 is Neutral, neither overbought nor oversold. The STOCH value of 88.90 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VRNS.
Varonis Systems Risk Analysis
Varonis Systems disclosed 56 risk factors in its most recent earnings report. Varonis Systems reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Varonis Systems Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $3.97T | 29.73 | 33.22% | 0.68% | 17.79% | 31.42% | |
75 Outperform | $4.99B | 51.41 | 217.31% | 4.86% | 9.63% | -45.56% | |
72 Outperform | $11.86B | -61.09 | -2.88% | ― | 20.13% | 70.24% | |
69 Neutral | $25.94B | -98.54 | 50.26% | ― | 42.45% | 46.36% | |
64 Neutral | $5.76B | -41.08 | -26.91% | ― | 15.86% | -33.39% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
60 Neutral | $8.48B | -10.98 | -434.99% | ― | 30.40% | -124.09% |
* Technology Sector Average
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Varonis Systems
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-19.71%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.