Company Reports

Varonis reported second-quarter results that included sales of $180 million, up 18%, and adjusted operating margins of 2%, up 300 basis points. Management raised its 2026 sales outlook slightly to $737 million, implying around 18% growth at the midpoint of the guidance range.

Varonis started 2026 strongly, with the firm's quarterly sales growing 27% to $173 million and its adjusted operating margins up 4 points to negative 1%. The firm's operating margins continue to be affected by its shift to delivering solutions through the cloud, which is near-term margin-dilutive.

Anthropic confirmed the existence of an upcoming model after Fortune first reported plans for it on March 26. This new model, named either Mythos or Capybara, is reportedly much better than existing models at finding cyber vulnerabilities. This news sent our cyber coverage down 5% on average.

On Feb. 20, Anthropic released a vulnerability-scanning tool aimed at security applications, leading to an average drawdown of over 5% across our cybersecurity coverage as investors worry that Anthropic and other artificial intelligence labs could replace cybersecurity functions within companies.

We view Varonis Systems as a solid data security vendor in a tough competitive landscape. Its solutions revolve around data security, privacy, and compliance. While the firm’s history stretches back to 2005, we are pessimistic on what the future holds for Varonis as intense competition and possibly an uptick in churn due to its ongoing cloud transition stand to exact a cost on its growth and profitability outlook.

Varonis reported mixed fourth-quarter results that included sales of $173 million, up 9%, and adjusted operating margins of 3%, down 700 basis points. The firm's 2026 ARR, or annual recurring revenue, outlook guides to a slowdown in growth, which led to the after-hours sell-off in shares.

Varonis reported mixed third-quarter results, which included sales of $162 million, up 9%, and adjusted operating margin of 0%, down 600 basis points. The firm reduced its annual recurring revenue outlook for 2025 by $17 million at the midpoint, leading to a sharp selloff in shares.

We view Varonis Systems as a premier data security vendor in a tough competitive landscape. Its solutions revolve around data security, privacy, and compliance. While the firm’s history stretches back to 2005, we are pessimistic on what the future holds for Varonis as intense competition and possibly an uptick in churn due to its ongoing cloud transition stand to exact a cost on its growth and profitability outlook.

Varonis reported second-quarter revenue of $152 million, up 17% year over year, with adjusted margins of negative 1%, down 280 basis points. The firm's transition to cloud remains on track, with SaaS making up 69% of the firm's annual recurring revenue, up from 36% a year ago and 61% last quarter.

We view Varonis Systems as a strong data security vendor in a tough competitive landscape. Its solutions revolve around data security, privacy, and compliance. While the firm’s history stretches back to 2005, we are pessimistic on what the future holds for Varonis as intense competition and possibly an uptick in churn due to its ongoing cloud transition stand to exact a cost on its growth and profitability outlook.

Varonis Systems' first-quarter revenue grew 20% to $136 million and adjusted operating margin improved 400 basis points to negative 5%. The firm's cloud transition remains on track, with software as a service now constituting 61% of the firm's annual recurring revenue, up from 30% a year earlier.

We view Varonis Systems as a strong data security vendor in a tough competitive landscape. Its solutions revolve around data security, privacy, and compliance. While the firm’s history stretches back to 2005, we are pessimistic on what the future holds for Varonis as intense competition and possibly an uptick in churn due to its ongoing cloud transition stand to exact a cost on its growth and profitability outlook.

Varonis reported solid financial results to close 2024. While annual comparisons remain affected by Varonis' transition to a cloud-based software-as-a-service model, the transition itself appears to be going well, with SaaS constituting 53% of the annual recurring revenue, up from 23% last year.

Varonis Systems reported solid third-quarter financial results, with sales and profitability ahead of our estimates. The company's transition to a cloud-based software-as-a-service offering remains on track, making up 43% of overall annual recurring revenue, up from 15% a year ago.

We view Varonis Systems as a strong data security vendor in a tough competitive landscape. Its solutions revolve around data security, privacy, and compliance. While the firm’s history stretches back to 2005, we are pessimistic on what the future holds for Varonis as intense competition and possibly an uptick in churn due to its ongoing cloud transition stand to exact a cost on its growth and profitability outlook.

We are raising our fair value estimate for no-moat Varonis to $33 from $30 following a strong quarterly earnings report with results ahead of our above-consensus estimates. The firm’s model transition toward a cloud-based software-as-a-service offering also remains on track, with cloud-based SaaS now making up 36% of the firm’s overall annual recurring revenue. While near-term macro headwinds, including elongated sales cycles, are expected to continue, we expect Varonis’ ARR growth to remain in the late teens for the remainder of 2024.

We view Varonis Systems as a strong data security vendor that occupies a tough competitive landscape. The firm’s solutions revolve around data security, privacy, and compliance. While the firm’s history stretches back to its founding in 2004, we are pessimistic on what the future holds for the firm as intense competition and possibly an uptick in churn due to the firm’s ongoing cloud transition stand to exact a cost on the firm’s growth and profitability outlook.

We view Varonis Systems as a strong data security vendor that occupies a tough competitive landscape. The firm’s solutions revolve around data security, privacy, and compliance. While the firm’s history stretches back to its founding in 2004, we are pessimistic on what the future holds for the firm as intense competition and possibly an uptick in churn due to the firm’s ongoing cloud transition stand to exact a cost on the firm’s growth and profitability outlook.

We are maintaining our fair value estimate for no-moat Varonis at $30 following a robust first-quarter earnings report. The firm made considerable headway in its transition to its cloud-based software-as-a-service offering, which now makes up 30% of its annual recurring revenue. We expect tight macroeconomic conditions to persist in the near term, causing high budgetary scrutiny to continue as a headwind. However, as macro pressures ease up, we anticipate a reduction in elongated sales cycles and greater customer spending, combined with scale-based operating leverage, to boost margins. Shares rose marginally afterhours, but we remain skeptical of the market’s valuation of Varonis and continue to view shares as overvalued.

We are raising our fair value estimate for no-moat Varonis to $30 from $25 after the firm reported strong fourth-quarter results to close out 2023. We continue to be optimistic about Varonis’ cloud transition with software-as-a-service, or SaaS, now making up more than 23% of the firm’s annual recurring revenue, or ARR. At the same time, we expect macroeconomic pressures to gradually dissipate over the next year, lessening the impact of macroinduced longer sales cycles and increased budgetary scrutiny on Varonis’ business. Despite our fair value increase, we remain unable to rationalize Varonis’ valuation and continue to view the firm’s shares as overvalued. For investors seeking cybersecurity exposure, we’d point to Fortinet, a wide-moat security company that currently trades in the 3-star range.