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Varonis Systems
(NASDAQ:VRNS)
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Rating:60Neutral
Price Target:
$48.00
▲(137.74% Upside)
Action:Reiterated
Date:07/07/26
The score is driven by a mixed financial profile (positive free cash flow but persistent losses and leverage/asset-contraction concerns) and a very strong but overextended technical setup. Raised guidance and strong SaaS ARR/revenue momentum from the latest earnings call support the outlook, while valuation remains constrained by negative earnings and no stated dividend yield.
Positive Factors
SaaS ARR Growth & Raised Guidance
Sustained high-teens to high-20s ARR growth and an upwardly revised ARR target indicate durable expansion of recurring revenue. This strengthens predictable cash flows, supports multi-year customer value, and reduces reliance on one-time deals, improving long-term revenue visibility and scale economics.
Negative Factors
Persistent Negative Net Margin and ROE
Ongoing negative net margins and deeply negative ROE signal that accounting losses persist despite revenue growth. Until operating leverage and net profitability sustainably improve, returns to shareholders and reinvestment effectiveness remain constrained, limiting long-term capital efficiency.
Read all positive and negative factors
Positive Factors
Negative Factors
SaaS ARR Growth & Raised Guidance
Sustained high-teens to high-20s ARR growth and an upwardly revised ARR target indicate durable expansion of recurring revenue. This strengthens predictable cash flows, supports multi-year customer value, and reduces reliance on one-time deals, improving long-term revenue visibility and scale economics.
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.
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The Fly
The FlyVaronis Systems (VRNS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.24B
Dividend YieldN/A
Average Volume (3M)2.20M
Price to Earnings (P/E)―
Beta (1Y)0.92
Revenue Growth15.27%
EPS Growth-39.93%
CountryUS
Employees2,406
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-1.13
Shares Outstanding114,814,150
10 Day Avg. Volume3,360,539
30 Day Avg. Volume2,202,740
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/Revenue6.40
Enterprise Value/Gross Profit8.20
Enterprise Value/Ebitda-38.33
Forecast
1Y Price Target
$37.78Price Target Upside87.11% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering21
EPS Forecast (FY)0.12
Revenue Forecast (FY)$734.41M
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 makes money primarily by selling subscriptions to its data security software platform and related modules/capabilities. Revenue is largely generated from (1) recurring subscription fees for access to the platform (including cloud-delivered...
Varonis Systems Earnings Call Summary
Earnings Call Date:Apr 28, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 03, 2026
Earnings Call Sentiment Positive
The call conveyed strong growth momentum in the transition to a SaaS-focused business: SaaS ARR ex-conversion grew 29% YoY, total revenue grew 27% YoY, management raised full-year ARR and revenue guidance, reported notable new-logo wins and product traction (AI-focused offerings and recent acquisitions), and maintained a strong balance sheet with active share repurchases. Offsetting items included modest margin pressure (gross margin and ARR contribution margin declines), lower reported free cash flow and cash from operations versus last year (partly due to acquisition-related cash costs), and ongoing visibility uncertainty related to the on-prem end-of-life and conversion timing. Overall, the positives (robust ARR growth, raised guidance, customer wins, product momentum and cash reserves) outweigh the transition-related headwinds and margin/cash-flow noise.Positive Updates
Strong SaaS ARR Growth
SaaS ARR excluding conversions increased 29% year-over-year to $522.6M; total SaaS ARR including conversions was $683.2M. Company raised full-year total SaaS ARR guidance to $814M–$845M (growth 27%–32%) and SaaS ARR ex-conversions guidance to 20%–21%.
Negative Updates
Gross Margin and ARR Contribution Margin Declines
Gross margin fell to 77.9% from 80.2% in Q1 2025 (down ~2.3 percentage points). ARR contribution margin declined to 14.1% from 16.7% (down 2.6 percentage points), attributed in part to the end-of-life transition for the on-prem platform.
Read all updates
Q1-2026 Updates
Positive
Negative
Strong SaaS ARR Growth
SaaS ARR excluding conversions increased 29% year-over-year to $522.6M; total SaaS ARR including conversions was $683.2M. Company raised full-year total SaaS ARR guidance to $814M–$845M (growth 27%–32%) and SaaS ARR ex-conversions guidance to 20%–21%.
Read all positive updates
Company Guidance
Varonis provided Q2 2026 guidance for SaaS ARR growth excluding conversions of 24%–25%, total revenues of $175–178M (up 15%–17% YoY), a non‑GAAP operating loss of $(1)M to breakeven and non‑GAAP diluted EPS of $0.00–0.01 (assuming 131.1M diluted shares). For full‑year 2026 it raised guidance to total SaaS ARR of $814–845M (+27%–32%), SaaS ARR growth excluding conversions of 20%–21%, free cash flow of $100–105M, total revenues of $731–737M (+17%–18%), non‑GAAP operating income of $7–9M and non‑GAAP diluted EPS of $0.11–0.12 (assuming 132.1M shares); management also reiterated conversion expectations of roughly $50–75M for the year and said the Q2 bridge to total SaaS ARR assumes zero conversions. This follows a strong Q1: SaaS ARR ex‑conversions $522.6M (+29% YoY), total SaaS ARR $683.2M (including $11.3M of conversions), Q1 total revenue $173.1M (+27%), Q1 FCF $49M ($61.6M adjusted for ~$12.6M acquisition‑related costs), $900M cash and equivalents, ~83.7M non‑SaaS ARR remaining, >90% SaaS renewal rate, gross margin 77.9%, operating loss (non‑GAAP) $(1.4)M, net income $7.5M ($0.06/diluted), and $132.1M of share repurchases (5,355,445 shares at $24.67).Varonis Systems Financial Statement Overview
Summary
Income Statement
42
Neutral
Balance Sheet
46
Neutral
Cash Flow
63
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 660.24M | 623.53M | 550.95M | 499.16M | 473.63M | 390.13M |
| Gross Profit | 515.71M | 493.44M | 457.10M | 427.41M | 403.80M | 330.74M |
| EBITDA | -110.30M | -104.01M | -63.58M | -70.55M | -82.04M | -80.15M |
| Net Income | -130.40M | -129.32M | -95.77M | -100.92M | -124.52M | -116.86M |
Balance Sheet | ||||||
| Total Assets | 1.63B | 1.79B | 1.66B | 1.10B | 1.04B | 1.11B |
| Cash, Cash Equivalents and Short-Term Investments | 785.91M | 920.97M | 568.42M | 533.72M | 732.49M | 807.61M |
| Total Debt | 522.17M | 571.76M | 754.41M | 311.84M | 316.46M | 302.82M |
| Total Liabilities | 1.18B | 1.19B | 1.21B | 614.26M | 541.61M | 511.94M |
| Stockholders Equity | 453.51M | 598.66M | 455.66M | 489.65M | 502.13M | 596.59M |
Cash Flow | ||||||
| Free Cash Flow | 119.54M | 134.80M | 108.51M | 54.32M | 475.00K | -3.31M |
| Operating Cash Flow | 134.47M | 147.43M | 115.20M | 59.42M | 11.87M | 7.18M |
| Investing Cash Flow | 87.51M | -837.00K | -532.25M | -143.08M | -374.25M | 54.38M |
| Financing Cash Flow | -195.75M | -129.70M | 371.90M | -53.40M | -75.58M | 510.11M |
Varonis Systems Technical Analysis
Positive
20.19
Price Trends
32.49
Positive
27.95
Positive
34.30
Positive
Market Momentum
3.51
Negative
84.97
Negative
91.98
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 20.19 is below the 20-day moving average (MA) of 37.09, below the 50-day MA of 32.49, and below the 200-day MA of 34.30, indicating a bullish trend. The MACD of 3.51 indicates Negative momentum. The RSI at 84.97 is Negative, neither overbought nor oversold. The STOCH value of 91.98 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 55 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 | $5.57B | 28.13 | 37.15% | ― | 10.21% | 13.31% | |
75 Outperform | $4.55B | -426.68 | -3.71% | ― | 10.74% | 74.22% | |
70 Outperform | $16.39B | 38.00 | 9.12% | ― | 6.15% | 0.30% | |
64 Neutral | $2.62B | 57.97 | 21.19% | 1.33% | 12.08% | -8.14% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
60 Neutral | $5.24B | -40.57 | -26.10% | ― | 15.27% | -39.93% | |
59 Neutral | $6.22B | -18.92 | -21.49% | ― | 21.38% | 27.92% |
* Technology Sector Average
VRNS
Varonis Systems
45.84
-5.34
-10.43%
AKAM
Akamai
114.37
33.73
41.83%
QLYS
Qualys
157.55
9.77
6.61%
ATEN
A10 Networks
36.52
17.24
89.45%
TENB
Tenable Holdings
40.62
5.89
16.96%
S
SentinelOne
18.16
-0.35
-1.89%
Varonis Systems Corporate Events
Executive/Board ChangesShareholder Meetings
Varonis Systems Shareholders Approve Directors, Compensation and Equity
Positive
Jun 2, 2026
Varonis Systems, Inc. held its 2026 Annual Meeting of Stockholders on June 1, 2026, where shareholders elected four directors – Yakov Faitelson, Thomas Mendoza, Avrohom J. Kess, and Ohad Korkus – to serve until the 2029 annual meeting....
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.