Varonis Systems (VRNS) AI Stock Analysis

• Market Cap: $4.21B
• Dividend Yield: N/A
• Average Volume (3M): 1.97M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.95
• Revenue Growth: 11.37%
• EPS Growth: -34.44%
• Country: US
• Employees: 2,406
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 0.06
• Shares Outstanding: 117,897,310
• 10 Day Avg. Volume: 1,330,492
• 30 Day Avg. Volume: 1,973,835
• PEG Ratio: 7.94
• Price to Book (P/B): 10.89
• Price to Sales (P/S): 9.00
• P/FCF Ratio: 45.72
• Enterprise Value/Market Cap: 1.52
• Enterprise Value/Revenue: 10.55
• Enterprise Value/Gross Profit: 13.18
• Enterprise Value/Ebitda: -70.61
• 1Y Price Target: $52.35
• Price Target Upside: 46.43% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 18
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 48 Neutral
• Price Target: $31.00 ▼(-13.29% Downside)

Varonis Systems' overall stock score is primarily impacted by its financial performance and technical analysis. The company shows strong SaaS growth and strategic partnerships, but faces profitability challenges and bearish technical indicators. The valuation is concerning due to a negative P/E ratio, and the earnings call reflects a mixed outlook with restructuring efforts.

Positive Factors

SaaS Transition

The successful transition to a SaaS model enhances recurring revenue streams and aligns with industry trends, supporting long-term growth.

Strategic Partnerships

Partnerships with major tech firms like Microsoft expand Varonis' market reach and integrate advanced technologies, strengthening competitive positioning.

Cash Flow Improvement

Improving cash flow indicates effective cash management, providing financial flexibility for strategic investments and operational stability.

Negative Factors

On-Premises Challenges

Challenges in the on-premises business segment could hinder overall revenue growth and necessitate strategic shifts or restructuring.

Net Losses

Ongoing net losses highlight profitability challenges, potentially limiting reinvestment capabilities and affecting long-term financial health.

Equity Decline

Declining equity levels may impact financial stability and investor confidence, necessitating careful capital management to sustain growth.

Varonis Systems Business Overview & Revenue Model

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.

How the Company Makes Money

Varonis generates revenue primarily through the sale of its software licenses and subscription services. The company employs a SaaS (Software as a Service) model, where customers pay for access to its cloud-based solutions, which provides a recurring revenue stream. Additionally, Varonis offers professional services, including implementation, training, and support, which contribute to its earnings. Key revenue streams include annual subscriptions for its data security products, maintenance fees for existing customers, and professional services. Partnerships with cloud service providers and integrations with third-party software also enhance its market presence and drive sales, as organizations increasingly seek comprehensive data security solutions.

Varonis Systems Financial Statement Overview

Summary

Varonis Systems shows consistent revenue growth and strong cash flow generation, but struggles with profitability. The balance sheet indicates improved leverage but low returns on equity. Overall, financial performance is mixed with strengths in revenue and cash flow, but weaknesses in profitability.

Income Statement

Varonis Systems shows a consistent revenue growth trend, with a TTM revenue growth rate of 2.27%. However, profitability remains a challenge, as indicated by negative EBIT and EBITDA margins, and a low net profit margin of 1.93% in TTM. The gross profit margin is strong at 80.04%, suggesting efficient cost management. Overall, while revenue is growing, the company struggles with profitability.

Balance Sheet

The balance sheet indicates a moderate debt-to-equity ratio of 0.85 in TTM, showing improved leverage compared to previous years. However, the return on equity is low at 2.65%, reflecting challenges in generating returns for shareholders. The equity ratio is not explicitly calculated, but the company appears to have a stable asset base. Overall, the balance sheet shows improved leverage but low returns.

Cash Flow

Varonis Systems demonstrates a positive trend in cash flow, with a free cash flow growth rate of 7.35% in TTM. The operating cash flow to net income ratio is 0.28, indicating a reasonable conversion of income to cash. The free cash flow to net income ratio is high at 91.13%, suggesting effective cash management. Overall, the cash flow statement reflects strong cash generation capabilities.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	608.68M	550.95M	499.16M	473.63M	390.13M	292.69M
Gross Profit	487.21M	457.10M	427.41M	403.80M	330.74M	248.43M
EBITDA	-90.93M	-63.58M	-70.55M	-82.04M	-80.15M	-61.71M
Net Income	-114.54M	-95.77M	-100.92M	-124.52M	-116.86M	-94.01M
Balance Sheet
Total Assets	1.67B	1.66B	1.10B	1.04B	1.11B	555.48M
Cash, Cash Equivalents and Short-Term Investments	707.92M	568.42M	533.72M	732.49M	807.61M	298.26M
Total Debt	520.67M	754.41M	311.84M	316.46M	302.82M	273.00M
Total Liabilities	1.06B	1.21B	614.26M	541.61M	511.94M	461.41M
Stockholders Equity	604.84M	455.66M	489.65M	502.13M	596.59M	94.07M
Cash Flow
Free Cash Flow	133.98M	108.51M	54.32M	475.00K	-3.31M	-15.96M
Operating Cash Flow	147.02M	115.20M	59.42M	11.87M	7.18M	-5.84M
Investing Cash Flow	-156.17M	-532.25M	-143.08M	-374.25M	54.38M	-54.75M
Financing Cash Flow	-115.71M	371.90M	-53.40M	-75.58M	510.11M	225.75M

Varonis Systems Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 35.75
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VRNS, the sentiment is Neutral. The current price of 35.75 is above the 20-day moving average (MA) of 33.45, above the 50-day MA of 33.89, and below the 200-day MA of 47.17, indicating a neutral trend. The MACD of -0.24 indicates Negative momentum. The RSI at 59.21 is Neutral, neither overbought nor oversold. The STOCH value of 77.77 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for VRNS.

Varonis Systems Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ATEN	79 Outperform	$1.24B	25.25	23.88%	1.33%	10.27%	3.52%
QLYS	78 Outperform	$4.78B	25.83	38.64%	―	9.95%	12.72%
AKAM	73 Outperform	$12.33B	25.13	10.64%	―	4.21%	-0.63%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
TENB	61 Neutral	$2.81B	-84.47	-8.95%	―	11.05%	45.23%
S	58 Neutral	$5.21B	-12.23	-25.79%	―	24.09%	-34.25%
VRNS	48 Neutral	$4.21B	-35.28	-22.17%	―	11.37%	-34.44%