Varonis Systems (VRNS)
NASDAQ:VRNS
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Varonis Systems
(NASDAQ:VRNS)
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Rating:54Neutral
Price Target:
$25.00
▲(10.96% Upside)
Action:ReiteratedDate:02/05/26
The score is supported primarily by improving financial resilience (strong and improving free cash flow and healthy gross margins) and constructive SaaS-focused guidance/metrics from the earnings call. These positives are tempered by persistent operating losses and a weak technical setup with the stock trading far below key moving averages alongside negative momentum indicators.
Positive Factors
Strong free cash flow generation
Consistent positive operating and free cash flow over 2024–2025 demonstrates durable cash conversion and working-capital discipline. This cash generation funds investments, buybacks and M&A, reduces financing risk during the SaaS transition, and provides flexibility while accounting profits remain negative.
Negative Factors
Persistent operating losses
Despite solid gross margins and top-line momentum, ongoing operating losses and widening operating deficits limit return on capital and mean the company has not yet converted revenue growth into sustainable operating profitability, increasing reliance on cash reserves and execution to reach break-even.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong free cash flow generation
Consistent positive operating and free cash flow over 2024–2025 demonstrates durable cash conversion and working-capital discipline. This cash generation funds investments, buybacks and M&A, reduces financing risk during the SaaS transition, and provides flexibility while accounting profits remain negative.
Read all positive factors
Varonis Systems (VRNS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.53B
Dividend YieldN/A
Average Volume (3M)2.10M
Price to Earnings (P/E)―
Beta (1Y)0.89
Revenue Growth11.37%
EPS Growth-34.44%
CountryUS
Employees2,406
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)0.08
Shares Outstanding117,447,720
10 Day Avg. Volume1,951,848
30 Day Avg. Volume2,104,342
Financial Highlights & Ratios
PEG Ratio-1.04
Price to Book (P/B)7.08
Price to Sales (P/S)6.79
P/FCF Ratio31.43
Enterprise Value/Market Cap1.15
Enterprise Value/Revenue4.66
Enterprise Value/Gross Profit5.92
Enterprise Value/Ebitda-27.95
Forecast
1Y Price Target
$35.77Price Target Upside58.77% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering16
EPS Forecast (FY)0.08
Revenue Forecast (FY)$726.25M
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 ...
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 recurr...
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 Earnings Call Summary
Earnings Call Date:Feb 03, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 04, 2026
Earnings Call Sentiment Neutral
The call presented strong operational momentum in SaaS — large SaaS ARR scale (86% of ARR), robust organic SaaS metrics (110% NRR, 14% customer growth), noteworthy Q4 conversion activity, strategic M&A to address AI risks, and a healthy cash position. Offsetting these positives are material near-term financial headwinds driven by the self-hosted end-of-life (expected $30M–$50M impact to 2026 ARR contribution margin and free cash flow), margin compression, lower operating income and net income vs. prior year, and uncertainty around the remaining conversions (wide $50M–$75M range, federal customers less likely to convert). Management emphasized this is a deliberate transition to a higher-quality SaaS business and expects the financial profile to improve in 2027.Positive Updates
SaaS ARR Scale and Mix
SaaS ARR was $638.5M in Q4, representing 86% of total ARR; total ARR was $745.4M, up 16% year-over-year.
Negative Updates
Margin Compression
Q4 gross margin fell to 80.0% from 84.4% in 2024; ARR contribution margin declined to 15.9% from 16.6% a year ago.
Read all updates
Q4-2025 Updates
Positive
Negative
SaaS ARR Scale and Mix
SaaS ARR was $638.5M in Q4, representing 86% of total ARR; total ARR was $745.4M, up 16% year-over-year.
Read all positive updates
Company Guidance
Management's 2026 guidance centers on accelerating the SaaS business and discloses new quarterly SaaS KPIs (SaaS ARR, SaaS ARR excluding conversions, conversions ARR and non‑SaaS ARR). For 2026 they guided SaaS ARR growth excluding conversions of 27%–28% (initial view) and full‑year SaaS ARR of $805M–$840M (26%–32% YoY), which they also described as 18%–20% SaaS ARR growth excluding conversions; they expect total revenues of $164M–$166M (20%–22% growth) in the near term and $722M–$730M for full‑year 2026 (16%–17% growth), free cash flow of $100M–$105M, non‑GAAP operating loss of $(11)M to $(10)M (near term) and full‑year non‑GAAP operating income breakeven to $4M, non‑GAAP net loss per share of $0.06–$0.05 (assumes 118M shares) and full‑year non‑GAAP net income per diluted share $0.06–$0.10 (assumes 134.2M shares). Management modeled conversions conservatively at $50M–$75M (after converting ~$65M in Q4 and leaving ~$105M non‑SaaS ARR at year‑end), and warned the self‑hosted end‑of‑life will impose a $30M–$50M headwind to ARR contribution margin and free cash flow in 2026; supporting 2025 metrics cited were SaaS ARR $638.5M (86% of total ARR $745.4M), ~6,400 subscription customers, 110% SaaS dollar‑based NRR and renewal rate >90%.Varonis Systems Financial Statement Overview
Summary
Income Statement
46
Neutral
Balance Sheet
55
Neutral
Cash Flow
72
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 623.53M | 550.95M | 499.16M | 473.63M | 390.13M |
| Gross Profit | 493.44M | 457.10M | 427.41M | 403.80M | 330.74M |
| EBITDA | -104.01M | -63.58M | -70.55M | -82.04M | -80.15M |
| Net Income | -129.32M | -95.77M | -100.92M | -124.52M | -116.86M |
Balance Sheet | |||||
| Total Assets | 1.79B | 1.66B | 1.10B | 1.04B | 1.11B |
| Cash, Cash Equivalents and Short-Term Investments | 920.97M | 568.42M | 533.72M | 732.49M | 807.61M |
| Total Debt | 571.76M | 754.41M | 311.84M | 316.46M | 302.82M |
| Total Liabilities | 1.19B | 1.21B | 614.26M | 541.61M | 511.94M |
| Stockholders Equity | 598.66M | 455.66M | 489.65M | 502.13M | 596.59M |
Cash Flow | |||||
| Free Cash Flow | 134.80M | 108.51M | 54.32M | 475.00K | -3.31M |
| Operating Cash Flow | 147.43M | 115.20M | 59.42M | 11.87M | 7.18M |
| Investing Cash Flow | -837.00K | -532.25M | -143.08M | -374.25M | 54.38M |
| Financing Cash Flow | -129.70M | 371.90M | -53.40M | -75.58M | 510.11M |
Varonis Systems Technical Analysis
Negative
22.53
Price Trends
24.15
Negative
28.68
Negative
41.40
Negative
Market Momentum
-0.66
Negative
38.96
Neutral
57.93
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VRNS, the sentiment is Negative. The current price of 22.53 is below the 20-day moving average (MA) of 22.89, below the 50-day MA of 24.15, and below the 200-day MA of 41.40, indicating a bearish trend. The MACD of -0.66 indicates Negative momentum. The RSI at 38.96 is Neutral, neither overbought nor oversold. The STOCH value of 57.93 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 |
|---|---|---|---|---|---|---|---|
70 Outperform | $1.77B | 30.33 | 20.61% | 1.33% | 10.27% | 3.52% | |
67 Neutral | $2.74B | 24.22 | 37.83% | ― | 9.95% | 12.72% | |
62 Neutral | $15.88B | 28.07 | 9.64% | ― | 4.21% | -0.63% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
60 Neutral | $1.89B | -78.26 | -10.29% | ― | 11.05% | 45.23% | |
58 Neutral | $4.35B | -10.24 | -29.84% | ― | 24.09% | -34.25% | |
54 Neutral | $2.53B | -38.13 | -27.04% | ― | 11.37% | -34.44% |
* Technology Sector Average
VRNS
Varonis Systems
21.53
-19.77
-47.87%
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76.68
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24.70
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57.32%
TENB
Tenable Holdings
16.41
-16.43
-50.03%
S
SentinelOne
12.77
-4.81
-27.36%
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.