Varonis Systems (NASDAQ:VRNS) Issues Quarterly Earnings Results, Beats Estimates By $0.03 EPS

Varonis Systems (NASDAQ:VRNS) posted its quarterly earnings data on Tuesday. The technology company reported $0.04 earnings per share for the quarter, beating analysts’ consensus estimates of $0.01 by $0.03, FiscalAI reports. Varonis Systems had a negative net margin of 20.55% and a negative return on equity of 18.24%. The business had revenue of $180.02 million during the quarter, compared to analyst estimates of $176.83 million. During the same quarter in the previous year, the business posted $0.03 earnings per share. The company’s revenue was up 18.3% on a year-over-year basis. Varonis Systems updated its FY 2026 guidance to 0.140-0.150 EPS and its Q3 2026 guidance to 0.020-0.030 EPS.

Here are the key takeaways from Varonis Systems’ conference call:

• SaaS ARR excluding conversions rose 25% year over year to $598.1 million, while new-logo SaaS ARR grew more than 20%. Management cited strong pipeline momentum, increasing adoption of Atlas, Interceptor and Database Activity Monitoring, and demand for AI and data security.
• Varonis raised its full-year outlook, targeting SaaS ARR of $819 million–$850 million and SaaS ARR growth excluding conversions of 20%–21% at the midpoint. Full-year free cash flow guidance increased by $5 million to $105 million–$110 million.
• Second-quarter revenue increased 18% to $180 million, with SaaS revenue of $171.7 million and a renewal rate above 90%. Non-GAAP operating income improved to $3.7 million, but gross margin declined to 77.7% from 80.6% a year earlier as the company transitions away from its self-hosted platform.
• Several large deals slipped in the final week of the quarter amid media speculation about a potential transaction involving Varonis, although management said some—including a seven-figure deal—closed in July. The company declined to comment on the transaction rumors.
• On-premises-to-SaaS conversions remained difficult to forecast, with management retaining a $50 million–$75 million full-year range; first-half conversions were running near the low end of expectations. Executives emphasized that SaaS ARR excluding conversions is the primary measure of underlying business health.

Varonis Systems Price Performance

Varonis Systems stock opened at $40.30 on Thursday. The firm has a fifty day moving average of $38.83 and a 200-day moving average of $30.60. Varonis Systems has a 52-week low of $19.70 and a 52-week high of $63.90. The company has a quick ratio of 1.69, a current ratio of 1.69 and a debt-to-equity ratio of 1.00. The firm has a market capitalization of $4.63 billion, a P/E ratio of -33.17 and a beta of 0.83.

Institutional Investors Weigh In On Varonis Systems

Several hedge funds have recently modified their holdings of the stock. XTX Topco Ltd purchased a new position in Varonis Systems in the 4th quarter valued at about $811,000. Captrust Financial Advisors lifted its stake in shares of Varonis Systems by 3.8% in the fourth quarter. Captrust Financial Advisors now owns 24,115 shares of the technology company’s stock worth $791,000 after acquiring an additional 884 shares in the last quarter. Fox Run Management L.L.C. acquired a new position in shares of Varonis Systems in the fourth quarter worth about $637,000. Headlands Technologies LLC purchased a new position in Varonis Systems in the fourth quarter valued at about $507,000. Finally, Bank of Nova Scotia purchased a new position in Varonis Systems in the fourth quarter valued at about $424,000. 95.65% of the stock is currently owned by hedge funds and other institutional investors.

Wall Street Analyst Weigh In

A number of research analysts have weighed in on the company. Rosenblatt Securities reissued a “buy” rating and set a $55.00 price target on shares of Varonis Systems in a research note on Wednesday. Robert W. Baird increased their target price on Varonis Systems from $40.00 to $45.00 and gave the stock a “neutral” rating in a research report on Wednesday. KeyCorp initiated coverage on Varonis Systems in a research note on Tuesday, May 26th. They issued a “sector weight” rating on the stock. Weiss Ratings upgraded Varonis Systems from a “sell (e+)” rating to a “sell (d-)” rating in a report on Tuesday, June 30th. Finally, Barclays decreased their target price on shares of Varonis Systems from $52.00 to $50.00 and set an “overweight” rating on the stock in a research report on Wednesday. Eighteen equities research analysts have rated the stock with a Buy rating, five have assigned a Hold rating and one has assigned a Sell rating to the company’s stock. According to MarketBeat.com, the company currently has a consensus rating of “Moderate Buy” and an average price target of $48.26.

Key Headlines Impacting Varonis Systems

Here are the key news stories impacting Varonis Systems this week:

• Positive Sentiment: Quarterly results exceeded expectations. Varonis reported second-quarter adjusted EPS of $0.04, versus the $0.01 consensus estimate, while revenue rose 18.3% year over year to $180.0 million, topping expectations of $176.8 million. Varonis Systems Q2 Earnings and Revenues Top Estimates
• Positive Sentiment: SaaS momentum remains strong. SaaS annual recurring revenue excluding conversions increased 25% year over year, while total SaaS ARR reached $726 million, up 52%. Management also cited growing demand for AI security and momentum in newer products including Atlas, Interceptor and Database Activity Monitoring. Varonis Announces Second Quarter 2026 Financial Results
• Positive Sentiment: Full-year outlook improved. Varonis projected third-quarter EPS of $0.02-$0.03 and fiscal 2026 EPS of $0.14-$0.15, both above consensus estimates. Fiscal-year revenue guidance of $735 million-$739 million was also slightly above expectations, and management indicated 2026 free cash flow of $105 million-$110 million while raising its SaaS ARR growth outlook to 20%-21%. Varonis Raises SaaS ARR Outlook
• Positive Sentiment: Analyst sentiment strengthened. Piper Sandler, Susquehanna, TD Cowen, Needham and JPMorgan raised their price targets, with several maintaining buy or overweight ratings. The broader brokerage consensus is “Moderate Buy.” Varonis Receives Moderate Buy Consensus
• Negative Sentiment: The market reaction has been unfavorable despite the earnings beat. Varonis remains unprofitable, with a negative net margin and negative return on equity, while analysts still forecast a full-year loss on a reported-EPS basis. The stock’s decline after results suggests investors may have expected an even stronger outlook or are taking profits after its substantial prior rally.

About Varonis Systems

Varonis Systems is a cybersecurity firm specializing in the protection and management of unstructured data. The company’s flagship Data Security Platform provides advanced analytics for monitoring file systems, email servers, collaboration platforms and cloud storage. By continuously mapping and analyzing data permissions and user behavior, Varonis enables organizations to detect insider threats, verify compliance and remediate exposed data in real time.

Founded in 2005 and headquartered in New York City, Varonis serves a diverse global customer base across financial services, healthcare, media, manufacturing and government.