Core Viewpoint - Varonis Systems, Inc. is currently under investigation for potential securities fraud violations, which may impact its stock performance and investor confidence [1] Company Summary - The investigation is being conducted by the DJS Law Group, indicating potential legal challenges for Varonis Systems, Inc. [1] - Investors are encouraged to discuss their rights in light of the ongoing investigation, suggesting that there may be significant implications for shareholders [1]

Core Insights - Varonis Systems reported revenue of $161.58 million for the quarter ended September 2025, reflecting a year-over-year increase of 9.1% [1] - The earnings per share (EPS) was $0.06, down from $0.10 in the same quarter last year [1] - The reported revenue fell short of the Zacks Consensus Estimate of $166.08 million, resulting in a surprise of -2.71% [1] - The company did not deliver an EPS surprise, as the consensus EPS estimate was also $0.06 [1] Financial Metrics - Annual Recurring Revenues (ARR) were reported at $718.6 million, slightly below the estimated $721.1 million [4] - Maintenance and Services revenues were $10.94 million, significantly lower than the estimated $13.8 million, marking a year-over-year decline of -49.1% [4] - Term license subscriptions generated $24.81 million, compared to the average estimate of $28.88 million, representing a year-over-year decrease of -63.9% [4] - SaaS revenues were reported at $125.82 million, matching the three-analyst average estimate, with a substantial year-over-year increase of +117.7% [4] Stock Performance - Varonis shares have returned +5.7% over the past month, outperforming the Zacks S&P 500 composite's +3.6% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Insights - Varonis Systems reported quarterly earnings of $0.06 per share, matching the Zacks Consensus Estimate, but down from $0.10 per share a year ago [1] - The company posted revenues of $161.58 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 2.71%, compared to $148.07 million in the same quarter last year [2] - Varonis shares have increased approximately 41.1% year-to-date, outperforming the S&P 500's gain of 16.9% [3] Earnings Performance - The company has surpassed consensus EPS estimates three times over the last four quarters [1] - Varonis has topped consensus revenue estimates two times in the last four quarters [2] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.05 on revenues of $170.2 million, and for the current fiscal year, it is $0.13 on revenues of $624.86 million [7] - The estimate revisions trend for Varonis was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Security industry, to which Varonis belongs, is currently in the bottom 20% of the Zacks industry rankings, which may negatively impact stock performance [8] - CrowdStrike Holdings, another company in the same industry, is expected to report quarterly earnings of $0.94 per share, reflecting a year-over-year change of +1.1% [9]

Financial Data and Key Metrics Changes - The company reported an 18% year-over-year increase in Annual Recurring Revenue (ARR), reaching $718.6 million [6][19] - Total revenues for the third quarter were $161.6 million, reflecting a 9% year-over-year growth [19] - Gross profit was $128.3 million, resulting in a gross margin of 79.4%, down from 85% in the same quarter last year [20] - Net income for the third quarter was $8.4 million, or $0.06 per diluted share, compared to $13.8 million, or $0.10 per diluted share, in the same period last year [21] Business Line Data and Key Metrics Changes - The SaaS business now accounts for 76% of total company ARR, indicating a successful transition to SaaS ahead of schedule [5][15] - SaaS revenues for the third quarter were $125.8 million, while term license subscription revenues were $24.8 million [19] - The company experienced weaker than expected renewals in both federal and non-federal on-premises subscription businesses, impacting overall performance [7][16] Market Data and Key Metrics Changes - The federal business has historically contributed around 5% of total ARR, with recent renewals showing a decline [81] - The company noted that the decline in renewal rates was observed in both federal and non-federal sectors, leading to adjustments in guidance [81] Company Strategy and Development Direction - The company plans to end-of-life its self-hosted solution by December 31, 2026, to focus entirely on its SaaS offerings [7][15] - Investments in partnerships, particularly with Microsoft, and acquisitions like Cyral and SlashNext are expected to drive future growth [12][56] - The company aims to enhance its SaaS platform's capabilities, particularly in data security and compliance, to meet evolving customer needs [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with the performance of the on-prem business but remains confident in the SaaS business's growth potential [23] - The company is taking a conservative approach to guidance, reflecting recent underperformance and the decision to phase out on-prem solutions [8][22] - There is a strong demand for the SaaS platform, driven by automation and the need for enhanced data security in the age of AI [11][12] Other Important Information - The company generated $111.6 million of free cash flow year-to-date, up from $88.6 million in the same period last year [19] - A $115 million share repurchase program has been authorized by the board, supported by a strong balance sheet [23] Q&A Session Summary Question: What led to the decision to reduce the federal team? - Management indicated that the federal business has not performed as expected, prompting a reevaluation of strategy and a reduction in team size to focus on SaaS transitions [26] Question: What were the reasons for lower on-prem renewals? - Management noted that there was no single theme for the non-renewals, but issues with account management and a focus on SaaS customers contributed to the decline [30][42] Question: How does the company plan to address the churn in the on-prem business? - The company is focusing on improving account management and ensuring that customers understand the value of transitioning to SaaS [30][69] Question: What is the expected contribution from recent acquisitions? - Management expressed confidence that acquisitions like SlashNext and Cyral will enhance the company's offerings and drive growth [56] Question: Is there a risk of alienating customers with the push to SaaS? - Management believes that moving to a 100% SaaS model is essential for operational efficiency and customer value, despite potential pushback from some customers [59][63]

Financial Data and Key Metrics Changes - The company reported an 18% year-over-year increase in Annual Recurring Revenue (ARR), reaching $718.6 million [6][19] - Total revenues for the third quarter were $161.6 million, reflecting a 9% year-over-year growth [19] - Free cash flow for the year-to-date was $111.6 million, up from $88.6 million in the same period last year [19][22] - Gross profit for Q3 was $128.3 million, with a gross margin of 79.4%, down from 85% in Q3 2024 [20] Business Line Data and Key Metrics Changes - The SaaS business now accounts for 76% of total company ARR, indicating a successful transition to SaaS [5][15] - SaaS revenues for the third quarter were $125.8 million, while term license subscription revenues were $24.8 million [19] - The company experienced weaker than expected renewals in both federal and non-federal on-premises subscription businesses [7][16] Market Data and Key Metrics Changes - The federal business has historically contributed around 5% of total ARR, but faced headwinds in renewals during Q3 [78] - The company noted strong demand for its SaaS platform, particularly in cloud environments, which represents a significant growth opportunity [9][15] Company Strategy and Development Direction - The company plans to end-of-life its self-hosted solution by December 31, 2026, to focus entirely on its SaaS offerings [7][15] - Investments in partnerships, particularly with Microsoft, are aimed at enhancing integration and capitalizing on AI-related data security needs [11][12] - The company is focusing on upselling existing SaaS customers and expanding its market potential [9][18] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with the performance of the on-prem business but remains confident in the SaaS business's growth potential [23] - The company is taking a conservative approach to guidance for Q4, reflecting the recent underperformance in renewals [17][22] - Management highlighted the importance of addressing customer needs and ensuring effective account management to improve renewal rates [30][44] Other Important Information - The company has authorized a $115 million share repurchase program, supported by a strong balance sheet with over $1 billion in liquidity [23] - The company is implementing a 5% reduction in headcount to reallocate resources more effectively [8][23] Q&A Session Summary Question: What led to the decision to terminate some federal team members after receiving FedRAMP High authorization? - Management indicated that the federal business has not performed as expected, leading to a reevaluation of strategy and a reduction in team size to focus on SaaS transitions [26] Question: What were the reasons for lower than expected renewals in the on-prem business? - Management noted that there was no single common theme for the non-renewals, but identified issues with account management and customer engagement as contributing factors [30][67] Question: How does the company plan to address the churn in the non-SaaS ARR base? - Management is baking in conservatism in guidance and will evaluate Q4 performance to determine if the recent trends are isolated or indicative of a larger issue [38][75] Question: What is the expected contribution from recent acquisitions like SlashNext and Cyro? - Management expressed confidence that these acquisitions will enhance the company's offerings and contribute positively to growth [55] Question: Is the push to migrate to SaaS alienating some customers? - Management believes that moving to SaaS is essential for long-term value and efficiency, despite potential short-term challenges with some customers [58][61]

Financial Data and Key Metrics Changes - The company reported an 18% year-over-year increase in Annual Recurring Revenue (ARR), reaching $718.6 million [4][19] - Total revenues for Q3 were $161.6 million, reflecting a 9% year-over-year growth [19] - SaaS revenues accounted for $125.8 million, while term license subscription revenues were $24.8 million, and maintenance and services revenues were $10.9 million [19] - Gross profit for Q3 was $128.3 million, resulting in a gross margin of 79.4%, down from 85% in Q3 2024 [19] - Net income for Q3 was $8.4 million, or $0.06 per diluted share, compared to $13.8 million, or $0.10 per diluted share in Q3 2024 [20] Business Line Data and Key Metrics Changes - The SaaS business now represents 76% of total company ARR, indicating a successful transition to SaaS completed ahead of schedule [4][16] - The on-premises subscription business has underperformed, particularly in the federal sector, leading to a reduction in team size and a more conservative outlook for renewals [5][16] Market Data and Key Metrics Changes - The company experienced weaker-than-expected renewals in both federal and non-federal on-premises subscription businesses during the final weeks of Q3 [5][17] - The federal business has historically contributed around 5% of total ARR, and recent renewals in this segment have faced challenges [78] Company Strategy and Development Direction - The company plans to end-of-life its self-hosted solution by December 31, 2026, to focus entirely on its SaaS offerings [5][16] - Investments in partnerships, particularly with Microsoft, and acquisitions like Cyro and SlashNext are expected to enhance the company's product offerings and market position [10][54] - The company aims to capitalize on the growing demand for data security solutions, especially in the context of AI and cloud environments [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with the on-prem business performance but remains optimistic about the strong demand for the SaaS platform [15][23] - The company is taking steps to manage expenses, including a 5% reduction in headcount, to reallocate resources effectively [6][23] - Future guidance has been adjusted to reflect conservatism due to recent performance issues, particularly in the on-premises segment [17][23] Other Important Information - The company generated $111.6 million of free cash flow year-to-date, up from $88.6 million in the same period last year [19] - A $115 million share repurchase program has been authorized by the board, supported by a strong balance sheet with over $1 billion in liquidity [23] Q&A Session Summary Question: What led to the decision to reduce the federal team? - The company lacks empirical evidence to justify continued investment in the federal sector due to ongoing underperformance, prompting a reevaluation of strategy [26] Question: What were the reasons for the lower on-prem renewals? - There was no single theme identified; issues included account management and a lack of comprehensive engagement with on-prem customers [28][44] Question: How does the company plan to address the non-renewal of on-prem customers? - The company is focusing on improving account management and ensuring that customers understand the value of transitioning to SaaS [28][44] Question: What is the expected contribution from recent acquisitions? - The company anticipates that acquisitions like SlashNext and Cyro will enhance its product offerings and contribute positively to growth [54] Question: Is there a risk of alienating customers with the push to migrate to SaaS? - The company believes that moving to SaaS is essential for operational efficiency and customer value, despite potential concerns from some customers [58][60]

Varonis Overview Q3 2025 Safe Harbor Statement This presentation has been prepared by Varonis Systems, Inc. (the "Company") solely for informational purposes. It is not, and should not be assumed to be, complete. This presentation is not an offer to sell securities, nor is it a solicitation of an offer to buy securities. This presentation is not directed at, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other juris ...

EXHIBIT 99.1 Varonis Announces Third Quarter 2025 Financial Results Annual recurring revenues increased 18% year-over-year SaaS ARR as a percentage of total ARR was approximately 76% Year-to-date cash from operations generated $122.7 million vs. $90.9 million last year Year-to-date free cash flow generated $111.6 million vs. $88.6 million last year Company announces $150.0 million share repurchase authorization MIAMI, Oct. 28, 2025 (GLOBE NEWSWIRE) -- Varonis Systems, Inc. (Nasdaq: VRNS), the leader in data ...

Core Insights - Varonis Systems, Inc. reported an 18% year-over-year increase in annual recurring revenues (ARR), reaching $718.6 million as of September 30, 2025 [6] - The company's SaaS ARR constituted approximately 76% of total ARR, reflecting strong demand for its SaaS platform [2][6] - The company generated $122.7 million in cash from operations year-to-date, compared to $90.9 million in the previous year [6] - Free cash flow for the year-to-date was $111.6 million, up from $88.6 million in the prior year [6] - Varonis announced a $150 million share repurchase authorization [6] Financial Performance - Total revenues for the third quarter were $161.6 million, compared to $148.1 million in the same quarter of 2024 [5] - SaaS revenues increased significantly to $125.8 million from $57.8 million year-over-year [5] - Term license subscription revenues decreased to $24.8 million from $68.8 million, primarily due to customer transitions to the SaaS platform [5] - Maintenance and services revenues also declined to $10.9 million from $21.5 million, again attributed to the shift to SaaS [5] - The GAAP operating loss was $35.9 million, compared to a loss of $23.6 million in the third quarter of 2024 [5] Business Developments - The company acquired SlashNext, enhancing its email security capabilities with AI-driven solutions [6] - Varonis launched new products, including Varonis Interceptor for email security and Next-Gen Database Activity Monitoring (DAM) for database security [6] - The company introduced AI identity protection for Salesforce Agentforce, improving visibility and control over data accessed by AI agents [6] Guidance and Outlook - Varonis has reduced its full-year ARR guidance due to lower-than-expected renewals in the Federal vertical and non-Federal on-prem subscription business [7] - The company anticipates a lower renewal rate for its on-prem subscription business in the fourth quarter [7]

Core Viewpoint - Varonis Systems, Inc. has authorized a share repurchase program for up to $150.0 million of its common stock, expected to be completed within the next 12 months [1][2]. Company Overview - Varonis is a leader in data security, focusing on protecting critical data through its cloud-native Data Security Platform, which utilizes AI-powered automation to discover, classify, and secure data [4][5]. - The company provides a range of security solutions, including data security posture management, data classification, data access governance, and more, to thousands of organizations globally [5]. Share Repurchase Program Details - The share repurchase will be conducted through open market purchases, privately-negotiated transactions, and in compliance with federal securities laws, including Rule 10b5-1 and Rule 10b-18 [2]. - The timing and number of shares repurchased will depend on Varonis' trading windows, available liquidity, and overall market conditions [2].