Varonis(VRNS) - 2025 Q1 - Quarterly Results

Varonis First Quarter 2025 Financial Results Financial and Business Highlights Varonis reported strong Q1 2025 results, driven by SaaS platform transition, with ARR growing 19% to $664.3 million and SaaS ARR reaching 61% of total - The company's Q1 results reflect the momentum of its SaaS platform, with SaaS ARR reaching 61% of total company ARR. Management attributes growth to tailwinds including MDDR and Generative AI[2] Q1 2025 Financial Performance vs. Q1 2024 | Metric | Q1 2025 ($) | Q1 2024 ($) | | :--- | :--- | :--- | | Total Revenues | $136.4 million | $114.0 million | | SaaS Revenues | $88.6 million | $34.0 million | | GAAP Operating Loss | ($43.8) million | ($47.6) million | | Non-GAAP Operating Loss | ($6.5) million | ($10.6) million | Q1 2025 Key Performance Indicators | Metric | Value ($) | Change (YoY) | | :--- | :--- | :--- | | Annual Recurring Revenues (ARR) | $664.3 million | +19% | | Cash from Operations (YTD) | $68.0 million | vs. $56.7 million | | Free Cash Flow (YTD) | $65.3 million | vs. $56.4 million | - Key business developments in the quarter include: Acquired Cyral to expand the Varonis Data Security Platform with next-gen Database Activity Monitoring; Launched Varonis for Agentforce to secure the AI layer of the Salesforce platform; Repurchased 1.5 million shares for a total of $61.3 million; Opened new data centers in India to support customer expansion[6][7] Financial Outlook Varonis provided Q2 and raised full-year 2025 guidance, projecting Q2 revenues of $145.0-$150.0 million and full-year ARR of $742.0-$750.0 million - Despite an uncertain macro environment, the company raised its full-year ARR guidance based on strong Q1 performance and business drivers[2] Q2 2025 Financial Outlook | Metric | Expected Range ($) | | :--- | :--- | | Revenues | $145.0M - $150.0M (11%-15% YoY Growth) | | Non-GAAP Operating Loss | ($5.0)M - ($2.0)M | | Non-GAAP Net Income per Diluted Share | $0.00 - $0.01 | Full Year 2025 Financial Outlook (Updated) | Metric | Expected Range ($) | | :--- | :--- | | Revenues | $610.0M - $625.0M (11%-13% YoY Growth) | | ARR | $742.0M - $750.0M (16%-17% YoY Growth) | | Non-GAAP Operating Income | $0.5M - $10.5M | | Non-GAAP Net Income per Diluted Share | $0.14 - $0.17 | | Free Cash Flow | $120.0M - $125.0M | Non-GAAP Financial Measures and Key Performance Indicators This section details the company's non-GAAP financial measures and defines key performance indicators like ARR and Free Cash Flow for clearer operational insights - Non-GAAP operating income (loss) is calculated by excluding stock-based compensation expense, related payroll tax expense, and amortization of acquired intangible assets and acquisition-related expenses[11] - Non-GAAP net income (loss) excludes the same items as non-GAAP operating income, plus foreign exchange gains/losses, amortization of debt issuance costs, and acquisition-related taxes[12] - Annual Recurring Revenue (ARR) is a key performance indicator defined as the annualized value of active SaaS, term-based subscription license, and maintenance contracts at the end of a period. It is not a forecast of future revenues[19] - Free cash flow is defined as net cash from operating activities less purchases of property and equipment and capitalized internal-use software. It is considered a useful indicator of liquidity[15] Consolidated Financial Statements This section presents the unaudited Condensed Consolidated Statements of Operations, Balance Sheets, and Cash Flows for Q1 2025, offering a GAAP-based financial overview Condensed Consolidated Statements of Operations Total revenues for Q1 2025 increased to $136.4 million, driven by SaaS revenue growth, while GAAP operating loss narrowed to ($43.8) million Condensed Consolidated Statements of Operations (in thousands) | Line Item | Q1 2025 ($) | Q1 2024 ($) | | :--- | :--- | :--- | | Total revenues | $136,423 | $114,022 | | SaaS | $88,560 | $33,985 | | Term license subscriptions | $31,488 | $55,980 | | Maintenance and services | $16,375 | $24,057 | | Gross profit | $107,405 | $92,673 | | Operating loss | ($43,766) | ($47,633) | | Net loss | ($35,783) | ($40,490) | | Net loss per share, basic and diluted | ($0.32) | ($0.37) | - The decline in term license subscription and maintenance revenues was primarily driven by customers converting to the company's SaaS platform[5] Condensed Consolidated Balance Sheets As of March 31, 2025, total assets were $1.58 billion and total liabilities $1.21 billion, with $1.2 billion in cash and marketable securities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Cash and cash equivalents | $153,107 | $185,585 | | Total marketable securities | $1,006,226 | $1,002,279 | | Total assets | $1,577,094 | $1,664,275 | | Total current liabilities | $710,108 | $709,885 | | Total long-term liabilities | $499,243 | $498,734 | | Total liabilities | $1,209,351 | $1,208,619 | | Total stockholders' equity | $367,743 | $455,656 | - As of March 31, 2025, the company had $1.2 billion in cash and cash equivalents, short-term deposits, and marketable securities[6] Condensed Consolidated Statements of Cash Flows For Q1 2025, cash from operations increased to $68.0 million, resulting in $65.3 million free cash flow, with $75.5 million used in financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Q1 2025 ($) | Q1 2024 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | $68,000 | $56,723 | | Net cash used in investing activities | ($25,017) | ($111,966) | | Net cash used in financing activities | ($75,461) | ($28,446) | | Decrease in cash and cash equivalents | ($32,478) | ($83,689) | - Cash used in financing activities included $61.3 million for the repurchase of common stock and $21.4 million for taxes paid related to net share settlement of equity awards[33] Reconciliation of GAAP to Non-GAAP Measures This section provides detailed reconciliations of GAAP to non-GAAP financial measures for Q1 2025 and Q1 2024, including operating loss, net income, and free cash flow Reconciliation of GAAP to Non-GAAP Operating Loss (in thousands) | Line Item | Q1 2025 ($) | Q1 2024 ($) | | :--- | :--- | :--- | | GAAP operating loss | ($43,766) | ($47,633) | | Stock-based compensation | $32,255 | $32,093 | | Payroll tax related to stock comp. | $3,067 | $4,587 | | Amortization & acquisition expenses | $1,986 | $381 | | Non-GAAP operating loss | ($6,458) | ($10,572) | Reconciliation of GAAP Net Loss to Non-GAAP Net Income (Loss) (in thousands) | Line Item | Q1 2025 ($) | Q1 2024 ($) | | :--- | :--- | :--- | | GAAP net loss | ($35,783) | ($40,490) | | Total add-backs | $36,451 | $36,763 | | Non-GAAP net income (loss) | $668 | ($3,727) | Reconciliation to Free Cash Flow (in thousands) | Line Item | Q1 2025 ($) | Q1 2024 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | $68,000 | $56,723 | | Purchases of property and equipment | ($2,339) | ($297) | | Capitalized internal-use software | ($325) | — | | Free cash flow | $65,336 | $56,426 |