Why Varonis Systems Stock Dived by Almost 11% Today

Core Insights - Varonis Systems experienced a significant stock decline of nearly 11% despite reporting robust revenue growth and announcing a new acquisition, primarily due to a substantial miss on net income guidance [1][2]. Financial Performance - In Q4 2025, Varonis reported total revenue of approximately $173.4 million, reflecting a year-over-year increase of 9%. However, net income, not in accordance with GAAP, fell sharply by 53% to $11.1 million, equating to $0.08 per share [2]. - Analysts had projected revenues of $168.5 million and a non-GAAP net income of $0.03 per share, indicating that Varonis outperformed on revenue but underperformed on profitability expectations [3][6]. - The company's key growth driver was its software-as-a-service (SaaS) offerings, which nearly doubled to over $142 million [3]. Acquisition Announcement - Varonis announced the acquisition of AllTrue.ai, a privately held company specializing in AI trust, risk, and security management, although the financial details of the acquisition were not disclosed [4]. Future Guidance - For the first quarter and the entirety of 2026, Varonis anticipates revenues between $722 million and $730 million, representing a 16% increase from 2025. Adjusted net income per share is expected to be between $0.06 and $0.10 [5]. - Analysts are projecting adjusted profitability of $0.34 per share, while revenue estimates are slightly lower at just under $719 million [6]. Market Context - The current market sentiment is particularly harsh towards software companies that miss guidance, which has contributed to the stock's decline despite the company's strong revenue growth [6]. - The data security niche in which Varonis operates is viewed as promising, with expectations for continued growth in demand [7].