Varonis Systems, Inc. (VRNS): history, ownership, mission, how it works & makes money

A Brief History of Varonis Systems, Inc.

Company Overview

Varonis Systems, Inc. is a data security and analytics company that specializes in protecting sensitive data and ensuring compliance with various regulations. Founded in 2009, Varonis has established itself as a leader in the field of data security, focusing on software solutions that provide visibility and control over data stored on-premises and in the cloud.

Recent Developments

As of 2024, Varonis has made significant strides in its transition towards a Software as a Service (SaaS) model. This transition has led to substantial growth in SaaS revenue, which is now a major component of the company's total revenue.

Financial Performance

For the nine months ended September 30, 2024, Varonis reported total revenues of $392.4 million, up from $345.1 million in the same period of the previous year, marking a 13.7% increase. Notably, SaaS revenues skyrocketed by 537.1%, reflecting a shift from traditional term license subscriptions to a predominantly SaaS delivery model.

Operating Expenses

Operating expenses for the same period totaled $424.7 million, compared to $404.6 million in 2023, an increase of 5.0%. Notably, research and development expenses increased by 7.8% to $146.2 million, indicating a commitment to innovation and product development.

Stockholder Equity

As of September 30, 2024, Varonis reported total stockholders' equity of $428.6 million, a decrease from $489.6 million in the previous year. The accumulated deficit increased to $727.2 million, reflecting ongoing investments in growth despite operational losses.

Market Position and Future Outlook

Varonis continues to strengthen its market position through strategic investments in technology and customer acquisition. The company aims to enhance its SaaS offerings and improve operational efficiencies as it navigates the challenges associated with the ongoing transition from traditional software licensing to a subscription-based model.

Key Performance Indicators

As of September 30, 2024, Varonis reported an Annual Recurring Revenue (ARR) of $610 million, up from $517.5 million the previous year, representing an 18% increase. This key performance indicator underscores the company's successful shift towards a subscription-based revenue model.

A Who Owns Varonis Systems, Inc. (VRNS)

Major Shareholders

As of 2024, the ownership of Varonis Systems, Inc. is distributed among various institutional investors, mutual funds, and individual shareholders. The following table summarizes the major shareholders:

Stock Performance

The stock performance of Varonis Systems, Inc. has shown significant volatility in recent years. As of the end of Q3 2024, the stock price is approximately $24.00, down from a high of $35.00 earlier in the year, reflecting broader market trends and company-specific challenges.

Financial Overview

Varonis reported total revenues of $148.1 million for the three months ended September 30, 2024, compared to $122.3 million for the same period in 2023. The company recorded a net loss of $18.3 million in the same quarter, indicating ongoing challenges despite revenue growth.

Recent Developments

In 2024, Varonis expanded its SaaS offerings, which accounted for a significant portion of its revenue growth. SaaS revenues reached $57.8 million in Q3 2024, compared to $13.7 million in Q3 2023, demonstrating a shift towards cloud-based solutions.

Market Capitalization

The market capitalization of Varonis Systems, Inc. as of September 30, 2024, is approximately $2.7 billion, reflecting the current share price and total outstanding shares, which were around 112.4 million.

Insider Holdings

Insider ownership remains a critical component of Varonis' capital structure, with key executives and board members holding approximately 2.9% of the total shares outstanding. This alignment can influence company strategies and shareholder value.

Conclusion on Ownership Dynamics

The ownership dynamics of Varonis Systems, Inc. reflect a diverse mix of institutional and individual investors, with a focus on long-term growth through SaaS and data security solutions. The company's performance and strategic direction will continue to be under scrutiny by its shareholders as it navigates the competitive landscape.

Varonis Systems, Inc. (VRNS) Mission Statement

Varonis Systems, Inc. is focused on protecting enterprise data from insider threats and cyberattacks by providing a comprehensive data security platform that helps organizations manage, analyze, and secure their data. Their mission is to empower organizations to safeguard their sensitive data, ensuring compliance and enhancing operational efficiency.

Company Overview

Founded in 2004, Varonis specializes in data security, threat detection, and compliance solutions. The company enables enterprises to protect their data stored in both cloud and on-premises environments.

Financial Performance

As of September 30, 2024, Varonis reported significant financial metrics that reflect its operational focus and market position:

Annual Recurring Revenue (ARR)

As of September 30, 2024, Varonis's ARR stood at $610 million, an increase of 18% compared to $517.5 million in 2023. This growth is attributed to the ongoing transition to a SaaS model and high renewal rates exceeding 90%.

Cost Structure

For Q3 2024, the cost of revenues increased to $24 million from $17.4 million in Q3 2023, reflecting a 38.1% rise. The gross profit margin decreased slightly to 83.8% from 85.8% in the previous year.

Market Presence

Varonis has established a strong presence in the North American market, accounting for approximately 78% of total revenues as of September 30, 2024, with the remainder coming from EMEA and other regions. The company continues to expand its international operations, focusing on enhancing its sales and marketing strategies.

Recent Developments

The company is transitioning towards a predominantly SaaS delivery model, which is expected to drive future growth, despite encountering challenges in the short term due to revenue recognition accounting treatments. Varonis's commitment to innovation and customer satisfaction is evident as it adapts to changing market demands.

How Varonis Systems, Inc. (VRNS) Works

Business Model and Strategy

Varonis Systems, Inc. operates in the data security and analytics space, focusing on protecting enterprises from data breaches and insider threats. The company primarily offers software solutions that provide visibility and control over data stored across various platforms, including SaaS applications, file shares, and databases.

As of September 30, 2024, Varonis reported an Annual Recurring Revenue (ARR) of $610.0 million, up from $517.5 million in the same period in 2023, marking an increase of 18% year-over-year.

Financial Performance

For the three months ended September 30, 2024, Varonis generated total revenues of $148.1 million, a 21.1% increase compared to $122.3 million in 2023. The breakdown of revenues is as follows:

Cost Structure

The cost of revenues for Q3 2024 was $24.0 million, compared to $17.4 million in Q3 2023, reflecting a 38.1% increase. The gross profit margin for this period was 83.8%, down from 85.8% in the previous year.

Operating expenses for the same period totaled $147.7 million, an increase from $134.1 million in Q3 2023. The breakdown is as follows:

Net Loss

For Q3 2024, Varonis reported a net loss of $18.3 million, compared to a net loss of $23.0 million in Q3 2023. The net loss per share for Q3 2024 was $(0.16) compared to $(0.21) for the same period last year.

Cash Flow and Liquidity

For the nine months ended September 30, 2024, Varonis reported cash inflows from operating activities of $90.9 million, compared to $49.0 million for the same period in 2023. The cash flow from investing activities showed a net outflow of $(412.8 million), primarily due to investments in marketable securities. Financing activities resulted in a net cash inflow of $373.4 million.

As of September 30, 2024, Varonis had cash and cash equivalents totaling $879.0 million, alongside $332.3 million in long-term marketable securities.

Market Presence

Approximately 78% of Varonis' revenues for the three months ended September 30, 2024, were derived from North America, with the remainder coming from EMEA and the rest of the world. The company continues to expand its operations both domestically and internationally, targeting markets that rely heavily on data security solutions.

How Varonis Systems, Inc. (VRNS) Makes Money

Revenue Streams

Varonis Systems, Inc. generates revenue primarily from three key sources:

• Term License Subscriptions
• Software as a Service (SaaS)
• Maintenance and Services

Term License Subscriptions

For the three months ended September 30, 2024, Varonis reported term license subscription revenues of $68.8 million, a decrease of 18.1% compared to $83.9 million in the same period of 2023. This revenue represented 46.5% of total revenues for the quarter.

For the nine months ended September 30, 2024, term license subscriptions totaled $187.5 million, down 25.1% from $250.3 million in 2023, accounting for 47.8% of total revenues.

Software as a Service (SaaS)

SaaS revenues have shown significant growth, reflecting Varonis's transition to a cloud-based delivery model. For Q3 2024, SaaS revenues reached $57.8 million, a remarkable increase of 321.4% from $13.7 million in Q3 2023. This accounted for 39.0% of total revenues in the quarter.

For the nine months ending September 30, 2024, SaaS revenues were $136.6 million, a staggering 537.1% increase from $21.4 million in the same period of the previous year, making up 34.8% of total revenues.

Maintenance and Services

Maintenance and services revenue for Q3 2024 was $21.5 million, down 12.7% from $24.6 million in Q3 2023, comprising 14.5% of total revenues. For the nine-month period, maintenance and services generated $68.4 million, a decrease of 6.7% from $73.3 million in 2023, accounting for 17.4% of total revenues.

Annual Recurring Revenue (ARR)

As of September 30, 2024, Varonis reported an Annual Recurring Revenue (ARR) of $610 million, representing an 18% increase from $517.5 million in 2023.

Cost and Gross Margin Analysis

For Q3 2024, the cost of revenues was $24.0 million, up 38.1% from $17.4 million in Q3 2023. The gross profit margin for the quarter stood at 83.8%, down from 85.8% in the prior year.

For the nine months ended September 30, 2024, the cost of revenues was $67.8 million, compared to $52.4 million in 2023, leading to a gross margin of 82.7%, down from 84.8%.

Operating Expenses

Operating expenses for Q3 2024 totaled $147.7 million, an increase of 10.2% from $134.1 million in Q3 2023. This included:

• Research and Development: $53.5 million
• Sales and Marketing: $71.4 million
• General and Administrative: $22.9 million

For the nine months ended September 30, 2024, total operating expenses were $424.7 million, up 5.0% from $404.6 million in 2023.

Net Loss

Varonis reported a net loss of $18.3 million for Q3 2024 compared to a net loss of $23.0 million in Q3 2023. For the nine months ended September 30, 2024, the net loss was $82.8 million, down from $100.0 million in the same period of the previous year.

Cash Flow and Liquidity

For the nine months ended September 30, 2024, Varonis had cash inflows from operating activities of $90.9 million. The company ended the period with cash and cash equivalents totaling $879.0 million and long-term marketable securities of $332.3 million.

Article updated on 8 Nov 2024

Resources:

• Varonis Systems, Inc. (VRNS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Varonis Systems, Inc. (VRNS)' financial performance, including balance sheets, income statements, and cash flow statements.
• SEC Filings – View Varonis Systems, Inc. (VRNS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.