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Varonis (VRNS) Up 0% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Varonis Systems (VRNS - Free Report) . Shares have added about 0% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Varonis due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.
Varonis Q3 Earnings Match Estimates, Revenues Increase Y/Y
Varonis came out with quarterly earnings of 6 cents per share, in line with the Zacks Consensus Estimate. This compares with earnings of a penny per share a year ago.
VRNS posted revenues of $161.58 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 2.71%. This compares with year-ago revenues of $148.07 million.
Varonis’ modest performance in the third quarter of 2025 can be attributed to a balance of momentum in SaaS offerings and the Managed Data Detection & Response platform, while it navigates the global macroeconomic uncertainty.
Varonis Systems’ Q3 2025 Details
Coming to Varonis’ business segments, revenues from SaaS (77.9% of total revenues) increased 117.7% year over year to $125.8 million. Term license subscriptions (15.4% of total revenues) decreased 63.9% to $24.8 million. Maintenance and services (9.1% of total revenues) declined 49.1% to $10.9 million.
By geography, the United States accounted for 72.7% of the total revenues, which increased 11.9% year over year to $114.4 million. The EMEA accounted for 20.8% of third-quarter revenues, which reflects an increase of 4.4% to $31.8 million. Revenues from the rest of the world accounted for 6.5% of the total revenues, which grew 14.4% year over year to $11.8 million.
Varonis’ gross margin contracted 260 basis points to 83%, reflecting the negative impact from the ongoing transition to the SaaS business model. Varonis posted a non-GAAP operating income of $1.61 million compared with the year-ago quarter’s operating income of $9.1 million. The non-GAAP operating margin for the third quarter of 2025 was 1% compared with the year-ago quarter’s 6.1%.
VRNS’ Balance Sheet & Cash Flow
As of Sept. 30, 2025, Varonis had $1.1 billion in cash, cash equivalents, marketable securities and short-term deposits, up from $807.4 million as of June 30, 2025.
The company generated $122.7 million in operating cash flow and reported free cash flow of $111.6million in the first three months of 2025.
Varonis Systems Updates FY25 Guidance
For 2025, Varonis now expects annual recurring revenues (ARR) between $730 million and $738 million, down from the previously announced guidance of $748 million to $754 million. It now expects 2025 revenues between $615.2 million and $621.2 million, down from the earlier guidance range of $616-$628 million.
Varonis expects its full-year 2025 earnings per share in the range of 12-13 cents, down from the previously guided range of 16-18 cents. Free cash flow is still projected in the range of $120-$125 million.
For the fourth quarter of 2025, Varonis projects revenues between $165 million and $171 million, suggesting year-over-year growth of 4% to 8%. Non-GAAP operating income is expected to range between $0 million and $3 million, while non-GAAP net income per diluted share is projected to be between 2 cents and 4 cents, based on 133.4 million diluted shares.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Varonis has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Varonis has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Varonis (VRNS) Up 0% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Varonis Systems (VRNS - Free Report) . Shares have added about 0% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Varonis due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.
Varonis Q3 Earnings Match Estimates, Revenues Increase Y/Y
Varonis came out with quarterly earnings of 6 cents per share, in line with the Zacks Consensus Estimate. This compares with earnings of a penny per share a year ago.
VRNS posted revenues of $161.58 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 2.71%. This compares with year-ago revenues of $148.07 million.
Varonis’ modest performance in the third quarter of 2025 can be attributed to a balance of momentum in SaaS offerings and the Managed Data Detection & Response platform, while it navigates the global macroeconomic uncertainty.
Varonis Systems’ Q3 2025 Details
Coming to Varonis’ business segments, revenues from SaaS (77.9% of total revenues) increased 117.7% year over year to $125.8 million. Term license subscriptions (15.4% of total revenues) decreased 63.9% to $24.8 million. Maintenance and services (9.1% of total revenues) declined 49.1% to $10.9 million.
By geography, the United States accounted for 72.7% of the total revenues, which increased 11.9% year over year to $114.4 million. The EMEA accounted for 20.8% of third-quarter revenues, which reflects an increase of 4.4% to $31.8 million. Revenues from the rest of the world accounted for 6.5% of the total revenues, which grew 14.4% year over year to $11.8 million.
Varonis’ gross margin contracted 260 basis points to 83%, reflecting the negative impact from the ongoing transition to the SaaS business model. Varonis posted a non-GAAP operating income of $1.61 million compared with the year-ago quarter’s operating income of $9.1 million. The non-GAAP operating margin for the third quarter of 2025 was 1% compared with the year-ago quarter’s 6.1%.
VRNS’ Balance Sheet & Cash Flow
As of Sept. 30, 2025, Varonis had $1.1 billion in cash, cash equivalents, marketable securities and short-term deposits, up from $807.4 million as of June 30, 2025.
The company generated $122.7 million in operating cash flow and reported free cash flow of $111.6million in the first three months of 2025.
Varonis Systems Updates FY25 Guidance
For 2025, Varonis now expects annual recurring revenues (ARR) between $730 million and $738 million, down from the previously announced guidance of $748 million to $754 million. It now expects 2025 revenues between $615.2 million and $621.2 million, down from the earlier guidance range of $616-$628 million.
Varonis expects its full-year 2025 earnings per share in the range of 12-13 cents, down from the previously guided range of 16-18 cents. Free cash flow is still projected in the range of $120-$125 million.
For the fourth quarter of 2025, Varonis projects revenues between $165 million and $171 million, suggesting year-over-year growth of 4% to 8%. Non-GAAP operating income is expected to range between $0 million and $3 million, while non-GAAP net income per diluted share is projected to be between 2 cents and 4 cents, based on 133.4 million diluted shares.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Varonis has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Varonis has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.