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Varonis reported Q1 EPS of 6 cents vs. expected loss, with revenues up to $173.1M, beating estimates.
VRNS saw SaaS revenues jump to $161.1M, driving ARR up 69% year over year to $683.2M.
Varonis raised 2026 outlook, guiding up to $737M revenues and projecting continued SaaS-led growth.
Varonis Systems (VRNS - Free Report) came out with first-quarter 2026 earnings of 6 cents per share, in contrast to the Zacks Consensus Estimate of a loss of 5 cents.
VRNS posted revenues of $173.13 million in the first quarter of 2026, beating the Zacks Consensus Estimate by 4.5%. This compares with year-ago revenues of $136.4 million.
Varonis beat the Zacks Consensus Estimates in each of the trailing four quarters, with an average surprise of 116.7%.
Varonis’ strong performance in the first quarter of 2026 can be attributed to SaaS momentum and rising demand for automated compliance products.
Varonis Systems, Inc. Price, Consensus and EPS Surprise
Varonis continued to benefit from its SaaS transition in the first quarter of 2026. SaaS revenues rose to $161.1 million compared with $88.6 million in the year-ago quarter, highlighting the expanding base of cloud-delivered contracts.
Legacy streams continued to contract as customers shifted to the SaaS platform. Term license subscription revenues declined to $6.9 million from $31.5 million a year ago, while maintenance and services revenues fell to $5.2 million from $16.4 million, with management attributing most of the declines to conversions.
Non-GAAP gross profit for the quarter was $134.9 million, translating to a gross margin of 77.9%, down from 80.2% in the prior-year period. The modest compression aligns with the company’s broader SaaS revenue recognition dynamics and ongoing platform evolution.
On the cost side, non-GAAP operating expenses totaled $136.3 million. That produced a non-GAAP operating loss of $1.4 million compared with a $6.5 million loss a year earlier, with operating margin narrowing to negative 0.8% from negative 4.7%.
As of March 31, 2026, Varonis had $899.5 million in cash, cash equivalents, marketable securities and short-term deposits, down from $921 million at the end of the previous quarter.
Varonis generated $49.0 million of free cash flow in the first quarter compared with $65.3 million a year ago. The company noted that results included acquisition-related costs, and adjusted free cash flow was $61.6 million for the period.
The company also returned capital via repurchases, buying back 5,355,445 shares at an average price of $24.67 for a total of $132.1 million.
Varonis Leans Into AI Security and Expanding Use Cases
Total SaaS ARR in the reported quarter was $683.2 million, up 69% year over year, reflecting both organic subscription expansion and the ongoing conversion of customers to the SaaS platform. Management reported $11.3 million of conversion ARR in the quarter and finished with about $83.7 million of non-SaaS ARR remaining.
Operationally, management emphasized accelerating demand tied to securing enterprise data for AI adoption, pointing to customer traction in managed detection and response capabilities and AI-related offerings. The company also highlighted early customer interest in newer products added through acquisitions, including Atlas, positioning it as a control plane for AI models, agents and pipelines that complements Varonis’ data security platform.
VRNS Raises Full-Year View and Guides Q2 for Growth
For the second quarter of 2026, Varonis expects revenues to be in the range of $175-$178 million, implying 15-17% year-over-year growth. The Zacks Consensus Estimate is pegged at $176.4 million.
The company projects breakeven to earnings of a penny per diluted share for the second quarter of 2026.
It also expects SaaS ARR growth to be in the range of 24-25% year over year, excluding conversions.
For full-year 2026, management raised its outlook and now expects revenues to be between $731 million and $737 million, implying growth of 17-18% year over year. The Zacks Consensus Estimate is pegged at $728 million.
The company projects total SaaS ARR between $814 million and $845 million, and free cash flow to be in the range of $100-$105 million.
VRNS’ non-GAAP operating income is expected to be in the band of $7-$9 million and non-GAAP earnings between 11 cents and 12 cents. The Zacks Consensus Estimate for 2026 earnings is pegged at 8 cents.
Shares of Arista Networks have gained 17.8% year-to-date. The Zacks Consensus Estimate for ANET’s 2026 earnings is pegged at $3.53 per share, up by a penny over the past 30 days, indicating an increase of 18.5% year over year.
Shares of Advanced Energy have gained 78.8% year-to-date. The Zacks Consensus Estimate for AEIS’ 2026 earnings is pegged at $8.32 per share, down a penny over the past 60 days, indicating an increase of 29.8% year over year.
Applied Materials shares have surged 53.4% year-to-date. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings is pegged at $11.10 per share, up 7 cents over the past 30 days, indicating an increase of 17.8% year over year.
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VRNS Q1 Earnings Surpass Expectations, Revenues Increase Y/Y
Key Takeaways
Varonis Systems (VRNS - Free Report) came out with first-quarter 2026 earnings of 6 cents per share, in contrast to the Zacks Consensus Estimate of a loss of 5 cents.
VRNS posted revenues of $173.13 million in the first quarter of 2026, beating the Zacks Consensus Estimate by 4.5%. This compares with year-ago revenues of $136.4 million.
Varonis beat the Zacks Consensus Estimates in each of the trailing four quarters, with an average surprise of 116.7%.
Varonis’ strong performance in the first quarter of 2026 can be attributed to SaaS momentum and rising demand for automated compliance products.
Varonis Systems, Inc. Price, Consensus and EPS Surprise
Varonis Systems, Inc. price-consensus-eps-surprise-chart | Varonis Systems, Inc. Quote
VRNS Revenue Mix Skews Further Toward SaaS
Varonis continued to benefit from its SaaS transition in the first quarter of 2026. SaaS revenues rose to $161.1 million compared with $88.6 million in the year-ago quarter, highlighting the expanding base of cloud-delivered contracts.
Legacy streams continued to contract as customers shifted to the SaaS platform. Term license subscription revenues declined to $6.9 million from $31.5 million a year ago, while maintenance and services revenues fell to $5.2 million from $16.4 million, with management attributing most of the declines to conversions.
Varonis Tightens Profitability Despite Transition Headwinds
Non-GAAP gross profit for the quarter was $134.9 million, translating to a gross margin of 77.9%, down from 80.2% in the prior-year period. The modest compression aligns with the company’s broader SaaS revenue recognition dynamics and ongoing platform evolution.
On the cost side, non-GAAP operating expenses totaled $136.3 million. That produced a non-GAAP operating loss of $1.4 million compared with a $6.5 million loss a year earlier, with operating margin narrowing to negative 0.8% from negative 4.7%.
VRNS Cash Generation Remains Solid, Buybacks Continue
As of March 31, 2026, Varonis had $899.5 million in cash, cash equivalents, marketable securities and short-term deposits, down from $921 million at the end of the previous quarter.
Varonis generated $49.0 million of free cash flow in the first quarter compared with $65.3 million a year ago. The company noted that results included acquisition-related costs, and adjusted free cash flow was $61.6 million for the period.
The company also returned capital via repurchases, buying back 5,355,445 shares at an average price of $24.67 for a total of $132.1 million.
Varonis Leans Into AI Security and Expanding Use Cases
Total SaaS ARR in the reported quarter was $683.2 million, up 69% year over year, reflecting both organic subscription expansion and the ongoing conversion of customers to the SaaS platform. Management reported $11.3 million of conversion ARR in the quarter and finished with about $83.7 million of non-SaaS ARR remaining.
Operationally, management emphasized accelerating demand tied to securing enterprise data for AI adoption, pointing to customer traction in managed detection and response capabilities and AI-related offerings. The company also highlighted early customer interest in newer products added through acquisitions, including Atlas, positioning it as a control plane for AI models, agents and pipelines that complements Varonis’ data security platform.
VRNS Raises Full-Year View and Guides Q2 for Growth
For the second quarter of 2026, Varonis expects revenues to be in the range of $175-$178 million, implying 15-17% year-over-year growth. The Zacks Consensus Estimate is pegged at $176.4 million.
The company projects breakeven to earnings of a penny per diluted share for the second quarter of 2026.
It also expects SaaS ARR growth to be in the range of 24-25% year over year, excluding conversions.
For full-year 2026, management raised its outlook and now expects revenues to be between $731 million and $737 million, implying growth of 17-18% year over year. The Zacks Consensus Estimate is pegged at $728 million.
The company projects total SaaS ARR between $814 million and $845 million, and free cash flow to be in the range of $100-$105 million.
VRNS’ non-GAAP operating income is expected to be in the band of $7-$9 million and non-GAAP earnings between 11 cents and 12 cents. The Zacks Consensus Estimate for 2026 earnings is pegged at 8 cents.
Zacks Rank and Stocks to Consider
Currently, VRNS carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer and Technology sector are Arista Networks (ADI - Free Report) , Advanced Energy (AEIS - Free Report) and Applied Materials (AMAT - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Arista Networks have gained 17.8% year-to-date. The Zacks Consensus Estimate for ANET’s 2026 earnings is pegged at $3.53 per share, up by a penny over the past 30 days, indicating an increase of 18.5% year over year.
Shares of Advanced Energy have gained 78.8% year-to-date. The Zacks Consensus Estimate for AEIS’ 2026 earnings is pegged at $8.32 per share, down a penny over the past 60 days, indicating an increase of 29.8% year over year.
Applied Materials shares have surged 53.4% year-to-date. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings is pegged at $11.10 per share, up 7 cents over the past 30 days, indicating an increase of 17.8% year over year.