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Why Is Varonis (VRNS) Up 1.9% Since Last Earnings Report?
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A month has gone by since the last earnings report for Varonis Systems (VRNS - Free Report) . Shares have added about 1.9% in that time frame, underperforming 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 its latest earnings report in order to get a better handle on the important catalysts.
Varonis Systems reported second-quarter 2026 non-GAAP earnings of 4 cents per share, which beat the Zacks Consensus Estimate of 1 cent.
VRNS generated revenues of $180 million in the second quarter of 2026, surpassing the Zacks Consensus Estimate by 1.7%. Revenues increased from $152.2 million reported in the year-ago quarter.
Varonis beat the Zacks Consensus Estimates in three of the previous four quarters, while missing the same on one occasion, with an average surprise of 146.7%.
The quarter's performance was driven by continued SaaS momentum, robust demand for AI and data security offerings, healthy new customer additions and increasing adoption of newer products such as Atlas, Interceptor and Database Activity Monitoring.
VRNS SaaS Momentum Continues
Varonis' SaaS transition remained the primary growth driver during the quarter. SaaS revenues increased to $171.7 million from $105.9 million in the year-ago quarter, reflecting strong cloud adoption.
Legacy revenue streams continued to decline as customers migrated to the SaaS platform. Term license subscription revenues decreased to $4.2 million from $32.4 million a year ago, while maintenance and services revenues fell to $4.1 million from $13.9 million, with the majority of the decline attributable to SaaS conversions.
VRNS Returns to Operating Profit
Non-GAAP gross profit was $139.9 million, representing a 77.7% gross margin, compared with 80.6% in the prior-year quarter, reflecting the ongoing revenue mix shift toward SaaS.
Non-GAAP operating expenses totaled $136.1 million. The company reported non-GAAP operating income of $3.7 million against a non-GAAP operating loss of $1.9 million in the year-ago quarter. Non-GAAP operating margin improved to 2.1% from negative 1.2% a year earlier.
Strong Balance Sheet Supports Growth
As of June 30, 2026, Varonis held $911.5 million in cash, cash equivalents, short-term deposits and marketable securities.
For the first six months of 2026, the company generated $69.1 million in free cash flow compared with $82.7 million in the prior-year period. Adjusted for acquisition-related costs, adjusted free cash flow totaled $81.0 million.
AI Security Demand Drives Growth
Total SaaS ARR reached $726 million, up 52% year over year, while SaaS ARR excluding conversions grew 25% year over year to $598.1 million.
Management highlighted strong momentum from AI-driven demand, with SaaS ARR from new customers growing more than 20%. The company also cited growing adoption of newer offerings, including Atlas, Interceptor and Database Activity Monitoring, as organizations increasingly prioritize AI governance, data security and automated risk reduction.
Management noted that several large deals slipped into July due to market-related news flow late in the quarter but have since closed, contributing to a strong start to the third quarter and supporting increased confidence in full-year guidance.
VRNS Raises Full-Year Outlook
For the third quarter of 2026, Varonis expects revenues between $185 million and $188 million, suggesting 14-16% year-over-year growth. Non-GAAP operating income is expected to be in the range of $2.5 million to $3.5 million. Non-GAAP earnings per share are projected between 2 cents and 3 cents. SaaS ARR growth, excluding conversions, is expected to be in the range of 22-23% year over year.
For full-year 2026, Varonis raised its outlook and now expects revenues between $735 million and $739 million, implying 18-19% year-over-year growth. Total SaaS ARR is projected to be in the range of $819-$850 million. SaaS ARR growth, excluding conversions, is projected to be between 20% and 21% year over year.
Free cash flow is expected to be in the band of $105-$110 million. Non-GAAP operating income is projected to be between $11 million and $13 million. Non-GAAP earnings per share are expected to be in the range of 14-15 cents.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 7.24% due to these changes.
VGM Scores
At this time, Varonis has a nice Growth Score of B, a score with the same score on the momentum front. However, the stock has a score of F on the value side, putting it in the bottom 20% quintile for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Varonis has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
View the Zacks #1 Rank List
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Why Is Varonis (VRNS) Up 1.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Varonis Systems (VRNS - Free Report) . Shares have added about 1.9% in that time frame, underperforming 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 its latest earnings report in order to get a better handle on the important catalysts.
Varonis Q2 Earnings Surpass Expectations, Revenues Rise Y/Y
Varonis Systems reported second-quarter 2026 non-GAAP earnings of 4 cents per share, which beat the Zacks Consensus Estimate of 1 cent.
VRNS generated revenues of $180 million in the second quarter of 2026, surpassing the Zacks Consensus Estimate by 1.7%. Revenues increased from $152.2 million reported in the year-ago quarter.
Varonis beat the Zacks Consensus Estimates in three of the previous four quarters, while missing the same on one occasion, with an average surprise of 146.7%.
The quarter's performance was driven by continued SaaS momentum, robust demand for AI and data security offerings, healthy new customer additions and increasing adoption of newer products such as Atlas, Interceptor and Database Activity Monitoring.
VRNS SaaS Momentum Continues
Varonis' SaaS transition remained the primary growth driver during the quarter. SaaS revenues increased to $171.7 million from $105.9 million in the year-ago quarter, reflecting strong cloud adoption.
Legacy revenue streams continued to decline as customers migrated to the SaaS platform. Term license subscription revenues decreased to $4.2 million from $32.4 million a year ago, while maintenance and services revenues fell to $4.1 million from $13.9 million, with the majority of the decline attributable to SaaS conversions.
VRNS Returns to Operating Profit
Non-GAAP gross profit was $139.9 million, representing a 77.7% gross margin, compared with 80.6% in the prior-year quarter, reflecting the ongoing revenue mix shift toward SaaS.
Non-GAAP operating expenses totaled $136.1 million. The company reported non-GAAP operating income of $3.7 million against a non-GAAP operating loss of $1.9 million in the year-ago quarter. Non-GAAP operating margin improved to 2.1% from negative 1.2% a year earlier.
Strong Balance Sheet Supports Growth
As of June 30, 2026, Varonis held $911.5 million in cash, cash equivalents, short-term deposits and marketable securities.
For the first six months of 2026, the company generated $69.1 million in free cash flow compared with $82.7 million in the prior-year period. Adjusted for acquisition-related costs, adjusted free cash flow totaled $81.0 million.
AI Security Demand Drives Growth
Total SaaS ARR reached $726 million, up 52% year over year, while SaaS ARR excluding conversions grew 25% year over year to $598.1 million.
Management highlighted strong momentum from AI-driven demand, with SaaS ARR from new customers growing more than 20%. The company also cited growing adoption of newer offerings, including Atlas, Interceptor and Database Activity Monitoring, as organizations increasingly prioritize AI governance, data security and automated risk reduction.
Management noted that several large deals slipped into July due to market-related news flow late in the quarter but have since closed, contributing to a strong start to the third quarter and supporting increased confidence in full-year guidance.
VRNS Raises Full-Year Outlook
For the third quarter of 2026, Varonis expects revenues between $185 million and $188 million, suggesting 14-16% year-over-year growth. Non-GAAP operating income is expected to be in the range of $2.5 million to $3.5 million. Non-GAAP earnings per share are projected between 2 cents and 3 cents. SaaS ARR growth, excluding conversions, is expected to be in the range of 22-23% year over year.
For full-year 2026, Varonis raised its outlook and now expects revenues between $735 million and $739 million, implying 18-19% year-over-year growth. Total SaaS ARR is projected to be in the range of $819-$850 million. SaaS ARR growth, excluding conversions, is projected to be between 20% and 21% year over year.
Free cash flow is expected to be in the band of $105-$110 million. Non-GAAP operating income is projected to be between $11 million and $13 million. Non-GAAP earnings per share are expected to be in the range of 14-15 cents.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 7.24% due to these changes.
VGM Scores
At this time, Varonis has a nice Growth Score of B, a score with the same score on the momentum front. However, the stock has a score of F on the value side, putting it in the bottom 20% quintile for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Varonis has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.