Varonis delivered a second quarter that exceeded Wall Street’s revenue and non-GAAP profit expectations, with the market responding positively. Management attributed the outperformance to robust demand for its SaaS platform and managed data detection and response (MDDR) offerings, which together drove annual recurring revenue (ARR) growth and continued customer expansion. CEO Yakov Faitelson emphasized the company’s data-first approach, stating, “Our Q2 performance reflects our continued strong ARR growth and cash flow generation as we accelerate towards the completion of our SaaS transition and make investments to capture our growing market opportunity.”
Is now the time to buy VRNS? Find out in our full research report (it’s free).
Varonis (VRNS) Q2 CY2025 Highlights:
- Revenue: $152.2 million vs analyst estimates of $148 million (16.7% year-on-year growth, 2.8% beat)
- Adjusted EPS: $0.03 vs analyst estimates of $0.01 ($0.02 beat)
- Adjusted Operating Income: -$1.90 million vs analyst estimates of -$3.13 million (-1.2% margin, 39.3% beat)
- The company slightly lifted its revenue guidance for the full year to $622 million at the midpoint from $617.5 million
- Management raised its full-year Adjusted EPS guidance to $0.17 at the midpoint, a 9.7% increase
- Operating Margin: -24%, down from -22.1% in the same quarter last year
- Annual Recurring Revenue: $693.2 million at quarter end, up 18.7% year on year
- Billings: $178.8 million at quarter end, up 16.3% year on year
- Market Capitalization: $6.09 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Varonis’s Q2 Earnings Call
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Saket Kalia (Barclays) asked about competition from DSPM vendors like Cyera and the impact of SaaS on the competitive landscape. CEO Yakov Faitelson explained that such vendors generate additional market awareness but lack the breadth and automation of Varonis’ offerings.
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Matthew George Hedberg (RBC Capital Markets) inquired about the financial impact and go-to-market plans for the Microsoft partnership. Faitelson noted early-stage integration and joint pipeline development, emphasizing the alignment on securing AI tools like Copilot.
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Joseph Anthony Gallo (Jefferies) requested transparency on ARR growth and SaaS net revenue retention. CFO Guy Melamed stated that SaaS NRR is higher than reported company-wide NRR, with strong new customer acquisition and upsell trends supporting long-term ARR targets.
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Joshua Alexander Tilton (Wolfe Research) questioned macroeconomic headwinds and SaaS conversion trends. Melamed responded that SaaS conversions are progressing ahead of plan, while deal scrutiny remains consistent with previous quarters.
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Roger Foley Boyd (UBS) asked about customer trends in consolidating security budgets with Varonis. Faitelson highlighted growing demand for unified solutions to address compliance, insider threats, and user behavior analytics across diverse data repositories.
Catalysts in Upcoming Quarters
In the coming quarters, StockStory analysts will closely monitor (1) the pace of SaaS customer conversions and expansion, (2) early signs of revenue traction from federal sector initiatives following FedRAMP authorization, and (3) the impact of the Microsoft partnership on large enterprise deals—particularly those involving AI security. Continued adoption of Varonis’ multi-cloud protection modules and successful execution on cross-sell opportunities will also be key to tracking the company’s strategic progress.
Varonis currently trades at $54.39, in line with $54.28 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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