Varonis Saw Strong SaaS Growth in Q4 and Full-Year 2023

Annual recurring revenues experienced a 17% year-over-year growth, with SaaS ARR accounting for roughly 23% of the total ARR. Leader in data security Varonis expect the uptake of SaaS to accelerate in dollar terms in the coming year, which positions them well as they enter 2024.

Varonis (Nasdaq: VRNS), known for its expertise in data security, has shared its financial results for the fourth quarter and full year ending December 31, 2023. These results highlight the company’s continued growth and success in offering its cloud-based Data Security Platform.

In the press release, Yaki Faitelson, Varonis CEO, commented on the fourth quarter results, highlighting the continued momentum of their SaaS platform: “Our fourth quarter results reflect the sustained momentum of our SaaS platform and I’m happy to announce that SaaS ARR represented approximately 23% of total company ARR at year-end. This progress gives us the confidence to accelerate our SaaS transition timeline, which we now expect to complete by the end of 2026, a year earlier than our initial outlook.” The faster timeline shows that Varonis is confident in the success of their SaaS platform. It also means they’re moving more towards using the cloud for their business, which they see as a smart move for the future.

Guy Melamed, Varonis CFO & COO, mentioned that there’s a strong demand for their SaaS platform: “The strong demand for our SaaS platform is reflected by our fourth quarter SaaS mix of 66% versus our guidance of 60% and better than expected existing customer conversions. This adoption benefits ARR and free cash flow and we expect the uptake of SaaS to accelerate in dollar terms in the coming year, which positions us well as we enter 2024.” Guy Melamed’s positive about Varonis’ future as they head into 2024, suggesting they’re well-prepared to benefit from the growing SaaS market.

(Image Source: Varonis)

Key Performance Indicators and Recent Business Highlights:

• Annual recurring revenues, or ARR, were $543.0 million as of the end of the fourth quarter, up 17% year-over-year.
• As of December 31, 2023, the Company had $744.8 million in cash and cash equivalents, short-term deposits, and marketable securities.
• During the twelve months ended December 31, 2023, the Company generated $59.4 million of cash from operations, compared to $11.9 million generated in the prior year period.
• During the twelve months ended December 31, 2023, the Company generated $54.3 million of free cash flow, compared to $0.5 million generated in the prior year period.
• Expanded Microsoft Exchange Online protection to prevent sensitive email exposure.
• Added Generative AI capabilities to Varonis Data Security Platform with the introduction of Athena AI.
• Launched Varonis Data Security Platform on Salesforce AppExchange.
• Announced a strategic collaboration with Microsoft to help companies safely harness the power of AI with Microsoft Copilot for Microsoft 365.
• Expanded their SaaS offering with coverage for Snowflake, which allows customers to continuously discover and classify critical data, remove exposures, and detect threats to Snowflake data warehouses and databases.
• Announced universal data classification support for databases, which allows customers to centralize data classification efforts under a single platform.
• Introduced Varonis MDDR, the industry’s first data-centric managed detection and response service with 24x7x365 coverage, further enabling customers to achieve effortless security outcomes.

Financial Outlook:

For the first quarter of 2024, Varonis expects revenues ranging from $111.0 million to $115.0 million, representing a year-over-year growth of 3% to 7%. Additionally, the company expects a non-GAAP operating loss between ($15.0) million and ($13.0) million. Non-GAAP net loss per basic and diluted share is projected to be in the range of ($0.10) to ($0.09), based on 110.1 million basic and diluted shares outstanding. Looking ahead to the full year 2024, they forecast an ARR of $617.0 million to $625.0 million, reflecting year-over-year growth of 14% to 15%. Free cash flow is expected to range from $70.0 million to $75.0 million. Revenues for the full year are expected to be between $536.0 million and $546.0 million, representing a year-over-year growth of 7% to 9%. Additionally, Varonis projects a non-GAAP operating income of $7.5 million to $12.5 million, with non-GAAP net income per diluted share ranging from $0.11 to $0.13, based on 127.7 million diluted shares outstanding.

About Varonis:

Varonis is a leader in data security and analytics, fighting a different battle than conventional cybersecurity companies. Varonis focuses on protecting enterprise data: sensitive files and emails; confidential customer, patient, and employee data; financial records; strategic and product plans; and other intellectual property. The Varonis Data Security Platform detects cyber threats from both internal and external actors by analyzing data, account activity, and user behavior; prevents and limits disaster by locking down sensitive and stale data; and efficiently sustains a secure state with automation.  Varonis products address additional important use cases including data protection, data governance, Zero Trust, compliance, data privacy, classification, and threat detection and response.

Varonis started operations in 2005 and has customers spanning leading firms in the financial services, public, healthcare, industrial, insurance, energy and utilities, technology, consumer and retail, media and entertainment, and education sectors.

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