Varonis Systems (VRNS) investor relations material

Executive summary

• Q1 2026 total revenues reached $173.1 million, up 27% year-over-year, driven by SaaS transition and high renewal rates.

• SaaS ARR grew 69% year-over-year to $683.2 million; excluding conversions, SaaS ARR rose 29% to $522.6 million.

• SaaS revenues were $161.1 million, now representing 93% of total revenues.

• The company completed the acquisition of AllTrue.ai, enhancing AI security capabilities and launching Varonis Atlas.

• The company is raising full-year guidance for SaaS ARR growth and expects continued momentum in new customer wins and platform expansion.

Financial highlights

• Gross profit was $134.9 million, with a gross margin of 76%–77.9%, down from 78.7%–80.2% year-over-year.

• Q1 operating loss was $44.5 million GAAP and $1.4 million non-GAAP; net loss was $36.9 million GAAP, while non-GAAP net income was $7.5 million ($0.06 per diluted share).

• Free cash flow was $49.0 million, impacted by $12.6 million in acquisition-related costs; adjusted free cash flow was $61.6 million.

• Cash, equivalents, and marketable securities totaled $899.5–$900 million at quarter end.

• Operating expenses increased year-over-year, mainly from R&D and sales and marketing investments.

Outlook and guidance

• Q2 2026 SaaS ARR growth expected at 24–25% year-over-year (excluding conversions); Q2 revenues projected at $175.0–$178.0 million.

• Full-year 2026 SaaS ARR guidance raised to $814.0–$845.0 million (27–32% growth); excluding conversions, 20–21% growth.

• Full-year revenues expected at $731.0–$737.0 million (17–18% growth); free cash flow of $100.0–$105.0 million.

• Non-GAAP operating income for the year forecast at $7.0–$9.0 million; non-GAAP net income per diluted share: $0.11–$0.12.

• RPO (remaining performance obligations) stood at $1,095.4 million, expected to increase.