Varonis Systems (VRNS) investor relations material

Macro and industry trends

• SaaS transition is nearly complete, expected to finish two years ahead of schedule by year-end, driven by evolving customer needs and increased cyber threats.

• AI adoption, especially tools like Copilot, is accelerating data security risks, prompting urgent customer action to secure sensitive information before broader rollout.

• Partnership with Microsoft has deepened, with a joint go-to-market strategy and new technological capabilities announced.

• The macro environment remains steady, with SaaS sales cycles proving shorter and more efficient than on-premise deals.

• Competitive landscape is intensifying, but long-standing expertise and comprehensive solutions provide a strong market position.

Business performance and SaaS transition

• SaaS mix guidance was raised to 82% for year-end, with most remaining conversions in the state and government sector, now enabled by recent FedRAMP certification.

• Q2 showed strong new and existing customer growth, with SaaS customers exhibiting higher lifetime value and net retention rates.

• Early engagement with customers up for Q4 renewals has improved conversion efficiency and freed up sales capacity for new pipeline generation.

• The move to SaaS has tripled the total addressable market, enabling expansion into new markets and customer segments.

• MDDR (Managed Data Detection and Response) is the fastest-adopted platform, driving upsell opportunities and higher average selling prices.

Product innovation and acquisitions

• MDDR is bundled with broader platform sales, incentivizing customers to adopt comprehensive solutions rather than standalone offerings.

• New product launches include database activity monitoring and email security, with strong customer enthusiasm for expanded functionality.

• Recent acquisition of SlashNext enhances phishing detection and prevention, integrating advanced sandboxing and AI-driven threat identification.

• SlashNext will initially be sold as a separate SKU, with plans to integrate into the broader platform; the acquisition is expected to have minimal near-term top-line impact but will be rolled out quickly.

• Continued investment in R&D and go-to-market capacity is prioritized to capture market opportunities and sustain growth.