Varonis Systems (VRNS) J.P. Morgan 54th Annual Global Technology, Media and Communications Conference summary

Business performance and outlook

• Q1 showed strong performance, driven by growth in new customers and a renewed focus on selling and upselling SaaS solutions, following a transition phase ending in 2026.

• Quota attainment in Q1 exceeded previous years, with a balanced approach to commissions and a focus on collective success.

• Hiring continues in targeted areas to address under-penetration, with headcount growth planned to remain below top-line growth rates.

• Conversion strategy shifted to prioritize moving customers to SaaS, even at flat rates, with value and uplift pursued post-conversion.

• Most conversions are expected in Q4 2026, especially as customers respond to end-of-life announcements for on-prem solutions.

AI, security, and customer trends

• AI adoption has accelerated, with organizations viewing it as essential for competitiveness, but data security remains a key bottleneck.

• Only about 3% of customer data is currently connected to AI, but urgency is increasing due to evolving threats and business needs.

• Customers are increasingly focused on securing AI systems and data, with more stakeholders involved in decision-making.

• The Mythos event and new AI models have heightened awareness and urgency around AI security and spending.

• Email security and identity integration are seen as natural extensions of the platform, enhancing threat detection and response.

Product and competitive positioning

• Recent acquisitions, such as AllTrue.ai and SlashNext, are generating strong pipeline interest, with expected revenue impact in the second half of the year.

• The platform's strengths in data security, AI monitoring, and database activity are differentiators in competitive scenarios.

• ServiceNow expanded its relationship, signaling potential for further partnership and traction.

• FedRAMP authorization opens opportunities in the federal sector, though no upside is included in current guidance.

• DSPM is viewed as a subset of broader data security needs, with the platform's comprehensive approach providing a competitive edge.