Varonis Systems (VRNS) Q1 2025 earnings summary

Executive summary

• Annual recurring revenue (ARR) grew 19% year-over-year to $664.3 million in Q1 2025, with SaaS ARR comprising 61% of total ARR, reflecting strong customer adoption and satisfaction.

• Total Q1 2025 revenues reached $136.4 million, up 20% year-over-year, driven by a 161% increase in SaaS revenues as the company transitions to a SaaS delivery model.

• Free cash flow for the quarter was $65.3 million, up from $56.4 million year-over-year, indicating strong operational performance.

• Continued innovation with new offerings, including Varonis for Agentforce and the acquisition of Cyral to enhance database security capabilities.

• Repurchased 1.48 million shares for $61.3 million in Q1 and authorized a share repurchase program up to $100 million.

Financial highlights

• SaaS revenues were $88.6 million, term license subscriptions $31.5 million, and maintenance/services $16.4 million for Q1 2025.

• Gross margin was 78.7%–80.2% in Q1 2025, down from 81.3%–83.3% year-over-year due to higher hosting and personnel costs.

• Non-GAAP operating loss narrowed to $6.5 million from $10.6 million year-over-year; GAAP net loss was $35.8 million, or $0.32 per share; non-GAAP net income was $0.7 million, or $0.01 per diluted share.

• Free cash flow margin for Q1 2025 was approximately 48%.

• Cash and equivalents plus marketable securities totaled $1.2 billion at quarter end.

Outlook and guidance

• Q2 2025 revenue expected at $145–$150 million, up 11–15% year-over-year.

• Full-year 2025 ARR guidance raised to $742–$750 million, up 16–17% year-over-year; full-year revenue expected at $610–$625 million, up 11–13%.

• Free cash flow for 2025 projected at $120–$125 million.

• SaaS mix guidance increased to 80% by year-end.

• Non-GAAP net income per diluted share for 2025 projected at $0.14–$0.17.