Varonis Systems (VRNS) Q2 2025 earnings summary

Executive summary

• Annual recurring revenue (ARR) grew 19% year-over-year to $693.2M in Q2 2025, with SaaS ARR comprising 69% of total ARR and SaaS revenues surging 137% to $105.9M, reflecting strong SaaS transition momentum and robust demand for data security solutions.

• Total Q2 revenues reached $152.2M, up 17% year-over-year, driven by SaaS growth, while term license and maintenance revenues declined due to SaaS migration.

• Free cash flow for the year-to-date was $82.7M, with cash from operations at $89.3M, both up from the prior year.

• Strategic partnership with Microsoft deepened, focusing on secure AI adoption and integration with Copilot, and FedRAMP authorization expanded SaaS platform access to the federal sector.

• Completed $100M share repurchase program and acquired Cyral, Inc. to enhance database security capabilities.

Financial highlights

• Q2 2025 ARR reached $693.2M (up 19% YoY); SaaS revenues were $105.9M (up 136.5%), term license $32.4M (down 48.4%), and maintenance/services $13.9M (down 39.1%).

• Total Q2 revenues were $152.2M (up 17% YoY); gross profit was $122.6M with an 80.6% gross margin.

• Q2 operating loss was $36.6M (GAAP), non-GAAP operating loss was $1.9M; net loss was $35.8M, non-GAAP net income was $3.8M ($0.03 per diluted share).

• Cash, equivalents, and marketable securities totaled $1.2B as of June 30, 2025.

• Repurchased 2.5M shares for $100M under the buyback program.

Outlook and guidance

• Q3 2025 revenue guidance: $163M–$168M (10–13% growth); non-GAAP operating income $4M–$7M; EPS $0.07–$0.08.

• Full-year 2025 guidance: ARR $748M–$754M (17% growth), SaaS mix expected to reach 82%, free cash flow $120M–$125M, revenue $616M–$628M (12–14% growth), non-GAAP operating income $0–$6M, EPS $0.16–$0.18.

• SaaS revenues expected to become the dominant revenue stream by end of 2025, with continued revenue variations during the transition.