Varonis Systems (VRNS) TD Cowen's 54th Annual Technology, Media & Telecom Conference summary

Company overview and SaaS transition

• Provides SaaS solutions for data and AI security, including threat monitoring, compliance automation, and AI stack protection.

• Transition to SaaS began in early 2023 and is nearly complete, with 89% of ARR from SaaS and full SaaS by end of 2024.

• On-premise products will reach end of life by December 31, 2026, accelerating customer migration.

• SaaS platform offers superior functionality and efficiency compared to legacy on-premise solutions.

Financial performance and guidance

• Q1 2026 showed strong new customer growth, attributed to a shift in sales focus from conversions to new business and upsells.

• SaaS ARR growth excluding conversions was 29% in Q1, with full-year guidance raised to 20%-21%.

• Conversion guidance for 2026 is set between $50M-$75M, with most conversions expected in Q4.

• Free cash flow and ARR contribution margin have outperformed internal expectations during the SaaS transition.

Product innovation and AI integration

• Recent acquisitions (Atlas, Interceptor, Alltrue.ai) expand AI security capabilities and open new markets.

• Atlas platform provides comprehensive AI stack visibility, risk scanning, and database activity monitoring.

• AI security is increasingly important as organizations deploy LLMs and agents, raising new data exposure risks.

• Atlas operates on a usage-based model, tracking per AI system or agent.