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- **SaaS Dominance**: Q4 SaaS ARR at $638.5 million (86% of total), growing 32% YoY (ex-conversions). Total ARR up 16% YoY to $745.4 million.
- **Conversion Momentum**: $65 million in Q4 conversions, with $50-75 million expected in 2026 as legacy on-prem winds down.
- **AI Expansion**: AllTrue acquisition bolsters AI security, aligning with 2026 focus on new customers and upselling SaaS features like MDDR and Copilot.
- **Financial Outlook**: 2026 SaaS ARR (ex-conversions) to grow 18-20%, with free cash flow of $100-105 million despite $30-50 million headwind from non-SaaS ARR.
- **Strategic Shift**: Transitioning to 100% SaaS by end-2026, prioritizing automation and data security to capitalize on AI-driven growth.

**【CEO Summary Section】**
- Q4 SaaS ARR reached $638.5 million (86% of total ARR), growing 32% YoY (excluding conversions). Total ARR was $745.4 million, up 16% YoY.
- Announced end-of-life for self-hosted platforms, driving $65 million in conversions in Q4, with $50-75 million expected in 2026.
- Acquired AllTrue to enhance AI security capabilities, integrating end-to-end visibility and guardrails for AI tools.
- Highlighted strong customer wins in healthcare and cloud migration scenarios, showcasing SaaS adoption and MDDR/Copilot adoption.
- Emphasized SaaS as the future, with focus on new customer acquisition and upselling existing SaaS customers.

**【CFO Financial Commentary】**
- Q4 revenues: $173.4 million (+9% YoY). SaaS revenues: $142.3 million. Gross margin: 80%. Free cash flow: $131.9 million (+21.6% YoY).
- 2026 guidance: SaaS ARR (excluding conversions) to grow 18-20% ($805-840 million total SaaS ARR). Free cash flow: $100-105 million.
- Headwind of $30-50 million from lower renewal rates of non-SaaS ARR, offsetting long-term benefits of transitioning to 100% SaaS.
- Dollar-based net retention rate for SaaS: 110% at year-end 2025, with potential to increase as focus shifts to upselling.

**【Q&A Highlights】**
- **SaaS Growth Clarification**: CFO emphasized SaaS ARR (excluding conversions) as key metric, guiding 18-20% growth in 2026. Q4 conversion momentum ($65 million) driven by end-of-life announcement.
- **AI and AllTrue Impact**: CEO highlighted AI as a growth driver, with AllTrue integration enabling end-to-end AI security. MDDR adoption accelerated due to automation benefits.
- **Financial Headwinds**: CFO detailed $30-50 million headwind from non-SaaS ARR renewals, but stressed 2027 financial targets remain achievable with 100% SaaS transition.
- **Go-to-Market Strategy**: Reps now focused on new customers and upselling, with incentives aligned to SaaS growth. Federal team adjustments reflect lower government conversion expectations.


Varonis Systems, Inc. (VRNS) Q4 2025 Earnings Call Transcript

- **SaaS Dominance**: 76% ARR from SaaS, with self-hosted solution ending in 2026. Q3 ARR $718.6M (18% YoY), but on-prem renewals underperformed, leading to 5% headcount cut.
- **Product Momentum**: Launches of Interceptor and DAM, plus Microsoft partnership, fuel growth. SaaS NRR healthy, with focus on upselling post-transition.
- **Financial Health**: $1.1B cash, $150M buyback. Full-year ARR guidance $730M-$738M, free cash flow $120M-$125M. Gross margin 79.4%, operating margin 0.1%.
- **Risks**: Federal and non-federal on-prem renewals volatile. 24% of ARR (non-SaaS) uncertain, but SaaS ARR expected to reach 83% by year-end.

**【CEO Summary Section】**
- **SaaS Transition Completion**: 76% of ARR now from SaaS, 2 years ahead of plan. Self-hosted solution to be phased out by December 2026.
- **ARR Growth**: Q3 ARR $718.6M (18% YoY), driven by SaaS. Federal and non-federal on-prem renewals underperformed, leading to 5% headcount reduction.
- **New Product Launches**: Varonis Interceptor (AI-native email security) and Next-Gen Database Activity Monitoring (DAM) via Cyral acquisition. Strategic Microsoft partnership to enhance Copilot security.
- **Customer Wins**: Fintech and financial services companies migrating to SaaS for cloud data protection and AI integration.

**【CFO Financial Commentary】**
- **Revenue**: Q3 total revenue $161.6M (9% YoY), SaaS $125.8M. Full-year ARR guidance $730M-$738M (14%-15% growth), free cash flow $120M-$125M.
- **Margins**: Gross margin 79.4%, ARR contribution margin 16.3%. Operating income $0.2M (0.1%), net income $8.4M ($0.06 EPS).
- **Liquidity**: $1.1B cash and marketable securities. $150M share buyback program announced.

**【Q&A Highlights】**
- **Federal Business Challenges**: Underperformance in renewals, team size reduction. FedRAMP high authorization pending, but focus on SaaS conversions.
- **SaaS NRR**: Healthy trends, excluding conversion uplift. Upsell focus for 2026 as SaaS transition completes.
- **End-of-Life Impact**: Additional conservatism baked into Q4 guidance. 24% of ARR (non-SaaS) faces uncertainty, but SaaS ARR expected to reach 83% by year-end.
- **Customer Migration**: Most non-renewing on-prem customers were single-use case; discussions ongoing to convert to SaaS. No term compression observed.
- **Strategic Acquisitions**: SlashNext (email security) and Cyral (DAM) driving adjacencies in data security and AI compliance.

Varonis Systems, Inc. (VRNS) Q3 2025 Earnings Call Transcript

- **ARR Growth Accelerates**: Q2 ARR $693.2M (+19% YoY), SaaS ARR 69% of total. FY25 guidance raises to $748-754M.
- **FedRAMP Milestone**: Federal sector access opens new opportunities, despite <5% ARR contribution.
- **AI & Cloud Security Leader**: Microsoft Copilot partnership, OpenAI integration, and SaaS automation drive 20%+ ARR growth.
- **Competitive Differentiation**: 3-step Find-Fix-Alert approach wins 80%+ of DSPM deals, outperforming point tools.
- **Cash Flow Strength**: Free cash flow $82.7M YTD (+23% YoY), positioning for post-transition growth.

**【CEO Summary Section】**
- Q2 ARR grew 19% YoY to $693.2M, with SaaS ARR at 69% of total ARR ($475M). FedRAMP authorization enables federal sector expansion.
- Emphasized Varonis' 3-step data security approach: Find (discover & classify data), Fix (automate risk mitigation), Alert (detect & respond to threats in real time).
- Strategic partnership with Microsoft to secure AI adoption, including Copilot integration. Key wins include a healthcare org with 20,000+ employees and a defense contractor.
- DSPM market growth driven by AI, cloud adoption, and compliance; Varonis differentiates via end-to-end automation and scale.

**【CFO Financial Commentary】**
- Q2 total revenue $152.2M (+17% YoY), SaaS revenue $105.9M. Free cash flow $82.7M YTD (+23% YoY).
- Gross margin 80.6%, ARR contribution margin 16.5% (vs 14.9% YoY). Operating loss $1.9M due to SaaS transition headwinds.
- Updated FY25 guidance: ARR $748-754M (+17%), free cash flow $120-125M, non-GAAP EPS $0.16-0.18.
- SaaS NRR >90%, with healthy upsell trends as customers adopt additional cloud platforms.

**【Q&A Highlights】**
- **Competitive Edge**: 80%+ of deals won against DSPM point tools; Varonis' POC-driven sales motion and automation reduce friction vs manual solutions.
- **Microsoft Partnership**: Copilot security integration drives pipeline growth; MDDR & Azure labeling automation key use cases.
- **ARR Growth Drivers**: SaaS conversions (8pt mix increase QoQ), new logos (+17% YoY), and upsells (SaaS NRR >90%).
- **Macro Trends**: Deal scrutiny persists, but AI adoption & cloud security awareness offset macro uncertainty.
- **FedRAMP Impact**: <5% of ARR but builds credibility for commercial customers; long-term federal opportunity exists.
- **New Products**: DAM (database activity monitoring) & Identity Protection Suite seeing strong adoption, targeting $300M+ TAM.

Varonis Systems, Inc. (VRNS) Q2 2025 Earnings Call Transcript

- **ARR Growth Accelerates**: Q1 ARR up 19% YoY to $664.3M, with SaaS ARR at 61% of total. Free cash flow surges 16% YoY to $65.3M.
- **Customer Momentum Strong**: New logos drove 30% YoY growth, while existing customers expanded to protect data across AWS, Azure, Snowflake, and Copilot.
- **MDDR Adoption Explosive**: Launched 5 quarters ago, MDDR is fastest-growing platform in company history, enabling automated threat detection for AI tools.
- **SaaS Transition On Track**: SaaS mix to reach 80% of ARR by year-end, up from 53% in Q4 2024. FY25 ARR guidance raised to $742M-$750M (+16%-17%).
- **Cyral Expansion**: Acquired database monitoring startup to unify structured/unstructured data security, targeting $1B+ TAM with minimal competition.


**【CEO Summary Section】**
- Q1 ARR grew 19% YoY to $664.3M, with SaaS ARR representing 61% of total ARR ($403.9M). Free cash flow reached $65.3M, up 16% YoY.
- Highlighted customer wins include a healthcare system with 100,000+ employees adopting Varonis SaaS for Microsoft 365 and Google Drive, and a consumer products company expanding to protect data across AWS, Azure, Snowflake, and GitHub.
- Acquired Cyral to expand database activity monitoring capabilities, enhancing unified data security across structured and unstructured data.
- Automated MDDR (Machine Data Detection and Response) adoption is accelerating, with customers using it to secure AI tools like Copilot and Agentic AI in Salesforce.

**【CFO Financial Commentary】**
- Total revenue of $136.4M (+20% YoY), driven by SaaS growth and strong renewal rates (>90%).
- Gross margin 80.2%, operating loss narrowed to $6.5M (-4.7% margin vs -9.3% YoY).
- Updated FY25 guidance: ARR $742M-$750M (+16%-17%), free cash flow $120M-$125M, non-GAAP EPS $0.14-$0.17.
- SaaS mix expected to reach 80% of ARR by year-end, up from 53% in Q4 2024.

**【Q&A Key Takeaways】**
- **SaaS Transition Confidence**: SaaS NRR significantly outpaces total NRR, with customers expanding deployments post-conversion. Q1 saw 8pt increase in SaaS mix (53% to 61%).
- **MDDR Growth**: Launched 5 quarters ago, MDDR adoption is fastest in company history, driven by automated threat detection and forensics capabilities.
- **AI Impact**: 70%+ of new customers cite Copilot deployment as a driver for adopting Varonis SaaS. Agentforce for Salesforce enables secure Agentic AI by auto-removing overexposed data access.
- **Macroeconomic Resilience**: Despite macro uncertainty, ARR growth is fueled by new customer momentum (+30% YoY) and existing customer expansion. FY25 guidance raised due to strong pipeline visibility.
- **Cyral Integration**: No ARR contribution in 2025, but positions for long-term market expansion into database security, a $1B+ TAM with minimal incumbent innovation.


Varonis Systems (VRNS)-6 May 25-2025 Q1 Earnings call transcript

- **SaaS Transition Acceleration**: Completing by end-2025, 2 years ahead of schedule, with SaaS ARR expected to reach $580 million.
- **ARR Growth**: Q4 ARR up 18% YoY to $641.9 million, with new customer ARR growing 50% YoY.
- **AI Impact**: Gen AI driving 100%+ YoY growth in Microsoft 365/Copilot-related ARR.
- **Cash Flow Strength**: Full-year free cash flow of $108.5 million, doubling from 2023.
- **Financial Leverage**: ARR contribution margin improved to 16.6%, up from 13.4% in 2023.

**【CEO Summary Section】**
- Q4 ARR reached $641.9 million, up 18% YoY, with SaaS ARR accounting for 53% of total ARR.
- New customer ARR grew 50% YoY, driven by SaaS adoption and Gen AI-related purchases.
- Accelerated SaaS transition to be completed by end-2025, 2 years ahead of initial plan.
- Free cash flow hit $108.5 million for the year, doubling from 2023 levels.

**【CFO Financial Commentary】**
- Q4 non-GAAP operating loss was $14 million to $11 million, reflecting SaaS transition headwinds.
- Full-year ARR contribution margin improved to 16.6%, up from 13.4% in 2023.
- 2025 guidance: ARR $737-745 million (+15-16%), free cash flow $120-125 million.
- SaaS ARR expected to reach $580 million by year-end, up from $340 million in 2024.

**【Q&A Key Takeaways】**
- SaaS conversions will accelerate with strategic investments in sales and customer success.
- Gen AI adoption is driving 100%+ YoY growth in Microsoft 365/Copilot-related ARR.
- Post-transition, NRR is expected to improve due to MDDR automation and SaaS simplicity.
- 2025 ARR growth will balance new customer momentum with existing base conversions.
- Long-term target of 20% ARR contribution margin remains on track for 2027.

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