What does Varonis Systems do and what are its main business segments?

What is the revenue and EPS growth rate for Varonis Systems year over year?

What is Varonis Systems's gross profit margin?

What factors drove the changes in Varonis Systems's revenue and profit?

What is the market's earnings forecast for Varonis Systems next quarter?

What were the key takeaways from Varonis Systems’s earnings call?

What guidance did Varonis Systems's management provide for the next earnings period?

Did Varonis Systems beat or miss consensus estimates last quarter?

- **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.

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