One-glance verdict
Within fair range
$56.24 our estimate vs market $41.89
Wall Street consensus: $37.05 (-34.1% lower than our fair-value estimate)
26% below our estimate
Fundamentals snapshot
Varonis Systems, Inc.
VRNS · NMS · Technology · Software - Infrastructure
Current price
$41.89
52-week range
$19.70 - $63.90
Market cap
$4.92B
Balance sheet
Healthy
-22.31x Concerning
Net cash $263.74M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
1 Risk
2 rewards · 1 risks
- Reward Revenue grew 24.3% last year.
- Reward Free cash flow was positive in 7/10 years.
- Risk Return on equity was -31.8% last year — the company lost money on shareholders' equity.
What this company does
Varonis Systems, Inc.
Varonis Systems sells software that acts like a security guard for a company's sensitive digital files, automatically finding and protecting important information from hackers and data breaches. The company makes most of its money from selling subscriptions to access this security platform, which creates recurring revenue (income that comes in regularly, like a magazine subscription). This matters because as businesses store more critical data online, the need to protect it from increasing cyber threats becomes more essential.
How the company got here
Varonis was founded in 2005 by Yaki Faitelson and Ohad Korkus, who saw that companies were creating huge amounts of data (like documents and emails) but had no good way to see who was accessing it. Their first product, launched in 2006, was designed to map out and audit this 'unstructured data' to improve security. A major turning point came in late 2022 when the company began a massive shift from selling perpetual software licenses (where a customer buys the software once and owns it forever) to a subscription-based model called 'Software-as-a-Service' or SaaS (where customers pay a recurring fee for access to the software and updates). This change makes their product more affordable upfront for customers and creates a more predictable revenue stream (money coming in at regular intervals) for Varonis. The company went public on the Nasdaq stock exchange in 2014 and recently moved its headquarters to Miami, Florida.
What it actually does
Imagine a company has thousands of employees and millions of digital files, like customer lists, financial reports, and product designs, stored across many different systems. Varonis provides software that acts like a security guard for all that data. It helps companies see exactly where their sensitive information is, who has access to it, and what they are doing with it. The system automatically spots unusual activity, like an employee suddenly accessing thousands of files they've never touched before, and sends an alert. It also helps clean up permissions so that employees only have access to the specific data they need for their jobs, reducing the risk of a data breach.
Software-as-a-Service (SaaS) Subscriptions
This is now the main way Varonis makes money and represents the vast majority of its new business. Instead of a large one-time purchase, customers pay a recurring fee, often yearly, for access to the Varonis Data Security Platform, which is hosted in the cloud. This subscription includes all the features for discovering, protecting, and monitoring data, as well as continuous updates and support. This model is becoming the entire business, as Varonis is phasing out its older way of selling software.
Maintenance and Services
This is a smaller and shrinking part of the company's revenue. It primarily consists of support fees from customers who still use the older, self-hosted software they bought under the old license model. As these customers are encouraged to switch to the main SaaS subscription, this revenue stream is expected to continue declining. This segment also includes fees for professional services, where Varonis experts help new customers set up and configure the software for their specific needs.
What management is betting on now
The company's biggest bet is completing its full transition to a Software-as-a-Service (SaaS) company by the end of 2026, believing this will lead to more predictable growth. They are also heavily focused on artificial intelligence (AI), both in using AI to improve their threat detection and by acquiring companies to help customers secure their own AI tools. Another key priority is expanding their Managed Data Detection and Response (MDDR) service, where Varonis experts actively monitor and respond to threats for customers, which is especially helpful for companies with smaller security teams. Management sees a major opportunity in helping companies secure their data before they adopt new generative AI technologies, positioning Varonis as a necessary first step for safe AI deployment.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q2
$10.90M
FY2024 Q3
$21.25M
FY2024 Q4
$19.92M
FY2025 Q1
$65.66M
FY2025 Q2
$17.97M
FY2025 Q3
$30.43M
FY2025 Q4
$20.74M
FY2026 Q1
$50.07M
Revenue
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Net income
$-36.85M
Diluted EPS
-0.32
Operating cash flow
$55.04M
Free cash flow
$50.07M
Fetching…
Sources
Revenue
—
Net income
$-27.77M
Diluted EPS
-0.23
Operating cash flow
$24.68M
Free cash flow
$20.74M
Fetching…
Sources
Revenue
—
Net income
$-29.94M
Diluted EPS
-0.26
Operating cash flow
$33.40M
Free cash flow
$30.43M
Fetching…
Sources
Revenue
—
Net income
$-35.82M
Diluted EPS
-0.32
Operating cash flow
$21.35M
Free cash flow
$17.97M
Fetching…
Sources
Revenue
—
Net income
$-35.78M
Diluted EPS
-0.32
Operating cash flow
$68.00M
Free cash flow
$65.66M
Fetching…
Sources
Revenue
—
Net income
$-12.99M
Diluted EPS
-0.12
Operating cash flow
$24.27M
Free cash flow
$19.92M
Fetching…
Sources
Revenue
—
Net income
$-18.33M
Diluted EPS
-0.16
Operating cash flow
$22.48M
Free cash flow
$21.25M
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Sources
Revenue
—
Net income
$-23.95M
Diluted EPS
-0.21
Operating cash flow
$11.72M
Free cash flow
$10.90M
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Sources
Is it cheap or expensive?
Fair value $56.24 vs current price $41.89
Wall Street consensus is the average analyst price target: $37.05 (-34.1% lower than our fair-value estimate).
Our most-likely fair value is $56.24 a share — about 34.2% away from today's price of $41.89, so the stock currently looks fairly priced.
Is it drowning in debt?
Healthy
Net cash $263.7M - more cash than debt. Interest coverage -22.3x.
Net debt
$-263.74M
Interest coverage
-22.31x
Varonis Systems, Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 2 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
VRNS
BASELINE
Varonis Systems, Inc.
Total debt $522.17M Interest coverage -22.31x This is the baseline the peer rows are being compared against.
Total debt $411.00M Interest coverage 38.25x This peer still has a real interest-payment cushion, while VRNS does not.
Total debt $821.34M Interest coverage -10.47x Neither company has much profit cushion over interest right now.
Total debt $421.80M Interest coverage -0.21x Neither company has much profit cushion over interest right now.
What you should know
The case for and against VRNS
2 Rewards
1 Risk
Rewards
-
Revenue grew 24.3% last year.
-
Free cash flow was positive in 7/10 years.
Risks
-
Return on equity was -31.8% last year — the company lost money on shareholders' equity.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
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Forward P/E
109.60x
P/B
10.61x
P/S
7.45x
EV/EBITDA
-34.48x
PEG ratio
7.38x
Profitability
How much profit each dollar creates
Gross margin
78.1%
Operating margin
-25.1%
Net margin
-19.8%
ROE
-31.8%
ROA
-5.7%
Health
Liquidity and balance-sheet strength
Debt / equity
1.15x
Current ratio
1.69x
Quick ratio
1.48x
Total debt
$522.17M
Total cash
$785.91M
Growth
How the business has been compounding
Revenue TTM
$270.29M
Revenue 5Y CAGR
27.8%
EPS TTM
-1.13
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$134.47M
Free CF TTM
$134.80M
FCF margin
49.9%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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