On July 29, 2024, Varonis Systems Inc (VRNS, Financial) released its 8-K filing detailing the financial results for the second quarter ended June 30, 2024. Varonis Systems, a cybersecurity vendor focused on data privacy and security, is currently transitioning its on-premises customers to its cloud products delivered as software-as-a-service (SaaS).
Performance Overview
Varonis Systems Inc (VRNS, Financial) reported total revenues of $130.3 million for Q2 2024, surpassing the analyst estimate of $124.84 million. This marks a significant increase from the $115.4 million reported in the same quarter last year. However, the company posted a GAAP operating loss of $28.8 million, an improvement from the $39.7 million loss in Q2 2023.
Key Financial Achievements
Annual recurring revenues (ARR) grew by 18% year-over-year to $584.2 million. Notably, SaaS ARR as a percentage of total ARR increased to approximately 36%, reflecting the strong adoption of Varonis' SaaS platform. Year-to-date cash from operations generated $68.4 million, up from $42.6 million last year, while free cash flow reached $67.3 million compared to $40.0 million in the prior year period.
Guy Melamed, Varonis CFO & COO, stated, “The strong adoption of our SaaS platform resulted in 36% of total company ARR coming from SaaS at the end of the second quarter. Our performance, coupled with the many tailwinds in our business gives us confidence to raise our full-year ARR and free cash flow guidance and also to increase our SaaS ARR expectations to 48% for the full-year.”
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Total Revenues | $130.3 million | $115.4 million |
| SaaS Revenues | $44.8 million | $5.7 million |
| Term License Subscription Revenues | $62.7 million | $85.4 million |
| Maintenance and Services Revenues | $22.8 million | $24.3 million |
| GAAP Operating Loss | ($28.8) million | ($39.7) million |
| Non-GAAP Operating Income | $2.1 million | $0.9 million |
Balance Sheet and Cash Flow
As of June 30, 2024, Varonis Systems Inc (VRNS, Financial) had $790.3 million in cash and cash equivalents, short-term deposits, and marketable securities. The company generated $68.4 million in cash from operations and $67.3 million in free cash flow during the first six months of 2024.
Analysis and Outlook
Varonis Systems Inc (VRNS, Financial) continues to show robust growth in its SaaS segment, which is crucial as the company transitions from on-premises solutions to cloud-based offerings. The increase in ARR and strong cash flow generation are positive indicators of the company's financial health and operational efficiency.
For the third quarter of 2024, Varonis expects revenues between $140.0 million and $143.0 million, representing year-over-year growth of 14% to 17%. The company also anticipates non-GAAP operating income of $7.0 million to $8.0 million and non-GAAP net income per diluted share in the range of $0.07 to $0.08.
For the full year 2024, Varonis has raised its guidance, now expecting ARR of $629.0 million to $635.0 million, free cash flow of $80.0 million to $85.0 million, and revenues of $544.0 million to $552.0 million.
Varonis Systems Inc (VRNS, Financial) remains a key player in the cybersecurity industry, with its focus on data security and privacy positioning it well for future growth. Investors will be keen to see how the company continues to leverage its SaaS platform to drive revenue and profitability.
Explore the complete 8-K earnings release (here) from Varonis Systems Inc for further details.
