Varonis Systems, Inc. (NASDAQ:VRNS) shares are trading lower Wednesday after the company reported third-quarter revenue below estimates and provided soft fourth-quarter guidance.
- VRNS stock is testing lower boundaries. Check the market position here.
What To Know: Varonis reported adjusted earnings per share of 6 cents, in line with the consensus estimate. In addition, the company reported sales of $161.57 million, missing the consensus estimate of $166.14 million.
Annual recurring revenues (ARR) rose 18 % year-over-year to $718.6 million, and SaaS ARR now accounts for approximately 76 % of total ARR. The company also said it has generated $122.7 million in cash from operations year-to-date, up from $90.9 million last year, and free cash flow of $111.6 million versus $88.6 million.
Term license subscription revenues dropped to $24.8 million from $68.8 million a year earlier, and maintenance and services revenues fell to $10.9 million from $21.5 million, both largely driven by customers converting to the SaaS platform. At the same time, Varonis incurred a GAAP operating loss of $35.9 million, deeper than the $23.6 million loss in the same quarter last year, and non-GAAP operating income all but evaporated at $200,000 versus $9.1 million a year ago.
The company disclosed $1.1 billion in cash, cash equivalents and marketable securities as of Sept. 30. Varonis also announced a $150 million share-repurchase authorization expected to be completed over the next 12 months.
CEO Yaki Faitelson noted strong demand for the SaaS platform and growing interest in cloud and AI initiatives but flagged lower renewals late in the quarter in the federal vertical and in on-prem subscription business, contributing to the stock's decline today.
Q4 Outlook: The company expects adjusted earnings per share of 2 cents to 4 cents in the fourth quarter, versus the consensus estimate of 5 cents. Varonis anticipates sales of $165 million to $171 million, versus the consensus estimate of $170.12 million.
Varonis raised its adjusted earnings per share guidance from a range of 11 cents to 12 cents to a new range of 12 cents to 13 cents, versus the consensus estimate of 14 cents. It also lowered its sales guidance from $616 million to $628 million to between $615.20 million and $621.20 million, versus the consensus estimate of $625.09 million.
Analyst Changes: Following the company’s earnings report, multiple analysts issued price target adjustments.
- RBC Capital analyst Matthew Hedberg maintained an Outperform rating on Varonis and lowered the price target from $72 to $60.
- UBS analyst Roger Boyd maintained a Buy rating on Varonis and lowered the price target from $70 to $60.
- Truist Securities analyst Junaid Siddiqui reiterated a Buy rating on Varonis and lowered the price target from $70 to $50.
- Susquehanna analyst Shyam Patil maintained a Positive rating on Varonis and lowered the price target from $65 to $50.
- Cantor Fitzgerald analyst Jonathan Ruykhaver maintained an Overweight rating on Varonis and lowered the price target from $70 to $60.
VRNS Price Action: At the time of writing, Varonis stock is trading 44.81% lower at $34.78, according to data from Benzinga Pro.
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This illustration was generated using artificial intelligence via Midjourney.
