Varonis Systems Shares Drop 19% Despite Q4 Earnings Beat
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Should l Buy VRNS?
Source: seekingalpha
- Significant Stock Drop: Varonis Systems' shares fell approximately 19% despite a Q4 earnings beat, indicating market concerns over the uncertainty surrounding non-SaaS annual recurring revenue, which could impact future cash flows.
- Analyst Rating Adjustments: Needham maintained a Buy rating on Varonis but lowered the price target from $55 to $30, reflecting a cautious outlook on the company's future performance, particularly regarding non-SaaS ARR conversions.
- Key Financial Metrics: Varonis reported a SaaS Net Revenue Retention of about 110% for 2025, with SaaS ARR (excluding conversions) growing 32% year-over-year; however, analysts noted that churn in non-SaaS ARR could create unexpected headwinds for 2026 free cash flow.
- Uncertain Market Outlook: Citi kept its Neutral/High Risk rating on Varonis and cut the price target to $28 from $37; while 2025 new logo SaaS performance exceeded expectations, total ARR growth slowed to 16% and NNARR declined to -16%, indicating weak fundamentals.
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Analyst Views on VRNS
Wall Street analysts forecast VRNS stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for VRNS is 52.18 USD with a low forecast of 37.00 USD and a high forecast of 80.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
18 Analyst Rating
14 Buy
4 Hold
0 Sell
Strong Buy
Current: 26.530
Low
37.00
Averages
52.18
High
80.00
Current: 26.530
Low
37.00
Averages
52.18
High
80.00
About VRNS
Varonis Systems, Inc. is a data security company. The Company’s cloud-native data security platform discovers and classifies critical data, removes exposures, and detects advanced threats with artificial intelligence (AI)-powered automation. Varonis software enables enterprises of all sizes and industries to protect data stored in the cloud and on-premises, including sensitive files, emails and databases; confidential personal data belonging to customers, patients and employees; financial records; source code, strategic and product plans; and other intellectual property. Its SaaS product portfolio includes two product lines: its flagship Varonis Data Security Platform, which protects Microsoft 365, Windows file shares, Active Directory, Edge devices (VPN, DNS, proxy), UNIX/Linux and hybrid NAS storage, and DatAdvantage Cloud, which protects IaaS environments and SaaS applications, such as Salesforce, AWS, Azure, Google Cloud, Google Workspace, Databricks, ServiceNow, and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Varonis Systems Q4 2025 Earnings Highlights
- SaaS Business Growth: Varonis reported a Q4 2025 SaaS ARR of $638.5 million, constituting 86% of total ARR, with a year-over-year increase of 32%, indicating strong market demand and customer conversion capabilities during its transition.
- Strategic Transition Decision: The company plans to fully phase out its self-hosted platform by the end of 2026, expecting to convert between $50 million to $75 million of ARR to SaaS, which will further solidify its leadership in the cloud security market.
- Acquisition of AllTrue: Varonis acquired AI security firm AllTrue to enhance its ability to address emerging AI risks and extend its platform to secure all AI systems and their data, demonstrating foresight in technological innovation and market adaptability.
- 2026 Outlook: The company projects total SaaS ARR of $805 million to $840 million for 2026, representing a growth rate of 26% to 32%, alongside expected free cash flow of $100 million to $105 million, reflecting confidence in future growth despite challenges from its non-SaaS business.
See More
Varonis Systems Shares Drop 19% Despite Q4 Earnings Beat
- Significant Stock Drop: Varonis Systems' shares fell approximately 19% despite a Q4 earnings beat, indicating market concerns over the uncertainty surrounding non-SaaS annual recurring revenue, which could impact future cash flows.
- Analyst Rating Adjustments: Needham maintained a Buy rating on Varonis but lowered the price target from $55 to $30, reflecting a cautious outlook on the company's future performance, particularly regarding non-SaaS ARR conversions.
- Key Financial Metrics: Varonis reported a SaaS Net Revenue Retention of about 110% for 2025, with SaaS ARR (excluding conversions) growing 32% year-over-year; however, analysts noted that churn in non-SaaS ARR could create unexpected headwinds for 2026 free cash flow.
- Uncertain Market Outlook: Citi kept its Neutral/High Risk rating on Varonis and cut the price target to $28 from $37; while 2025 new logo SaaS performance exceeded expectations, total ARR growth slowed to 16% and NNARR declined to -16%, indicating weak fundamentals.
See More
Software Stock Sell-Off Accelerates, Raising Concerns
- Software Stocks Decline: Since the latter half of 2025, software stocks have been under pressure due to fears of AI disrupting the industry, with the iShares Expanded Tech-Software Sector ETF (IGV) down nearly 20% this year and over 27% from its recent high, indicating a pessimistic market sentiment.
- Market Reaction Intensifies: On Tuesday, the S&P 500 fell nearly 1%, with ServiceNow and Salesforce shares dropping close to 7% each, and even the Magnificent Seven, including Nvidia, saw a roughly 3% decline, reflecting a significant loss of investor confidence in the software sector.
- Earnings Expectations Fail to Boost: Despite Varonis Systems beating earnings expectations, its stock fell over 14% in premarket trading on Wednesday, highlighting increasing concerns in the software space, while Super Micro Computer's earnings report raised red flags for the sector.
- Investors Shift Focus: Analysts noted that investors have pivoted to other market areas that could benefit from AI, such as energy, industrials, and utilities, indicating a waning confidence in the software sector, with a cautious outlook for potential earnings misses in the coming weeks.
See More
Super Micro Computer Surpasses Q2 Expectations with Strong AI Demand
- Super Micro Performance: Super Micro Computer reported an adjusted earnings per share of 69 cents for Q2, significantly exceeding the consensus estimate of 49 cents, with revenue of $12.68 billion surpassing the $10.23 billion forecast, driven by strong demand for AI-optimized servers, prompting the company to raise its annual revenue forecast to at least $40 billion from $36.09 billion.
- Silicon Labs Acquisition: Shares of Silicon Laboratories surged 52% following reports that Texas Instruments agreed to acquire the chip designer for $7.5 billion, highlighting ongoing consolidation in the semiconductor industry, which may lead to increased market concentration.
- Eli Lilly Strong Results: Eli Lilly's fourth-quarter earnings exceeded expectations, with non-GAAP earnings guidance between $33.50 and $35 per share, surpassing the $33.04 consensus, while projecting 2026 revenue of $80-$83 billion, significantly above analysts' expectations of $77.64 billion, indicating robust performance in the pharmaceutical sector.
- Uber Stock Decline: Uber's stock fell 8% after the company issued lower-than-expected guidance for the current quarter, forecasting adjusted earnings between 65 cents and 72 cents, below the consensus estimate of 79 cents, with leadership cautioning that autonomous vehicle efforts will remain a minor part of the rideshare category for years due to ongoing technological and regulatory challenges.
See More
Varonis Reports Better-Than-Expected Q4 Earnings
- Earnings Beat: Varonis Systems reported Q4 earnings of $0.08 per share, exceeding the analyst consensus of $0.03, indicating improved profitability despite a negative market reaction.
- Sales Growth: The company achieved quarterly sales of $173.369 million, surpassing the analyst estimate of $168.528 million, demonstrating strong product demand, although future sales guidance is slightly below market expectations.
- Future Outlook: Varonis expects FY2026 adjusted EPS to range from $0.06 to $0.10, significantly lower than the market estimate of $0.34, which may impact investor confidence moving forward.
- Stock Price Volatility: Despite the earnings beat, Varonis shares fell 14.7% in pre-market trading, reflecting market concerns about future growth, especially after analysts lowered their price targets.
See More
Super Micro Computer Q2 Earnings Exceed Expectations
- Earnings Beat: Super Micro Computer reported Q2 earnings of $0.69 per share, surpassing the analyst consensus of $0.49 by 41.68%, indicating a significant improvement in profitability that boosts investor confidence.
- Significant Revenue Growth: The quarterly revenue reached $12.68 billion, exceeding the market estimate of $10.22 billion and representing a 123.76% increase from $5.68 billion in the same period last year, showcasing the company's strong market performance and growth potential.
- Optimistic Outlook: Super Micro expects Q3 adjusted EPS of $0.60, above the analyst estimate of $0.53, and anticipates revenue in the range of $12.3 billion to $12.6 billion, reflecting confidence in future performance.
- Positive Stock Reaction: In pre-market trading, Super Micro's shares jumped 10.5% to $32.79, indicating a favorable market response to its strong earnings and optimistic outlook.
See More
Varonis Systems Q4 2025 Earnings Highlights
- SaaS Business Growth: Varonis reported a Q4 2025 SaaS ARR of $638.5 million, constituting 86% of total ARR, with a year-over-year increase of 32%, indicating strong market demand and customer conversion capabilities during its transition.
- Strategic Transition Decision: The company plans to fully phase out its self-hosted platform by the end of 2026, expecting to convert between $50 million to $75 million of ARR to SaaS, which will further solidify its leadership in the cloud security market.
- Acquisition of AllTrue: Varonis acquired AI security firm AllTrue to enhance its ability to address emerging AI risks and extend its platform to secure all AI systems and their data, demonstrating foresight in technological innovation and market adaptability.
- 2026 Outlook: The company projects total SaaS ARR of $805 million to $840 million for 2026, representing a growth rate of 26% to 32%, alongside expected free cash flow of $100 million to $105 million, reflecting confidence in future growth despite challenges from its non-SaaS business.
See More
Varonis Systems Shares Drop 19% Despite Q4 Earnings Beat
- Significant Stock Drop: Varonis Systems' shares fell approximately 19% despite a Q4 earnings beat, indicating market concerns over the uncertainty surrounding non-SaaS annual recurring revenue, which could impact future cash flows.
- Analyst Rating Adjustments: Needham maintained a Buy rating on Varonis but lowered the price target from $55 to $30, reflecting a cautious outlook on the company's future performance, particularly regarding non-SaaS ARR conversions.
- Key Financial Metrics: Varonis reported a SaaS Net Revenue Retention of about 110% for 2025, with SaaS ARR (excluding conversions) growing 32% year-over-year; however, analysts noted that churn in non-SaaS ARR could create unexpected headwinds for 2026 free cash flow.
- Uncertain Market Outlook: Citi kept its Neutral/High Risk rating on Varonis and cut the price target to $28 from $37; while 2025 new logo SaaS performance exceeded expectations, total ARR growth slowed to 16% and NNARR declined to -16%, indicating weak fundamentals.
See More
Software Stock Sell-Off Accelerates, Raising Concerns
- Software Stocks Decline: Since the latter half of 2025, software stocks have been under pressure due to fears of AI disrupting the industry, with the iShares Expanded Tech-Software Sector ETF (IGV) down nearly 20% this year and over 27% from its recent high, indicating a pessimistic market sentiment.
- Market Reaction Intensifies: On Tuesday, the S&P 500 fell nearly 1%, with ServiceNow and Salesforce shares dropping close to 7% each, and even the Magnificent Seven, including Nvidia, saw a roughly 3% decline, reflecting a significant loss of investor confidence in the software sector.
- Earnings Expectations Fail to Boost: Despite Varonis Systems beating earnings expectations, its stock fell over 14% in premarket trading on Wednesday, highlighting increasing concerns in the software space, while Super Micro Computer's earnings report raised red flags for the sector.
- Investors Shift Focus: Analysts noted that investors have pivoted to other market areas that could benefit from AI, such as energy, industrials, and utilities, indicating a waning confidence in the software sector, with a cautious outlook for potential earnings misses in the coming weeks.
See More
Super Micro Computer Surpasses Q2 Expectations with Strong AI Demand
- Super Micro Performance: Super Micro Computer reported an adjusted earnings per share of 69 cents for Q2, significantly exceeding the consensus estimate of 49 cents, with revenue of $12.68 billion surpassing the $10.23 billion forecast, driven by strong demand for AI-optimized servers, prompting the company to raise its annual revenue forecast to at least $40 billion from $36.09 billion.
- Silicon Labs Acquisition: Shares of Silicon Laboratories surged 52% following reports that Texas Instruments agreed to acquire the chip designer for $7.5 billion, highlighting ongoing consolidation in the semiconductor industry, which may lead to increased market concentration.
- Eli Lilly Strong Results: Eli Lilly's fourth-quarter earnings exceeded expectations, with non-GAAP earnings guidance between $33.50 and $35 per share, surpassing the $33.04 consensus, while projecting 2026 revenue of $80-$83 billion, significantly above analysts' expectations of $77.64 billion, indicating robust performance in the pharmaceutical sector.
- Uber Stock Decline: Uber's stock fell 8% after the company issued lower-than-expected guidance for the current quarter, forecasting adjusted earnings between 65 cents and 72 cents, below the consensus estimate of 79 cents, with leadership cautioning that autonomous vehicle efforts will remain a minor part of the rideshare category for years due to ongoing technological and regulatory challenges.
See More
Varonis Reports Better-Than-Expected Q4 Earnings
- Earnings Beat: Varonis Systems reported Q4 earnings of $0.08 per share, exceeding the analyst consensus of $0.03, indicating improved profitability despite a negative market reaction.
- Sales Growth: The company achieved quarterly sales of $173.369 million, surpassing the analyst estimate of $168.528 million, demonstrating strong product demand, although future sales guidance is slightly below market expectations.
- Future Outlook: Varonis expects FY2026 adjusted EPS to range from $0.06 to $0.10, significantly lower than the market estimate of $0.34, which may impact investor confidence moving forward.
- Stock Price Volatility: Despite the earnings beat, Varonis shares fell 14.7% in pre-market trading, reflecting market concerns about future growth, especially after analysts lowered their price targets.
See More
Super Micro Computer Q2 Earnings Exceed Expectations
- Earnings Beat: Super Micro Computer reported Q2 earnings of $0.69 per share, surpassing the analyst consensus of $0.49 by 41.68%, indicating a significant improvement in profitability that boosts investor confidence.
- Significant Revenue Growth: The quarterly revenue reached $12.68 billion, exceeding the market estimate of $10.22 billion and representing a 123.76% increase from $5.68 billion in the same period last year, showcasing the company's strong market performance and growth potential.
- Optimistic Outlook: Super Micro expects Q3 adjusted EPS of $0.60, above the analyst estimate of $0.53, and anticipates revenue in the range of $12.3 billion to $12.6 billion, reflecting confidence in future performance.
- Positive Stock Reaction: In pre-market trading, Super Micro's shares jumped 10.5% to $32.79, indicating a favorable market response to its strong earnings and optimistic outlook.
See More
