Varonis Q2 revenue beats analyst estimates as cloud platform adoption increased

Overview

• Data and AI security firm's Q2 revenue rose 18% yr/yr, beating analyst expectations

• Non-GAAP operating income turned positive from a loss last year

• SaaS ARR excluding conversions grew 25% yr/yr as customers migrated to cloud platform

Outlook

• Varonis sees Q3 revenues of $185 mln to $188 mln, up 14% to 16% year-over-year

• Company expects full-year SaaS ARR of $819 mln to $850 mln, up 28% to 33% year-over-year

• Varonis raises full-year SaaS ARR excluding conversions growth outlook to 21% at midpoint

Result Drivers

• SAAS GROWTH - SaaS ARR excluding conversions rose 25% yr/yr, driven by new customer additions and increased adoption of cloud platform

• CUSTOMER CONVERSIONS - Declines in term license and maintenance revenues were mainly due to customers moving to SaaS platform

• AI SECURITY DEMAND - Increased focus on securing AI and data supported new business momentum, according to CFO

Company press release: ID:nGNX5fcPtc

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 18 "strong buy" or "buy", 6 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the software peer group is "buy"

• Wall Street's median 12-month price target for Varonis Systems Inc is $43.00, about 7.9% below its July 27 closing price of $46.67

• The stock recently traded at 172 times the next 12-month earnings vs. a P/E of 168 three months ago

Reuters Recommended Reads

• July 27 - F5 raises annual revenue growth forecast again on strong cybersecurity demand

• July 28 - Commvault Q1 revenue rises on subscription growth

• July 27 - Nvidia forms industry alliance for open AI security after Hugging Face hack

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)