AI Earnings Predictions for Varonis Systems Inc. (VRNS)

EX-99.1

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PRESS RELEASE

EdgarFiling

EXHIBIT 99.1

Varonis Announces Third Quarter 2026 Financial Results

MIAMI, Nov. 03, 2026 (GLOBE NEWSWIRE) -- Varonis Systems, Inc. (Nasdaq: VRNS), the data and AI security leader, today announced financial results for the third quarter ended September 30, 2026.

Financial Summary for the Third Quarter Ended September 30, 2026

Total revenues were $189.5 million, compared with $161.6 million in the third quarter of 2025. SaaS revenues were $185.1 million, compared with $125.8 million in the third quarter of 2025. Term license subscription revenues were $1.2 million, compared with $24.8 million in the third quarter of 2025, with the vast majority of the decline driven by customers converting to our SaaS platform. Maintenance and services revenues were $3.1 million, compared with $10.9 million in the third quarter of 2025, with the vast majority of the decline driven by customers converting to our SaaS platform. GAAP operating loss was ($47.7) million, compared to GAAP operating loss of ($35.9) million in the third quarter of 2025. Non-GAAP operating income was $7.6 million, compared to non-GAAP operating income of $0.2 million in the third quarter of 2025. The tables at the end of this press release include a reconciliation of GAAP operating income (loss) to non-GAAP operating income (loss) and GAAP net income (loss) to non-GAAP net income (loss) for the three and nine months ended September 30, 2026 and 2025. An explanation of these measures is included below under the heading "Non-GAAP Financial Measures and Key Performance Indicators."

Key Performance Indicators and Recent Business Highlights

SaaS ARR, was $774.6 million as of the end of the third quarter, up 42% year-over-year and up 24% year-over-year, excluding conversions. As of September 30, 2026, the Company had $937.8 million in cash and cash equivalents, short-term deposits and short-term and long-term marketable securities. During the nine months ended September 30, 2026, the Company generated $108.3 million of cash from operations, compared to $122.7 million generated in the prior year period. During the nine months ended September 30, 2026, the Company generated $94.8 million of free cash flow, compared to $111.6 million generated in the prior year period. During the nine months ended September 30, 2026, the Company generated $108.2 million of adjusted free cash flow, compared to $113.4 million generated in the prior year period. An explanation of SaaS ARR is included below under the heading "Non-GAAP Financial Measures and Key Performance Indicators." In addition, the tables at the end of this press release include a reconciliation of net cash provided by operating activities to non-GAAP free cash flow and non-GAAP adjusted free cash flow. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures and Key Performance Indicators."

Financial Outlook and Conference Call and Webcast In light of the pending acquisition by Proofpoint, a portfolio company of Thoma Bravo, Varonis will not be providing forward-looking guidance or updates to previously issued guidance and will not conduct an earnings conference call or webcast for its third quarter fiscal 2026 results.

Non-GAAP Financial Measures and Key Performance Indicators

Varonis believes that the use of non-GAAP operating income (loss) and non-GAAP net income (loss) is helpful to our investors. These measures, which the Company refers to as our non-GAAP financial measures, are not prepared in accordance with GAAP.

Non-GAAP operating income (loss) is calculated as operating income (loss) excluding (i) stock-based compensation expense, (ii) payroll tax expense related to stock-based compensation, and (iii) amortization of acquired intangible assets and acquisition-related expenses.

Non-GAAP net income (loss) is calculated as net income (loss) excluding (i) stock-based compensation expense, (ii) payroll tax expense related to stock-based compensation, (iii) amortization of acquired intangible assets and acquisition-related expenses, (iv) foreign exchange gains (losses) which include exchange rate differences on lease contracts as a result of the implementation of ASC 842, (v) amortization of debt issuance costs and (vi) acquisition-related taxes.

The Company believes that the exclusion of these expenses provides a more meaningful comparison of our operational performance from period to period and offers investors and management greater visibility to the underlying performance of our business. Specifically:

Stock-based compensation expenses utilize varying available valuation methodologies, subjective assumptions and a variety of equity instruments that can impact a company's non-cash expenses; Payroll taxes are tied to the exercise or vesting of underlying equity awards and the price of our common stock at the time of vesting or exercise, factors which may vary from period to period; Acquired intan

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