Varonis Crashes After Reporting Mixed Q3 Results and Weaker Outlook

Varonis (NASDAQ: VRNS) shares plunged after the data-security software firm reported mixed third-quarter results and issued a soft revenue outlook amid a continued shift from term licenses to its subscription-based SaaS platform.

Q3 Financial Highlights

Term license subscription revenue: $24.8 million, down sharply from $68.8 million year over year
The decline reflects the company’s transition to SaaS, which temporarily reduces upfront license sales while increasing recurring revenue potential.

Although total revenue and earnings were roughly in line with expectations, the composition of sales raised investor concerns about short-term growth visibility.

Q4 and FY2025 Guidance

Varonis provided the following forward guidance:

Q4 revenue: $165 million – $171 million (vs. $170.8 million consensus)
Q4 non-GAAP EPS: $0.02 – $0.04 (vs. $0.03 expected)
FY2025 revenue: $615.2 million – $621.2 million (vs. $625.31 million expected)
FY2025 non-GAAP EPS: $0.12 – $0.13 (vs. $0.12 consensus)

The company acknowledged that the transition to SaaS will weigh on near-term results, but management reaffirmed confidence in the long-term benefits of the recurring-revenue model.

Share Repurchase Program

To offset dilution and signal confidence, Varonis announced a $150 million share repurchase program over the next 12 months.

Market Reaction

Despite management’s optimism, investors reacted negatively to the weaker revenue guidance and falling license sales, driving the stock down 31%, marking one of the largest declines in the cybersecurity sector this quarter.