Varonis Systems Reports 20% Revenue Growth to $136.4 Million in Q1 2025

Varonis Systems, Inc. reported a total revenue of $136.4 million for the first quarter of 2025, marking a 20% increase from $114.0 million in the same period of 2024. The growth was primarily driven by a significant rise in Software as a Service (SaaS) revenues, which surged 161% to $88.6 million, up from $34.0 million year-over-year. This increase reflects the company's strategic transition to a SaaS delivery model, which is expected to continue influencing revenue patterns as existing customers convert to this model. However, revenues from term license subscriptions and maintenance services declined, contributing to a shift in the revenue mix, with SaaS now accounting for 64.9% of total revenues compared to 29.8% a year earlier.

Despite the revenue growth, Varonis reported a net loss of $35.8 million for the quarter, an improvement from the $40.5 million loss recorded in the first quarter of 2024. The operating loss also decreased to $43.8 million from $47.6 million year-over-year. The company attributed the losses to increased operating expenses, which rose to $151.2 million, driven by higher costs in research and development, sales and marketing, and general administrative functions. The gross profit margin slightly decreased to 78.7% from 81.3%, primarily due to increased costs associated with the transition to a SaaS model.

In terms of operational developments, Varonis completed the acquisition of Cyral, Inc. on March 17, 2025, for $25.5 million in cash. This acquisition is expected to enhance Varonis's database security capabilities by integrating Cyral's database activity monitoring technology. The company also reported an annual recurring revenue (ARR) of $664.3 million, a 19% increase from $560.3 million in the previous year, indicating a solid foundation for future growth.

Geographically, approximately 70% of Varonis's revenues were derived from the United States, with the remaining 30% coming from EMEA and other regions. The company continues to focus on expanding its international operations, which may involve increased sales and marketing expenses. As of March 31, 2025, Varonis had cash and cash equivalents, along with marketable securities, totaling $609.2 million, which the company believes will be sufficient to fund operations and capital expenditures for at least the next 12 months.

Looking ahead, Varonis anticipates that the transition to a SaaS delivery model will continue to impact revenue recognition and overall financial performance. The company expects to see further growth in SaaS revenues and ARR, while also managing the associated challenges of this transition. The ongoing geopolitical situation in the Middle East, particularly the conflict affecting some of its employees in Israel, may also pose risks to operations, which the company is monitoring closely.