Varonis Systems Inc Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Saket Kalia - Barclays Services Corp - Analyst : Okay. Great. Yaki, maybe for you. The numbers here are pretty straightforward. So I'd love to ask a market question here, if I could. We all saw one of your privately held competitors, Cyera raised money recently. And I was wondering, since we're all on the call, can you just talk about how you compete against them? How you win? And maybe how your move to SaaS is changing that competitive backdrop? Does that make sense?

Question: Matthew Hedberg - RBC Capital Markets Inc - Analyst : Congrats on the results. Yaki, it's great to hear about the updates to your expanded Microsoft partnership. I'm wondering, is there a way that you can help us size the opportunity in terms of revenue contribution today? And additionally, how should we think about go-to-market initiatives to drive even more success? It sounds like you talked about a lot of integration work. But curious about some of the go-to-market initiatives as well.

Question: Joseph Gallo - Jefferies LLC - Analyst : Are there any metrics or data you can share that just instill the confidence in over 20% ARR growth. I imagine that means SaaS ARR without conversion tailwinds is growing healthily above that currently. But just anything on new logos or NRR that kind of helps us see that what you guys see and are so positive on.

Question: Roger Boyd - UBS AG - Analyst : Awesome. Can you expand on the trend of customers consolidating their data security budgets to Varonis. And when you look at the trends around consolidating around data stores like database or around functional areas like DSPM and DLP, are there particular trends within those that are looking stronger than others? And is this something that you're seeing today, the general brownfield consolidation opportunity? Or is this more of a pipeline opportunity you think out over the next year?

Question: Brian Essex - JPMorgan Chase & Co - Analyst : It's Brian from JPMorgan, operator trying to demote me. But thank you for taking the question. Yaki, maybe a question for you. Great to see the FedRAMP Authorization. I would love to get your sense of how you feel positioned ahead of the stronger third quarter for fed spending how much visibility you might have into that Fed business? And what's your sense of the preparedness on the Fed side to adopt data security versus what you're seeing on the enterprise side?

Question: Andrew Nowinski - Wells Fargo Securities LLC - Analyst : Okay. So I wanted to ask about your SaaS revenue. So you've had two consecutive quarters of significantly outperforming the consensus estimate, suggesting the Street seems to be mismodeling that conversion I know you don't guide specifically to SaaS revenue, but if we just use your SaaS REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 29, 2025 / 8:30PM, VRNS.OQ - Q2 2025 Varonis Systems Inc Earnings Call ARR of 478 that you reported this quarter and divide that by 4 and use that as a proxy, it certainly suggests that subscription or SaaS revenue should be about $120 million in Q3. I guess my question is, is there anything -- any reason that, that proxy or that calculation would not be correct. Is there anything that -- why we wouldn't want to use something like that?

Question: Shrenik Kothari - Robert W. Baird & Co Inc - Analyst : Yes. And echoing congrats on the quarter. So beyond the new logos, right, you reiterated strong SaaS conversion execution, of course, tracking ahead of plan. But specifically, Yaki and Guy, you just made comments that past these conversions and the tailwinds, the SaaS NRR, right, the customer is realizing value faster post transition, about the expansion upside cross. So just what specific new workload ramping or multi-cloud expansion signals are giving you the most confidence here? And if you can just help unpack that SaaS and RR a little bit more among MDDR, Copilot, OpenAI, greenfield SaaS, unstructured data, as you mentioned, Snowflake -- just wanted to understand like if you can unpack that a little bit more.

Question: Rudy Kessinger - D.A. Davidson & Co - Analyst : Similar question actually the last one. I am curious, you mentioned in the prepared remarks, the contribution mix of protecting the cloud and SaaS environment continues to increase. Any data points you can share on what percent of SaaS net new ARR from new logos in expansion, not the conversions you're doing, but new logos and expansion is coming from protecting cloud environment and SaaS applications.

Question: Jonathan Ruykhaver - Cantor Fitzgerald LP - Analyst : Yes. So regarding the recent introduction of your next-gen dam offering, database activity monitoring, I'm curious how should we view that in terms of just an enhancement over traditional dams to drive a replacement cycle versus positioning around a broader data security strategy. When you look at the revenue opportunity it would seem the replacement opportunity relative to some legacy vendors like Imperva and Guardium would

Question: Junaid Siddiqui - Truist Securities - Analyst : Just wanted to ask about your identity protection suite that you launched last month. We're seeing more and more convergence between data and identity security. Could you just talk a bit about some of the differentiating aspects what this does compare to what some of the other identity vendors are able to offer their customers?