Varonis Systems Inc at Barclays Global Technology Conference Transcript

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

Question: Saket Kalia - Barclays - Analyst : Well, I want to jump right into last quarter, right, because there's so much to talk about there. Guy, you said something interesting in the last call, which was Varonis is really becoming two separate businesses right now. There is the SaaS business. And then the on-prem business. Talk to us a little bit about why those two businesses feel so separate right now in terms of their performance. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 10, 2025 / 7:00PM, VRNS.OQ - Varonis Systems Inc at Barclays Global Technology Conference

Question: Saket Kalia - Barclays - Analyst : Got it. Very helpful data point. I mean I want to follow on that a little bit. It felt like the higher-than-expected churn. It was clearly a surprise for all of us. And it felt like it was a little bit of a surprise for the team as well particularly given what I think were healthy renewal rates in the on-prem business in the first half of the year. And it sounds like there wasn't really one common theme around why some of those customers didn't renew. But as we get further and further from the sun, right, like what have you kind of seen as you've gone back and looked at those customers that have churned and whether there was anything common or what drove it or was it a fluke? I mean, who knows, right? So what's your kind of post-mortem on that? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 10, 2025 / 7:00PM, VRNS.OQ - Varonis Systems Inc at Barclays Global Technology Conference

Question: Saket Kalia - Barclays - Analyst : Very clear. Very helpful. Brian, maybe this question is for you because I know you spend a lot of time with customers. For the on-prem subscription customers that didn't renew, are they still interested in adopting Varonis SaaS over time? Or are they considering other vendors? I mean DSPM is a very hot space right now, right? Like is that playing into it at all? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 10, 2025 / 7:00PM, VRNS.OQ - Varonis Systems Inc at Barclays Global Technology Conference

Question: Saket Kalia - Barclays - Analyst : Got it. Understood. That's very helpful on the competitive win rates. And I do agree that this market does seem to be getting bigger. Guy, maybe the follow-up question here is, have you ever kind of talked about what percentage of the base is, quote, single-threaded? Like what's the risk that we kind of have as -- what percent of the base is on security, what percentage is single-threaded as we think about just what the incremental risk might be.

Question: Saket Kalia - Barclays - Analyst : That''s why I was smiling.

Question: Saket Kalia - Barclays - Analyst : Which then -- it makes a ton of sense because then presumably, that can give you a basis for modeling into '27, right? When 100% of the business will be SaaS, presumably. Very interesting. And that idea of kind of separating out the conversions, I think, would be very helpful for what it's worth. Brian, I want to move over to you for a second. I mean one of the pushbacks that I get sometimes is going back to sort of the DSPM market is, well, there's start-ups like Cyera that are doing really well, et cetera. And you talked about really the win rate not changing, but how much of that is a factor right now from just a competitive standpoint?

Question: Saket Kalia - Barclays - Analyst : I think the idea of being a security vendor versus a DSPM point solution is an interesting nuance. Guy, I want to kind of move beyond sort of last quarter's on-prem discussion and talk about that phaseout of on-prem in '26. One of the things that I think Varonis has done really well in the past not just through this transition, but prior transitions, has been sort of turning knobs a little bit, whether it's on pricing or if it's on sales force compensation to really bring about different behavior from your team as well as from customers. As you think about kind of that end of life for on-prem by the end of '26, open-ended question, are there any changes that you're making from a pricing or sales comp perspective ahead of that?

Question: Saket Kalia - Barclays - Analyst : There's an opportunity cost to that time, right?

Question: Saket Kalia - Barclays - Analyst : And that is the gift that keeps on giving, right, in terms of SaaS and lifetime value? That makes a ton of sense. We've focused so much on the different moving parts of that the ARR line, Brian, you brought up a couple of times just on one of the secular themes in data security, and that is how to secure data in an AI or a copilot driven world. So maybe for you, again, knowing how much time you spend with customers. How much is Varonis coming up in copilot discussions? And one of the questions I get sometimes is, Well, hey is Microsoft purview like a competitor or are they a friend here? Maybe address that as part of the answer.

Question: Saket Kalia - Barclays - Analyst : Got it. Maybe just to stay with you, Brian. I mean, I think there are some other -- and Guy brought up some acquisitions earlier, right? I think one of the areas that we've kind of entered is database activity monitoring, which I think came through the Cyral, is that right? The Cyral acquisition, as well as Varonis Interceptor, which I think came through the SlashNext acquisition. Maybe for -- because we -- I would say that certainly, I can tell maybe the question is who are you displacing in those instances for -- LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 10, 2025 / 7:00PM, VRNS.OQ - Varonis Systems Inc at Barclays Global Technology Conference

Question: Saket Kalia - Barclays - Analyst : Well, as I put myself into Guy's seat, I mean, that only helps support that net revenue retention on the SaaS side, right? And I talked about back to basics on that part of the business, so that certainly helps. Guy, maybe just to wrap up your last couple of questions. We talked so much about the ARR base and growth. I definitely want to hit on profitability as well because I think that's been great to see as part of the transition. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 10, 2025 / 7:00PM, VRNS.OQ - Varonis Systems Inc at Barclays Global Technology Conference And listen, we're seeing a little bit of compression in the ARR contribution margin this year for various reasons. But maybe you can talk about some of the puts and takes that are driving that? And how to think about that balance between growth and profitability from here, particularly in the context of some of your long-term targets?

Question: Saket Kalia - Barclays - Analyst : I go back to where we started, right, with two companies, two companies right now inside of Varonis, but really by the end of '26, that too goes down to one, right?

Question: Saket Kalia - Barclays - Analyst : I couldn't think of a better way to end than that. So Guy, Brian, thanks so much for the time.