Varonis Systems Inc at UBS Global Technology and AI Conference Transcript

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

Question: Roger Boyd - UBS - Analyst : Awesome. Before I get started, if you want to ask a question, there should be a QR code, you can use the app. I'm more than happy to weave into the conversation, but with that, I'll kick off the fire side. So, I think most investors are familiar but maybe it's helpful to start with kind of a brief overview of Veronis. And I think the story has changed a lot over the past years. Like what's, what's, what's been kind of the driving forces you think about like the last two years or so?

Question: Roger Boyd - UBS - Analyst : Makes sense. Let's talk about MDDR and I think if you look at kind of the changes that have been made to Veron over the past couple of years, a lot of it's been designed to help customers better, better use the platform, better adopt the platform. And I think MDDR is kind of the next step in that. So can you just talk about what that product actually does and how unique is that in the market is or anybody else doing any sort of managed data detection?

Question: Roger Boyd - UBS - Analyst : I think what I think about, many years back kind of on prem term license and like a lot of the pain points I would hear about was, it's hard to get it running. It takes time and maybe somewhat expensive. And, to your point now it feels like most new customers are picking it up. And it's that idea of you don't need to spend more on infrastructure, it runs in your, in your cloud. And you don't need someone to really learn the product because you're getting the information fed is that we're doing it for you.

Question: Roger Boyd - UBS - Analyst : Makes sense. You talked a little bit about the feedback and what, how it's showing up with new customers. Can you just remind us how do you expect to monetize this? I know there's a couple of different angles and the ultimate goal is to, to get broader platform adoption. But what have you said around kind of monetization? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 6:35PM, VRNS.OQ - Varonis Systems Inc at UBS Global Technology and AI Conference

Question: Roger Boyd - UBS - Analyst : Got it. Okay. You mentioned it earlier but I think the beginning of the year you launched additional support for some more structured data stores with snowflake and, and some others, I feel like that's been maybe under the radar. Can you just talk about what the customer reaction has been there? And what sense are you getting some momentum with that side of the business?

Question: Roger Boyd - UBS - Analyst : Got it. Okay. We're going to talk about generative A is that, of course we are I think on the, on the, on the 3Q call, you talked a little bit more about seeing a little more momentum with that and I'd love if you could just kind of high level parse out what your conversations with customers have kind of tracked as we look throughout the year. We are, we getting to a point where, there's a little more recognition around the security risk of the point of like co-pilot and just broadly, how are you thinking about generative AI as a talent from here?

Question: Roger Boyd - UBS - Analyst : Got it maybe specifically with Microsoft Co-Pilot. Can you talk about where you kind of fit into the customer journey there? And I think you talked about in some cases, there's customers that, that feel like they need to go to be before they deploy it, there's others that maybe deploy it and then later on realize that maybe exposing the network kind of what, where do you fit in those conversations and have those kind of changed as you've gone throughout the year.

Question: Roger Boyd - UBS - Analyst : Got you. Okay? I wanted to touch on the revenue transition and the conversions you're seeing. Can you just frame out what you've talked about in terms of the timeline to convert to SaaS and in many ways, it feels like you're tracking ahead of that. There's elements of phase two that are showing up now, kind of where, where are we today in that, in that transition?

Question: Roger Boyd - UBS - Analyst : Can you, can you just talk about how the conversion actually plays out and you think about some customers that would maybe be up for renewal and buy an incremental self hosted license. How does that kind of look if those customers want to go this fast? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 6:35PM, VRNS.OQ - Varonis Systems Inc at UBS Global Technology and AI Conference

Question: Roger Boyd - UBS - Analyst : How about from a sales perspective? And I know you have incentives for the sales force to push the fast product. But if I'm a sales person and I'm looking at a customer, how difficult is that conversion from that end.

Question: Roger Boyd - UBS - Analyst : One of, one of the stories this year has been the conversion of maintenance customers. And again, that's tracking well ahead of where you talked about in terms of the transition. But I think today still all those conversations are customer led. That's not something that's being incentivized through your sales force. And can you just talk about kind of the incentive for maintenance customer to move this fast? I think sometimes I get questions from investors about the rationale of why a customer has paid for a perpetual license would want to move over to fast.

Question: Roger Boyd - UBS - Analyst : And to that point, I mean, a lot of the new functionality is only available in the platform. How, I mean, how much do we look at? MDDR is kind of a driver of some of these maintenance conversions? Is that, is that a significant factor? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 6:35PM, VRNS.OQ - Varonis Systems Inc at UBS Global Technology and AI Conference

Question: Roger Boyd - UBS - Analyst : I wanted to touch a little bit on the competitive environment and a lot of investors recognize there's some level of overlap with Microsoft. Can you just talk about? I mean, I think the generative AI use cases an interesting kind of example of that. But where, where do you line up? And as Microsoft, as the Purview, I think they had a DSPM earlier this month or last month. Just kind of how that's kind of impacting your view of the competitive environment.

Question: Roger Boyd - UBS - Analyst : How about the broader competitive landscape around data security, foster management, DSPM year ago, there was 10 of these companies and they've all half of them have been acquired. And I look at my security coverage and a lot of companies are talking about data security. How do you think about DSPM, which I think is a feature on your platform as well. And, and the competitive landscape maybe opening.

Question: Roger Boyd - UBS - Analyst : I think that's a good point that the level of marketing and the level of interest around data security is kind of all time highs. And I think about Varonis five years ago, there was maybe more of an element of you needed to maybe evangelize and say a little bit come in, do the risk assessment, prove it out. Can you just talk about the level of evangel evangelization that still needs to be done or not? And just kind of broader budget availability? Like my impression from talking to customers and partners is that we're starting to see budget line items for data security. And I don't think that was the case.

Question: Roger Boyd - UBS - Analyst : Just another question budget availability. In what ways does the MDDR product change that? And you're not a managed security service provider, but there's a significant amount of customers relying on those vendors to help them. How does that maybe open up the budget for it?

Question: Roger Boyd - UBS - Analyst : I know you don't disclose the customer account number, but I know one of the focuses of the fast transition and, and now MDDR is to maybe pursue a broader cohort of customers that Varonis is typically looked at. Can you just talk about historically what, what an average bonus customer looks like? And with some of the new logos you're picking up and how much has that changed? Or, or maybe not.

Question: Roger Boyd - UBS - Analyst : I want to talk about DLP and I, you've been very clear in the past that what you do is not, not really DLP, I think some others in the industry have talked about DLP and SIM and data governance to some, some degree converging and there's been some acquisitions there how, how do you think about DLP versus what, what you do? Which I think is still fairly, fairly distinct.

Question: Roger Boyd - UBS - Analyst : Excellent. Maybe two more high level questions. You spend a lot of time talking to customers. What's what's your perception around just broader budget availability? And I know we've talked about data security kind of climbing the ranks in terms of priorities, but just a broader demand question. Like what, what are you seeing in terms of broader budget availability and speed of customers. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 6:35PM, VRNS.OQ - Varonis Systems Inc at UBS Global Technology and AI Conference

Question: Roger Boyd - UBS - Analyst : Maybe, maybe one or two more quick ones. Again, high level as we head into 2025 there's I think a lot of avenues for, for growth with MDDR generative AI continuation the, on the transition. But in your words, kind of what are you most excited about? What are customers excited about? And, and how should we think about kind of the puts and takes of next year?

Question: Roger Boyd - UBS - Analyst : And just to round it out. I mean, how do you think about routes to market? It sounds like again, relative to a few years ago, there's more coming to you. But as you think about channels, I know as your marketplace has been pretty influential for you, how do you think about how that could potentially change or build upon strength in the next year.

Question: Roger Boyd - UBS - Analyst : Awesome. I think that we'll do it. We'll wrap there and thank you all for joining. Thank you Brian for being here.