Varonis Systems Inc at Wells Fargo TMT Summit (Virtual) Transcript

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

Question: Andrew Nowinski - Wells Fargo - Analyst : Yes, my pleasure. Why don't we start by, Jamie, maybe you can recap some of the highlights from the Q3 earnings call and things you think investors should focus on as takeaways from that.

Question: Andrew Nowinski - Wells Fargo - Analyst : Okay, that was a good overview. I just want to follow up on one of your comments there about how Q4 guidance was the strongest since 2014, since going public. What do you think is the underlying driver of that? Because it seems like it's an inflection. I mean, coming off of a strong Q3 and I guess your strongest guidance since your IPO from the upcoming quarter, it seems like things may be certainly getting a lot better. Is there anything you can point to that might be causing that inflection?

Question: Andrew Nowinski - Wells Fargo - Analyst : Yes, that makes sense. It does seem like data is what every breach or every attack is going after ultimately, so it's -- protecting that data has to be a priority. And I guess that is a good segue into our next question. Maybe David or Jamie, I'm curious, a lot of people do these CIO surveys and we get an idea of where CIOs think they are spending and where they are prioritizing certain areas within security every year. Where do you think data protection or data management was in this year, in 2021, and where do you think it will be next year?

Question: Andrew Nowinski - Wells Fargo - Analyst : Yes, that was a good summary. Certainly, it seems like reducing the blast radius and being able to, like you said, monitor your data and how it's being used are obviously very important. And with ransomware attacks up about 10X from where they were last year at this point, it would be hard to believe that data protection and data management as a category wouldn't be a higher priority next year than it was this year. It just seems like the whole need for this type of solution is certainly increasing. Maybe we will shift gears and talk about your software license portfolio. You've got about 36 different licenses you offer now, and it sounds like you have done a lot of different use cases as you described in the last question there around compliance, threat detection, and reducing blast radius. I'm just wondering if you could give us an overview of maybe the most common licenses that customers typically purchase.

Question: Andrew Nowinski - Wells Fargo - Analyst : That was a great overview. So it sounds like, if I have it correct, SaaS and automation, just the transition to those from perpetual is really what got you to the starting point of having customers buy 5 to 6 licenses upfront. And I guess I wanted to drill down into the point of how it's easier to go from 5 to 10 licenses versus 2 to 5. Why is it that it would be easier? So they are seeing more value upfront now and that's why they add more additional licenses? Whereas when you're only running, call it, two licenses, they don't see the entire value of Varonis and weren't buying additional licenses? Is that what you're saying?

Question: Andrew Nowinski - Wells Fargo - Analyst : All right. That was a great overview. I guess it begs the question that if you have -- clearly you're providing a lot of value as it relates to providing more insight on identifying threats and where data is being used, and the threat landscape has clearly changed significantly with ramping up of ransomware. But if it really is easier for customers to basically double the number of licenses they're purchasing -- they have already purchased, and going into this double-digit range, I'm curious on the pricing of each license because I guess at a high level, the backdrop is really strong and you are seeing customers buying double the number of licenses. Shouldn't your revenue be growing faster than 20% then? So I would think it would be -- just curious if you could provide any color on what is the pricing you're getting per license? I mean, does that equate to a doubling of revenue if they double the number of licenses they are buying from you? 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 01, 2021 / 1:00PM, VRNS.OQ - Varonis Systems Inc at Wells Fargo TMT Summit (Virtual)

Question: Andrew Nowinski - Wells Fargo - Analyst : Yes. No, I think what I was referencing was if you look out over the next two years, the Street expectations for growth are in the low 20% range. I know you're going faster right now. But going forward, there's lower expectations for growth, but it sounds like given the market dynamics and some of what you are seeing as well from customers adding more licenses here, it certainly seems like you should be growing faster than what expectations are out there. We are running out of time. We only have got a few minutes left, but I want to touch on a few things really quick. Maybe competitively, there's been -- I'm just wondering if there's about any changes -- I guess I've seen CrowdStrike recently launched a product called FileVantage. It comes up a little bit in discussions. Just wondering -- it doesn't seem like it would be competitive to you, but curious if you could just comment on that solution up there. Are they entering the market? And then any other changes you're seeing competitively?

Question: Andrew Nowinski - Wells Fargo - Analyst : Okay, great. With the last minute here, maybe you guys could just close it out with any thoughts around $1 billion in ARR that you are -- I know it is a long-term target, but I'm wondering if you'd put any parameters around when you could potentially or when you think about Varonis reaching that target.

Question: Andrew Nowinski - Wells Fargo - Analyst : That's great summary. Thank you guys so much for the chat this morning, and it was a real pleasure speaking with both of you.