Varonis Systems — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenues reached $189.5 million for the quarter ended September 30, 2026, compared to $161.6 million in the same period of 2025.
• SaaS revenues were $185.1 million, up from $125.8 million in the third quarter of 2025.
• Term license subscription revenues declined to $1.2 million from $24.8 million in the prior year period.
• Maintenance and services revenues decreased to $3.1 million from $10.9 million in the prior year period.
• GAAP operating loss was $47.7 million, widening from a $35.9 million loss in the third quarter of 2025.
• Non-GAAP operating income was $7.6 million, an improvement from $0.2 million in the third quarter of 2025.
• For the nine months ended September 30, 2026, total revenues were $542.6 million compared to $450.2 million in 2025.
• GAAP net loss for the nine months ended September 30, 2026, was $125.3 million, compared to $101.5 million in 2025.
• Non-GAAP net income for the nine months ended September 30, 2026, was $24.6 million, compared to $12.9 million in 2025.
• Cash and cash equivalents, short-term deposits, and marketable securities totaled $937.8 million as of September 30, 2026.
• Cash from operations for the nine months ended September 30, 2026, was $108.3 million, down from $122.7 million in the prior year period.
• Free cash flow for the nine months ended September 30, 2026, was $94.8 million, compared to $111.6 million in 2025.
• Adjusted free cash flow for the nine months ended September 30, 2026, was $108.2 million, compared to $113.4 million in 2025.
• Deferred revenues were $422.6 million as of September 30, 2026, down from $427.8 million as of December 31, 2025.
• Convertible senior notes, net, stood at $453.8 million as of September 30, 2026.

Guidance and Future Outlook:

• Varonis will not provide forward-looking guidance or updates to previously issued guidance due to the pending acquisition by Proofpoint.
• The company will not conduct an earnings conference call or webcast for its third quarter fiscal 2026 results.

Business Segments and Product Lines:

• SaaS ARR was $774.6 million as of the end of the third quarter, representing a 42% year-over-year increase.
• SaaS ARR excluding conversions increased 24% year-over-year.
• The decline in term license subscription and maintenance revenues is attributed to customers converting to the SaaS platform.

Market and Competitive Landscape:

• No specific market share, competitive landscape, or market trend data was provided in the press release.

Risks and Challenges:

• Risks include the potential failure to complete the Transaction with Proofpoint in a timely manner or at all.
• Risks include the failure to satisfy conditions to consummation, including stockholder adoption and regulatory approvals.
• Risks include the termination of the Merger Agreement, which could require the payment of a termination fee.
• Risks include the impact of the Transaction on business relationships, operating results, and the ability to attract, retain, and motivate employees.
• Risks include disruption to current plans and operations and the diversion of management's attention.
• Risks include adverse macroeconomic or labor market conditions, inflation, and geopolitical instability.
• Risks include the outcome of legal proceedings related to the Merger Agreement.
• Risks include unexpected costs, charges, or expenses resulting from the proposed Transaction.
• Risks include the ability to obtain necessary financing arrangements.

Management Commentary and Tone:

• No direct management commentary or quotes were included in the press release.
• The tone reflects a transition period driven by the pending acquisition, resulting in the suspension of standard guidance and conference call activities.

Other Key Points:

• Varonis is in a pending acquisition by Proofpoint, a portfolio company of Thoma Bravo, pursuant to an Agreement and Plan of Merger dated October 15, 2026.
• During the nine months ended September 30, 2026, the company spent $113.6 million on acquisitions, net of cash acquired.
• The company repurchased $135.0 million of common stock during the nine months ended September 30, 2026.
• Stock-based compensation expense for the nine months ended September 30, 2026, was $109.5 million.
• Amortization of acquired intangible assets and acquisition-related expenses for the nine months ended September 30, 2026, was $30.6 million.
• The company reported a net loss per share of $1.09 (GAAP) and net income per share of $0.21 (Non-GAAP) for the nine months ended September 30, 2026.