Varonis Announces Third Quarter 2019 Financial Results
Varonis Systems, Inc., a pioneer in data security and analytics, today announced results for the third quarter ended September 30, 2019.
Yaki Faitelson, Varonis CEO, said, “We are very pleased with our third-quarter results. Revenues of $65.6 million significantly exceeded the high end of our guidance, while we also saw an acceleration in our subscription model transition, with 74% of total license revenues from subscription products compared to our original expectation of 55%. The team is executing well, and our transition is almost complete.” Mr. Faitelson added, “We continue to see strong adoption by both new and existing customers as they seek to manage their sensitive data with Varonis’ Data Security Platform that reduces risk, detects and responds to threats, and improves regulatory compliance.”
“We are pleased to see our customers making larger investments that allow them to more quickly realize the value of the Varonis Data Security Platform. With our rapid transition to a subscription model, the underlying fundamentals of our business continue to strengthen,” said Guy Melamed, Varonis CFO and COO. “Our updated full-year guidance includes the third quarter revenues beat, offset by the headwind from the substantial increase in our fourth quarter subscription guidance mix to approximately 75% from 40%. Without this increase in subscription mix, we would have shown a meaningful raise to the fourth quarter and full-year guidance we provided last quarter.”
Financial Summary for the Third Quarter Ended September 30, 2019
- Subscription revenues were $23.3 million, or 74% of license revenues, compared with $2.5 million, or 7% of license revenues, in the third quarter of 2018.
- Maintenance and services revenues were $34.1 million, up 10% compared with the third quarter of 2018.
- Total revenues were $65.6 million, compared to $67.1 million in the third quarter of 2018, reflecting the accelerated transition to a subscription-based model and generating a higher-than-guided third-quarter subscription revenues mix.
- GAAP operating loss was ($16.0) million for the quarter, compared to ($6.8) million in the third quarter of 2018.
- Non-GAAP operating loss was ($4.7) million for the quarter, compared to non-GAAP operating income of $2.0 million in the third quarter of 2018.
- As of September 30, 2019, the Company had $131.4 million in cash and cash equivalents, marketable securities and short-term deposits.
- During the nine months ended September 30, 2019, the Company used ($10.7) million of cash from operations, compared to $16.3 million generated in the prior-year period, reflecting the accelerated transition to a subscription-based model.
The tables at the end of this press release include a reconciliation of GAAP to non-GAAP income (loss) from operations and net income (loss) for the three and nine months ended September 30, 2019, and 2018. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures and Key Performance Indicators."
Key Performance Indicators and Recent Business Highlights
- ARR, or annual recurring revenues, were $178.9 million at the end of the third quarter, up 52% over the prior-year period.
- Generated 50% of license and first-year maintenance revenues from existing customers and 50% from new customers in the third quarter of 2019, compared to 53% and 47%, respectively, in the prior-year period.
- Added 148 new customers during the third quarter of 2019 compared with 188 in the prior-year period.
- For the third quarter of 2019, total revenues in North America were $47.4 million, total revenues from EMEA were $16.7 million, and total revenues from Rest of World were $1.5 million.
- As of September 30, 2019, 75% of customers had purchased two or more product families, and 43% had purchased three or more product families, up from 72% and 39%, respectively, as of September 30, 2018.
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