Varonis Systems VRNS
Varonis Systems reported a net loss of $41.65 million for Q3 2026.
- Form
- 10-Q
- Filed
- Importance
- Notable
- Accession
- 0001628280-26-070185
- Revenue was $189.46 million for the three months ended Sep 30, 2026.
- Diluted EPS was -$0.36 for the three months ended Sep 30, 2026.
- Cash and equivalents were $270.95 million as of Sep 30, 2026.
Written from the 10-Q on EDGAR. Check the filing before you rely on it.
What changed
13 changes since the June 2026 10-Q
Compared with the 10-Q 0001628280-26-050630, filed Jul 29, 2026.
Failure to complete, or delays in completing, the Merger could materially and adversely affect our business…
On October 15, 2026, we entered into the Merger Agreement with Parent and Merger Sub.
From the filings
Now
Failure to complete, or delays in completing, the Merger could materially and adversely affect our business, financial condition, results of operations, and stock price. On October 15, 2026, we entered into the Merger Agreement with Parent and Merger Sub. Completion of the Merger is subject to approval by our stockholders, receipt of required regulatory approvals and the satisfaction of other customary closing conditions in the Merger Agreement. The parties to the Merger Agreement may not receive the necessary approvals for the transaction or receive them within the expected timeframe. In addition, the Merger may fail to close for other reasons, and either we or Parent may terminate the Merger Agreement if the Merger is not consummated by July 15, 2027, subject to an automatic three-month extension under specified circumstances relating to required regulatory approvals. If the proposed Merger is delayed or not completed, we are subject to a number of risks, including: • our management will have devoted significant attention and resources to the Merger; • we could be subject to litigation related to any failure to complete the Merger; • if the Merger Agreement is terminated, under some circumstances, we may be required to pay a termination fee of $211.7 million; • if the Merger Agreement is terminated under circumstances in which Parent is required to pay us a reverse termination fee of $423.3 million, such fee, together with certain limited expense reimbursement and enforcement costs, generally will be our sole and exclusive monetary remedy against Parent and its related parties and may not be sufficient to compensate us for our losses; • we will remain liable for significant transaction costs, including legal, accounting, financial advisory and other costs relating to the Merger regardless of whether the Merger is consummated; • the price of our common stock may decline, including to the extent that the current market price of our common stock reflects an…Uncertainty about the Merger may adversely affect relationships with our employees, customers, partners and…
Uncertainty about the Merger and the effect of the Merger on customers, partners, suppliers, employees and other third parties who deal with us may have a material adverse effect on our business, results of operations…
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Uncertainty about the Merger may adversely affect relationships with our employees, customers, partners and suppliers, whether or not the Merger is completed. Uncertainty about the Merger and the effect of the Merger on customers, partners, suppliers, employees and other third parties who deal with us may have a material adverse effect on our business, results of operations, and financial condition. Such uncertainties may impair our ability to attract, retain, and motivate key personnel pending the consummation of the Merger, as such personnel may experience uncertainty about their future roles following the consummation of the Merger, creating distractions and thus resulting in a decline in their productivity. These uncertainties could also lead current and prospective customers and partners to purchase products and services from other providers or delay purchasing from us, which could have a material adverse effect on our business, results of operations, financial condition, and market price of our common stock. The Merger may also generate negative publicity and a negative impression of us in the financial markets, and may lead to litigation against us and our directors and officers. The pursuit of the Merger may place a significant burden on management and internal resources, which may have a negative impact on our ongoing business. It may also divert management's time and attention from the day-to-day operation of our remaining businesses and the execution of our other strategic initiatives. This could adversely affect our financial results.Any of the foregoing, individually or in combination, could materially and adversely affect our business…
Any of the foregoing, individually or in combination, could materially and adversely affect our business, our financial condition and our results of operations.
From the filings
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Any of the foregoing, individually or in combination, could materially and adversely affect our business, our financial condition and our results of operations.While the Merger is pending, we are subject to contractual restrictions and interim covenants that could…
The Merger Agreement generally requires us to operate our business in the ordinary course in all material respects, subject to certain exceptions, pending consummation of the Merger, and subjects us to customary…
From the filings
Now
While the Merger is pending, we are subject to contractual restrictions and interim covenants that could harm our business relationships, financial condition, results of operations, and business. The Merger Agreement generally requires us to operate our business in the ordinary course in all material respects, subject to certain exceptions, pending consummation of the Merger, and subjects us to customary interim operating covenants that restrict us from taking certain specified actions without Parent's approval until the Merger is consummated or the Merger Agreement is terminated in accordance with its terms, including, among other things, issuing or repurchasing equity securities; incurring debt; entering into, establishing, adopting, amending, modifying or terminating any employee benefit plan or certain contracts; increasing the compensation or employee benefits of certain employees, contractors or service providers or hiring or terminating certain employees, contractors or service providers; settling, releasing, waiving or compromising certain legal proceedings; materially changing our methods, principles or practices of financial accounting; and incurring certain capital expenditures. These restrictions could prevent us from pursuing certain business opportunities that may arise prior to the consummation of the Merger and may affect our ability to execute our business strategies and attain financial and other goals and may impact our financial condition, results of operations and cash flows. The Merger Agreement contains provisions that limit our ability to pursue alternatives to the Merger. Under the Merger Agreement, we are restricted from soliciting or engaging in discussions or negotiations with respect to any alternative acquisition proposal, subject to customary fiduciary exceptions. In addition, under certain circumstances, including if we terminate the Merger Agreement to enter into an agreement providing for a superior proposal or if Parent…The Merger will involve substantial costs.
The Company and Parent have incurred, and expect to continue to incur, a number of non-recurring costs associated with the proposed Merger, a substantial majority of which will consist of transaction and regulatory…
From the filings
Now
The Merger will involve substantial costs. The Company and Parent have incurred, and expect to continue to incur, a number of non-recurring costs associated with the proposed Merger, a substantial majority of which will consist of transaction and regulatory costs.Lawsuits may be filed against us and the members of our board of directors arising out of the Merger, which…
Stockholder complaints and other complaints may be filed against us, our board of directors, Parent, Parent's board of directors, and others in connection with the transactions contemplated by the Merger Agreement.
From the filings
Now
Lawsuits may be filed against us and the members of our board of directors arising out of the Merger, which may delay or prevent the Merger. Stockholder complaints and other complaints may be filed against us, our board of directors, Parent, Parent's board of directors, and others in connection with the transactions contemplated by the Merger Agreement. The outcome of litigation is uncertain, and we may not be successful in defending against any such claims. Such lawsuits could delay or prevent the Merger, divert the attention of our management and employees from our day-to-day business, result in substantial costs to us, and otherwise adversely affect our business, results of operations, and financial condition.New legal mention
The Merger is expected to close in the first half of 2027, subject to the satisfaction of customary closing conditions, including, but not limited to (i) approval by the holders of at least a majority in voting power…
From the filings
Now
The Merger is expected to close in the first half of 2027, subject to the satisfaction of customary closing conditions, including, but not limited to (i) approval by the holders of at least a majority in voting power of the outstanding Company shares entitled to vote thereon, (ii) the absence of any governmental entity issuing any order or other legal restraint that makes consummation of the Merger illegal or otherwise prohibited, (iii) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iv) the clearance or approval under certain specified foreign regulatory laws and (v) the absence of any Material Adverse Effect (as defined in the Merger Agreement) since the date of the Merger Agreement.New legal mention
On August 25, 2026, lead plaintiffs filed a motion to transfer the venue of this action from the Southern District of New York to the Southern District of Florida.
From the filings
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On August 25, 2026, lead plaintiffs filed a motion to transfer the venue of this action from the Southern District of New York to the Southern District of Florida.Cash up 16% from Jun 30
$271M, was $234M.
From the filings
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$234MNow
$271MEPS up 12% from Jun 30
−$0.36, was −$0.41.
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−$0.41Now
−$0.36Net income up 11% from Jun 30
−$41.6M, was −$46.8M.
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−$46.8MNow
−$41.6MRevenue up 5.2% from Jun 30
$189M, was $180M.
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$180MNow
$189MWe are subject to a number of legal requirements, contractual obligations and industry standards regarding…
Adds "In addition, regulatory frameworks governing artificial intelligence, automated…".
From the filings
Before
We are subject to a number of legal requirements, contractual obligations and industry standards regarding security, data protection and privacy, and any failure to comply with these requirements, obligations or standards could have an adverse effect on our reputation, business, financial condition and operating results. Privacy and data protection laws in the United States and internationally are rapidly evolving and remain subject to uncertainty. U.S. federal, state, and foreign authorities have enacted, and continue to consider, laws governing the collection, use, disclosure, storage, and security of personal information. In the United States, the California Consumer Privacy Act (CCPA) and the California Privacy Rights Act (CPRA) impose significant obligations on businesses and grant consumers enhanced rights, such as the ability to opt out of certain sales of personal information. In recent years, numerous U.S. states have enacted comprehensive privacy laws, and additional states continue to consider similar legislation. These laws generally impose obligations relating to the collection, use, disclosure, storage, security, and processing of personal information, provide consumers with enhanced rights regarding their personal data, and require businesses to implement specified data protection measures. Because these laws are not uniform and continue to evolve, they increase the complexity of the regulatory landscape and may increase our compliance costs, require changes to our business practices, products and services, and expose us to heightened regulatory, litigation, and reputational risks. Internationally, nearly every jurisdiction where we operate has established its own privacy and data security framework, often more restrictive than U.S. laws, governing the collection, use, storage, disclosure, and protection of data that identifies or could identify an individual (for example, names, email addresses, and, in some jurisdictions, IP addresses). The…Now
We are subject to a number of legal requirements, contractual obligations and industry standards regarding security, data protection and privacy, and any failure to comply with these requirements, obligations or standards could have an adverse effect on our reputation, business, financial condition and operating results. Privacy and data protection laws in the United States and internationally are rapidly evolving and remain subject to uncertainty. U.S. federal, state, and foreign authorities have enacted, and continue to consider, laws governing the collection, use, disclosure, storage, and security of personal information. In the United States, the California Consumer Privacy Act (CCPA) and the California Privacy Rights Act (CPRA) impose significant obligations on businesses and grant consumers enhanced rights, such as the ability to opt out of certain sales of personal information. In recent years, numerous U.S. states have enacted comprehensive privacy laws, and additional states continue to consider similar legislation. These laws generally impose obligations relating to the collection, use, disclosure, storage, security, and processing of personal information, provide consumers with enhanced rights regarding their personal data, and require businesses to implement specified data protection measures. Because these laws are not uniform and continue to evolve, they increase the complexity of the regulatory landscape and may increase our compliance costs, require changes to our business practices, products and services, and expose us to heightened regulatory, litigation, and reputational risks. Internationally, nearly every jurisdiction where we operate has established its own privacy and data security framework, often more restrictive than U.S. laws, governing the collection, use, storage, disclosure, and protection of data that identifies or could identify an individual (for example, names, email addresses, and, in some jurisdictions, IP addresses). The…
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Section by section. Added words and removed words against the earlier filing.
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For the quarterly period ended June September 30, 2026
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As of July 24, October 30, 2026, there were 114,860,485 115,298,568 shares of common stock, par value $0.001 per share, outstanding.
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Financial statements 322 changes
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Marketable securities 426,474 681,225
June September 30, 2026 December 31, 2025
Cash and cash equivalents $ 233,643 270,954 $ 202,482
Marketable securities 322,713 681,225
Short-term deposits 38,149 37,775 37,259
Accounts receivable (net of allowances of $ 1,458 1,787 and $ 1,260 at June September 30, 2026 and December 31, 2025, respectively)
Prepaid expenses and other short-term assets 147,790 121,898 134,767
Total current assets 996,952 920,378 1,298,555
Long-term marketable securities 213,260 306,342 187,202
Operating lease right-of-use assets 61,826 62,113 57,677
Property and equipment, net 40,314 38,753 36,032
Intangible assets, net 56,006 53,600 16,687
1 unchanged paragraph
Other assets 70,955 70,680 60,183
Total long-term assets 657,443 746,570 493,057
Total assets $ 1,654,395 1,666,948 $ 1,791,612
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Trade payables $ 12,328 $ 5,735
Deferred revenues 420,198 427,811
Trade payables $ 8,677 $ 5,735
Accrued expenses and other short-term liabilities 173,413 195,992 225,411
Deferred revenues 422,646 427,811
Total current liabilities 605,939 627,315 658,957
1 unchanged paragraph
Deferred revenues 15,368 14,406
Other liabilities 72,463 7,585
Convertible senior notes, net 453,278 453,792 452,259
Operating lease liabilities 62,854 60,513 59,749
Deferred revenues 16,363 14,406
Other liabilities 75,058 7,585
Total long-term liabilities 603,963 605,726 533,999
1 unchanged paragraph
Accumulated deficit ( 953,142 ) ( 869,479 )
Common stock of $ 0.001 par value - Authorized: 200,000,000 shares at June September 30, 2026 and December 31, 2025; Issued and outstanding: 114,853,875 115,298,568 shares at June September 30, 2026 and 117,546,852 shares at December 31, 2025
Accumulated other comprehensive income 27,159 13,038 23,132
Additional paid-in capital 1,370,361 1,415,544 1,444,885
Accumulated deficit ( 994,790 ) ( 869,479 )
Total stockholders' equity 444,493 433,907 598,656
Total liabilities and stockholders' equity $ 1,654,395 1,666,948 $ 1,791,612
4 unchanged paragraphs
June 30, Six Months Ended
SaaS $ 171,727 $ 105,895 $ 332,792 $ 194,455
Term license subscriptions 4,162 32,374 11,058 63,862
Maintenance and services 4,134 13,894 9,299 30,269
Total revenues 180,023 152,163 353,149 288,586
Cost of revenues 44,512 31,249 86,082 60,267
Gross profit 135,511 120,914 267,067 228,319
Research and development 73,339 56,247 143,100 110,457
Sales and marketing 78,978 76,578 159,314 149,341
General and administrative 23,825 24,641 49,765 48,839
Total operating expenses 176,142 157,466 352,179 308,637
Operating loss ( 40,631 ) ( 36,552 ) ( 85,112 ) ( 80,318 )
Financial income (expense), net ( 763 ) 4,967 3,683 16,918
Loss before income taxes ( 41,394 ) ( 31,585 ) ( 81,429 ) ( 63,400 )
Provision for income taxes ( 5,415 ) ( 4,239 ) ( 2,234 ) ( 8,207 )
Net loss $ ( 46,809 ) $ ( 35,824 ) $ ( 83,663 ) $ ( 71,607 )
September 30, Nine Months Ended
SaaS $ 185,120 $ 125,824 $ 517,912 $ 320,279
Term license subscriptions 1,217 24,812 12,275 88,674
Maintenance and services 3,124 10,941 12,423 41,210
Total revenues 189,461 161,577 542,610 450,163
Cost of revenues 46,890 35,149 132,972 95,416
Gross profit 142,571 126,428 409,638 354,747
Research and development 78,668 62,737 221,768 173,194
Sales and marketing 80,943 74,025 240,257 223,366
General and administrative 30,674 25,600 80,439 74,439
Total operating expenses 190,285 162,362 542,464 470,999
Operating loss ( 47,714 ) ( 35,934 ) ( 132,826 ) ( 116,252 )
Financial income, net 9,188 7,806 12,871 24,724
Loss before income taxes ( 38,526 ) ( 28,128 ) ( 119,955 ) ( 91,528 )
Provision for income taxes ( 3,122 ) ( 1,814 ) ( 5,356 ) ( 10,021 )
Net loss $ ( 41,648 ) $ ( 29,942 ) $ ( 125,311 ) $ ( 101,549 )
Net loss per share of common stock, basic and diluted $ ( 0.41 0.36 ) $ ( 0.32 0.26 ) $ ( 0.73 1.09 ) $ ( 0.64 0.90 )
Weighted average number of shares used in computing net loss per share of common stock, basic and diluted 114,818,267 112,054,715 115,300,485 112,347,961 114,998,580 114,974,455 115,198,744 113,254,510
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June 30, Six Months Ended
Net loss $ ( 46,809 ) $ ( 35,824 ) $ ( 83,663 ) $ ( 71,607 )
September 30, Nine Months Ended
Net loss $ ( 41,648 ) $ ( 29,942 ) $ ( 125,311 ) $ ( 101,549 )
1 unchanged paragraph
Income (loss) on derivative instruments reclassified into earnings, net of tax 7,596 ( 1,337 ) 13,502 ( 1,999 )
Total other comprehensive income 6,630 15,659 4,027 11,821
Comprehensive loss $ ( 40,179 ) $ ( 20,165 ) $ ( 79,636 ) $ ( 59,786 )
Unrealized income (loss) on marketable securities, net of tax ( 916 3,081 ) 46 837 ( 2,604 5,685 ) 2,477 3,314
Income (loss) on marketable securities reclassified into earnings, net of tax 10 — 123 — 47 ( 161 )
Unrealized income (loss) on derivative instruments, net of tax ( 60 17,383 ) 17,073 523 ( 6,918 24,301 ) 11,504 12,027
Income on derivative instruments reclassified into earnings, net of tax 6,343 2,525 19,845 526 ( 11,040 ) 3,048 ( 4,456 ) 12,553
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and 242 more changes in the filing
Forward-looking statements 231 changes
1 unchanged paragraph
On October 15, 2026, we entered into the Merger Agreement with Parent, an affiliate of funds advised by Thoma Bravo, L.P., and Merger Sub. If the Merger is consummated, our stockholders will be entitled to receive $49.75 in cash, without interest, for each share of our common stock they hold as of immediately prior to the Effective Time of the Merger, other than certain excluded shares. The Merger is expected to close in the first half of 2027, subject to approval by our stockholders, receipt of required regulatory approvals and the satisfaction of other customary closing conditions. See "Merger Agreement" within Note 1 "General" of our condensed consolidated financial statements for information regarding the Merger.
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Our go-to-market model is channel-led and enterprise-focused. We sell through channel partners, including distributors and resellers, which sell to end-user customers, which we refer to in this report as our customers. We believe that our sales model, which combines the leverage of a channel sales model with our highly trained and professional sales force, has and will continue to play a major role in our ability to grow and to successfully deliver our unique value proposition for enterprise data. While our products serve customers of all sizes, across industries and across geographies, the marketing focus and majority of our sales focus is on targeting larger organizations who can make sizable initial purchases with us and, over time, have a greater potential lifetime value. Our customers span leading organizations across financial services, public, healthcare, industrial, insurance, energy and utilities, technology, construction and engineering, education and consumer and retail sectors. Our sales motion leads with a rapid risk assessment that surfaces immediate, high-priority exposure – typically within days of deployment – creating a clear and urgent case for expansion. Our SaaS renewal rate is over 90% for the six nine months ended June September 30, 2026.
We believe there is a significant long-term growth opportunity in both domestic and international markets. Any organization that stores data in SaaS applications, IaaS environments, databases, file shares, email systems, or AI platforms is a potential customer. As enterprises accelerate AI adoption, the need to govern, secure, and monitor the data those systems touch will only grow. We believe Varonis is uniquely positioned to meet that demand – not as a company adapting to the AI era, but as one built for it. For the three and six nine months ended June September 30, 2026, approximately 72% of our revenues were derived from the United States, while approximately 20% of our revenues were derived from EMEA and approximately 8% from ROW. Additionally, despite the revenue recognition variations from the accounting treatment associated with existing customer conversions to SaaS, total revenues still grew approximately 22% 21% for the six nine months ended June September 30, 2026, compared with the six nine months ended June September 30, 2025. We continue to expect expansion in both domestic and international markets to be key components of our long-term growth strategy. Over the last few years, we have seen changes in customer buying patterns including some budgetary tightening and additional scrutiny on enterprise spending as a result of a higher inflation and interest rate environment.
1 unchanged paragraph
Since inception, we have continued to scale our business and execute on strategic initiatives which we believe have positioned us for durable long-term growth. During the three and six nine months ended June September 30, 2026, we have continued to grow our revenues despite revenue recognition accounting treatment variations associated with existing customer conversions to SaaS. For the three months ended June September 30, 2026 and 2025, SaaS revenues were $171.7 $185.1 million and $105.9 $125.8 million, respectively. For the six nine months ended June September 30, 2026 and 2025, SaaS revenues were $332.8 $517.9 million and $194.5 $320.3 million, respectively. For the three months ended June September 30, 2026 and 2025, our total revenues were $180.0 $189.5 million and $152.2 $161.6 million, respectively. For the six nine months ended June September 30, 2026 and 2025, our total revenues were $353.1 $542.6 million and $288.6 $450.2 million, respectively. For the three months ended June September 30, 2026 and 2025, we have operating losses of $40.6 $47.7 million and $36.6 $35.9 million and net losses of $46.8 $41.6 million and $35.8 $29.9 million, respectively. For the six nine months ended June September 30, 2026 and 2025, we have operating losses of $85.1 $132.8 million and $80.3 $116.3 million and net losses of $83.7 $125.3 million and $71.6 $101.5 million, respectively.
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As of June September 30, 2026 and 2025, SaaS ARR was $726.0 $774.6 million and $478.3 $546.1 million, respectively, an increase of 52% 42% period over period. The annualized value of contracts is a legal and contractual determination made by assessing the contractual terms with our customers. The annualized value of these contracts is not determined by reference to historical revenues, deferred revenues or any other GAAP financial measure over any period. SaaS ARR is not a forecast of future revenues and can be impacted by contract start and end dates and renewal rates. We expect SaaS ARR to continue to increase in absolute dollars.
1 unchanged paragraph
As we have completed our SaaS transition and announced the end-of-life of our self-hosted business by the end of 2026, the historical renewal rate disclosure has been replaced by the SaaS renewal rate which is over 90% for the six nine months ended June September 30, 2026. In addition, throughout 2026, we will also be disclosing SaaS ARR excluding conversions which excludes SaaS ARR associated with self-hosted customers converting to SaaS over the trailing twelve months. As of June September 30, 2026, SaaS ARR excluding conversions was $598.1 $674.6 million, an increase of 25% 24% compared to June September 30, 2025 SaaS ARR. We expect SaaS ARR excluding conversions to increase in absolute dollars. These additional performance metrics align with our new business model and how management views the business.
1 unchanged paragraph
Remaining performance obligations ("RPO") represent contracted revenues that have not yet been recognized, which includes deferred revenues and non-cancelable amounts that will be invoiced in the future. Our RPO was $1,084.5 $1,127.6 million as of June September 30, 2026 and we expect RPO to increase in absolute dollars.
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Our SaaS renewal rate for each of the six nine months ended June September 30, 2026 and 2025 is over 90%. We measure the SaaS renewal rate for our customers over a 12-month period, based on a dollar renewal rate for SaaS contracts expiring during that time period. The expected increase in SaaS revenues, combined with the timing of conversions and renewals, as well as conversion and renewal rates, may result in significant variation in the revenues we recognize in a given period. We expect term license subscription revenues and perpetual license revenues, including the associated maintenance and support related to perpetual licenses, to continue to decline.
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June 30, Six Months Ended
September 30, Nine Months Ended
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SaaS 95.4 % 69.6 % 94.3 % 67.4 %
Term license subscriptions 2.3 21.3 3.1 22.1
Maintenance and services 2.3 9.1 2.6 10.5
SaaS 97.7 % 77.9 % 95.4 % 71.1 %
Term license subscriptions 0.6 15.3 2.3 19.7
Maintenance and services 1.7 6.8 2.3 9.2
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Gross profit is total revenues less total cost of revenues. Gross margin is gross profit expressed as a percentage of total revenues. As the majority of our expenses are relatively fixed quarter over quarter and due to the seasonality of our business, the first quarter typically results in the lowest gross margin as our first quarter revenues have historically been the lowest for the year. Conversely, the fourth quarter typically results in the highest gross margin as our fourth quarter revenues have historically been the highest for the year. We have seen the impact of these seasonal patterns, due to differences in revenue recognition accounting treatment, decline in 2025 and during the six nine months ended June September 30, 2026 and we expect it to continue to decline, as we seek to sell more of our SaaS offering to customers and complete the end-of-life of our self-hosted business.
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Comparison of the Three Months Ended June September 30, 2026 and 2025
The following tables are a summary of our condensed consolidated statements of operations for the three months ended June September 30, 2026 and 2025 in dollars and as a percentage of our total revenues.
1 unchanged paragraph
SaaS $ 171,727 $ 105,895
Term license subscriptions 4,162 32,374
Maintenance and services 4,134 13,894
Total revenues 180,023 152,163
Cost of revenues 44,512 31,249
Gross profit 135,511 120,914
Research and development 73,339 56,247
Sales and marketing 78,978 76,578
General and administrative 23,825 24,641
Total operating expenses 176,142 157,466
Operating loss (40,631) (36,552)
Financial income (expense), net (763) 4,967
Loss before income taxes (41,394) (31,585)
Provision for income taxes (5,415) (4,239)
Net loss $ (46,809) $ (35,824)
SaaS $ 185,120 $ 125,824
Term license subscriptions 1,217 24,812
Maintenance and services 3,124 10,941
Total revenues 189,461 161,577
Cost of revenues 46,890 35,149
Gross profit 142,571 126,428
Research and development 78,668 62,737
Sales and marketing 80,943 74,025
General and administrative 30,674 25,600
Total operating expenses 190,285 162,362
Operating loss (47,714) (35,934)
Financial income, net 9,188 7,806
Loss before income taxes (38,526) (28,128)
Provision for income taxes (3,122) (1,814)
Net loss $ (41,648) $ (29,942)
2 unchanged paragraphs
Term license subscriptions 2.3 21.3
Maintenance and services 2.3 9.1
Term license subscriptions 0.6 15.3
Maintenance and services 1.7 6.8
1 unchanged paragraph
Research and development 40.8 37.0
Sales and marketing 43.9 50.3
Total operating expenses 97.9 103.5
Operating loss (22.6) (24.0)
Financial income (expense), net (0.4) 3.3
Loss before income taxes (23.0) (20.7)
Provision for income taxes (3.0) (2.8)
Net loss (26.0) % (23.5) %
SaaS $ 171,727 $ 105,895 62.2 %
Term license subscriptions 4,162 32,374 (87.1) %
Maintenance and services 4,134 13,894 (70.2) %
Total revenues $ 180,023 $ 152,163 18.3 %
Cost of revenues 24.7 20.5 21.8
Gross profit 75.3 79.5 78.2
Research and development 41.5 38.8
Sales and marketing 42.8 45.8
General and administrative 13.2 16.2 15.8
Total operating expenses 100.5 100.4
Operating loss (25.2) (22.2)
Financial income, net 4.9 4.8
Loss before income taxes (20.3) (17.4)
Provision for income taxes (1.7) (1.1)
Net loss (22.0) % (18.5) %
SaaS $ 185,120 $ 125,824 47.1 %
Term license subscriptions 1,217 24,812 (95.1) %
Maintenance and services 3,124 10,941 (71.4) %
Total revenues $ 189,461 $ 161,577 17.3 %
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2 unchanged paragraphs
1 unchanged paragraph
7 unchanged paragraphs
2 unchanged paragraphs
1 unchanged paragraph
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and 151 more changes in the filing
Market risk 2 changes
3 unchanged paragraphs
Approximately one fifth of our revenues for the three months ended June September 30, 2026 were earned in non-U.S. dollar denominated currencies, mainly in the euro and pound sterling. Our expenses are generally denominated in the currencies in which our operations are located, primarily the U.S. dollar and new Israeli shekel, and to a lesser extent the euro, pound sterling, Canadian dollar, Australian dollar, Singapore dollar, Indian rupee, Japanese yen and Polish zloty. Our expenses denominated in foreign currencies consist primarily of personnel and overhead costs from our international operations. Our condensed consolidated results of operations and cash flow are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. We enter into financial hedging strategies to reduce our exposure to foreign currency rate changes. During 2026, the effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business, after considering foreign currency hedges, would not have had a material impact on our condensed consolidated financial statements.
2 unchanged paragraphs
As of June September 30, 2026, we have cash and cash equivalents, short-term marketable securities and short-term deposits of $698.3 $631.4 million and investments in long-term marketable securities of $213.3 $306.3 million. We hold our cash and cash equivalents, short-term marketable securities and short-term deposits for working capital purposes. We do not enter into marketable security investments for trading or speculative purposes.
3 unchanged paragraphs
Controls and procedures 1 change
3 unchanged paragraphs
There was no change in our internal control over financial reporting that occurred during the three months ended June September 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
1 unchanged paragraph
Risk factors 37 changes
1 unchanged paragraph
• failure to complete, or delays in completing, the Merger could materially and adversely affect our business, financial condition, results of operations, and stock price;
• uncertainty about the Merger may adversely affect relationships with our customers, partners, suppliers, and employees, whether or not the Merger is completed;
22 unchanged paragraphs
Risks Related to the Merger
Failure to complete, or delays in completing, the Merger could materially and adversely affect our business, financial condition, results of operations, and stock price.
On October 15, 2026, we entered into the Merger Agreement with Parent and Merger Sub. Completion of the Merger is subject to approval by our stockholders, receipt of required regulatory approvals and the satisfaction of other customary closing conditions in the Merger Agreement. The parties to the Merger Agreement may not receive the necessary approvals for the transaction or receive them within the expected timeframe. In addition, the Merger may fail to close for other reasons, and either we or Parent may terminate the Merger Agreement if the Merger is not consummated by July 15, 2027, subject to an automatic three-month extension under specified circumstances relating to required regulatory approvals. If the proposed Merger is delayed or not completed, we are subject to a number of risks, including:
• our management will have devoted significant attention and resources to the Merger;
• we could be subject to litigation related to any failure to complete the Merger;
• if the Merger Agreement is terminated, under some circumstances, we may be required to pay a termination fee of $211.7 million;
• if the Merger Agreement is terminated under circumstances in which Parent is required to pay us a reverse termination fee of $423.3 million, such fee, together with certain limited expense reimbursement and enforcement costs, generally will be our sole and exclusive monetary remedy against Parent and its related parties and may not be sufficient to compensate us for our losses;
• we will remain liable for significant transaction costs, including legal, accounting, financial advisory and other costs relating to the Merger regardless of whether the Merger is consummated;
• the price of our common stock may decline, including to the extent that the current market price of our common stock reflects an assumption that the Merger and the other transactions contemplated by the Merger Agreement will be consummated without delays, which could have a material adverse effect on our business, results of operations, and financial condition.
If any of these effects were to occur, it could adversely impact our business, results of operations, financial condition or cash flow, as well as the market price of our common stock and our perceived value, regardless of whether the Merger is completed.
Uncertainty about the Merger may adversely affect relationships with our employees, customers, partners and suppliers, whether or not the Merger is completed.
Uncertainty about the Merger and the effect of the Merger on customers, partners, suppliers, employees and other third parties who deal with us may have a material adverse effect on our business, results of operations, and financial condition. Such uncertainties may impair our ability to attract, retain, and motivate key personnel pending the consummation of the Merger, as such personnel may experience uncertainty about their future roles following the consummation of the Merger, creating distractions and thus resulting in a decline in their productivity.
These uncertainties could also lead current and prospective customers and partners to purchase products and services from other providers or delay purchasing from us, which could have a material adverse effect on our business, results of operations, financial condition, and market price of our common stock. The Merger may also generate negative publicity and a negative impression of us in the financial markets, and may lead to litigation against us and our directors and officers.
The pursuit of the Merger may place a significant burden on management and internal resources, which may have a negative impact on our ongoing business. It may also divert management's time and attention from the day-to-day operation of our remaining businesses and the execution of our other strategic initiatives. This could adversely affect our financial results.
Any of the foregoing, individually or in combination, could materially and adversely affect our business, our financial condition and our results of operations.
While the Merger is pending, we are subject to contractual restrictions and interim covenants that could harm our business relationships, financial condition, results of operations, and business.
The Merger Agreement generally requires us to operate our business in the ordinary course in all material respects, subject to certain exceptions, pending consummation of the Merger, and subjects us to customary interim operating covenants that restrict us from taking certain specified actions without Parent's approval until the Merger is consummated or the Merger Agreement is terminated in accordance with its terms, including, among other things, issuing or repurchasing equity securities; incurring debt; entering into, establishing, adopting, amending, modifying or terminating any employee benefit plan or certain contracts; increasing the compensation or employee benefits of certain employees, contractors or service providers or hiring or terminating certain employees, contractors or service providers; settling, releasing, waiving or compromising certain legal proceedings; materially changing our methods, principles or practices of financial accounting; and incurring certain capital expenditures. These restrictions could prevent us from pursuing certain business opportunities that may arise prior to the consummation of the Merger and may affect our ability to execute our business strategies and attain financial and other goals and may impact our financial condition, results of operations and cash flows.
The Merger Agreement contains provisions that limit our ability to pursue alternatives to the Merger.
Under the Merger Agreement, we are restricted from soliciting or engaging in discussions or negotiations with respect to any alternative acquisition proposal, subject to customary fiduciary exceptions. In addition, under certain circumstances, including if we terminate the Merger Agreement to enter into an agreement providing for a superior proposal or if Parent terminates the Merger Agreement because our board of directors adversely changes its recommendation in favor of the Merger, we would be required to pay Parent a termination fee of $211.7 million. These provisions could discourage a third party that may have an interest in acquiring all or a significant part of our business from considering or proposing an acquisition, even if such third party were prepared to pay consideration with a higher value than the value of the consideration provided for in the Merger Agreement.
The Merger will involve substantial costs.
The Company and Parent have incurred, and expect to continue to incur, a number of non-recurring costs associated with the proposed Merger, a substantial majority of which will consist of transaction and regulatory costs.
Lawsuits may be filed against us and the members of our board of directors arising out of the Merger, which may delay or prevent the Merger.
Stockholder complaints and other complaints may be filed against us, our board of directors, Parent, Parent's board of directors, and others in connection with the transactions contemplated by the Merger Agreement. The outcome of litigation is uncertain, and we may not be successful in defending against any such claims. Such lawsuits could delay or prevent the Merger, divert the attention of our management and employees from our day-to-day business, result in substantial costs to us, and otherwise adversely affect our business, results of operations, and financial condition.
26 unchanged paragraphs
Certain U.S. and international laws also require companies to notify individuals of security breaches involving personal information, whether caused by us or our service providers. Despite contractual protections, a breach could harm our reputation, erode customer trust, reduce sales, lead to customer loss, and expose us to liability or significant remediation costs. Beyond government regulation, privacy advocates and industry groups may introduce new self‑regulatory standards that could apply to us. We also anticipate continued legislative and regulatory developments in privacy, data protection, and information security, the impact of which remains uncertain. In addition, regulatory frameworks governing artificial intelligence, automated decision-making, and the use of data in connection with AI systems are rapidly evolving in the United States, Europe, the United Kingdom, and other jurisdictions. These requirements may impose additional compliance obligations, restrict certain product functionality, increase costs, or result in regulatory investigations, enforcement actions or litigation. New laws, amendments, or reinterpretations of existing requirements—as well as evolving industry standards and contractual obligations—may increase compliance costs and restrict our operations. Because interpretation and enforcement of these requirements are uncertain, they may conflict with our current practices or product features. If so, we could face fines, litigation, or be required to make fundamental changes to our business or software, which may not be commercially feasible and could limit our ability to innovate. Failure to adequately address privacy concerns—whether valid or perceived—or to comply with applicable requirements could result in additional costs, liability, reputational harm, inhibited sales, and other adverse effects on our business.
65 unchanged paragraphs
We have incurred net losses in each year since our inception, including a net loss of $83.7 $125.3 million for the six nine months ended June September 30, 2026 and net losses of $129.3 million and $95.8 million in each of the years ended December 31, 2025 and 2024, respectively. Because the market for our software is rapidly evolving and has still not yet reached widespread adoption, it is difficult for us to predict our future results of operations. We expect our operating expenses to increase over the next several years as we hire additional personnel, expand and improve the effectiveness of our distribution channels, and continue to develop features and applications for our software.
1 unchanged paragraph
We rely on channel partners, such as distribution partners and resellers, to sell the Varonis Data Security Platform. In 2025 and for the six nine months ended June September 30, 2026, our channel partners fulfilled substantially all of our sales, and we expect that sales to channel partners will continue to account for substantially all of our revenues for the foreseeable future. Our ability to achieve revenue growth in the future will depend in part on our success in maintaining successful relationships with our channel partners.
3 unchanged paragraphs
Historically, we have generated the majority of our revenues from customers in the United States. For the year ended December 31, 2025 and for the six nine months ended June September 30, 2026, approximately 71% and 72%, respectively, of our total revenues were derived from sales in the United States. Nevertheless, we have operations across the globe, and we plan to continue to expand our international operations as part of our long-term growth strategy. The further expansion of our international operations will subject us to a variety of risks and challenges, including:
80 unchanged paragraphs
Our business relies on our customers' satisfaction with the technical support, customer success and professional services we provide to support our products. Our customers have no obligation to renew their agreements with us after the initial terms have expired. Our customers have an option to renew their agreements and, for us to maintain and improve our results of operations, it is important that our existing customers renew their agreements, if applicable, when the existing contract term expires. For example, our SaaS renewal rate for the six nine months ended June September 30, 2026 and 2025 is over 90%.
15 unchanged paragraphs
As of June September 30, 2026, we have 130 134 issued patents in the United States and 68 70 pending U.S. patent applications. We also have 58 patents issued and 97 123 applications pending for examination in non-U.S. jurisdictions, and 30 25 pending PCT patent applications, all of which are counterparts of our U.S. patent applications. We may file additional patent applications in the future. The process of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner all the way through to the successful issuance of a patent. We may choose not to seek patent protection for certain innovations and may choose not to pursue patent protection in certain jurisdictions. Furthermore, it is possible that our patent applications may not issue as granted patents, that the scope of our issued patents will be insufficient or not have the coverage originally sought, that our issued patents will not provide us with any competitive advantages, and that our patents and other intellectual property rights may be challenged by others or invalidated through administrative process or litigation. In addition, issuance of a patent does not guarantee that we have an absolute right to practice the patented invention. Our policy is to require our employees (and our consultants and service providers that develop intellectual property included in our products) to execute written agreements in which they assign to us their rights in potential inventions and other intellectual property created within the scope of their employment (or, with respect to consultants and service providers, their engagement to develop such intellectual property). However, we may not be able to adequately protect our rights in every such agreement or execute an agreement with every such party. Finally, in order to benefit from patent and other intellectual property protection, we must monitor, detect and pursue infringement claims in certain circumstances in relevant jurisdictions, all of which is costly and time-consuming. As a result, we may not be able to obtain adequate protection or to enforce our issued patents or other intellectual property effectively.
13 unchanged paragraphs
We are also subject to the regular examination of our income tax returns by the U.S. Internal Revenue Services Service and other tax authorities in various jurisdictions. Tax authorities may disagree with our intercompany charges, cross-jurisdictional transfer pricing, IP structure or other matters and assess additional taxes. While we believe that we are currently in material compliance with our obligations under applicable taxing regimes, and regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes, there can be no assurance that the outcomes from these regular examinations will not have a material adverse effect on our results of operations and cash flows.
3 unchanged paragraphs
On December 22, 2017, the Tax Cuts and Jobs Act (the "TCJA") was enacted. The TCJA remains unclear in some respects and has been, and may continue to be, subject to amendments and technical corrections, as well as interpretations and implementing regulations by the Treasury and Internal Revenue Service, any of which could lessen or increase certain adverse impacts of TCJA. Effective in July 2025, the TCJA, as revised by the OBBBA, requires all U.S. companies to capitalize and subsequently amortize research and development expenses that fall within the scope of Section 174 over fifteen years for research and development activities conducted outside of the U.S. As of the second third quarter of 2026, we have accounted for an estimate of the effects of the research and development capitalization, based on interpretation of the law as currently enacted. Once our available NOLs or tax credits are fully utilized, then, due to the capitalization of research and development expenses for those activities conducted outside of the U.S., we would incur a significant increase in our tax expenses and a decrease in our cash flows provided by operations.
3 unchanged paragraphs
In September 2024, we issued the 2029 Notes. As of June September 30, 2026, we have $460.0 million outstanding aggregate principal amount of the 2029 Notes. Our indebtedness may limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general business purposes, limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general business purposes, require us to use a substantial portion of our cash flow from operations to make debt service payments, limit our flexibility to plan for, or react to, changes in our business and industry, place us at a competitive disadvantage compared to our less leveraged competitors and increase our vulnerability to the impact of adverse economic and industry conditions.
21 unchanged paragraphs
Our Israeli subsidiary has benefited from a status of a "Beneficiary Enterprise" under the Israeli Law for the Encouragement of Capital Investments, 5719-1959, or the Investment Law, since its incorporation. As of June September 30, 2026, the tax benefit that we have been utilizing for our Israeli subsidiary terminated. A tax rate of 16% should be paid by our Israeli subsidiary per such eligible income under the terms of the Investment Law, subject to meeting various conditions. To the extent we do not meet these conditions, our Israeli operations will be subject to a corporate tax at the standard rate of 23%. If the Israeli subsidiary is subject to a corporate tax at the standard rate, it may adversely affect our tax expenses and effective tax rates. Additionally, if our Israeli subsidiary increases its activities outside of Israel, for example, through acquisitions, these activities may not be eligible for inclusion in Israeli tax benefit programs. The tax benefit derived from the Investment Law is dependent upon the ability to generate sufficient taxable income. Accordingly, our Israeli subsidiary may be unable to earn enough taxable income in order to fully utilize its tax benefits.
3 unchanged paragraphs
As of June September 30, 2026, we have options, restricted stock units ("RSUs") and performance stock units ("PSUs") outstanding that, if fully vested and exercised, would result in the issuance of approximately 9.2 9.0 million shares of our common stock. All of the shares of our common stock issuable upon exercise of options and vesting of RSUs and PSUs have been registered for public resale under the Securities Act. Accordingly, these shares will be able to be freely sold in the public market upon issuance as permitted by any applicable vesting requirements.
33 unchanged paragraphs
In addition, if a "fundamental change" occurs prior to the maturity date of the 2029 Notes, holders of the 2029 Notes will have the right, at their option, to require us to repurchase all or a portion of their Convertible Notes. If a "make-whole fundamental change" (as defined in the indentures) occurs prior to the maturity date, we will in some cases be required to increase the conversion rate of the 2029 Notes for a holder that elects to convert its Notes in connection with such "make-whole fundamental change." These features of the 2029 Notes may make a potential acquisition more expensive for a potential acquiror, which may in turn make it less likely for a potential acquiror to offer to purchase our company, or reduce the amount of consideration offered for each share of our common stock in a potential acquisition. Furthermore, the indentures prohibit us from engaging in certain mergers or acquisitions unless, among other things, the surviving entity assumes our obligations under the 2029 Notes.
16 unchanged paragraphs
Other information 1 change
During the fiscal quarter ended June September 30, 2026, no director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.
Exhibits 7 changes
1 unchanged paragraph
Agreement and Plan of Merger, dated as of October 15, 2026, by and among Proofpoint, Inc., Vail Merger Sub, Inc., and the Company
2 unchanged paragraphs
Amended and Restated Varonis Systems, Inc. 2023 Omnibus Equity Incentive Plan
4 unchanged paragraphs
101 The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended June September 30, 2026, formatted in inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Unaudited Condensed Consolidated Statements of Operations, (iii) the Unaudited Condensed Consolidated Statements of Comprehensive Loss, (iv) the Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity, (v) the Unaudited Condensed Consolidated Statements of Cash Flows and (vi) related notes to these condensed consolidated financial statements, tagged as blocks of text and in detail.
2 unchanged paragraphs
(3) Filed as Appendix A of the Proxy Statement on Form DEF 14A with the SEC on April 17, 2026 and incorporated herein by reference.
(2) (1) Filed as Exhibit 3.2 2.1 to the Company's Annual Current Report on Form 10-K 8-K with the Securities and Exchange Commission on February 8, 2022 October 15, 2026 (File No. 001-36324) and incorporated herein by reference.
(1) (2) Filed as Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 8, 2014 (File No. 001-36324) (the "Company's First Quarter 2014 Form 10-Q") and incorporated herein by reference.
(3) Filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K with the Securities and Exchange Commission on February 8, 2022 (File No. 001-36324) and incorporated herein by reference.
Unchanged: MD&A, Legal proceedings
Compared by code from the two filings' text and XBRL. Not advice.
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