Varonis Systems (VRNS) Q2 2025 earnings summary

Executive summary

• Annual recurring revenue (ARR) grew 19% year-over-year to $693.2M in Q2 2025, with SaaS ARR comprising 69% of total ARR and SaaS revenues at $105.9M.

• Q2 2025 total revenues reached $152.2M, up 17% year-over-year, driven by a 137% surge in SaaS revenues, while term license and maintenance revenues declined due to SaaS migration.

• Free cash flow for the first half of 2025 was $82.7M, up from $67.3M year-over-year, and cash from operations was $89.3M.

• Achieved FedRAMP authorization, expanded Microsoft partnership for secure AI integration, and completed the acquisition of Cyral, Inc. to enhance database security.

• Completed a $100M share repurchase program, retiring 2.5M shares, and issued $460M in 2029 convertible notes.

Financial highlights

• Q2 2025 total revenues: $152.2M (up 17% year-over-year); SaaS revenues: $105.9M (up 137%); term license: $32.4M; maintenance/services: $13.9M.

• Gross margin for Q2 2025 was 79.5% (down from 82.8% in Q2 2024) due to SaaS mix and higher costs.

• Non-GAAP operating loss was $1.9M (margin -1.2%), while GAAP operating loss was $36.6M; net income was $3.8M non-GAAP, net loss $35.8M GAAP.

• Net income per diluted share was $0.03 non-GAAP, net loss per share was $0.32 GAAP.

• Cash, equivalents, and marketable securities totaled $1.2B as of June 30, 2025.

Outlook and guidance

• Q3 2025 revenue guidance: $163M–$168M (10–13% growth), non-GAAP operating income $4M–$7M, EPS $0.07–$0.08.

• Full-year 2025 guidance: ARR $748M–$754M (17% growth), SaaS mix expected to reach 82%, free cash flow $120M–$125M, total revenue $616M–$628M (12–14% growth), non-GAAP operating income break-even to $6M, EPS $0.16–$0.18.

• SaaS revenues are expected to become the dominant revenue stream by end of 2025.