Varonis Systems (VRNS) Q4 2025 earnings summary

Executive summary

• Annual recurring revenue (ARR) reached $745.4 million, up 16% year-over-year, with SaaS ARR at $638.5 million, up 88% year-over-year and now 86% of total ARR; SaaS ARR grew 32% year-over-year excluding conversions.

• The company is targeting a full transition to 100% SaaS by the end of 2026 or 2027, aiming to unlock further growth and operational efficiencies.

• Free cash flow for 2025 was $131.9 million, up from $108.5 million in 2024.

• Acquisition of Altru/AllTrue.ai enhances AI security capabilities, reinforcing the data-first strategy and expanding the platform's reach.

• Full-year revenues increased 13% year-over-year to $623.5 million, driven by SaaS growth and customer conversions from term licenses.

Financial highlights

• Q4 total revenues were $173.4 million, up 9% year-over-year; SaaS revenues were $142.3 million.

• Q4 gross profit was $138.7 million (80% gross margin), down from 84.4% in Q4 2024.

• Q4 non-GAAP operating income was $4.6 million (2.6% margin), down from $15.3 million (9.7% margin) last year; GAAP operating loss was $30.3 million.

• Q4 non-GAAP net income was $11.1 million ($0.08 per diluted share); GAAP net loss was $27.8 million.

• Ended 2025 with $1.1 billion in cash, cash equivalents, and marketable securities.

Outlook and guidance

• 2026 SaaS ARR expected at $805 million–$840 million (26%–32% growth); SaaS ARR growth excluding conversions guided at 18%–20%.

• 2026 total revenues expected at $722 million–$730 million (16%–17% growth); free cash flow expected at $100 million–$105 million.

• 2026 non-GAAP operating income expected to be break-even to $4 million.

• Q1 2026 SaaS ARR growth (ex-conversions) guided at 27%–28%; total revenues $164 million–$166 million.

• No non-SaaS ARR expected by end of 2026; federal and state government customers may not convert.