0001628280-26-028411
SEC filingVaronis delivers 27% revenue growth driven by SaaS transition with SaaS ARR up 69%, while operating margins improve 640 bps to (25.7%).
For the three months ended March 31, 2026, Varonis reported total revenues of $173.1 million, a 26.9% increase from $136.4 million in the prior-year period. The growth was fueled by a massive 81.9% surge in SaaS revenues to $161.1 million, which now represent 93.0% of total revenues (up from 64.9% a year ago). This shift reflects the company's successful transition to a SaaS delivery model, as term license subscriptions declined 78.1% to $6.9 million and maintenance and services fell 68.5% to $5.2 million. Gross margin declined to 76.0% from 78.7%, primarily due to increased third-party hosting costs and higher headcount costs associated with the SaaS transition and MDDR offering. Operating loss widened slightly to $44.5 million from $43.8 million, but as a percentage of revenues, operating margin improved significantly to (25.7%) from (32.1%), a 640 basis point improvement, driven by revenue growth outpacing expense growth. Net loss increased to $36.9 million from $35.8 million.
The SaaS segment is the primary growth engine, with SaaS annual recurring revenues (ARR) reaching $683.2 million, up 69% from $405.2 million a year ago. The SaaS renewal rate remains above 90%. The decline in term license subscriptions is expected to continue as customers convert to SaaS. Maintenance and services revenues are also declining as the self-hosted business approaches its end-of-life by December 31, 2026. The company's remaining performance obligations (RPO) stood at $1,095.4 million, providing strong forward revenue visibility.
Varonis expects SaaS revenues to continue growing considerably, while term license and maintenance revenues will continue to decline. The company anticipates SaaS ARR to increase in absolute dollars, though it cautions that renewal rates and conversions may cause variability. The end-of-life of the self-hosted business is expected to create some short-term disruption but positions the company for a more durable recurring revenue model. Management remains focused on expanding both domestic and international markets, with a channel-led go-to-market strategy. No specific numerical guidance was provided for future periods.
As of March 31, 2026, Varonis held $179.3M in cash and cash equivalents, $681.8M in marketable securities (including $113.6M long-term), and $38.4M in short-term deposits, totaling $899.5M in liquidity. The company has no short-term debt and $452.8M of convertible senior notes (2029 Notes) net of issuance costs, resulting in a net cash position of $446.7M. Shareholders' equity stood at $453.5M, down from $598.7M at year-end 2025 due primarily to $110M in share repurchases and the net loss.
The company disclosed contractual minimum purchase commitments with three service providers aggregating $407.1M. Of this, $15.8M is due within the next 12 months, and $391.3M thereafter, with the largest commitment ($389.1M) extending through May 2031. Additionally, operating lease obligations total $80.5M on an undiscounted basis, with $9.4M due in the remainder of 2026. Varonis also reported remaining performance obligations (RPO) of $1,095.4M, of which 55% is expected to be recognized within 12 months.
During Q1 2026, Varonis repurchased 5.4M shares for $132.1M, completing the October 2025 $150M authorization. The company also spent $7.0M on capital expenditures ($5.0M property and equipment, $1.0M capitalized software). There were no new debt issuances or repayments; interest expense on the 2029 Notes was $1.15M contractual plus $0.5M amortization of issuance costs. Total stock-based compensation was $33.7M.
Varonis operates as a single reportable segment. Revenue by geography: United States $124.0M (71.6%), EMEA $35.8M (20.7%), Rest of World $13.3M (7.7%). No single customer exceeded 10% of total revenues. Long-lived assets (property and equipment and operating lease ROU) are concentrated in Israel ($49.6M) and the United States ($35.3M).
Operating cash flow (OCF) of $55.0M in Q1 2026 was significantly lower than the net loss of $36.9M, indicating positive cash flow generation despite GAAP losses. The primary driver of OCF was strong collections reflected in a $86.2M decrease in accounts receivable, partially offset by stock-based compensation ($33.7M) and amortization of deferred commissions ($16.0M). Capital expenditures (capex) increased to $6.0M from $2.7M, representing a capex intensity of 10.9% of OCF (vs. 3.9% in prior year). The company did not report free cash flow explicitly. Share repurchases totaled $135.0M, far exceeding OCF, highlighting reliance on cash balances and investing inflows. Investing activities provided $63.3M net, driven by maturities and sales of marketable securities. The large acquisition ($113.6M) was partly funded by these proceeds. No dividends were paid.