Slide 1: Varonis Overview Q4 2023
\\ varonis Varonis Overview Q4 2023
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation has been prepared by Varonis Systems, Inc. (the “Company”) solely for informational purposes. It is not, and should not be assumed to be, complete. This presentation is not an offer to sell securities, nor is it a solicitation of an offer to buy securities. Th
Slide 3: Company Overview
Company Overview \\ varonis
Slide 4: Varonis at a Glance
Varonis at a Glance A leader in data security, fighting a different battle than conventional cybersecurity companies VRNS $543.0MM $59.4MM OPERATIONAL IN 2005 ANNUAL RECURRING REVENUES IPO IN 2014 17% Y/Y GROWTH 2023 OPERATING CASH FLOW ~2,250 66% / ~23% $54.3MM Q4 SaaS MIX* SaaS ARR AS % OF TOTAL 2
Slide 5: Proven Technology
Proven Technology DATA, APPS, INFRASTRUCTURE ANALYTICS & AUTOMATION USE CASES CLOUD Sensitivity Data Protection Threat Detection & Response Permissions ON-PREM Privacy & Compliance Activity
Slide 6: Proven Approach
Proven Approach Detect Prevent Sustain threats by analyzing data, account disaster by automatically locking down a secure state by automating activity and user behavior. sensitive and stale data, reducing broad authorizations, migrations and access and simplifying permissions. disposition.
Slide 7: Secular Trends
Secular Trends Data Growth Hybrid Cloud Cyber Threats The amount of data created in the More than 85% of enterprises adopting a By 2025, almost 90% of all data is world is expected to grow at a cloud-first strategy are expected to continue expected to require a meaningful compound annual growth rate
Slide 8: Industry Changes
Industry Changes Board Adoption & Awareness Standardization Regulation Boards of Directors are now A data-centric approach to security is The confluence of notable attacks, media required to address cyber risks and becoming the standard as the digital attention, and public outcry has led to demonstr
Slide 9: History of Innovation
History of Innovation Automated Remediation Varonis SaaS for M365, Box, Google Salesforce Protection Proactive Remote Incident Work Google Drive Response Data Security Protection Classification Salesforce Network Policy Box Shield Monitoring Expansion Protection Integration GDPR Data Classification
Slide 10: SaaS Data Security Platform
SaaS Data Security Platform DatAdvantage Varonis SaaS Cloud • Windows/NAS • Google Drive • Microsoft 365 • Box • Exchange Online • Salesforce • Active Directory • Slack z • Edge • GitHub • UNIX/Linux • Jira • Azure Files • AWS • Amazon S3 • Zoom • Okta • AWS Databases • Snowflake
Slide 11: Self-Hosted Data Security Platform
Self-Hosted Data Security Platform Data Classification DatAlert DatAdvantage Engine • Windows • Windows/SharePoint • DatAlert • Directory Services • SharePoint Online • Edge • SharePoint • OneDrive • • UNIX/Linux Exchange • • UNIX z Policy Pack • OneDrive • Data Classification Labels • SharePoint On
Slide 12: First-Mover Advantage
First-Mover Advantage 2005 Complexity High-Frequency Data was stored in fewer Iterations places 20 years of battle-testing, refinement, and innovation Data Volume Discipline Data volumes were much Sales process drove tens of smaller thousands of production installs
Slide 13: Predictable Sales Motion
Predictable Sales Motion NURTURING Leads CHANNEL MARKETING Risk Assessment VARONIS SALES Closing Channel resellers provide CHANNEL VARONIS introductions to the right buyers SALES and help with closing Salesforce performs in-person or virtual risk assessment and builds Highly metrics-driven business
Slide 14: Proven Management Team
Proven Management Team Yaki Faitelson Guy Melamed David Bass CEO, President, Jim O’Boyle CFO & COO Executive VP & CTO SVP of Worldwide Sales Co-Founder & Chairman Varonis since 2011 Varonis since 2005 Varonis since 2006 Varonis since 2005 Dana Shahar Gilad Raz Shai Cohen-Golan Dov Gottlieb Chief Hum
Slide 15: Financial Results: Q4 2023 Highlights
Financial Results: Q4 2023 Highlights
Slide 16: Q4 & Full-year 2023 Highlights
Q4 & Full-year 2023 Highlights $543.0 $465.1 $543.0MM ARR at the end of Q4 grew 17% YoY $387.1 ~23% SaaS ARR as % of Total 66% Q4 SaaS Mix* $54.3MM 2023 Free Cash Flow Q4 2021 Q4 2022 Q4 2023 *SaaS Mix is defined as new SaaS ARR booked during the quarter divided by new business ARR + upsell ARR ANNU
Slide 17: Annual Recurring Revenues
Annual Recurring Revenues 17% Q4 2023 GROWTH YoY $543.0 $517.5 $497.0 $478.1 $465.1 $447.8 $426.3 $404.5 $387.1 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023
Slide 18: SaaS is a headwind to reported revenue
SaaS is a headwind to reported revenue, but driving positive business momentum $25 $26 • In the fourth quarter, we had a ~16% headwind to our year-over-year revenue growth rate as a result of $129 $117 having increased SaaS sales in our bookings mix Q4 2022 Q4 2023 Subscriptions Maintenance & Servic
Slide 19: SaaS is a headwind to reported operating margin
SaaS is a headwind to reported operating margin, but driving positive business momentum $54 $26 $27 $0 Q4 2022 Q4 2023 Q4 2022 Q4 2023 Non-GAAP Operating income SaaS Mix Headwind YTD Free Cash Flow During the quarter as compared to the same quarter last year, we had approximately a 10% headwind to o
Slide 20: SaaS is a headwind to reported revenue (full year)
SaaS is a headwind to reported revenue, but driving positive business momentum $98 $107 • In 2023, we had a ~12% headwind to our year-over-year revenue growth rate as a result of having $401 $366 increased SaaS sales in our bookings mix FY 2022 FY 2023 Subscriptions Maintenance & Services SaaS Mix H
Slide 21: SaaS is a headwind to reported operating margin (full year)
SaaS is a headwind to reported operating margin, but driving positive business momentum $54 $30 $29 $0 FY 2022 FY 2023 FY 2022 FY 2023 Non-GAAP Operating income SaaS Mix Headwind YTD Free Cash Flow During the fiscal year as compared to the previous year, we had approximately a 10% headwind to our op
Slide 22: Q1 & FY 2024 Financial Guidance
Q1 & FY 2024 Financial Guidance Guidance Q1 2024 FY 2024 Annual Recurring Revenues (“ARR”) $617.0MM – $625.0MM YoY growth 14% – 15% Total Revenues $111.0MM – $115.0MM $536.0MM – $546.0MM YoY growth 3% – 7% 7% – 9% Non-GAAP Operating Income ($15.0)MM – ($13.0)MM $7.5MM – $12.5MM Non-GAAP Operating Ma
Slide 23: Long-term goal: a billion-dollar business
Our long-term goal is to build a billion-dollar business that grows meaningfully with expanding profit and cash flow.
Slide 24: Thank you
Thank you \\ varRonis
Slide 25: Appendix: Revenue Recognition Example #1
Appendix: Revenue Recognition Example #1 TERM-BASED ON-PREM SUBSCRIPTION SAAS $80k $25k $25k $25k $25k $5k $5k $5k $5k Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ~80% Upfront / ~20% Ratable 100% Ratable ~85% of deal recognized in Q1 ~25% of deal recognized in Q1 100% of deal recognized in fiscal year 100% of deal reco
Slide 26: Appendix: Revenue Recognition Example #2
Appendix: Revenue Recognition Example #2 TERM-BASED ON-PREM SUBSCRIPTION SAAS $80k $25k $25k $5k $5k $0k Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ~80% Upfront / ~20% Ratable 100% Ratable ~80% of deal recognized in Q2 <1% of deal recognized in Q2 ~90% of deal recognized in fiscal year ~50% of deal recognized in fisca
Slide 27: Appendix: Revenue Recognition Example #3
Appendix: Revenue Recognition Example #3 TERM-BASED ON-PREM SUBSCRIPTION SAAS $80k $0k Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ~80% Upfront / ~20% Ratable 100% Ratable ~80% of deal recognized in Q4 <1% of deal recognized in Q4 ~80% of deal recognized in fiscal year <1% of deal recognized in fiscal year Both scenari
Slide 28: Appendix: Reconciliation of GAAP Measures to Non-GAAP
Appendix: Reconciliation of GAAP Measures to Non-GAAP Three Months Ended December 31, Twelve Months Ended December 31, 2023 2022 2023 2022 Reconciliation to non-GAAP operating income: GAAP operating loss ($5,244) ($9,993) ($117,223) ($121,228) Add back: Stock-based compensation expense 31,643 34,806
Slide 29: Appendix: Reconciliation of GAAP Measures to Non-GAAP
Appendix: Reconciliation of GAAP Measures to Non-GAAP Reconciliation to non-GAAP free cash flow: FY 2024 Net cash provided by operating activities $77.0MM – $84.0MM Purchases of property and equipment ($7.0MM) – ($9.0MM) Free cash flow $70.0MM – $75.0MM