Slide 1: Varonis Overview Q3 2022
\\ varonis Varonis Overview Q3 2022
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 Fighting a different battle than conventional cybersecurity companies VRNS 23% 7.9% FOUNDED IN 2004 Q3 TOTAL Q3 NON-GAAP IPO IN 2014 REVENUE GROWTH OPERATING MARGIN 2,250+ $447.8MM $8.4MM EMPLOYEES WORLDWIDE ANNUAL RECURRING REVENUES YTD OPERATING CASH FLOW 26% Y/Y GROWTH
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 from 45 cloud-first strategy are expected to continue expected to require a meaningful Zettabytes in 2019 to 18
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: Total Addressable Market
$50.1 BN $15.5 BN Application Software Storage Management $37BN+ $49.7 BN $7.0 BN Security Software Total Addressable Market1 Content Services $33.9 BN $5.8 BN IT Operations Management Data Integration $23.3 BN $2.2 BN Infrastructure Software Cloud Access/Workload Protection Software (1) Market size
Slide 10: Data Security Platform
Data Security Platform DatAdvantage Data Classification DatAlert DatAdvantage Cloud Engine • DatAlert • Windows • Google Drive • Windows/SharePoint • Edge • Directory Services • Box • SharePoint Online • SharePoint • Salesforce • OneDrive • • UNIX/Linux Exchange • • Slack GitHub z • • UNIX Policy Pa
Slide 11: History of Innovation
History of Innovation • SharePoint • Directory Services 2006 2009 2011 2008 2010 2012 2005 • Unix/Linux • Exchange
Slide 12: History of Innovation
History of Innovation • SharePoint • OneDrive • SharePoint Online • SharePoint Online • OneDrive • Exchange Online • Unix • Windows 2013 2015 2017 2014 2016 • Analytics • OneDrive • SharePoint Online
Slide 13: History of Innovation
History of Innovation • Google Drive • Jira • Box • AWS • Google Drive • Salesforce • Amazon S3 • Box • Slack • Zoom • Policy Pack • GitHub • Okta 2019 2021 2018 2020 2022 • Azure Active Directory • Federal Policy Pack • Salesforce • Amazon S3
Slide 14: First-Mover Advantage
First-Mover Advantage 2005 Complexity High-Frequency Data was stored in fewer Iterations places 15+ 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 15: 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 16: 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 17: Financial Results: Q3 2022 Highlights
Financial Results: Q3 2022 Highlights
Slide 18: Q3 2022 Highlights
Q3 2022 Highlights $447.8 $447.8MM ARR at the end of Q3 grew 26% YoY $354.2 23% Total revenue growth YoY $261.1 7.9% Non-GAAP Operating Margin $8.4MM YTD Operating Cash Flow Q3 2020 Q3 2021 Q3 2022 ANNUAL RECURRING REVENUES ($MM)
Slide 19: Annual Recurring Revenues
Annual Recurring Revenues Q3 2022 GROWTH YoY 26% $447.8 $426.3 $404.5 $387.1 $354.2 $328.2 $306.9 $287.3 $261.1 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022
Slide 20: Greater Individual License Adoption
Greater Individual License Adoption 2020-2022 GROWTH 2020-2022 GROWTH 60% 70% 76% 27% 37% 47% 81% 26% Q3 2020 Q3 2021 Q3 2022 Q3 2020 Q3 2021 Q3 2022 4 OR MORE LICENSES 6 OR MORE LICENSES Percentages reflect customers with 500 employees or more.
Slide 21: Q3 2022 Reconciliation of Revenue and ARR for FX & Russia
Q3 2022 Reconciliation of Revenue and ARR for FX & Russia % Change (in millions) Q3 2022 Q3 2021 Reported Total reported revenues $123.3 $100.4 23% Effect of foreign currency rate fluctuations $3.3 – 3% Exit of Russia business – ($0.9) 1% Total reported ARR $447.8 $354.2 26% Effect of foreign curren
Slide 22: Q4 & FY 2022 Financial Guidance
Q4 & FY 2022 Financial Guidance Guidance Q4 2022 FY 2022 Annual Recurring Revenues (“ARR”) - $460.0MM – $463.0MM YoY growth - 19% – 20% Total Revenues $139.0MM – $142.0MM $470.0MM – $473.0MM YoY growth 10% – 12% 20% – 21% Non-GAAP Operating Income* $22.0MM – $24.0MM $25.5MM – $27.5MM Operating Margi
Slide 23: Q4 2022 Financial Guidance Reconciliation for FX & Russia
Q4 2022 Financial Guidance Reconciliation for FX & Russia (in millions) Q4 2022 Q4 2021 % Change Total reported revenues $140.5 $126.6 11% Effect of foreign currency rate fluctuations 4% Exit of Russia business 1% Revenue guidance is shown at the midpoint of our provided range. In addition to report
Slide 24: FY 2022 Financial Guidance Reconciliation for FX & Russia
FY 2022 Financial Guidance Reconciliation for FX & Russia (in millions) FY 2022 FY 2021 % Change (in millions) FY 2022 FY 2021 % Change Total reported revenues $471.5 $390.1 21% Total reported ARR $461.5 $387.1 19% Effect of foreign currency rate fluctuations 3% Effect of foreign currency rate fluct
Slide 25: Long-term goal: build a billion-dollar business
Our long-term goal is to build a billion-dollar business that grows revenues meaningfully with expanding profit and cash flow.
Slide 26: Thank you
Thank you \\ varRonis
Slide 27: Appendix: Revenue Recognition Example
Appendix: Revenue Recognition Example On-prem Subscription SaaS ~80% Upfront / ~20% Ratable 100% Ratable ~85% of deal recognized in first quarter ~25% of deal recognized in first quarter $80K $25K $25K $25K $25K $5K $5K $5K $5K Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Both scenarios assume $100K ARR deal signed on J
Slide 28: Appendix: Reconciliation of GAAP Measures to Non-GAAP
Appendix: Reconciliation of GAAP Measures to Non-GAAP Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Reconciliation to non-GAAP operating income: GAAP operating loss ($25,582) ($18,555) ($111,235) ($80,861) Add back: Stock-based compensation expense 34,300 24,42
Slide 29: Appendix: Reconciliation of GAAP Measures to Non-GAAP
Appendix: Reconciliation of GAAP Measures to Non-GAAP Guidance FY 2023 Net cash provided by operating activities $28.0MM – $35.0MM Purchases of property and equipment ($8.0MM) – ($10.0MM) Free cash flow $20.0MM – $25.0MM