Needham analyst Alex Henderson has reiterated their neutral stance on VRNS stock, giving a Hold rating today.
Geoff Meacham has given his Hold rating due to a combination of factors concerning Varonis Systems’ recent financial performance and future expectations. While the company exhibited a strong fourth quarter in 2023, with revenue, annual recurring revenue (ARR), and free cash flow surpassing guidance, and a promising increase in ARR year-over-year, there are aspects that warrant a cautious stance. The SaaS component of the business is growing and outperformed expectations, yet the full transition to a SaaS model is still in progress, with management accelerating the timeline for completion.
Additionally, Varonis faced a headwind with customer conversions in the fourth quarter that was greater than anticipated, and this trend is expected to accelerate in the second half of 2024, potentially impacting financials. Despite a solid increase in customer count, net retention has decreased when compared to the same quarter last year. While investments are being made to reignite ARR growth, the initial guidance for the coming year suggests a moderate pace of growth. These factors combined lead to the conclusion that while the company’s steps towards the SaaS model are commendable, the current outlook does not present significant upside potential, justifying the Hold rating.
In another report released today, Jefferies also maintained a Hold rating on the stock with a $50.00 price target.
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Varonis Systems (VRNS) Company Description:
Varonis Systems, Inc. engages in providing data security and analytics. It operates through the following segments: United States, EMEA, and Rest of the World. Its products includes datadvantage, data classification engine, data transport engine, Varonis edge, datanswers, datalert, dataprivilege, automation engine, and GDPR patterns. The company was founded by Yaki Faitelson and Ohad Korkus on November 3, 2004 and is headquartered in New York, NY.
Read More on VRNS:
- Varonis Announces Fourth Quarter and Full-Year 2023 Financial Results
- Varonis Introduces MDDR: Industry’s First Managed Data Detection and Response Offering
- VRNS Earnings this Week: How Will it Perform?
- Varonis announces universal data classification support for databases
- Varonis Announces Universal Data Classification Support for Databases
