Varonis Systems Inc 10-K for FY2024

Varonis Systems Inc (VRNS)

10-K 2025-02-06 For: 2024-12-31

Added on April 04, 2026

About this 10-K

Varonis Systems Inc filed this 10-K on February 6, 2025, covering the fiscal year ended December 31, 2024 (FY2024).

Headline figures

Fiscal year ended December 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $550.95M; up 10.4% from $499.16M a year earlier
Net loss: $95.77M; compared with a net loss of $100.92M a year earlier
Diluted EPS: -$0.86; compared with -$0.92 a year earlier

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Delaware			57-1222280
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	VRNS	The NASDAQ Stock Market LLC


Large Accelerated Filer	☒	Accelerated Filer	☐

Non-accelerated Filer	☐	Smaller reporting company	☐

		Emerging growth company	☐


		Page
PART I

Item 1	Business	1
Item 1A	Risk Factors	12
Item 1B	Unresolved Staff Comments	35
Item 1C	Cybersecurity	35
Item 2	Properties	36
Item 3	Legal Proceedings	36
Item 4	Mine Safety Disclosures	36

PART II

Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	38
Item 6	Reserved	40
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	54
Item 8	Financial Statements and Supplementary Data	56
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	95
Item 9A	Controls and Procedures	95
Item 9B	Other Information	96
Item 9C	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	96

PART III

Item 10	Directors, Executive Officers and Corporate Governance	97
Item 11	Executive Compensation	97
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	97
Item 13	Certain Relationships and Related Transactions, and Director Independence	97
Item 14	Principal Accounting Fees and Services	97

PART IV

Item 15	Exhibits and Financial Statement Schedules	98
Item 16	Form 10-K Summary	98


Company/Index	12/31/2019		12/31/2020		12/31/2021		12/31/2022		12/31/2023		12/31/2024
Varonis Systems, Inc.	$	100.00	$	210.54	$	188.32	$	92.42	$	174.80	$	171.52
NASDAQ Composite	$	100.00	$	143.64	$	174.36	$	116.65	$	167.30	$	215.22
NASDAQ Computer	$	100.00	$	149.98	$	206.76	$	132.79	$	221.06	$	301.44


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Item 5.			Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities


Item 7.			Management’s Discussion and Analysis of Financial Condition and Results of Operations


	Year Ended December 31,
	2024		2023		2022
	(as a percentage of total revenues)
Revenues:
Term license subscriptions	46.1	%	71.4	%	76.8	%
SaaS	37.9	%	8.9	%	0.5	%
Maintenance and services	16.0	%	19.7	%	22.7	%
Total revenues	100.0	%	100.0	%	100.0	%


	Payments Due by Period
	2025		2026		2027		2028		2029		Thereafter		Total
	(in thousands)
Operating lease obligations	$	12,305	$	12,029	$	12,084	$	12,088	$	8,015	$	10,012	$	66,533


Item 7A.			Quantitative and Qualitative Disclosures About Market Risk



			Page
Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 1281)			57
Consolidated Balance Sheets			61
Consolidated Statements of Operations			63
Consolidated Statements of Comprehensive Loss			64
Consolidated Statements of Changes in Stockholders’ Equity			65
Consolidated Statements of Cash Flows			66
Notes to Consolidated Financial Statements			68


			Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A Tel-Aviv 6492102, Israel			Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com


Revenue Recognition - Evaluation of standalone selling price of subscription licenses


	Year Ended December 31,
	2024		2023		2022
	(in thousands)
Statement of Operations Data:
Revenues:
Term license subscriptions	$	254,241	$	356,490	$	363,898
SaaS	208,781		44,417		2,246
Maintenance and services	87,928		98,253		107,490
Total revenues	550,950		499,160		473,634
Cost of revenues	93,847		71,751		69,836
Gross profit	457,103		427,409		403,798
Operating expenses:
Research and development	196,765		183,838		177,881
Sales and marketing	288,769		277,893		275,090
General and administrative	89,220		82,901		72,055
Total operating expenses	574,754		544,632		525,026
Operating loss	(117,651)		(117,223)		(121,228)
Financial income, net	34,644		30,305		10,413
Loss before income taxes	(83,007)		(86,918)		(110,815)
Income taxes	(12,758)		(13,998)		(13,703)
Net loss	$	(95,765)	$	(100,916)	$	(124,518)


	Year Ended December 31,
	2024		2023		2022
	(as a percentage of total revenues)
Statement of Operations Data:
Revenues:
Term license subscriptions	46.1	%	71.4	%	76.8	%
SaaS	37.9		8.9		0.5
Maintenance and services	16.0		19.7		22.7
Total revenues	100.0		100.0		100.0
Cost of revenues	17.0		14.4		14.7
Gross profit	83.0		85.6		85.3
Operating expenses:
Research and development	35.8		36.8		37.6
Sales and marketing	52.4		55.7		58.1
General and administrative	16.2		16.6		15.2
Total operating expenses	104.4		109.1		110.9
Operating loss	(21.4)		(23.5)		(25.6)
Financial income, net	6.3		6.1		2.2
Loss before income taxes	(15.1)		(17.4)		(23.4)
Income taxes	(2.3)		(2.8)		(2.9)
Net loss	(17.4)	%	(20.2)	%	(26.3)	%


	Year Ended December 31,
	2024		2023		% Change
	(in thousands)
Operating expenses:
Research and development	$	196,765	$	183,838	7.0	%
Sales and marketing	288,769		277,893		3.9	%
General and administrative	89,220		82,901		7.6	%
Total operating expenses	$	574,754	$	544,632	5.5	%


	Year Ended December 31,
	2024		2023
	(as a percentage of total revenues)
Operating expenses:
Research and development	35.8	%	36.8	%
Sales and marketing	52.4	%	55.7	%
General and administrative	16.2	%	16.6	%
Total operating expenses	104.4	%	109.1	%


	December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	185,585	$	230,740
Marketable securities	343,383		253,175
Short-term deposits	39,450		49,800
Trade receivables (net of allowance of $2,518 and $1,487 at December 31, 2024 and December 31, 2023, respectively)	192,832		169,116
Prepaid expenses and other short-term assets	116,824		64,326
Total current assets	878,074		767,157

Long-term assets:
Long-term marketable securities	658,896		211,063
Operating lease right-of-use assets	45,593		51,838
Property and equipment, net	30,795		33,964
Intangible assets, net	—		1,263
Goodwill	23,135		23,135
Other assets	27,782		15,490
Total long-term assets	786,201		336,753
Total assets	$	1,664,275	$	1,103,910


	Year ended
	December 31,
	2024		2023		2022
Revenues:
Term license subscriptions	$	254,241	$	356,490	$	363,898
SaaS	208,781		44,417		2,246
Maintenance and services	87,928		98,253		107,490
Total revenues	550,950		499,160		473,634

Cost of revenues	93,847		71,751		69,836

Gross profit	457,103		427,409		403,798

Operating expenses:
Research and development	196,765		183,838		177,881
Sales and marketing	288,769		277,893		275,090
General and administrative	89,220		82,901		72,055
Total operating expenses	574,754		544,632		525,026

Operating loss	(117,651)		(117,223)		(121,228)
Financial income, net	34,644		30,305		10,413

Loss before income taxes	(83,007)		(86,918)		(110,815)
Income taxes	(12,758)		(13,998)		(13,703)

Net loss	$	(95,765)	$	(100,916)	$	(124,518)

Net loss per share of common stock, basic and diluted	$	(0.86)	$	(0.92)	$	(1.14)

Weighted average number of shares used in computing net loss per share of common stock, basic and diluted	111,660,541		109,141,894		109,281,368


	Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Total stockholders’ equity
	Number	Amount
Balance as of January 1, 2022	107,509,096	$	108	$	1,018,005	$	6,083	$	(427,603)	$	596,593
Effect of adoption of ASU 2020-06	—	—		(30,794)		—		8,647		(22,147)
Stock-based compensation expense	—	—		142,862		—		—		142,862
Common stock issued under employee stock plans	3,078,402	3		12,493		—		—		12,496
Taxes paid related to net share settlement of equity awards	—	—		(31,076)		—		—		(31,076)
Repurchase of common stock	(2,914,446)	(3)		(56,442)		—		—		(56,445)
Unrealized loss on derivative instruments, net of tax	—	—		—		(15,363)		—		(15,363)
Unrealized loss on available for sale securities, net of tax	—	—		—		(277)		—		(277)
Net loss	—	—		—		—		(124,518)		(124,518)
Balance as of December 31, 2022	107,673,052	108		1,055,048		(9,557)		(543,474)		502,125
Stock-based compensation expense	—	—		139,819		—		—		139,819
Common stock issued under employee stock plans	2,931,316	2		12,647		—		—		12,649
Taxes paid related to net share settlement of equity awards	—	—		(21,415)		—		—		(21,415)
Repurchase of common stock	(1,500,647)	(1)		(43,521)		—		—		(43,522)
Unrealized loss on derivative instruments, net of tax	—	—		—		(1,040)		—		(1,040)
Unrealized income on available for sale securities, net of tax	—	—		—		1,948		—		1,948
Net loss	—	—		—		—		(100,916)		(100,916)
Balance as of December 31, 2023	109,103,721	109		1,142,578		(8,649)		(644,390)		489,648
Stock-based compensation expense	—	—		126,682		—		—		126,682
Common stock issued under employee stock plans	3,397,390	3		16,079		—		—		16,082
Taxes paid related to net share settlement of equity awards	—	—		(38,295)		—		—		(38,295)
Unrealized income on derivative instruments, net of tax	—	—		—		15,423		—		15,423
Unrealized loss on available for sale securities, net of tax	—	—		—		(4,098)		—		(4,098)
Common stock issued for debt conversion	49,045	1		1,500		—		—		1,501
Purchase of capped calls related to Convertible senior notes	—	—		(55,522)		—		—		(55,522)
Net loss	—	—		—		—		(95,765)		(95,765)
Balance as of December 31, 2024	112,550,156	$	113	$	1,193,022	$	2,676	$	(740,155)	$	455,656


Decrease in cash and cash equivalents	(45,155)		(137,060)		(437,961)
Cash and cash equivalents at beginning of period	230,740		367,800		805,761
Cash and cash equivalents at end of period	$	185,585	$	230,740	$	367,800

Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	24,249	$	16,089	$	7,354
Cash paid for interest	$	3,193	$	3,196	$	3,167
Lease liabilities arising from obtaining right-of-use assets	$	3,148	$	3,166	$	1,625
Common stock issued for debt conversion	$	1,501	$	—	$	—


e.			Cash, Cash Equivalents, Marketable Securities and Short-Term Investments:


	As of December 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Cash equivalents
Money market funds	$	133,113	$	—	$	—	$	133,113
Total	$	133,113	$	—	$	—	$	133,113

Marketable securities
US Treasury securities	$	342,751	$	632	$	—	$	343,383



Total	$	342,751	$	632	$	—	$	343,383

Short-term deposits
Term bank deposits	$	39,450	$	—	$	—	$	39,450
Total	$	39,450	$	—	$	—	$	39,450

Long-term marketable securities
US Treasury securities	$	661,955	$	104	$	(3,163)	$	658,896

Total	$	661,955	$	104	$	(3,163)	$	658,896


	As of December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Cash equivalents
Money market funds	$	164,848	$	—	$	—	$	164,848
Total	$	164,848	$	—	$	—	$	164,848

Marketable securities
US Treasury securities	$	242,633	$	530	$	(1)	$	243,162
US Government Agency securities	9,972		41		—		10,013


Total	$	252,605	$	571	$	(1)	$	253,175

Short-term deposits
Term bank deposits	$	49,800	$	—	$	—	$	49,800
Total	$	49,800	$	—	$	—	$	49,800

Long-term marketable securities
US Treasury securities	$	209,961	$	1,102	$	—	$	211,063
Total	$	209,961	$	1,102	$	—	$	211,063


Computer equipment		33%
Office furniture and equipment	14%	—	15%
Leasehold improvements		Over the shorter of the expected lease term or estimated useful life


j.			Goodwill and Other Long-Lived Assets, including Acquired Intangible Assets and Right-of-Use Assets:


l.			Contractual Purchase Obligations and Contingent Liabilities:


	Assets (liabilities) as of				Assets (liabilities) as of
	December 31, 2024				December 31, 2023
	Notional Amount		Fair Value		Notional Amount		Fair Value
Foreign exchange forward contract derivatives in cash flow hedging relationships for operating expenses included in prepaid expenses and other short-term assets	$	131,363	$	773	$	128,411	$	3,372
Foreign exchange forward contract derivatives in cash flow hedging relationships for operating expenses included in accrued expenses and other short-term liabilities	$	56,256	$	(2,902)	$	—	$	—
Foreign exchange forward contract derivatives in cash flow hedging relationships for operating expenses included in long-term other assets	$	96,950	$	3,083	$	33,233	$	519
Foreign exchange forward contract derivatives in cash flow hedging relationships for operating expenses included in long-term other liabilities	$	—	$	—	$	102,216	$	(1,624)
Foreign exchange forward contract derivatives in cash flow hedging relationships for revenues included in prepaid expenses and other short-term assets	$	142,051	$	7,326	$	—	$	—

Foreign exchange forward contract derivatives for monetary items included in prepaid expenses and other short-term assets	$	—	$	—	$	39,155	$	36
Foreign exchange forward contract derivatives for monetary items included in accrued expenses and other short-term liabilities	$	—	$	—	$	5,213	$	(7)


x.			Recently Issued Accounting Pronouncements Not Yet Adopted:


	December 31, 2024
	2025 Notes		2029 Notes		Total
Liability
Principal	$	251,494	$	460,000	$	711,494

Unamortized issuance costs	(965)		(9,757)		(10,722)
Net carrying amount	$	250,529	$	450,243	$	700,772


	As of December 31, 2024								As of December 31, 2023
	Level I		Level II		Level III		Total Fair Value		Level I		Level II		Level III		Total Fair Value
Financial assets:
Cash equivalents:
Money market funds	$	133,113	$	—	$	—	$	133,113	$	164,848	$	—	$	—	$	164,848
Marketable securities:
US Treasury securities	—		343,383		—		343,383		—		243,162		—		243,162
US Government Agency securities	—		—		—		—		—		10,013		—		10,013


Prepaid expenses and other short-term assets:
Forward foreign exchange contracts	—		8,099		—		8,099		—		3,408		—		3,408
Long-term marketable securities:
US Treasury securities	—		658,896		—		658,896		—		211,063		—		211,063
Long-term other assets:
Forward foreign exchange contracts	—		3,083		—		3,083		—		519		—		519
Financial liabilities:
Accrued expenses and other short-term liabilities:
Forward foreign exchange contracts	—		(2,902)		—		(2,902)		—		(7)		—		(7)
Long-term other liabilities:
Forward foreign exchange contracts	—		—		—		—		—		(1,624)		—		(1,624)
Total financial assets (liabilities), net	$	133,113	$	1,010,559	$	—	$	1,143,672	$	164,848	$	466,534	$	—	$	631,382


c.			Restricted stock units ("RSUs") and performance stock units ("PSUs"):


	Number of shares underlying outstanding RSUs and PSUs	Weighted-average grant date fair value
Unvested balance as of January 1, 2024	8,234,171	$	36.83
Granted	3,864,327	$	43.38
Vested	(3,224,561)	$	39.75
Forfeited	(1,231,445)	$	38.78
Unvested balance as of December 31, 2024	7,642,492	$	38.60


e.			Stock-based compensation expense for employees and consultants:


c.			Loss before taxes on income is comprised as follows (in thousands):


d.			Taxes on income (loss) are comprised as follows (in thousands):


g.			A reconciliation of the beginning and ending amounts of unrecognized tax benefits, including interest and penalties, in the years ended December 31, 2024 and 2023 are as follows (in thousands):