Varonis Systems Faces Downgrades Post Disappointing Earnings
Varonis Systems Reports Q3 Earnings and Guidance
Varonis Systems Inc (NASDAQ: VRNS) has recently revealed disappointing results for its third quarter, with revenue figures falling short of market expectations. Their reports indicated earnings of 6 cents per share, aligning with the analysts' consensus, but the total revenue came in at $161.577 million, which significantly missed the anticipated $166.149 million.
Fourth Quarter Expectations
Looking ahead, Varonis expects adjusted earnings per share for the fourth quarter to be between 2 cents and 4 cents, falling below market projections of 5 cents. Additionally, the company forecasts sales in the range of $165.00 million to $171.00 million. This also contrasts with earlier estimates which were set at $170.129 million.
CEO Comments on SaaS Demand
Yaki Faitelson, the CEO of Varonis, stated that despite the recent downturn, there remains a robust demand for their Software as a Service (SaaS) platform. This service now constitutes about 76% of their total Annual Recurring Revenue (ARR). He attributed this ongoing interest to the automated solutions the platform provides and the growing customer focus toward implementing AI initiatives and securing data in the cloud.
Challenges Faced
However, Faitelson also noted challenges faced in the last weeks of the quarter, particularly lower renewal rates in both Federal and non-Federal on-premises subscription businesses. These issues contributed to the company’s disappointing financial outcomes.
Stock Performance and Analyst Ratings
In response to the earnings news, Varonis Systems' stock fell by 45.2%, trading at $34.53. Following the release of these quarterly earnings, several analysts adjusted their price targets for the stock:
Changes in Price Targets
1. Mike Cikos from Needham retained a Buy rating but lowered the price target from $70 to $55.
2. Saket Kalia from Barclays maintained an Overweight rating while adjusting the price target from $70 to $50.
3. Neutral ratings were kept by Rob Owens from Piper Sandler, who reduced the target price from $50 to $45.
4. Jonathan Ruykhaver at Cantor Fitzgerald kept his Overweight rating and adjusted the price target from $70 to $60.
5. Shyam Patil from Susquehanna maintained a Positive outlook, cutting the price target from $65 to $50.
6. Junaid Siddiqui from Truist Securities reiterated a Buy rating, slashing the price target from $70 to $50.
7. Roger Boyd at UBS continued to endorse Varonis Systems with a Buy rating but lowered the price target from $70 to $60.
Analytical Insights
For those considering purchasing VRNS stock, it's crucial to be aware of the mixed analyst sentiments following the earnings report. While some maintain optimism about the company's growth potential in the SaaS domain, the immediate financial outlook remains uncertain.
Frequently Asked Questions
What were Varonis Systems' earnings for Q3?
For Q3, Varonis reported earnings of 6 cents per share, meeting analyst expectations.
How did Varonis' revenue compare to expectations?
Varonis' revenue of $161.577 million fell short of the anticipated $166.149 million.
What does the fourth-quarter guidance indicate?
Varonis expects adjusted EPS of 2 to 4 cents and revenue of $165 million to $171 million for Q4.
What has been the market reaction to the earnings report?
The stock price of Varonis Systems dropped by 45.2%, closing at $34.53.
What analysts say about Varonis' stock?
Various analysts have downgraded their price targets, reflecting skepticism about Varonis' short-term performance.
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