What Happened?
Shares of data security company Varonis Systems (NASDAQ:VRNS) jumped 8.5% in the morning session after the stock rebounded following a steep sell-off in the previous session, which followed disappointing third-quarter results and a lowered full-year forecast. The data security company’s shares had plunged significantly after it reported weak renewals in its on-premise subscription business and announced plans to cut its workforce by about 5%. However, investors appeared to be looking past the initial bad news. Despite the challenges, the company’s Annual Recurring Revenue (ARR) increased by 18% year over year to $718.6 million, with its cloud-based SaaS business showing strength. In a sign of confidence in its long-term value, Varonis's board also authorized a $150 million stock buyback program.
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What Is The Market Telling Us
Varonis Systems’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 45.5% on the news that the company posted disappointing third-quarter results and cut its full-year guidance. For the third quarter, Varonis reported revenue of $161.6 million, falling short of Wall Street's expectations. While its adjusted earnings per share of $0.06 slightly beat forecasts, this was overshadowed by weakness elsewhere. The company's outlook particularly concerned investors, as its fourth-quarter revenue guidance of $168 million came in below analysts' projections. Compounding the issue, Varonis slashed its full-year adjusted earnings per share guidance by 26.5%. The combination of a current revenue miss and a weaker-than-expected forecast for future revenue and profit prompted the sharp sell-off.
Varonis Systems is down 20.9% since the beginning of the year, and at $35.06 per share, it is trading 44.6% below its 52-week high of $63.31 from October 2025. Investors who bought $1,000 worth of Varonis Systems’s shares 5 years ago would now be looking at an investment worth $910.10.
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