Varonis Systems (VRNS) 3 Feb 232022 Q4 Earnings call transcript

Welcome to the Varonis Systems, Inc. Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

my Relations. introduce now Perz you, is Investor with it pleasure to to Tim And Tim. you, Thank

You may begin.

a and the financial Thank Officer Chief for call and to remarks, quarter Guy joining preliminary operator. today of us year call you, Good Chief will question-and-answer Financial we today Varonis. review afternoon. are Yaki Melamed, session. Varonis' After Executive on Chief With Operating me results. Thank to Faitelson, you full open the XXXX Officer; fourth and Officer

earnings During under those number factors statements such these year set actual results that in with and more full our this of factors, reports filed our related captions, to would forward-looking in be for Exchange we may set statements. forth a and the call, make laws, in Securities ending risk of our December under considered are our section and federal press important projections forth results that from differ quarter the statements. release business And forward-looking are may including factors Commission. materially These XX, other we operating fully today issued statements XXXX. future first described to securities Due the

as forward-looking undertaking reflect application to revisions statements any SEC any read or -- encourage publicly and We investors subsequent any all only disclaims filings. our These date. release expressly or as not relied of made our views any upon any our to of statements be views Varonis should today of to updates herein. as representing

section. is which found release directly XXXX A discussed comparable conference and our fourth press Relations most quarter reconciliation at the the measures investor also financial Additionally, in will call. be this Investor in be presentation, available non-GAAP GAAP www.varonis.com can financial measures earnings for on

that Relations the webcast on please website is Lastly, available section. call of Investor our today's a note in

Yaki Yaki? that, turn our Chief I'd Officer, to the to over Executive Faitelson. With like call

for update provide you updated fourth us year joining SaaS I to and new everyone. and full our and performance. Tim, Thank XXXX an quarter our on to like Thanks, afternoon, good outlook. offering discuss also would

very Data Varonis for economic whether a story as At our it the to ago. of of a Advantage, birth company. announcements in We same we interest the SaaS big are layoff slowing. there days the time introduce is SaaS of is nearly world raising the rates, XXX first inflation, milestone the in just time, growing general at a world, is or Varonis us is uncertainty version our exciting lot

of happen In this the data world, uncertainty, of whatever and with is all data sleep thing protected. one to will create people certain, needs midst eat, that be in and the

still expected, to encouraging size. we At business the platform our fourth same our that early, time, but new the It a very small and quarter Turning our was to slowing of continued impact though SaaS to customers. results. macro reception environment than better performs very initial is the sample

fourth we above of you provided quarter came the end ARR last high quarter. range our Our in guidance

start of the year. growth the the at goals reported we below our Although had remains

billion our this the Guy this weather our in ability quarterly economic Varonis in initial us on the and detail, current profitability gives to will environment more of path our to achieving confidence growth review ARR. but emerge SaaS in outlook with additional results and from healthy and performance transition $X

company, for to step its the a most Data I do. and you back people. take second we moment of assets remind importance any take is valuable a to only to Now like would the of what

of you is control. data, it, If someone data have it. wants but depends out on Everything completely

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of data the past surface, will be amount In while home inflict significant cloud APT, massive usage this whether all hybrid is attack system criminals always continue one attacker massive cloud get attack harder is of work, insider. on-prem the compromised target, vulnerable their always takes will order as repository views and and main remote to somewhere together damage, data, and in same. Securing exploded of by the few user purpose There growth. expanded machine is it it change, years end a cyber their and device or magnitude, to

but You you all once infrastructure, it gets can attacker is endpoint, an data, the can an over. rebuild to replace

You why can't problem data protection the security important enrich is This most is solve. to data.

reduced effort significant With the with problem is this automation into SaaS, to solve we software. the customer needed built that

our three. to platform, top would SaaS the Although like has there from get benefits I outline many are to

important, with automation First much better much down more unneeded that from find lock Varonis come much sharing, over and effort. and access has most less exposures protected customers and are to misconfiguration.

visibility We matter and stores behavior usage all on the data most, detect ability respond which attack. our that to into have and to enhances more

providing stay all offer customers evolving protection, threats faster. and front now automatic continual to response With delivered of regulation reducing this incident in proactive enhanced of effort, layer new of for again, customers, is our another visibility, customer and enable updates we SaaS and

deploy I customers for to and to resources diving time easier should upgrade, lower saves in SaaS which is scarce into Varonis response, spend significantly to result has moment is incident the is proactive would infrastructure for a like key quicker SaaS offering. and differentiator of two any and And costs our third, deeper easier maintain value. our SaaS time to another Second, season. which headcount, and

customers across customer proactively base notify incident As world-class orders investigate who suspicious team security reduce their service incidents. part of the to team growing potential This will the improve ability and get air our customers to activity, from provide and SaaS customer threats of magnitude alerts on pressure entire stop make more power. the subscriptions, cover this SaaS response the watch our and of ability

benefits, we top are introduced consume we on of we are the year. strategy these as doubling On it easier beginning down Varonis to at of the making bundling critical last

customers and received simpler We reception protection and who both Varonis have platform in a revenues. great former discussions, who from from deal pricing upfront seen sales the force initial benefit the

our is our new win-win for company. and The strategy a customers

customers deal. Our from our platform value initial in receive the more

Varonis For is what story business matters the know to our is force, them achieve, this down tell application. and our their important selling store are that customers Varonis it know why approach. our we our data protect an to easier most that largest They and customers and on sales doubling help outcomes platform

an security platform receive business achieve help autonomous outcomes Our updated ensure packaging their that on day one. them that data will customers

are Now how offering. me through see should for platform, that I an the customers some it review let on update value have we to we our of making SaaS that provided easier benefits of realize you with Varonis the

we SaaS help deploy this, are will expected First, result risk our think the cycle, our we updated packaging will to should to simplify go-to-market infrastructure greatly cycles. motion sales customer and a result shorter easier which requirements sales reduced. also are quicker in in because Along expect pricing assessments, be discussion, product shorter the of core

total Second, approach to is lower which to of XX% selling driven pricing justified and a our uplift, XX% new ownership customer subscription on-premise platform the launch be as by offering. our product's cost by largely compared

And more larger that customer renewal initiatives. even and we quicker rates to expect to improved faster margin to expect these scale. as better lead which time and easily, customer in We customers value to innovate and us SaaS our profile our greater will benefit satisfaction lifetime support we value help

we very still to initial this is the are see of benefit. transition, proof It early beginning in but

intellectual SaaS privacy originally the deal because X,XXX deal on turn customer with I discuss that briefly CCPA This wanted realize. quarter. employees from and and global comply key Guy, to requirements. infrastructure packaging could improve quarter during with deal we was detect A ability to and of company the OPS to call fourth switched cost Before became QX Varonis property a its GDPR respond organization to capital illustration. data threats the savings this customer to and a to resource This and want wins I was an of over sensitive

in exchange online the The purchase XXX Active and already environment. and we're protect the Directory Box Microsoft supplement to fretting to protect discussions Windows, packages and to and edge with capabilities

purchase At SaaS. SaaS platforms customer will environment health the a driver. perpetual the ago, will existing growth number double-digit base power originally to protect licenses a Varonis and same time, our continue its serve upgraded key is hybrid window of weeks of OPS to our and A customer care a organization, of as a couple

reduce with lower cost its customer the due and This greater was renewal ownership win-win automation will Varonis. benefits infrastructure customer from a and of to The costs. for total

as a an result ARR the recognize will We conversion. of uplift in

forward and we initial Day excited by at are We look the Investor our on driving to SaaS reception sharing the the how years March see growth of coming in doable our this XX. Varonis

Guy. efforts With our over transition a and Finally, we turn this their past for tireless to to would this to I XXXX. excited call like make Guy? in thank year, are me the team that, success let

Good Yaki. everyone. afternoon, Thanks,

our how more the update to views our customers. full XXXX transition, environment color outlook, and on initial quarter my on is year of to addition providing macro time progress the fourth our plan affecting In our today and our updating of I focus SaaS performance to

with early we're SaaS signs the rollout. start Let's new our from seeing

Yaki of we're the confidence when XXX fourth from while seeing our transition early trajectory nearly ago. As customers us announcement during this quarter made days in sales as behavior the the and gives very our the compared first anticipated increased to mentioned, it's transition, we in force still our

for $XXX.X we macro both was up benign environment, bottom fourth softening guidance. came the the end results on of slightly macro or year-over-year the adjusting with environment, ARR our deterioration, a our assumed ARR the more Russia. We guidance it we the in see in and than did above year quarter of top the the FX but million, XX% Despite what Regarding and XX% ended of line.

up operating breakeven, approximately $X and In in leverage million measures we took the the the the quarter, from last fourth business we expenses. were which cash negative inherent manage free reflecting model our year, flow to was

performed and approximately represented and XX% quarter, In we whole as expected than new of a upsell ARR. the better SaaS business fourth

below but SaaS the XXXX with slightly Cloud, gravitated which of optimistic announcement us the our was number the stages, pleased approximately cautiously very the in outlook. once SaaS our about our For DA was It's we by as expectations, towards are very still $X.X seen quarter of the million the product introduce product. impacted believe fourth leaves Varonis sold new selling early we but which we we reps year, behavior

the what a elaborate like on to from saw perspective. Now we I'd macro in fourth quarter

our impact our negatively As business of business assumed to began the European we and our cost, QX as to guidance, economic sales environment North deal impact cycles. scrutiny saw macro and board, in we America longer Across worsening continued the additional well.

have our the pipeline to deals the expect competition have deals to lengthen of remain closed, continue that as slipped Despite ongoing in not scrutiny. additional this, and QX since deal in slipped as budgetary the lost but cycles Some a of the were that to result to continues build we pipeline.

the engagement uncertainty and In customer from we on optimizing to and new our in interest publicized economy customers. spite existing continue focus spend, cloud see of healthy widely the

more customers our XX, ago those purchased and ago. employees up a and or As XX% up purchased from years six with year customers more XX% years last four of XX% or two licenses, two XX% of XX% or from December XX% more year XXXX, of licenses, ago. XXX

help to plan changes understand We metrics. will better Investor the this earlier, packaging at next trends month. you to our that introduce last be Due discussed provide we SaaS business new Yaki quarter to that KPIs these our Day the in the

our subscription rate XXX% and adjusting dollar-based was or Lastly, this FX customers XXXX for XXX% retention net for ABM Russia.

fourth quarter detail. results our more to in now Turning

I numbers, ARR. into take importance a moment I'd the like you the get Before to of of remind to

And going important. You've talk we direction quarters. with more company metric saw heard will the because for talked the about me We forward, six this even become was this about ARR only metric this the that past leading as moving. the

model the indicative been the transition in from ratable business SaaS period, of statement the past. our have a of shift they fully metric the business is make XX% with upfront of the income During in less deal stars will the than deals, our north term SaaS period, not health licenses where our of this revenue value investor subscription flow approximately recognized differences understand slide and treatment a transition Throughout because your the be speed cash for the free on-prem transition. help we've included will ARR To of and you impacted are they better presentation. versus in our by accounting to the

XX% for revenues QX year-over-year FX Now million, Russia. or on adjusting up total and were XX% numbers. $XXX.X the to

as a approximately which fully our again, SaaS products. and services quarter, million, same having subscription our versus During on-prem $XX.X in growth of our were to last quarter revenue rates, renewal result X% the the were had year-over-year million, recognized recognition compared over revenues increased of mix, our are headwind booking year, we $XXX.X a ratable to the sales rate Subscription upfront as were maintenance XX%. revenues and as

XXX When looking like services basis basis was XXX approximately comparability: maintenance which and the points. for and our impact of the was exit on-prem point headwinds, growth our basis to business in a headwind; conversion total three the headwind; year-over-year Russia b, at a a, c, perpetual I'd call on reported out XXX to a rate FX of maintenance basis, XXX was basis of subscription points, points another

revenues reflecting $XX.X the grew $XXX.X and headwind or million revenue, the in revenues the In a XX% total America, from mix, a XX% North too. or EMEA, region X% or The XX%. economy was rest of total of slowdown to of In in SaaS total to revenue. X% Russia, million for FX million grew and revenues of grew revenue. XX% growth $X.X XX% Adjusting world to

down million. Moving a quarter the was for XX.X% XXXX. statement. quarter compared fourth fourth non-GAAP be results Operating the quarter profit the going I'll representing in $XXX.X totaled of forward. income million, fourth gross $XXX.X in XX.X% discussing of expenses margin to Gross the

million was of in an margin or same operating income $XX $XX.X period XX.X% year. an operating compares this fourth million a As to XX.X%, of of quarter or operating operating income last result, margin the

accounting the program, to After points. basis for the shekel XXX our related was hedging basis in expansion XX headwind points

increased fully to ratable a quarter During year, headwind as the result our versus sales we mix, operating the which X.X% recognition margin upfront booking quarter, to having in products. had the subscription on-prem as approximately recognized SaaS our compared a last same of our of are

diluted on we quarter, and short $XX.X diluted outstanding million the share $XX.X million, fourth income our the cash During of driven the XXX had income This XXXX. XXXX, income income fourth net per and income $X.X XXXX diluted respectively. of share to shares compared for income million $X.XX interest quarter of based per for QX million is quarter or on approximately was of or of financial and investments. Net by $X.XX XXXX QX million of XXX.X for term

As equivalents, deposits. XXXX, cash, of $XXX.X December we had XX, in million cash short-term marketable securities and

million For million ended December compared we generated operations of same from to for $XX.X months generated the $XX.X million CapEx million to last last was year. cash XXXX XX $X.X compared $XX.X period the XX, XXXX, in year.

headwind capitalization an $X.X cash million in Cuts negative XXXX million $X.X in Free improved despite Tax to XXXX, from million Jobs approximate $X Act R&D provisions. and from flow the of

our million which measures from X.X fourth quarter, remaining third year purchase decrease the have on ended the X% with headcount During repurchase reflects approximately a we share shares average and which repurchased million at $XX.XX, $XX.X we We of completed employees, quarter. quarter, the the X,XXX in taken, reduction price were the fourth an authorization.

I Total will briefly to full grew results. XXXX now $XXX.X Russia. revenues or our and XX% year adjusting recap for million FX XX%

hedging for was program, Our X.X% Shekel was X.X% our points operating headwind year the for compared XXXX. adjusting on from points. margin basis XXX XXX After the basis full to expansion

also softness From we quarters more EMEA and in in are in to North four and X.X increase in an the economic continues longer continued conditions. worsening other America Turning XXXX. which to among of one perspective, assumes a in our factoring economic expectations additional of factor to worsening board, both a in cycles scrutiny, This -- across detail. conditions guidance quarter, sales unemployment X a budgetary versus the macro and respectively, of

we are From six-month when new in comp began a early introduced. plan transition ramp-up standpoint, in January period, was SaaS factoring the a sales which

SaaS. first as half comfort force will force sales deals as well last on-prem new impact in from and may assumptions turnover gains sales second pipeline sales the learnings are as also longer the based the lower assumes product transition. in sales to our selling primarily year, our cycles increased guidance the Our and the productivity quarters convert on These in subscription of first as

a is these of create uncertainty, contemplated all already guidance. in of factors level While this our

the our quarter. from quarter I from into first numbers, sales and product the now a our in our upsell and the fourth previously. new Before assumes new customers of encouraging get SaaS reception mix business SaaS year reflects full and This up X% to our guidance force XX% initial ARR,

is are we two-phase this SaaS a earlier, the we if will wants on. to But which base have initiative. metric just success of X, course, which and help converting the our the on In SaaS X, we customers transition. do. as this to customers, we initiated, work gauge come approach Phase of always Phase later focused selling an will existing new existing you benefit customer We them with to of SaaS of our will,

is new divided and clear, mix be business by To the SaaS ARR. and upsell new SaaS calculation ARR total upsell business

example, of we numerator would that mix and $XXX,XXX, a nominator the renewal in we if $XX,XXX at of SaaS calculation. only then the to of had For the $XXX,XXX the SaaS upsell include incremental converts

our to guidance. turning Now

representing negative of negative we of first basic and $X net million total negative negative operating XXX.X assumes the to and of diluted This range quarter $XXX million $X.XX million $XXX XX% expect in million non-GAAP the of growth outstanding. and shares non-GAAP share to XXXX, diluted $X per XX%, million, For revenues $X.XX. basic loss to of to loss

XX%. XX% representing $XX million, million, full the $XX $X year-over-year million of the million cash headwind of $XXX we year to related includes XXXX, of of of TCJA $XXX to million, R&D million which growth the revenues capitalization million representing ARR of of to to provisions. XX%. Total $X XX% flow to $XXX For to $XXX Free to million expect growth

$XX million This expected non-GAAP Non-GAAP $XX and share to XXX.X shares per of million in operating CapEx million $XX outstanding the diluted million to diluted be to is income assumes $X.XX. net range to million. of income $X.XX and $X

any on unlock for managing which, remain growth turn, long-term stakeholders. and value for SaaS we Varonis laser-focused thoughtfully on summary, condition business under in all will transition significant In our execution our economic

on I person joining for Investor Day seeing us XX March York. in New at today. Thanks forward you in our look to all

With that, questions. happy Operator? to we take will be

you. Thank

question-and-answer question comes now Instructions] RBC line session. the will from first conducting And Please We be Markets. with question. Matt with our Capital [Operator a of Hedberg your proceed

Yeah. be fast you're This Matt on is Matt. Thank think insights using this the on the subscription on [ph] your force? a for for of guidance your that helpful comment transition. Guy, what's in in you subscription given success little with from that pace macro, congratulations, of the the you. in quarter I your And same transition, guess, Johnson learned to and transition. rapid with you what stages transition conversations your about a more and And might some you're SaaS made seeing just based that's different early guys, us sales it about customers that the maybe on hear especially these I and

a That's question. great

we when offering very, days really is said, of very think the look and that positive. transition. the sales our at very in introduction With both team introduced the we that customers only our that feedback from ago, early it's XXX receiving I we're the SaaS

taken that the of previous from lessons we've transition. lot So there's a

sales in lot started of and we from January that's when deal when comp factored perspective, cycles why six-month the But a the really that environment, new in just factored and more kind the And scrutiny. introduced factored ramp-up we a in we the some we we And longer macroeconomic SaaS deterioration plan. guidance, build of period. in

of sales SaaS. new top assume force in comfort and of year, are also try also the going But half in lower our increased productivity selling we on-prem convert that sales that we to kind pipe and on force the of are that, in to first turnover subscription assumed product. sales and deals that, sales them of as the teams convert our as top the of And the try some on gains

All the that of months But they the are these guidance, the I will is feedback been that our into that mostly in extremely first we've received of baked year. overall, and the you six positive. impact has assumptions can expectation tell us

the Thank with question. of proceed line you. Stanley. question Please Hamza Morgan And the with Fodderwala next comes your from

evening. Hi, for taking guys. Good question. my Thanks

basis saw bit quick on little you with better of was clarifying couple EMEA, QX. the than came rate that a there growth Is seems expected? questions. a consistent currency in Just region you it It say like to a fair in pretty constant what

you about thinking Guy, into SaaS then bundle doubling about a ago? upfront on more about discounting how talked you adoption? going talk staying or are adoption to up to And less Are about versus bit drive -- a Thank thinking you. little SaaS that maybe the year down Can bit get a or you're we those strategy. 'XX same that they the

was all in the the the what it's about adoption we And bundles, value. Overall, Europe expected. regarding just

a just very, which SaaS in strategy. how get the with evolve. customers reaction early SaaS we bundles the see our far, just encouraging. works the extremely well lot very to need initial But will And still . it innings. of so The is With is automation,

actual EMEA when Russia, saw we Russia look in and with that macroeconomic XX%. sales cycles more excluding at environment we definitely FX, on longer of were at we when FX percentages, as the deal And constant QX. definitely factor scrutiny, basis, yes, that QX it just business, we saw X% currency a and in as effect Europe QX. of said, in well the the kind With and on in the the in of to the kind was exit at revenue you touch of and mentioned, the Matt, as you

look guidance, this SaaS that of continued deterioration of as and And the fact the point for baked the into kind rest the consideration And of we from taking when the ramping that transition kind at we year. kind well. we're of XXXX up in

line Please the Barclays. question. question Saket of next proceed from with Kalia And your comes with the

to Thanks my it guys. question I'll Great. you. Yaki, for maybe Hey, direct here. Okay. taking

of easier lot Cloud the stuff if -- curious was a So customer wondering early share our went of of you customer them, this gotten? you've I with just I'm feedback buying but days, You in here through is SaaS fun some early some just but because the that could because it's more early or it maybe early. applications been it's Varonis is it, points understanding hosting on because think covers or to main perspective? else? is Varonis the very support, a And from something do again, still What customer you selling have right, that

part outcomes. The are regarding a without complete game main selling doubt outcomes. the the It's changer a

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our we've seen the automation, problems excited ability outcomes, on everything very very, signs. far definitely from are the to so encouraging We many very serve the stability,

Citi. your next Our from Instructions] line with comes proceed question [Operator of you. Boolani Thank Please the question. with Fatima

you. questions. for evening. is for you this taking my good Thank Guy, Hi, one

business? selling XXX% you. Thank incentives these mean program SaaS to are be around incentives curious, deemphasized you to to program it. and clarification entire would sales You that selling. selling created or platform. compensation Any more great. the less behavior drive that talked I'd sunsetting I'm shift appreciate there about SaaS mean around introducing completely term you've a that I and entirely new does

to and great build of we Fatima, do When comp strategic align the it's what question. company to perspective. a try trying we a it plan is the from kind

think on lot a where align targeting Phase worked of you trying going, it having them kind kind SaaS. new the we to customers and that Phase sell when gave the X, back about So of And about we trying to company Phase X goes them. is color to and X

of more the to progresses this how is whole see to to to we where But as and plan that on So and want building focusing they really align to along. it's we reps give that's of go new the our a kind selling a character. Obviously, to art we'll want plan if Phase comp on X of comp color an -- of there's We And go a a do combination the concept and we SaaS company is science. focused having that, the customers. SaaS lot selling try customers. align new

next Truist with Please proceed with question Joel comes of your from question. And the line Fishbein Securities. the

like-for-like, if SaaS my Thank this you is uplift know selling it's you. guys. I would can Yaki, regard SaaS of bundles that the share justify I how works. to And thank but you're solution talked people's that it's platform. in early, you XX% what I'm question. you actually you curious is -- of minds about share just think with the to for guess for transition to a a on-prem that's the price? taking both selling lot on And how really that XX% with I

can this justify ownership and the a And total the we very bundle, to easy customer. that's coherent us of we very the it it's show even think cost because built to calculator, unrelated for on prem. I is to sophisticated and

So well. the far, understanding very

the customer bundle, of the want buying automation. easy for day, it's In end the terms they of at because the

bundles. And is protection automation, to automation a take in end the provide really is taking of data end. that the an out is the of you only get is means bottleneck to once If there The you way hard. back, lot process. end data. buy always issue And very really is an The to all a step security, you're the

the the X licenses, bundles, with many X X times. And equals plus it's

cases, So data. very Everybody just need ownership of automation. and to it cost very -- This that in of they lot lot understand protect well. a Total most good ROI. of a works provides

so that So, the very see we far, offering compelling. is

just down And bundling, that on we the on-prem success we're touch subscription the like to bundling. basically with on Yaki said, saw the doubling

So really both the sales lifetime in the customers, simpler metrics but it our size, and deal, over the on buy well. more retention renewals more because initial as the they'll the on deal see discussion the they'll also which a and also and deal But initial time, it's customer helps value. initial value really, increases force

sell not XX we're products. both Varonis outcomes. We're customers and trying our sell to We're to our that platform force. the really sell trying to sales the helps and trying different So helps

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from of proceed And question. question the with next with Essex your line Brian JPMorgan. Please the comes

a on question and conversations it indicate year. the guidance sounds conservative evening. it Good taking of if taking you. for you you one kind of kind to Maybe half-weighted seasonality Thank is the you're for we're Yaki, having that like if deterioration question. Thank they're great. Hey my approach is this -- more with side of modeling kind incremental back CIOs cautious spending will.

how nicely. regard with deferrals stratification with spending of you into quite your might what for building what on just top the are us are and is that scale? year? does customer you like about like conversations have, prioritizing environment be this, might as like what your be think how to And relates half the understand assuming of year for back It that? backlog data having? then security guess, to spending within I on help security outlook deterioration Or that the the intentions Could And better-than-expected priority you're they they it half spending the sounds conversations customers second of that fall to in your

automatically. the customer digital be -- to the we And protect the is technological Most of have security the efforts platform assets. with to this completely SaaS objective now

is SaaS, postpone But effort. hard. customers us see And to easier a see that budgets, stages. lot and is to but still they of it's we to Many that something show get need solve to don't trying you're for it. times, what So we much early the put value now will

force time and sell -- believe how every we really it of our sales to in value we sales friction the the motion customers. will with in So journey it, every in in the right the will in the customer when way, know so much that step reduced understand

exciting. this So is very

data and always is scrutinizing and really The to we hard the sold historically -- protect where benefit critical setting easy need environment, very the that understand other times, And where almost thing and because almost with from for at put this to every analyzing and organizational times in dollars, after we hard you for need that to they very COVID, very it's data. do many we it. organization, what easy it want to

the all So a where directory services. of have right cynical with lot you data collaboration,

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I see there. And customers, assets just items with budget more are the time, that. high almost protecting a that other protection, customers that strong be data there priority that if and believe for tell I this cyclical over -- a is automatically, because trying digital come many should that see you you many can will I are also solve. than security that their is secular of can probability I for every more more organization priority to top and will believe line it's there you them. plan out and that So are it time, is that do it towards a a think we top problem us most

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from of comes your Roger with proceed question Thank And with Please the our Boyd next UBS question. line you. Securities.

quarter. Great. SaaS the drifting Guy, Advantage Cloud quarter. And to about attention on Thank force congrats my you taking you for in over sales talked the the offering question. maybe Data Varonis

opportunity how calendar SaaS And sold Thanks. like for been there? there? 'XX, there for the you think Advantage Varonis bundling Cloud synergies has mix what be SaaS broader about there now SaaS maybe to of should versus for a XX% we sort DA Is that Just launched? contributing as are think Cloud curious, about

sub try and questions the address I'll Well, within question. the

First of XX%. SaaS the from all, mix we increased X% days XXX to ago

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positive the us being cloud ahead. for in a tailwind very about We feel the DA years

we of resides, you when protect the applications can a data talked kind And is look that we and into had that advantage, wherever SaaS, about we that our support before. customers that synergies that support value great with customers that Yaki significant new think can gives now a couldn't them. the it I fact Varonis before to at combined there, enter and we the

see has. repository, look And and you you the easy what applications, data almost every it's the that at something we are it's organization what also, of very cloud the understand is supporting, if adoption to SaaS that

access with automatically. doing really and So all users protecting are to is And we data. that protect data what happening wherever all to have the today in you is the data flows is Varonis do critical applications, it APIs it that want

in it's platform organization. whole the that something believe we that So almost every

Company. question [Operator of Eyal Instructions] with & your Cowen from the Our Please Thank you. line Shaul next comes proceed question. with

Thank SaaS, you, U.S.? progress. SaaS reason, seeing Or afternoon, between EMEA? guys. Are buying SaaS, and more Congrats the pronounced on the you hi. behavior some for rapid Good is similar in U.S. the on

Hi, Shaul.

Varonis and in is it EMEA the the for we U.S. only, IX, terms the did encouraging. in of So open SaaS, we've pipeline in done it now We only it

so will the I the a don't don't of But major non terms have you time, hardware people. this just objections. or just details progressing. We in have have we And in give that objections, as more it's I see we all really general, eliminated don't

you data want to So way it it, to protect do if clinical is you have the to and use our platform.

line Gallo And Please question. your question Joseph comes our next with the of with proceed Jefferies. from

since wanted for you guys. growth important on Guy, Cloud think the Hey, DA guys. that an that's mentioned takes time. vector question. you it up Appreciate I to just such I follow

issue? of mentioned specifically takes product. the issue? a office that. little comfortability Is you if a product a provide Is issue? curious it it awareness You it on more What it could that sales is Just kind an time? feature detail Is

see. I see. I

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the it of it. that how tremendous very some Guy structure, a Once it, have that you a for a done It's a force -- engine mentioned told repository you're something you of get we SaaS have lot to you're us is the you have our is lot we time when Cloud that two is But of it's release growth and we configuration always row, doing you DA just friction. believe you and takes time permission like SaaS, this that What also, Varonis sales quarter, in of is connectivity. API This complex kind us. you it -- why -- everything, sell that in in it's a quarters introducing knows every if something you when some like to will. -- fourth takes data major ducks also the have that, when there lot

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And Piper with next from your comes Please question. with your Rob question line Please Owens with proceed Sandler. our question. of proceed the

taking questions. for Thanks my

term? Thanks. on-prem the the solution. SaaS are Just And and with map come the in near feature parity road down what's you curious pike on for to currently at the

the question. Thanks for

-- in stuff be they some the advanced parity, are we not are somethings that we SaaS, in than on-prem parity. need feature So to much the on-prem, in starting more complete but are

fast it's for we with It's and new every Varonis on-prem to very very, customer a get cloud. a moving fit customer, the are parity. We the fit of to XX%-XX%

prioritize. many also advancements We have this new we in so platform, really

thing, other the is cloud see of we The usage. beauty the can the

stuff the how see doing customers, affecting and our can we we we prioritize can if You that are effectively. prioritize can

the Craig our your Chad Hallum. next question from question. Please of with Bennett comes with proceed line And

for my taking question. Thanks Great.

So maybe for Guy.

the in Just early SaaS seems pretty obviously traction seeing you're significant it -- like platform.

seeing from reiterated so you XX. lift that, sales to ARR for ARR XX, you're this year overall XX that up assuming fact, of to I And a to that effectively an tailwind you sticks mix X price relative ARR a to uplift priced? that's of ARR or Wouldn't what you SaaS upped if, mix kind be higher talked or think of in And about before. your higher mix

We our six-month we to we -- it slightly, This much. but that move We time year. the kind wanted ramp-up beginning talked is because factored XXX we're at days, overall number, this Chad. the saying, when gave did why Yeah, it definitely very from like increase a great we in. kind And number, we're very didn't the the early lot And SaaS the of said, increase look our to move you with feedback start you're which lot of force. the the XX%. ARR of over in saw the of of a look transition. X% when it good didn't mix at But about introduction, offering. traction the With to SaaS feel last for customers we at we sales SaaS gained both confidence the that that's and much. us about you great

And with Please question proceed Andrew from your comes Fargo. the of Wells our next Nowinski question. line with

Thank you. SaaS a question on had the also. I just mix

for excuse or in the year. XX% said QX. then -- XX% business generated you me, XX% SaaS from the think in new I and So of And QX you

continue et wondering up ramped increase and sales why cetera. reps wouldn't So the to I'm mix as year the get throughout more

why wondering just XX% after flat it's So QX. at staying

happen XXX which days this in get we mix baked is and the the But we confidence. before, a first I in in of friction of very do process, lot it expect that early already some and guidance. we months will was a X% we're transition, said ago, again, gained again, like the six

pipeline we'll everyone more as transition, this see and kind as give obviously through we of the update will build. progress color we We

progression we'll But we possible see so moved early to metrics up and the XX%, be it this. and as transparent the because to transition and everyone to transition, in And within this the want as -- then we're from update throughout and X% give give that progress start we the with can transition. we'll allow

line Please Robert the with Baird. from question. And our next Kothari question comes proceed with W. Shrenik of your

for Yaki about question. for Hey, for good a evening. my quick One Great the Guy. SaaS hear thanks progress. follow-up and taking And to

macro to impact and customers conditions mentioned into slowing both America. continued EMEA you the of across the about North crawling worsening Yaki, board, continue So

in the I now comparing trending is but weakness you U.S. some U.S. your your line? or above expectations on course, the on Just there comment the you quarter, commentary cited federal quick Can a with in it Federal mean last also of EMEA trends? revenues, trends, was just comment.

quickly margins. very the on operating then And

You X.X% the Thank -- know structure costs to support related headwind sales headwinds? the mentioned incentive hosting versus wanted between about you. and just breakdown

actives pipeline in building that protect many want sector critical healthy data that has This market. federal are they did to We lot data. the a and a need of the in very general

data market. massive this believe protect in and we to want you do very ours, stores can solutions the in we federal new like If that well

impacting just critical economic an have usually you for you spend. again, But IT slowdown, wants it's it's when And business. if it, essential data, someone have every

that can economic very effectively. any tease we So believe slowdown we weather

XX% we're indicator our we've sure one the In wanted a for that about you've -- the income health deal's less model business We leading of ratable of the fully shifting to everyone past. me metric the the ARR talked the a we margins, revenue. approximately and statement probably heard terms make to about SaaS It that than talk being where things of a last quarters. that upfront of make understands our of been indicative license it's kind from lot with of term when business six in will the recognize value the

that the by way two the So the is revenue is most between headwind recognized obviously impacted we're talking the about models.

And they're that's and why impacted not stars flow transition, ARR because north we by that transition. the our said cash throughout be will the the free speed of

happening transparent Investor just not So during to with investors we'll we our allow us at try be color, announced more and to on obviously, as XX, give headwinds, work this and color analysts on Day, and we'll KPIs possible on color March as we'll more transition. we'll give the as but give

of Thank Instructions] with your you. Wolfe comes proceed Joshua question. Research. with Tilton from Please line [Operator the next question Our

guys. Can you hear me? Hey,

Yeah.

Great.

one Just for one quick me.

to message derisk outlook walk the have guess I XQ all X%. change to growth for feeling tended same? that outlook you into away real the guys is I and that away the derisked think only guys call know earnings you walked initial of be there's kind last with XXXX that we the message we I the no growth XXXX. XXXX? was the guidance the still for guidance from a Should

more I line feel understood if hard -- whether think guidance hard to That's have we question hear, is And uncertainties. factored the about I in question. we but confident still our that's macroeconomic and the of the very

sales to basically is customers extremely the SaaS force. days we are and confident more yes about ago. XXX were both. today that we positive. has offering thought feel versus both from about reception We answer where of our been where I talked we The our The

cycles, budgetary the of EMEA With America. we economic that board. across We conditions assumed said, the sales softness for North of and worsening conditions. XXXX, We worsening when the guidance we economic longer the in basically assumed did in look bake scrutiny, additional at

friction the wanted the offering, that guide that six both account with time for might So deterioration months. we introduction the of up basically better today some and we of ramp business. as the But about feel for SaaS of macroeconomic to occur and XXXX, would we

from our proceed And of question comes your the Please line question. JMP with next Erik Suppiger with Securities.

little the Yeah, taking through bit things It about that may linearity Can quarter? question. just thanks you talk the like the saw you sounds eroded. for a be

kind on end are slow? sales the organization. of about then what expecting you the also of in turnover did you sales the Can turnover organization? quarter you And So some in the talked comment

when of of behaved the software do didn't seasonality. similar where couple of large kind seasonality, businesses, actually quarter we the to the quarter. in every We So terms last enterprise other at business come weeks abnormal component in have behavior we see the of of similar a look any very

there. trends major any see didn't we So

In from the the reception of call can our the we've I into terms offering, increased perpetual guidance and we've has of you been kind extremely turnover, SaaS as tell lessons on baked which to times positive. the some is some this the that factor that mentioned of on-prem turnover, that several But taken we from of move in.

about that's But expectations. now, everything it. in of thought with So our way line going of kind the kind as is we of

Please question. your our final Shebly from question line the with with comes proceed And Securities. FBN Seyrafi of

you Thank much. Yes. very

you you in this business about trends large How the in smaller Can noticeable So year? was North versus talk of a January the I early to delve end did month, headwind? and of finally, between the customers or last And different SaaS pickup saw American the America customers? to want much deceleration XX% in into the February, see February, North XX%. from XX-point that growth, you like

when spillover and with to macroeconomic some the we increased that some region. And our guidance in last with EMEA America scrutiny was in said we we that expectations. cycles North quarter, in from the gave see Now expected to conditions sales longer line deal

kind it last in when we line kind guided quarter. how results that of saw saw the in we we So of QX with were

good has mix we'll we color that I we SaaS the and kind guidance some progress and of reported revenue give just have XX. update only Day tell the started. of we'll North feel headwind was There We SaaS from in guidance. of shift on about March January gave could QX. XXX basis America we that provided, points And you, But transition with our as our during the and Investor on terms in February, February impacted

questions. are At no there this time, further

the back I'd floor over like Now for any turn comments. Perz closing to to Tim

Thanks York. We March on at for in joining you our XX forward look Day today. all Investor us to New seeing

concludes teleconference. This today's

now may a And participation. day. time. this end your You disconnect have you great at for your Thank