“One plus one could equal five”: Varonis CEO on $6.3 billion Proofpoint deal
Yaki Faitelson says the companies’ complementary technologies create an opportunity to build a major cybersecurity business as AI agents increase the need to protect sensitive data.
“We started working on Varonis in 2005, when things were tough and there was far less money in the cybersecurity sector than there is today. Along the way, we also navigated the 2008 financial crisis. We built a deep-tech company with highly sophisticated technology, and today it has evolved into a platform projected to reach a $1 billion annual revenue run rate by next year,” says Yaki Faitelson, co-founder and CEO of Varonis, in an interview with Calcalist following the company’s $6.3 billion sale to American cybersecurity firm Proofpoint.
Faitelson, 51, founded Varonis alongside Ohad Korkus, who is no longer with the company. For years, the two maintained a low profile and rarely gave interviews, until the acquisition was announced last night. Proofpoint will acquire Varonis in an all-cash deal, and the Israeli-founded company will be delisted from Nasdaq. Although Varonis is incorporated in the U.S., where most of its employees are based, its development center in Herzliya Pituach employs approximately 1,000 people.
Faitelson also lived in the U.S. for most of the company’s history but returned to Israel in 2024, a decision he attributes to the outbreak of the war. “Given everything that happened, I felt there was nowhere else to be,” he says.
An alumnus of the IDF’s Unit 81, Faitelson worked at NetApp before founding Varonis. “From a young age, I felt that data wasn’t being sufficiently protected. We started with on-premises systems and began transitioning to the cloud about five years ago. Today, nearly all our revenue comes from SaaS, which is growing at a rate of 25%, significantly outpacing our overall growth.
“Now, AI is providing a tailwind for the company. AI requires data, yet it accesses that data autonomously, creating potential security risks. We have built a platform designed to secure data against these AI agents while enabling them to work with that data.”
If everything is going so well, why sell now?
“Proofpoint approached us, and we saw a strong strategic fit and a window of opportunity to build a major company in this space. I believe that, down the line, we could even acquire Israeli cybersecurity companies, contributing to the local economy.
“It’s a great deal for our shareholders and employees, with significant upside, including the possibility that the combined company could go public again in the future. The deal allows us to pursue our goals together without getting lost inside a massive conglomerate.
“Proofpoint isn’t vastly larger than Varonis. It has 5,000 employees compared with our 2,800, and an annual revenue run rate of $2.7 billion. It has an extensive platform but lacks a product in our specific category. This is a classic case in which one plus one could equal five.”
What will happen to your employees? How deep will the cuts be, as often happens after acquisitions?
“It’s too early to discuss the workforce. Many details have yet to be finalized. However, there is strong interest in Varonis’ development team, as well as in its marketing capabilities. Naturally, every deal involves synergies, but the intention is to integrate Varonis employees into the broader platform.”
Looking back, when you see much younger Israeli cybersecurity companies being sold for billions, was it worth being a publicly traded company, or would it have been better to sell earlier?
“People at Varonis have made a lot of money over the years through RSUs, or restricted stock units, and most employees still hold them today.
“From a historical perspective, companies like ours, CyberArk and SolarEdge went public in a different era. That put Israel on the map and ultimately brought a great deal of capital into the country. An IPO creates financial opportunities for founders and investors, and it allows you to control your own destiny.
“An exit is an exit, but we take pride in having weathered difficult periods and built a company with a $1 billion revenue run rate, a company that could just as easily have been the acquirer. If you want to control your own destiny, it’s better to be a public company.”
