Varonis shares plunge 45% after surprise earnings miss
Investors punish Israeli-founded cyber firm for lack of warning as cloud shift raises doubts about long-term strategy.
Israeli-founded cybersecurity company Varonis published disappointing quarterly results and announced plans for staff cuts, without issuing a profit warning beforehand. The company’s shares plunged by more than 45%, bringing its market capitalization below $4 billion, after trading above $6 billion for an extended period.
The sharp drop is seen as disproportionate to the scale of the earnings miss, suggesting that investors were reacting more to the lack of transparency before the report’s release than to the actual figures themselves.
Varonis sought to calm investors, saying the weakness was concentrated among long-term customers still using its on-premise software, while its cloud-based SaaS business continues to grow steadily.
However, investors voiced concern that long-standing clients may be migrating to competitors’ platforms as they transition to cloud and subscription-based models, rather than remaining with Varonis.
The company said it will lay off around 5% of its workforce while lowering full-year guidance. The decision comes just two months after Varonis acquired U.S. company SlashNext for an estimated $150 million.
Varonis attributed the weak results to a slowdown in subscription renewals for its software in the final weeks of the third quarter.
Founded in 2004 and headquartered in New York with 2,000 employees, most of them in the U.S., Varonis develops a cloud-based data security platform that identifies and classifies sensitive data, removes exposures, and detects threats using AI-driven automation. The company is led by CEO and co-founder Yaki Faitelson, who also serves as chairman and president.
Varonis went public in 2014 and has experienced cycles of sharp growth and retrenchment. Over the past year, however, the company has delivered no return to investors, despite the broader boom in the cybersecurity sector.
Varonis had been expected to close 2025 with revenues of about $625 million, reflecting 12% annual growth and positive operating cash flow. Under its new forecast, revenues are now projected to reach between $615 million and $621 million.
