Varonis Systems, Inc.

Q2 2026 revenue was $180 million, up 18% year over year. Gross profit was $139.9 million, and gross margin was 77.7% versus 80.6% in Q2 2025. Non-GAAP operating income was $3.7 million, or 2.1% operating margin, versus an operating loss of $1.9 million a year ago. Net income was $5.3 million, or $0.04 per diluted share, compared with $3.8 million, or $0.03 per diluted share, in Q2 2025. SaaS ARR excluding conversions increased 25% year over year to $598.1 million; total SaaS ARR was $726 million. Q2 conversion ARR was $11.4 million, and non-SaaS ARR remaining was about $59.3 million. Year to date, free cash flow was $69.1 million versus $82.7 million last year, though management said adjusting for about $11.9 million of acquisition-related costs would put it at approximately $81 million. As of June 30, cash, cash equivalents, short-term deposits and marketable securities totaled $911.5 million. For Q3 2026, management expects SaaS ARR growth of 22% to 23% excluding conversions, revenue of $185 million to $188 million, non-GAAP operating income of $2.5 million to $3.5 million, and non-GAAP EPS of $0.02 to $0.03. For full-year 2026, guidance calls for total SaaS ARR of $819 million to $850 million, SaaS ARR growth of 20% to 21% excluding conversions, revenue of $735 million to $739 million, free cash flow of $105 million to $110 million, non-GAAP operating income of $11 million to $13 million, and non-GAAP EPS of $0.14 to $0.15.

Yakov Faitelson framed the quarter around a growing secular need to secure AI and the data behind it. He said AI and data security are effectively the same problem for customers, and emphasized that Varonis is positioned to help companies understand exposure, govern AI access, and automate remediation. He also pointed to more than 20% new-logo growth, stronger momentum in Atlas, Interceptor and DAM, and several customer wins where Varonis was used to protect AI deployments and replace point products.

Guy Melamed focused on the numbers, saying Q2 revenue of $180 million grew 18% year over year and gross margin was 77.7%, which he said remains healthy and in line with long-term targets. He highlighted $69.1 million of year-to-date free cash flow, the $11.9 million of acquisition-related costs affecting that figure, and $911.5 million of cash and investments at quarter-end. He also said the company raised full-year free cash flow guidance by $5 million and lifted full-year SaaS ARR guidance, while noting some late-quarter slip from news-related rumors and that July started strongly.

Analysts focused on the late-quarter deal slippage, whether the rumors affected customer confidence, and how much of the delayed business could still close this year; management said some of those deals already closed in July and more are expected in Q3. Questions also centered on whether AI-related demand is bringing in new buyers or changing the sales motion; management said the main buyer is still the CISO, with some involvement from Chief AI Officers, and that the company is generally selling larger platforms upfront. On conversions and federal exposure, management said the focus should remain on SaaS ARR excluding conversions, and that they did not assume upside from federal in Q3, effectively de-risking that vertical in guidance.