Revenue growth accelerated to 18.3% in 2026Q2, but gross margin contracted to 75.3% and operating margin remained deeply negative at -22.6%, reflecting ongoing investment costs.
Varonis Systems, Inc. (VRNS) annual income statement — 15-year revenue, gross profit & net income history
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 | Dec'15 | Dec'14 | Dec'13 | Dec'12 | Dec'11 |
|---|
| Sales/Revenue | 688.1M | 623.53M | 550.95M | 499.16M | 473.63M | 390.13M | 292.69M | 254.19M | 270.29M | 217.36M | 164.46M | 127.21M | 101.35M | 74.62M | 53.41M | 39.78M |
| Revenue Growth % | 15.61% | 13.17% | 10.38% | 5.39% | 21.4% | 33.29% | 15.15% | -5.96% | 24.35% | 32.17% | 29.28% | 25.52% | 35.83% | 39.7% | 34.27% | - |
| Cost of Goods Sold | 157.79M | 130.09M | 93.85M | 71.75M | 69.84M | 59.4M | 44.26M | 35.14M | 27.68M | 20.87M | 15.84M | 12.02M | 9.91M | 6.48M | 4.93M | 3.52M |
| COGS % of Revenue | - | 20.86% | 17.03% | 14.37% | 14.74% | 15.23% | 15.12% | 13.83% | 10.24% | 9.6% | 9.63% | 9.45% | 9.78% | 8.68% | 9.23% | 8.86% |
| Gross Profit | 530.31M | 493.44M | 457.1M | 427.41M | 403.8M | 330.74M | 248.43M | 219.05M | 242.6M | 196.49M | 148.61M | 115.19M | 91.44M | 68.14M | 48.48M | 36.26M |
| Gross Margin % | 77.07% | 79.14% | 82.97% | 85.63% | 85.26% | 84.77% | 84.88% | 86.17% | 89.76% | 90.4% | 90.37% | 90.55% | 90.22% | 91.32% | 90.77% | 91.14% |
| Gross Profit Growth % | - | 7.95% | 6.95% | 5.85% | 22.09% | 33.13% | 13.41% | -9.71% | 23.47% | 32.22% | 29.01% | 25.98% | 34.19% | 40.55% | 33.73% | - |
| Operating Expenses | 681.61M | 638.07M | 563.91M | 558.89M | 521.21M | 438.33M | 326.84M | 295.03M | 271.74M | 208.09M | 164.31M | 134.26M | 108.75M | 73.98M | 50.04M | 39.66M |
| OpEx % of Revenue | - | 102.33% | 102.35% | 111.97% | 110.04% | 112.35% | 111.67% | 116.07% | 100.54% | 95.74% | 99.91% | 105.55% | 107.3% | 99.15% | 93.68% | 99.7% |
| Selling, General & Admin | 410.08M | 400.26M | 367.15M | 375.05M | 343.33M | 300.45M | 227.48M | 214.27M | 201.77M | 160.73M | 127.65M | 102.47M | 80.66M | 53.01M | 35M | 26.61M |
| SG&A % of Revenue | - | 64.19% | 66.64% | 75.14% | 72.49% | 77.01% | 77.72% | 84.29% | 74.65% | 73.94% | 77.62% | 80.55% | 79.59% | 71.05% | 65.53% | 66.89% |
| Research & Development | 270.46M | 237.81M | 196.76M | 183.84M | 177.88M | 137.88M | 99.36M | 80.76M | 69.97M | 47.37M | 36.66M | 31.79M | 28.09M | 20.97M | 15.03M | 13.05M |
| R&D % of Revenue | - | 38.14% | 35.71% | 36.83% | 37.56% | 35.34% | 33.95% | 31.77% | 25.89% | 21.79% | 22.29% | 24.99% | 27.71% | 28.11% | 28.15% | 32.8% |
| Other Operating Expenses | 1000K | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Operating Income | -151.31M | -146.51M | -106.81M | -131.48M | -117.41M | -107.59M | -78.42M | -75.99M | -29.14M | -13.42M | -15.69M | -19.07M | -17.31M | -5.84M | -1.55M | -3.4M |
| Operating Margin % | -21.99% | -23.5% | -19.39% | -26.34% | -24.79% | -27.58% | -26.79% | -29.89% | -10.78% | -6.17% | -9.54% | -14.99% | -17.08% | -7.83% | -2.91% | -8.55% |
| Operating Income Growth % | - | -37.17% | 18.76% | -11.98% | -9.12% | -37.21% | -3.2% | -160.81% | -117.12% | 14.5% | 17.72% | -10.2% | -196.12% | -276.13% | 54.33% | - |
| EBITDA | -132.45M | -134.21M | -95.68M | -119.78M | -95.93M | -88.47M | -59.51M | -60.64M | -24.98M | -10.09M | -13.51M | -17.46M | -16.02M | -5.05M | -1.09M | -2.95M |
| EBITDA Margin % | -19.25% | -21.52% | -17.37% | -24% | -20.25% | -22.68% | -20.33% | -23.86% | -9.24% | -4.64% | -8.22% | -13.72% | -15.81% | -6.77% | -2.04% | -7.42% |
| EBITDA Growth % | -21.79% | -40.26% | 20.11% | -24.86% | -8.43% | -48.67% | 1.87% | -142.78% | -147.54% | 25.33% | 22.6% | -8.96% | -217.35% | -363.64% | 63.08% | - |
| D&A (Non-Cash Add-back) | 18.86M | 12.31M | 11.13M | 11.7M | 21.48M | 19.12M | 18.9M | 15.34M | 4.16M | 3.33M | 2.18M | 1.61M | 1.28M | 796K | 465K | 453K |
| EBIT | -133.59M | -116.32M | -74.7M | -82.25M | -103.52M | -99.27M | -80.61M | -76.17M | -27.97M | -10.87M | -16.43M | -20.6M | -18.71M | -6.97M | -4.51M | -2.91M |
| Net Interest Income | 16.96M | 37.04M | 34.74M | 29.9M | 3.12M | -11.4M | -4.61M | 1.83M | 1.55M | 562K | 371K | 330K | -123K | -113K | 11K | -604K |
| Interest Income | 17.72M | 49.95M | 43.05M | 34.56M | 10.41M | 164K | 674K | 2.03M | 1.74M | 747K | 520K | 330K | 188K | 36K | 97K | 62K |
| Interest Expense | 763K | 12.9M | 8.3M | 4.66M | 7.29M | 11.57M | 5.29M | 205K | 195K | 185K | 149K | 0 | 311K | 149K | 86K | 666K |
| Other Income/Expense | 16.96M | 30.19M | 23.8M | 44.56M | 6.59M | -3.24M | -7.48M | -389K | 970K | 2.36M | -885K | -1.52M | -1.71M | -1.27M | -3.04M | -171K |
| Pretax Income | -134.35M | -116.32M | -83.01M | -86.92M | -110.81M | -110.84M | -85.9M | -76.38M | -28.16M | -11.23M | -16.58M | -20.6M | -19.02M | -7.12M | -4.6M | -3.57M |
| Pretax Margin % | -19.52% | -18.66% | -15.07% | -17.41% | -23.4% | -28.41% | -29.35% | -30.05% | -10.42% | -5.17% | -10.08% | -16.19% | -18.77% | -9.54% | -8.61% | -8.98% |
| Income Tax | -3.8M | 13M | 12.76M | 14M | 13.7M | 6.02M | 8.11M | 2.39M | 413K | 2.79M | 1.13M | 686K | 376K | 356K | 247K | 224K |
| Effective Tax Rate % | 2.83% | -11.18% | -15.37% | -16.1% | -12.37% | -5.43% | -9.44% | -3.13% | -1.47% | -24.81% | -6.82% | -3.33% | -1.98% | -5% | -5.37% | -6.27% |
| Net Income | -141.38M | -129.32M | -95.77M | -100.92M | -124.52M | -116.86M | -94.01M | -78.76M | -28.58M | -13.84M | -17.71M | -21.28M | -19.4M | -7.47M | -4.85M | -3.8M |
| Net Margin % | -20.55% | -20.74% | -17.38% | -20.22% | -26.29% | -29.95% | -32.12% | -30.99% | -10.57% | -6.37% | -10.77% | -16.73% | -19.14% | -10.02% | -9.07% | -9.55% |
| Net Income Growth % | -37.35% | -35.04% | 5.1% | 18.95% | -6.55% | -24.31% | -19.36% | -175.61% | -106.43% | 21.83% | 16.79% | -9.72% | -159.5% | -54.25% | -27.59% | - |
| Net Income (Continuing) | -130.55M | -129.32M | -95.77M | -100.92M | -124.52M | -116.86M | -94.01M | -78.76M | -28.58M | -13.84M | -17.71M | -21.28M | -19.4M | -7.47M | -4.85M | -3.8M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | -1.23 | -1.13 | -0.86 | -0.92 | -1.14 | -1.11 | -1.00 | -0.87 | -0.33 | -0.17 | -0.22 | -0.28 | -0.30 | -0.10 | -0.09 | -0.07 |
| EPS Growth % | -32.61% | -31.4% | 6.52% | 19.3% | -2.7% | -11% | -14.94% | -163.64% | -94.12% | 22.73% | 21.43% | 6.67% | -200% | -17.37% | -27.54% | - |
| EPS (Basic) | - | -1.13 | -0.86 | -0.92 | -1.14 | -1.11 | -1.00 | -0.87 | -0.33 | -0.17 | -0.22 | -0.28 | -0.30 | -0.10 | -0.09 | -0.07 |
| Diluted Shares Outstanding | 115.3M | 129.17M | 111.66M | 109.14M | 109.28M | 105.31M | 94.34M | 90.77M | 87.06M | 82.4M | 79.22M | 75.6M | 63.73M | 71.51M | 56.89M | 56.89M |
| Basic Shares Outstanding | 115.3M | 129.17M | 111.66M | 109.14M | 109.28M | 105.31M | 94.34M | 90.77M | 87.06M | 82.4M | 79.22M | 75.6M | 63.73M | 71.51M | 56.89M | 56.89M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
Quick answers to the most common questions about buying VRNS stock.
For fiscal year 2025, Varonis Systems, Inc. (VRNS) reported total revenue of $623.5M. This represents a 1467.5% increase compared to $39.8M in 2011.
Varonis Systems, Inc. (VRNS) reported a net loss of $129.3M for the fiscal year ending 2025.
Varonis Systems, Inc. (VRNS) reported an operating income of $-146.5M, resulting in an operating profit margin of -23.5%. This margin reflects the operational efficiency of the business before interest and taxes.
Varonis Systems, Inc. (VRNS) generated $493.4M in gross profit for the year, representing a gross profit margin of 79.1%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
Persistent operating losses
Metrics are mathematically derived from official filings.
SaaS Transition Drives Reacceleration
Revenue growth accelerated to 18.3% in 2026Q2 from 9.4% in 2025Q4, according to reported figures, signaling the SaaS transition is gaining traction. Management's raised guidance suggests continued momentum.
The 18.3% year-over-year growth in 2026Q2 marks a clear inflection from the sub-10% growth seen in late 2025, indicating that the shift to subscription-based offerings is translating into stronger top-line performance. This acceleration appears driven by higher SaaS ARR, with CEO commentary citing 25% growth in SaaS ARR excluding conversions. The durability of this trend hinges on whether new logo acquisition and product expansion (Atlas, Interceptor) can sustain momentum, but the current trajectory suggests the transition is maturing.
Gross Margin Pressure from Cloud Costs
Gross margin contracted to 75.3% in 2026Q2 from 83.6% in 2024Q4, as reported in financial statements, reflecting higher cloud infrastructure costs and a changing revenue mix. This trend warrants monitoring for structural impact.
The 830 basis point decline in gross margin over six quarters suggests that the SaaS delivery model carries higher direct costs, likely due to cloud hosting expenses and increased support requirements. While still above 75%, this compression is notable relative to peers like Datadog (80%) and Qualys (82.8%), indicating potential pricing or efficiency challenges. Investors should assess whether this is a temporary transition effect or a permanent shift in the cost structure, as it directly impacts the path to profitability.
Operating Leverage Elusive Amid Heavy Spending
Despite revenue growth, operating margin improved to -22.6% in 2026Q2 from -32.1% in 2025Q1, based on reported data, but remains deeply negative. SG&A and R&D costs continue to outpace gross profit gains.
The improvement in operating margin is encouraging, but the company still spends $176.1M on R&D and SG&A against $135.5M in gross profit, indicating that operating leverage has not yet materialized. The sequential increase in R&D spending (from $64.6M to $73.3M) suggests continued investment in product development, which may be necessary to compete in the DSPM space. However, the persistent negative operating income implies that revenue growth must accelerate further or cost growth must moderate to achieve breakeven.
SBC Masks True Cash Burn
Stock-based compensation of $34.6M in 2026Q2, as disclosed in financial statements, represents a significant non-cash expense that widens the gap between GAAP losses and cash consumption. This raises questions about the sustainability of reported losses.
With SBC exceeding the net loss of $46.8M in 2026Q2, the company's cash burn is actually lower than GAAP results suggest, but the magnitude of SBC (about 19% of revenue) is substantial. This level of dilution may concern investors, as it reduces EPS and can mask underlying operational performance. The absence of SBC data in some quarters (e.g., 2025Q4) complicates trend analysis, but the recent figures indicate a consistent reliance on equity compensation, which could pressure shareholder value if not offset by growth.
R&D and SG&A Intensity Persist
Combined R&D and SG&A expenses reached $176.1M in 2026Q2, up from $146.5M in 2024Q2, according to reported figures, reflecting continued investment in growth. However, SG&A as a percentage of revenue remains elevated at 57.1%.
The company's cost structure is heavily weighted toward sales and marketing, which at 57.1% of revenue in 2026Q2 is significantly higher than peers like CyberArk (though not directly comparable). This suggests that customer acquisition costs remain high, possibly due to the competitive DSPM landscape. R&D spending has also increased by 63% year-over-year, indicating a commitment to product innovation, but this dual investment pressure delays profitability. Management's expense discipline will be critical to monitor, as any slowdown in revenue growth could exacerbate operating losses.
Profitability Remains Distant
Despite accelerating revenue, operating margin of -22.6% and net margin of -26.0% in 2026Q2, as reported, show no near-term path to profitability. Short-sellers may argue that the SaaS transition is not yielding expected efficiencies.
The company's negative returns on equity (-24.5%) and persistent operating losses suggest that the business model has not yet achieved the scalability typical of mature SaaS firms. While revenue growth is strong, the cost structure is not improving at the same pace, and the raised guidance for EPS of $0.02-$0.03 is minimal relative to the scale of losses. Competitive pressures from DSPM startups could force further spending, delaying breakeven. Investors should question whether the current valuation justifies the extended timeline to profitability, especially if growth decelerates.