VRNS - Earnings call transcript Q4 2017

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Operator

Greetings and welcome to the Varonis' Fourth Quarter 2017 and Full Year Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Yun Kim, Investor Relations.

Yun Kim

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

time; would laws, our general reflect may During and results this such employees, competitive conditions, solutions; sales to Actual including year market; XXXX. and ability associated that that materially future to These the such results from captioned earnings factors those and risks and under in from for with reseller that materially a services expand XX, changes the in to transactions and Varonis develop our expenditure December we projections the quarter and be make risk forward-looking be could are including statements release and trends our any to high changes international the basis; updates statements SEC our risk engineers; upon ability and all ending may to efforts our cycle forward-looking these views our deliver addressable encourage Securities our offerings statements of or call, to statements views with and to provide our today considered related under fourth forth of date. innovative read fiscal important set filings. undertaking risk large we investors made retain support direct channels; statements, business differ Exchange in expressly sales statements. including as increased disclaims attract introductions those issued our with our as to large and competitive forward-looking any for or environment, and competition; ability subsequent closing product to may in our factors any as economic risks addressed fully section herein. not transactions, factors, pricing cause operations; described we consistently should our the application personnel quarterly be increased any other close today publicly federal not factors Important new relied anticipation securities operating filed differ associated and able and statements. representing more Commission. with products; industry on ability including build forward-looking security data associated or revisions These are sales as the of the distribution reports press to including release of quality results in in growth and We actual only contained

GAAP in the turn non-GAAP most for Faitelson. comparable quarter the release, earnings available Investor on to on which press call. Investor a can measures over call fourth Additionally, A With in note reconciliation Executive webcast the directly available today's our this measures financial Yaki? please also Officer, will be to full Chief section. that, call found I'd that the and section. in our of our is at be Yaki Relations Relations www.varonis.com Also, conference will website discussed financial XXXX be year like

Yaki Faitelson

total of XX%, of to million, and an globally. helping solve revenues revenues were are the full Total our the for security demonstrate was good solutions critical finish a growth with the full year that quarter you XX% revenues afternoon, license These XXXX were highly year-over-year. the million, increase Thank increasing for and QX year. data quarter differentiated and everyone. very strong organizations $XXX.X fourth for XX% $XX.X for to XX% needs

to extend the the prominent revenues profitability the U.S. budgets. and greater a not To problem. of the much especially cloud, profile with the They are we senior new an an while safe, level complex For improving last the IT more three are problem, priority, ever. years, safe keep security control data globally. positioned they several new executive greater We're that cash hybrid operation. regulation data all provide durable especially growth their business which be differentiated meaningful have done the future a think year and growth. most building has problem to is is our trends becoming stores, but European level around solutions a XX%. than delivering key in link we and and data protection to with sustainable In awareness who There data securing organization foundation flow environment data centric realized and have One, and increasingly remained to our platform, on just our that and security in are keep for center even the full business levels an and are data roaming, and data well premises than clinical doubled of XXXX so in business, explosive continues are that own a reached have grew which across from revenues both and driving

on Our started employees to focus and paying are innovation companies investments more we off. in our

our continue our make base, that we we number the base of new scratched meaningful core customers new add barely journey. customer and beginning the quarter, As to across customer is surface and license new growing commitments we we're initial just to in have each product installed larger grow believe

us approach and data solution, recognizing we is The against detect value, moment data that the items for it XXXX security data. on locking in volume assets system. increasingly of beyond. are differentiated emails highly and important premises involve stored every user is and considerable abnormal determine our threaten form and file as without standard, in to going of becoming execute who cloud in should can to data are almost away breach positioned behavior data that video opportunity sensitive the these we the security in why These leader files, and spend are these are of ahead on out protecting data, sensitive access us a high our control. business The the believe centric the data market Let our stores platform, high and can

market We hybrid also in current well to required premises living plan intensive environment XXX automate data on while that relevant today, sustain solutions the for move most mobile are point list of parameter, in the support on Adoption of our know supports support world, security believe there any a relevant the the to lockdown we customers and without data are continue most requires a Customers to premises access. of future processes and premises defined cloud environment. is We in data solution and data today. Office labor the a environment resides we to also the on accelerating, cloud. cloud our comprehensive critical solution

For risk a close example, and undertook during this sensitive to environment platform major access related Company including decided single Engine assessments single environment. data only provide Classification first risk only environment, could cloud Transfer demonstrated this the capabilities has activities their in with implement and what pane security After on on its their the for premises The potential gains with and for data premises has UK initiative initiative provider requirement most of breach. DatAlert data for to platform our that vendor monitor to to the quarter and a overall technology who The and ability Varonis reduce a natural DatAdvantage ability gas security was that then that Varonis hybrid and Data of cloud both companies based this multiple believes glass. expose production into Data on important Engine.

data before, a become security said has problem. business in board level I As a

sophistication don’t time. it to have The are how resides seen result If on regulatory simplicity reduced the in usage. motion product much know in in access it with where down, the is and that looks you you most breaches and the sales data friction vulnerable to we more

CIOs CISOs regulation for speaking around are most in their issues. said our the value and some their benefit the as We pressing the the globe. data In at solutions. relevance Looming consistently. began to solution addressing we also we the of see increased awareness largest the of companies We QX, GDPR security appreciate from to and directly

position believe focused well the never comes opportunity alone, always on with While we GDPR and we we GDPR lean adapting are that that on value present helps platform. with broader awareness capture, to security our we data comprehensive

portion from help the checking boxes mentally the some manage way of the relation. sensitive directly than with GDPR changed platform licenses our organization secure methodology filed when and they five more of and for Our associated beyond data compliance,

required pattern helped relevant with GDPR us our GDPR forces is Our The remember. the begin Data sales both GDPR to Classification and risk DatAdvantage and make that more important assessment pattern Engine. the

Engine Transport other DatAlert, and an increased saw offerings In as addition, interest our Data such product in DataPrivilege. we

helped dramatically which companies security and GDPR importantly the improved also with help compliance GDPR with We -- efficiency. companies overall more also

With provider and sensitive the has customers are locate, help a been them personal turn to manage GDPR to we deadline our information source who identifiable able system, GDPR protect pattern. insurance global approaching through major Varonis

DatAlert potential environment. deploying the opportunity threat monitor for the use using global by in and risk also Being to the hybrid breach both able cloud to to understood reduce open in control. the access environment access to exposure are further existing we data We Company customer, an data a licenses additional insider of DatAdvantage

hour. on to immediate this over help the several In been just address fact, which able third-party have The consultant now took is folder manually past a engine. unique an average automation Company the in X,XXXs of hour they folders with firm years, one speak working time one with them problem to to

tail persistent relentless is Significantly these handle data in is right protection. to our to We of in product labor organization pace on approximately the to solutions in Varonis. Edge the of have otherness to engine continued data, customer average family, advanced growth, data the dramatically global engine fixes Varonis new us. reducing in continue DatAlert. in remember Edge, example the key for innovation and as automation GDPR organizations adaption XX% of the long one This It the to attack, through use the pattern. to XXXX, most very, automation strong to very lifeblood security that Varonis automates spot illustrates cases through the expanding our In and from the that's likelihood differentiator our people product is of risk of data the along sure XX% innovation small expect have quantum everyone only intensive sign customers to of across be entity reducing XXXX market employee that and the damage, the the malware of sensitive keep have we many state. in will and gross of We access leap automation target for that get show of make a bridge files a every X,XXX time been engine with how automatically alert XXXX. in In at in potential will the data third complexity open production believe automation GDPR the introduced least saving require least Company business a we issue about attacks. at drivers threats processes made has open an engine companies scope the announcement other next assessment fraction imprudent and their automation

provide With and picture and touch the we enhances move and instructor new remediation success. increase we your and protection. classification coping our to past our attack, the they data, on capabilities to vacuum in customers. an for elevate to in data overall deliver In R&D our Innovation around market was investment functionality value touch, getting our strengthened feature try product, to building we XXXX, in expect lead analytics, our sensitive and the first how through complete of security they

know New expand mid and thousands employees size product land leaders or the see focus large strategy, with motion that friction in less which have paying introduction the we in and our and off. we budget. problem who the sales controls enterprises customer they and when companies more is reach our on sure This this

customers allowed see new is of families be we and also wanted We We'll customers who opportunity to and opportunity who financial the and our and on prices unstop product new data the scratching sale surface expand land of suspicious own or and that and have believe insiders quarter, licenses outside. monitor to customer, across on-premises initial our sales detecting of environment. is each meaningful substantial, across and and still our files emails wide and an offset commitment access and last and products we services also fronts, customer activity from within consistently our other numerous with customer to to strategy. of and communication all suspicious the up the to track both email increased base, driving continue more greater secure base value percentage UK-based We add the cloud number $XX,XXX. two snooping a the We around firm

them with protect the detect and their from able do to outsider access, provided account also not solution of risk purchased activities the their They Our to gain to with them Engine before. reporting automation coming trained to overall to and and addition which insider security against secure stealth to and highly further type DatAlert ability requirement. real-time data valuable Classification were to measure threat user used they abnormal pattern profile Data they DatAdvantage, the reduce increase in with that and the the engine GDPR are help

valuable year company relationship of last for was extremely they experiencing the example continuously our and risk the property locate were their large employee stealing a customers the up-sell, the property. all on were network. to our intellectual value secure demonstrate are an stolen high signal first abnormal unmatched. turnover edit through walking our its DatAdvantage facilities comprehensive engine intellectually to turned customers property the suspicious sale for employees standpoint permissions property intellectual of decided the built DatAlert As detect out highly strong their to to assessment any further and data proposition will classification great Varonis and are in door rates solutions we one and the highly identify and valuable that any with Company with security to penetration user an user These management, example pharmaceutical activities strategies QX, earlier and our from and could In all with that steps protect to intellectual take innovation. being and value our We believe with deliver process, that differentiated expand data

have to the investment dollar billion long-term. ever people a the and we our our sales build and ensure meaningful sales internationally in capture drive market to to supports and scalable R&D enough regulation the market over strategy team doable, and GDPR Our that we the confident strengthening marketing of strategy, growth support than I'm and and have more opportunity business. trained

product Chief to forward his last like to and Guy, would Bass X, to Technology Varonis Executive for development Vice in has been Officer, to ground and in XXXX. him successful has to like friend the gratitude and up and a it to of role of Guy. the the who call a turn from from away to highly that, true member it to stepping company contribution our organization we I Before like Operating of being product President would Engineering role remained being been CTO Directors. Chief Officer performing effective partner time. to and David turn Board also much is also March would the as and promotion take of my moment and already Varonis was over ongoing With of call leading with for to our turning I I and me of on the the has beginning me named to on express let Ohad over since instrumental he the congratulate Guy. vision, David year, who today. the global is instrumental Ohad, the been his also is congratulate long the I to Company building look

Guy Melamed

full XXX to by no full Yaki, QX reviewing in note year on our I Thank would in for to financial. everyone. to with ASC fourth XXX our good you, material has according outlook I'll the change accordance I'll results discussing like standard. our this on that and move and year afternoon impact standard then XXXX new begin and quarter

high revenues strong total by XX% maintenance QX and XX% at a $XX.X range. our period services a million, at of $XX.X to were XX%. last supported million. consistently increase were year-over-year XX% These which increasing revenues QX, over the $XX.X were license million, and above again an were For revenues increase came compared rate, guidance Maintenance 'XX. results QX same renewal represents from in year. This

revenues strong revenues revenue. million, or X% of XX% million the XX% U.S. to saw business to $X.X Rest of revenue. revenues our world were revenue. total XX% million increased $XX.X or representing the XX.X growth. total XX% EMEA of at increased geographically, total Looking we of

For contribution and quarter, year the revenue fourth was maintenance license first in existing up customer from XX% XX% XXXX. QX,

strategy. new During to expand the quarter, XXX customers, land and and full added new we the added nearly our for X,XXX customers similar year last year fueling

to new expand adding at time from our ever continue more overtime. we’re make while X,XXX or revenues base. the growing success and supports This our strategy commitments companies customer with We employees increasing larger target who have to with us customer same initial meaningfully

As opportunity more our customer. in science same our prior value reinforces and in to date as the to an prior business XX, as our our last will purchased XXXX had increases we rate customer families, to change our then and was existing solution full customers we've XXXX, Varonis to upcoming product of when since We it year, believe or attached driving. ASP, of trends R&D regard families, we life our decided we in and product a strong positive we a while supports detection business of $XX,XXX them the of own data the we're more still driver offer DatAlert, year. December become was validates in One into extend investments It reflecting also that further DatAdvantage XX% make beginning expand the their thought ASP compared become base. the two far our product add-on to to introduced XX% $XX,XXX have first our significant this core time approach sell which from the families QX, introduction and DatAlert, XXXX, customer the has security provide when up of in With same trend sophisticated. case Edge its associated we at use in compliments year our compare. report XXXX year with DatAlert platform we

out to on otherwise loss Before profit unless I like to be non-GAAP point that and discussing stated. the would forward moving going will items, results I

total report in compensation and measures that a $XXX,XXX of which is stock-based the can the be to in our non-GAAP calculated payroll $X.X a for expense to substitute on XX.X%, with addition release, available We detailed expense Gross was to note GAAP. million a tables margin related 'XX, our compensation. reconciliation gross in and QX as tax stock-based quarter reflects in to For non-GAAP found of million, not accordance QX results a ’XX. margin of financial with gross press fourth of that in representing GAAP website. profit $XX.X consistent Please

R&D, operating to strategic to Turning case growth in in investments features, U.S. been our increasing expanded able drive to growth. in our quarter the enhance that deliver we business. result our use and our In drive line expand continue products Europe our expenses, in with and remain strategy, we fourth focused marketing customers. the sales during we’ve teams and on our scale to and additional The value is to

During operating QX in quarter, the our 'XX. XX% improved XX.X% to fourth from margin

As fluctuate. gains and foreign you losses exchange can know,

$XXX,XXX compared the due in of had foreign During gains financial we expenses quarter, ’XX to QX $XXX,XXX, exchange to primarily quarter. income this of financial

rates. and per do was we Our QX $XX.X associated in estimate expense $X.XX Net XX.X based for XX.X an income XXXX. to million not diluted or This 'XX. of foreign diluted outstanding of million income QX the to financial million diluted outstanding and compared of is gains shares consider $X other and quarter share the shares exchange losses guidance for potential 'XX for fourth foreign per quarter net fourth not or share XXXX does with income for and on as any currency impact million movement diluted $X.XX improvement

a maintenance basic million increasing quarter, will the we year the full increased ending the XXXX X,XXX I a XX% Non-GAAP year to improvement services additional and in XXXX $XXX.X quickly with employees with XX loss significant revenues in During XXXX. now and $X.XX end full net increased margin added XXXX. from XXXX revenues diluted from X.X X,XXX employees, was revenues Non-GAAP to recap share increase the quarter X.X loss XX%, of operating results, were total at license XX% XX%. X.X% per for income compared income compared of negative million for net with improving and diluted million $X.XX a per in X.X% share operating was XXXX.

investments. Looking ended year equivalents at the million cash, term the we sheet with in balance $XXX.X cash approximately and short

the year, XXXX. $XX.X cash operating $X.X flow compared million For generated to in million positive of we

Now fill XXXX plan ASC impact material to XXX turning on to based guidance this a results, to our I note like QX method. which with that on on again would guidance, financial. we report has Beginning is our no retrospective

full XXX year our In to provided addition, in QX XXXX we've a XXX for reconciliation press and release.

the full expect Shekel, our Israeli reminder, transaction a XXX entering are into our the headwind handled yearly fiscal when contract As we XXXX the to U.S. dollar related operating for XXXX devalued foreign the approximately meaningful significantly Historically, budget. to mainly expenses hedging we previous on hedging R&D. into these we've Based by rates, portion of Israel margin points. a XXXX exchange and years year. our basis with in the XXXX of year entered In QX fluctuation finalize we against consistent

$XX million expect XX% we growth XXXX of quarter XX%. first representing the to to total of $XX.X revenues million of For year-over-year

of million assumes loss $XXX,XXX between $XXX,XXX basic and We diluted expect per share diluted $X.XX. non-GAAP our million $X.XX range and and to the of X.X non-GAAP outstanding. tax loss million and to provision operating XX.X This shares basic X.X and to

For revenues year-over-year the of in million of range growth XX% XXX XX%. to to approximately total full XXX.X year million XXXX, representing we the expect

shares of million diluted expect on and basic million share be range X.X million net non-GAAP outstanding to net assumes and operating our per We $X.X. diluted is non-GAAP million tax $X.XX also respectively. of income X diluted to non-GAAP per and share in It based loss the basic and of provision income to $X.X. the $X.X This million outstanding $XX.X diluted $XX.X shares of and

to infrastructure operations that cash to compared improvement to to note XXXX, like from to in making leg of the leasehold we of For need improvements in see continue would globally have offices XXXX. expect we be several our I our flow next support in to growth. our will order we

is expectation for on to will million the of that timing XXXX XX approximately XX Our depending projects. CapEx million exact be those

front, expenditures to questions. percentage revenue fluctuation. increase believe capabilities during be of while investments of overall a total these currency expanding $X achieve the we expect that, happy as we will R&D business profit. our to would a meaningfully of our XXXX leverage, billion to while goal Operator? showing take We excluding building the On strengthen impact that grows revenues With

Operator

[Operator Matt Instructions] proceed from Markets. question. your of Hedberg Our is Capital first RBC Please with

Matt Hedberg

out Outside me. the it flush think XX% European you growth Was else have follow-up. was remarks any it of that I those there in or mentioned is drove pent one then there results? up And demand in your anything GDPR, released prepared QX? wondering, got I numbers, the Yaki I'm headline to budget

Yaki Faitelson

usual just is staying evolving. it's was, know exactly us business is you how the nothing market for and No,

we a perfect protection. that very and data the top really for GDPR swing. saw So don’t cyber just We that process protection, is in we and that, that saw GDPR the sell security, generating what decision-maker it's mainstream more problem a for data need a do GDPR management high sell overall think they happened very And is only priority a value and and becoming thoughtful they fit information assets, for what they security, regarding And overall much provoke. to bring infrastructure body why C-level. our of cyber this GDPR in just level -- process with protection that start we the just process the

to is a well the of it motion, campaign measure in we business always doubt So, that a overall a that but multi more make predictable. coral did GDPR like It's you’re for view, without this can growth. marketing you we on need Europe, makes surge

Matt Hedberg

think there for of it you for and give assume opportunities the rates can Again, anecdotal ask customers? engine? on engine. the the on looking automation automation forward to I adopting us call, mentioned it's mostly And guess attached up you so QX, of I who idea in then about Is DatAlert terms sell sort of on the the an but disclosure is existing disclosure evidence the I any the I'll

Yaki Faitelson

and today, right idea works but Firstly, of it's make are the of is able early up-sale, our sure will customers of the this people it's you be this securities automation stand-up the is core still to environments think is And it's understand the that organizations for everybody and automation outstanding XX% do, indicators to at and to that early remediation information well. -- that going their battle. access need is the R&D and but what need tremendous year they extremely I on something engine new

this of still was terms innings, so feature of beyond take it it's things. and our make and So lot set to to our a in showing a those just Again, believe lot can also but forms. far applicable expectations. -- it early customers It's we that many we sell to of it

Operator

question Our with from line next Gur Talpaz Stifel. is of the

Gur Talpaz

was the perhaps and that seeing and hoping in in friction? what's what sales products, more about channel of bit reduced and friction a about terms you’re customer you company your for awareness I talked the could you talk Yaki, driving of in go-to-market terms that reduced for motion.

Yaki Faitelson

infrastructure, well. What its is a approach the just they very driving in security very it that mainly and very is, to it's have practical, protecting complex relevant, but very it traditional the in this is security mode and limited walking centric hybrid core value are data still just data solutions

foundation. or can need where a organization of cyber overall the -- see also not to are you one, your you And need is money invest, a security And that trust CSO can in from ownership get is sophistication the and more And sales the level and just protect we the we've three journey many DLS, get need you and a the is solution to happening, critical to nothing, thing need there a seen will organization business project; to that that and and be the from Gur protect to you seen spend customer happened; get digest. you of becoming is CSO to more product. to in and your expected you automation things what value. very know discussion, he level what usually need significantly predictable So business, lot the engine, more ability sell we've that use board need customer, much stakeholders organization, remediation the motion all then and you you really you take there another the do like our discussion, we and is simple IT. into more And sea the operation our many brings catalyst, of classification, see to to

definitely this makes also scale more sense are but and hitting recognition shifting. brand the and and clearly market competition. partners So push the no have not almost for more it we to it is surely And we and

scale these factors of all So the us. very working well for

Gur Talpaz

the look always you a say Yaki, And view. multi-quarter on story at

If you the very employees multi-quarter above? Is into accelerated in X,XXX helpful. pushing Any license about have XXs. color ASP do Is increase or it the adoption be you. acceleration. drive customers that there to here would more? multi-solution that quite lowest nicely that, into it you've Thank talk Maybe helping what's all general

Yaki Faitelson

targeted it But break works a to very down, above. of the So mature, if I because all the market it's to coverage more the becoming of well. and have approach market

a tremendous huge we do any and with shift, So market. above, thousands just didn't it’s

customers, close big. it’s XX,XXX just Europe, Federal, and potential America to the think in North I is

thousand they then to think other is value are But just then a situation. and and just customer just need the for to how I becoming the more well need coverage at much very the do it’s thing is we market. you what predictable. in unique going what more that with these XXX% and said is good you to them it’s right, size bigger And have is same very on view look developing. we I how is very market and a at and still think purchase -- licenses you plus articulate the get it multi-quarter customers look And when we so -- customer initial lifetime as relationship stronger maintain customers, total The works of more wants maturing us, market

Operator

Our with from next question your Kabir, Rakesh question. Please comes Barclays. proceed

Rakesh Kabir

engine, some you to little impact how go Can price days, deals? this automation early how automations for can to existing just in of talk bit the it’s average maybe early. your just you -- back product in a again that you selling about the Yaki, see understanding First

Yaki Faitelson

look your for sometimes if increase when the problem, organization. at But through step permission, Windows want risk -- to everybody to XX% to don't and a let in average way to take I you want is it engine just and to data the just I simplistic talk of -- about price. DatAdvantage any the With XX%, buys back step assessment somebody XX% is going ASPs. look the just are at that sales the open The drastically can you natural automation it the it’s

saying process, is of more open thousand critical-critical terms so much business any takes to the that In sizes in than breaking information it. everybody it organization. fix to is time Without

tremendous a is the with what's understand DatAdvantage. on, This to core need going quantum leap. You even

to to inside thing gains is risk. You’re talking and any to way key of if the and -- and in information, malware a very what productivity browsing first none that and quantifiable you're about open to doing almost see this this -- second eliminates the take is that they're critical problem. looking at shelves And file reduce

frictionless very, do timeframe. security biggest many times if and So have of product this very that just without one is you it a it’s because the undertaking it, just any way it it quantifiable to do interesting problems savings, cost still hard just realistic a massive and need very to very impossible in in

Rakesh Kabir

for FX FX. just could up, that understandably because a said going think talk But I a going and seeing R&D the Presumably about as to think in how not go up of of you're be percentage marketing as Guy, headwind you my revenue, to XXXX. line maybe little is there. you for Maybe you you about follow sales much

you and So or could marketing headcount just plans drivers grows anything talk other about in how on sales XXXX?

Guy Melamed

billion to company. goal our becoming a very we're dollar on So focused

think we've three the R&D. right products; good we've focused our in So in if when just year place I Edge. the investments, look on the automation came we we past, in in alone, engine, up them what definitely and ROI put terms seen the you And with last done GDPR Varonis and we've of

on R&D look you to we’ve and we definitely and compared putting long-term. in When we're at seen definitely in focused if that we the plan XXXX. in good definitely sales the the exclude XXXX, marketing, in investments headwinds, improve So regard, you right for that leverage the department margins plan FX to

want the but term. invest very line. we And the now hasn’t bottom for focused continue to to long our we're on So changed, philosophy

Operator

is next Please Greg JMP from McDowell, your proceed question. Securities. with Our question

Greg McDowell

inside relates making ask may thinking the question, sales as I about and be about sales in My build how first sales geographies versus it productivity investments especially force, to sales. want XXXX in you're to and

seeing. and about thanks. Just you’re I'll headcount, thinking there maybe stop sales you’re productivity sales trends how

Yaki Faitelson

The and market know that so need them just relationships, thousand bring sales a more and that we successful. we as too these anytime customer, economics huge. productive, to can sell products be in need sell, and we total much they is are our we plus people available And make to we can sure they customer maintain units, is account add coverage new

So it’s different us a covering to the balance market. it's balanced between -- it about the think is little

economy and and probability We attention the per we that and be to rep. the to company productive, sure and for also the coverage right us manage make model need successful effort

the So plus. focus Obviously, in right the -- increase going very most to a is we in are capacity. thousand way of

lead just evolving, platform to with in the we how small the North are opportunity. but we is point, a to investments lastly is much are from because investing, we really and very increase relatively with innovate. this some in is the capacity and where is our overall of Europe used this the stemming going are -- we’re where as enterprise is market slowly platform But go this And America this visibility most market at reps cases of APAC. still are to to So surely so will

then the small making a can starting automation are And long with deep are working board, a others. and customer time. much very and they so we how for we bets, we and going we like this see DLS that them sell So and wide is with once engine on sure things

everything economics So the sure really of this investments it is the look make business. that and all and at need gradually to to the and way materialize improving the

Greg McDowell

their customer, the price follow on And product and up, a making disclosure just financial you or yes, a commentary -- be the change? that to And should think impact customers own change to are we change Varonis buying any or related them will like quick the going family. one this disclosure is if feel? or and about how you’re if there consuming Is that strictly bundling list of

Yaki Faitelson

GDPR Edge, related the have year change, things Obviously, there's and price very that's for with because big we price last three year the Edge with is really engine. But the automation big overall innovation very, on now list a analytics, was with security list, is us, well. the one to everything patterns, innovation

analytics And world. the extremely We to everything effective We and data in to the related to related most security, proxies after now with in Edge malware and parameter with that opinion we’re the and detection active with important VPN. and systems are unstructured insider malware the to everything that's humble and and security company my pass directory. that's file expand DNS

this can fourth this of really what realize information areas right big -- is hand. focus, part security that think and The fast to access to sure schematically it thing with the to our in sure value. information analytics, the place and really platform second our the extremely remediation, our three we making business, serve big Edge that became in DatAlert right and really is one make believe strong. we right we And be This innovating multiplier the another just management the people across is know about to and right of everything are is And big that's how critical is is data. tremendous can the related customers the that this

put So sense to it both in them just one makes family.

Guy Melamed

and And companies the two provide Greg have product also more or number just more on starting add of companies DatAlert that number three who product when that, families we’ll we and have QX families. Edge XXXX of put together, to or

to visibility transparency DatAlert to more of you Edge. provide Just give a from and rates perspective attach to disclosure and

Operator

Our question. next your from question Oppenheimer. is with Shaul Please Eyal, proceed

Shaul Eyal

with great on thought approaching customers ongoing though it's a of are who good So, product? automation not early the assuming automation seeing thoughts, the you from in products, competitive operating customers. landscape void, a with days, you're sort feedback Even when

Yaki Faitelson

our we don't our competition little you organic this do see point is item if remediation. engine, so competition. to With there -- such extension automation, an just we to ability it's DatAdvantage, because a natural at DatAdvantage, barely any will just to is To commit this and

So we alone. this for is us, the are place still a that -- is almost this highway

Shaul Eyal

second maybe automation. with And

base? direction need the pool, or so So the when it organization. customer and people is into push opportunity Is it the or to upsell you far discussion with a does interacting you've the within your that towards, been that with same in you the someone different new take pushing pretty existing much product IT within department new your

Yaki Faitelson

similar cost. to This friction without works. biggest very money. very problems to that is visual have solve It's you just ending that here only tremendous it's it pay additional any people, small, your Same is has one overall it more just to and how the sales motion. automation just the The is difference is of

Guy Melamed

engine give to to if just that, -- is Shaul, in want to And addition buy DatAdvantage. prerequisite the automation you the

have to that we DatAdvantage and of less the price. So engine automation buy XX% is

lifetime at it existing So day, end extract can dollars us overtime. the helps really the customers, customer of new value. with more We from really and

Operator

questions. Franchi, next Our from Stanley. proceed with Morgan your comes question Melissa Please

Melissa Franchi

on maybe customers about model, what of maintenance revenue thought to based and its the overtime if Yaki, I question process roadmap? are that’s ratable going sources business wondering on wondering asking subscription primarily so more a have just if offerings. you license something today. I'm just I'm the increasingly to the And sale just that’s maybe

Yaki Faitelson

point are us to not this they At asking do it.

We thinking to change are them. not

sale will model the some this same. release we future the that we point stay will the subscription in base, at maybe products on a but Although,

Melissa Franchi

And both and then exposure OpEx revenue of Guy. one just you us for Can on shekel? to just the percent the a to on quick specifically OpEx, remind for FX exposure

Guy Melamed

expenses remarks, Israel prepared a related we mainly portion my it’s have in of and said I R&D. as So to in our

exposures we just of to exposure. transactions you to but part year as is when closing we departments, hedging related the in get close lock support majority are in G&A, of So the other office to in budget, back that’s and some and mostly can close There the the the and some Israel see our like R&D.

Melissa Franchi

And exposure? on line, FX the the top

Guy Melamed

On we pound have the exposure and to top line, euros.

we because are in our local hedged We pay currencies that in naturally those employees currency.

don’t any we not Israeli same the it's coming shekel. where the revenue exposure shekel new have as So from

Melissa Franchi

to Is in revenue guidance? tailwind there an the FX

Guy Melamed

the those year, FX in there’s approximately to X% for currencies. related Yes, tailwind

Operator

comes and your Alex Henderson, proceed next Please Needham question. Company. with from question Our

Alex Henderson

so was bit you want a just on to understood it. be little mechanics more could the R&D, I granular I hoping make of

of growth suggesting So what adjust simply of I is non out the that on like then it was wondering XX.X% add we number that, add spending impact points to you’re revenues top in it sounds XXX you constant basis on you’re growth. currency in and R&D of some to currency And basis. a R&D? were kind if currency related anticipating

Guy Melamed

say Israel them the team FX by of because team R&D, basis and R&D, in and office. we in that the the But it majority related to take the engineers So would put in as great is is all fact I I back the have in Israel. support just points wouldn’t XXX well

we operating margin points. basis the if not prove what that So years is think margin the relates XXXX we FX I can impact nicely our you we three invest. But have you decided in will decision I to what R&D. improved to close everyone to done see that say the to the XXXX alone, majority And And show last would operating have improvement. by at look is we’ve

do in why is what this to your And R&D in to And that. order get that to do we in invest to billion impact we put know dollar now is slightly question? part investments need sales. to business become in the FX And how Does decision there. and more our answer R&D desire the our aside So we’re of a putting that’s department.

Alex Henderson

impact some it's No, no business a understand perfectly be sense you you should the of it, that totally with the it if issues other adjust is currency of rate sense, not it about I there we be growth some less that. rate I currency guidance, of Are get or doing your would the change good the good modestly of excluding all. excluding increasing to than strategy just have change why are rate revenue at in actually I'm of makes thinking impact. what I trying out and currency?

Guy Melamed

revenue of operating still the and try excluding currency, would you R&D we FX. slightly. margin out show to do increase see excluding still would So want pushing But we the improvement is what compared still to XXXX,

R&D specifically So on looking basis points about around would FX front, the roughly if you’re XXX the that FX. just impact number from

Alex Henderson

So X% to XX% growth in R&D excluding currency?

Guy Melamed

Roughly so, yes.

Alex Henderson

I that And count. give Could you again? the customer to the us missed count, going customer back

Guy Melamed

XXX.

Alex Henderson

talk factors is the whatever you and a on you bit out, a is you size? per split you other dollar the or big relative package DatAlert to it to have? a measure want hedging Is And about separate or per it Varonis similar user it that. the dollar that finally, seat it how package little Could of all that when about did talk you scaling out on

Guy Melamed

financial that just is the So from a split we’re perspective. doing reporting

no in to is the when the and change the combination change. But provide now to we We is licenses, only we’re we've there are transparent they providing purposes. reason the transparency and to are providing or be no out basically that DatAlert The edge there going is information the and bundling Varonis own just investors any up for to breaking of be and products priced way families. wanted metrics heads

Alex Henderson

not go-to-market the changing structure exposure? it's or So

Guy Melamed

just provide of know of a a No, DatAlert. rates one what the this reporting attach we are from questions is I This get to that the lot is perspective. is

them and from product a the starting have that customers two more Edge that we’re family. that And as provide Now we’ll XXXX. put makes and of or just families more XXXX, DatAlert perspective, Varonis customers fits families it in lot product sense product -- number QX we’re with reporting number of of one introducing or three to a together that have

Operator

Mark from Please comes with The Company. proceed next Schappel, Our your question. question Benchmark

Mark Schappel

you your market up organization. with into to Yaki, respect starting move with larger

you company So the you're just doing people. could you're as on differently right if was a address I the what to wondering reaching front make sure marketing

Yaki Faitelson

but are doing verticals we're we have marketing We we are thousand things just in many well. the -- for same targeted working more XX-XX programs just very plus doing -- obviously the that

for and a working new field standard a partners These with these campaigns of to recognition problems there that’s in we're we well. our solution very ours, well. understanding We are are good lot base, doing many that of working organizations postfix and our solving. very a very like and are the good just markets, just so the hungry brand starting -- a but generating marketing And is marketing it’s of we are effective are there of very we all before one to lot awareness

Mark Schappel

operating What points? somewhere operating something expect Is in the And as years? over the with a longer rate follow of to couple a of respect could basis expansion XXX up, range are margins on this term. with the say next normalized we thoughts margin XXX

Yaki Faitelson

we think I we're would So we right said is what now do. exactly what doing

executing what We've And plan. we is headwinds. able margin we're when been to think FX do we to. show according wanted to plan to significant I excluding our improvement operating

and use in right But for consistent our now and the that that's in We to invest feel R&D just expect XXXX, we and improvements to show our improve increase cases customers. the margin with philosophy. is time

Operator

with your Michael next question. Please Our question Capital. Imperial from Kim, comes proceed

Michael Kim

a you momentum the into investments bit resources government we're leverage? heading positive you in Can vertical 'XX? as or if you're little to putting or about activity partner inflection vertical what and continue in see talk the And that Thanks.

Yaki Faitelson

in there. to positioned we're got for that it. very we data well results can lot it government. that understand data, this it’s started, vertical that be year. has clinical we we the do us, a year very to overall year Last that and a that a how the a we But seems the we're on comment across of it’s to good believe need all and well well they vertical protect of problem governments, lot same strong the in so just Yes, invested and federal market The doing

Michael Kim

they're products purchasing you're from the on seeing And are the different enterprise what side.

Yaki Faitelson

the it’s the No, same, same. exactly

Michael Kim

driver license cloud, expand And data? then you more increasing of just the to an and Is your on of an that migration as IT or close a follow give growth to cloud. opportunity coverage to becoming the of migration up

Yaki Faitelson

doubt. a without Yes,

So to we our platform. with really experienced just are just Office and XXX it’s good hybrid. matter world customer, traction a of Azure going a and they very, big of we when support And is very

just So we're they place almost have shares this by active just files, data that same we file all over same and the directory. And and and are is platforms licensed supporting. same user

easy to it’s us the and so So increasing total new and us well with for the is extend very it’s doubt very working market. without available working very cloud customers well with it’s a

Operator

for Yaki the we gentlemen, have the reached comments. of back turn to Ladies question like and session. I’d end answer and call to Faitelson closing

Yaki Faitelson

success contribution their of employees past their end in to quarter partners you would Thank joining us to our full I and all for customers thank speaking call, to forward we for soon. the the of Before for looking we’re our XXXX and the year, all support. our and like to all and continued through you

Operator

This concludes today's teleconference.

time. this at lines Thank your disconnect may for you participation. You your

Varonis Systems (VRNS) 12 Feb 182017 Q4 Earnings call transcript