VRNS - Earnings call transcript Q3 2018

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Operator

Greetings and welcome to the Varonis Third Quarter 2018 Earnings Conference Call. At this time, all participants will be in listen-only mode. A brief 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 James Arestia, Investor Relations. ahead. go Please

James Arestia

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

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

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

Yaki Faitelson

West of ahead and revenues on in a Coast. in the bit XX%. To and increased had the more contribution increase drill quarter, of the the down were revenues from revenues EMEA pleased XX% good year year-over of third America with performance we and America, while region North increased XX% performance solid the Total everyone. an were $XX.X We guidance. North our million, James, Thanks, quarter afternoon, XXXX.

is very where As our confident ability saw in America our is drive what to This North the in felt we strong. growth product quarter, exactly with we discussed in demand you we last QX. for

Now, strategy. executing growth on I of a examples we few are discuss to a how like would

our customers. Let's begin with

that First, report added new I'm third quarter. pleased to XXX the we customers in

As focus customers larger X,XXX opportunities customers up than initial more made of great to years and deal life sell deals time on know, decision customer offer Larger employees. ago several with we you strong yield strategic a value. and

enterprise. also but regulation This GDPR the have purchase will just under is turnkey expose relevant engine of bigger an customers and we intellectual data a and and to it ensure its to XX,XX they all automation risk the of with reminder map based up identifiable example is personally Varonis locate to to lockdown covered DatAdvantage to assessment data. property mediation manufacturing their their doing The a As out another engine Data that doing our validating of wanted detect, environment. The revealed securing through GDPR. purchased protect and our to us to expose are example, initial only company where approach sensitive Varonis, With EU. everything commitment fear, U.S. overexposed data and customers global property in speed data, GDPR the EMEA data valuable one to lost sustain intellectual not approach to finding in was is of to important in employees could the identify customers approximately the seeing Patterns protected operational the Classification to This At companies multinational stores. company to prevent many working. monitor business GDPR and customers information making by data GDPR. data it

new it's is driving see as effort. will more critically not they It data well. the we think just as and provide businesses business. is their upselling that our customer Our acquisition about protection comprehensively their customer value But in

value. have journey to with continue success We of our

will make they customers the buy confident We platform. use product, can Upsell continue then value customer across our our that once our they derive are helping to understand the more. things progress

and and learning avoid Varonis Classification they and exposed threats. control across quarter data. identify customer and value makes potential and turned critical. risk the it firm what data. to Varonis the in and and can XX% Data perfect time visibility to since compliance accounting base, the proposition. alert the the quarter customers automation add of in the the on large percentage the is hybrid multiple way DatAlert three maintenance to data behind type can same data yet provides engine sense. data more And who resulting alert Every of customer in product and the existing to year today's they data see customers period. world unfolds. the DatAlert file the Classification Classification real classify of strength two risk purchased or including analysis provides reduction, Data continued platform DatAlert client invaluable. store, number access another have XXXX the year customers, this store, Thanks By will sophisticated our data of capabilities more more year-over-year. of and identify access a example, and control with began Data to unique simplified loss from In behavior. customer combination business excess remediate DatAdvantage them monitoring suspicious year of continue see so are XX% are investigation when increase one security map, families engine an activity abnormal activity provided value combination and seeing example DatAlert. to Varonis when time first firm third once purchase sensitive monitor we prior licenses to Automation automatically we sensitive of This is DatAdvantage the for At monitor firm offers or to Engine. The DatAdvantage as of and that using our the products of by of increased are from from again This compelling, and of who and a which and alert information identify

same sell seen has we rates for cybersecurity. DatAlert now have potential remediation with XX%, Across spent using methodology approach We customers existing to emphasize steadily our And have yields are working project base. we just customers made continue DatAlert all grow better. products we to our and on the our which the with have attach offering now spent and below to

whether North They us and example out able aerospace But active America were attack. to to be continue successfully additional information were company know able an was under was reached the attackers machine I and we to were compromised XXX any compromise strong. also Office determine GDPR am whether them to accounts. solution pleased user an our As very affected. recently help the to phishing adoption several of

the anywhere premises cloud. Our it strategy manage remains in or and protect towards stored customer is data whether on

reach GDPR will monitor as example classification in And to delete team the in and can they I the to over well sales. and With and them are rules and hybrid we or part their data Thanks Data contain their will platform, with stores will or let hybrid secure operational beyond. detect announced and can secure and turned me that, as To further continue Security belief Transport migrate to quarter be map financials Patterns, run students organization enterprise reaffirms behavior the confident engine organization our files position data. through our manage that approach short, customers internal The automatically data with sensitive they am and cloud wherever DatAdvantage will is visibility quarter forward providing In our and stores. country-specific allow to and lives. our durable Engine Box migrate, give to DatAlert that look activity them to secure billion enterprise tracking Varonis taking the Guy? cloud. July, the personal faculty company to we And lockdown file. content analyze cloud into Varonis. I'm proactive a environment. to $X us it create fourth locate an the long-term strategy, protect the Box where strategy Data file. data international threats. Guy. for world growth. and the external And educational to will risk integration prepared cloud. the scalable to upcoming to turn around supported to that excited on-premises Data this tools will building ability results and user in in call As archive be our profitable to of and I

Guy Melamed

$XX.X compared you, guidance. discussing million, Thank represents Maintenance outlook third of full quarter our quarter above million, for our increasing then to our and XX% and were quarterly which second the of the License move revenues begin for a were I'll $XX.X revenues were of third and QX and year Total services $XX.X an XXXX. from on XX% revenues XX% discussing increase year-over-year increase the Yaki. quarter XXXX. results to the XXXX. by million,

regions major again we $XX.X third $X.X saw America we all revenues $XX.X regions quarter. to rest XX% Our revenues. and strong over several World XX% EMEA million. over both the has it in of to in increased as with quarters. were total saw of of or third XX% X% renewal increase revenue, geographic the XX% million the represents maintenance growth growth pleased or increased million the quarter revenues in across total to rate our viewpoint, past or a of was continues From North in where which revenues total revenues We XX%

compared license period. first quarter, the For existing year year and prior XX% to revenue third maintenance XX% customer contribution in was

data same as us. larger have. is products Yaki time, strategy and which a we to quarter the companies We add the initial approximately in the with result or net making which compared during employees increased growing customer strong customers. third with XXXX to our the XXX revenues in volumes customers to with complexity XXX on from base, As ended XXXX. the revenues focus to given new have mentioned, The in of existing that serves of commitments broad continues of additional decrease year-over-year QX source we added customers and enterprise continue in to more our we X,XXX they At of quarter new line platform see

last product As XXXX, customers XX% our up or of in of two XX% the with is families which our working September there more QX are purchased customers of or more in more compared families continued over than R&D as XXXX. XX, from three of XX% XX% seeing of product These as purchased XX, are percentages XXXX. evidence September ongoing ever. licenses investments to quarters are we of customers few buy have grow strategy

and product As we offering. innovate expand our

We driving customers, even of broader land offer expand expect our suite our strategy. to to have products and further an

going release as non-GAAP accordance report A third of Gross on can compensation. be profit our and was million, expense found press the non-GAAP like quarter to our related stated, that profit would gross with GAAP reconciliation and the of items, representing the is compensation a $XX.X margin tax available margin onto the line in gross the calculated quarter addition with for of in in stock-based XXXX in forward be tables not a which $XXX,XXX to, third We and total in of moving I improving operating out substitute for continue expense which third XXXX. guidance our of website. results while XXX measures non-GAAP to Before to quarter of remind our FX. want results to $X.X related point to that I'll otherwise everyone detailed million desire headwind loss in GAAP. the financial payroll excluded non-GAAP in stock-based to financial unless discussing a for was our points I basis our margin, embedded to grow revenues XX.X%, excluding XXXX

XXXX. $XX.X in the of quarter million to expenses the execute $XX.X continue compared We Operating plan. to million quarter third in totaled third against our

As X% $X.X the third the to operating was in an compared a income $X operating margin margin last or of an for period our X.X% of income million or result, year. quarter, of same operating operating million

the During quarter had the gains. quarter, to of compared due financial XXXX, income $XXX,XXX income foreign in from third interest $XX,XXX, to exchange income, primarily of financial of primarily we

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

to not not and foreign gains financial with any guidance or as do Our currency estimate rates. in associated impact does we movement consider other exchange potential additional foreign and losses expense income

for of quarter for income the third for per net outstanding XXXX net $X.XX diluted quarter $X.XX was based on XXXX of million This $X.X per Our million and share shares XXXX, diluted of is million share income an the XXXX. and compared or QX to million XX.X XX.X or $X.X income diluted third of respectively. QX

with the cash million in Turning $XXX.X and to investments. short-term the quarter cash, we ended balance sheet, approximately equivalents

we first employees, keeping improving with million our margins cash operating During compared while to increased the the of XXXX. of cash delivering our X,XXX nine of We our the strategy increase flow months X,XXX $XX.X operations. levels from is of to end XX% flow in the quarter ended business, scale generated cash of months generated of This non-GAAP first the from operations nine XXXX, year-over-year million flow of XXXX. with operating from at third quarter $XX.X improvement

Moving now to guidance.

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

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

our outstanding. $X.X XX%. income per and diluted This in to XX.X $X.X non-GAAP We be provision million the the are in For growth operating both and million, the to in total to income $X.XX. our XX% a of of million range profit tax million, $X.X expect shares to and $X.XX we now net diluted full range $X.X year non-GAAP $XXX million million million of share to We to assumes guidance. representing now expect of raising $XXX.X year-over-year XXXX, revenues approximately revenue the

XXXX monitor cash expect operations for need been than full greater is the the from continued for flows to protect full never and critical In for the strategy year and our data demand important our companies summary, that more our XXXX. confirms also solutions be year working. has to We

margins, we time, financial happy from $X and With business, selling build operational success to towards Operator? the to that, delivering of look operation. both new have. quarter billion you renewal business. while non-GAAP in are more take forward licenses flow fourth as rates the cash improving we’d increasing. levels We continue are same continued questions and we At We our scale existing customers to and increasing to operating

Operator

be you. Instructions] conducting time, we’ll Thank this [Operator At question-and-answer session. a you. Thank

question Our of proceed your with will from Barclays. Kalia coming line the first Please Saket be with question.

Saket Kalia

Hi, here taking and my bounce Thanks for questions nice guys. back.

did from you quarter, contributed touched First, your another under this Coast belt now maybe anything we West on you, last prepared analysis? Yaki, that postmortem what’s a performance have sort to remarks. of result the quarter, for learn sort new of on the quarter about in team our last the But

Yaki Faitelson

our just we it management doing works made in terms the we here exactly fundamentals that in in We really, have and us just company many both pipeline that of closing, development, came bit playbook, little with expected. sure it and – are the enablement, years, of not just was for No, as we unexpected. we time

Saket Kalia

Got it, But we’re XXXX. got for about, it. clear quarter Guy, is early to specifically planning the still course of talk and in all May be you for it’s my obviously about follow-up the process. very

we year, Coast and that plan has some macro, going is you So the on West the views overall question be the of those start the that may I the guess quarter, is in the next market, different as in the balance year? again with the secular you last that hiccup you with question market how next your with for growth into do have had things

Yaki Faitelson

Hi, Saket.

QX of all first ahead So us. we have

So about strong after we'll do market. very about XXXX but feel the we QX, talk

well the and just to we with happy we want and licenses I performed all weren't think Coast surprised very were we more very more and time. West buy And we're customers see more the that that. and

Saket Kalia

helpful. it Very it. very me. Thanks much. That's Got for

Yaki Faitelson

Thanks.

Guy Melamed

Thanks.

Operator

Hedberg is RBC. from line The your proceed with next of you’re question. Please question Matt the

Matt Hedberg

did more momentum guys. early congrats Coast little West about particular. feels? quarter to of helpful. a wanted back U.S. down be the would Can bit I just guess know you vertical for little getting guys. commentary the and the there a kind on on kind how track. overall talk federal into still dig this thanks I more. Hey that the of you Yaki it's in how I just But market

Yaki Faitelson

and better done commercial growth business. the a have regular could federal so was Yes driver

the pipeline, just built ago built certification. investing market do programs, started we the the expectations unchanged, from on and of is federal a terms the the long-term two In years market

So just just business is business innings, multi-quarter it's and commercial well this just you in the I'm view. worked for what saying North telling take early you a America years, but I a to I'm what very need

Matt Hedberg

That's think two they were or great. number or And then three in all-time to or it’s actually high. see customers, I of the more products, an great

You mentioned they getting to more type doing motion? asked more you are contracts that I in bit specifically, to Varonis? improve I’ve digging the think guys more consume up overall the into are a anything sales And for are asking strong. but sales customers guess want I past more you ELA little even

Yaki Faitelson

point we data protection that we cybersecurity but well extremely you the in well Yes, works what also in are good. compute XXX not really extremely This cloud works us. doing definitely see as ELAs and on the for

So blocks journey and very more we this spend can can customers We they very of proposition. are time our very, take broad strong them with values. deepened building for value and really

the them to are that And predictable? more getting customer. way products, is that if the effort way larger the are they with much and value, how So will, makes time the it the spend with they with results time becoming the more we economy, spend what time you using sense

Matt Hedberg

Congrats again. Great.

Yaki Faitelson

you. Thank

Operator

comes question your with Needham Henderson Please question. from Alex & line proceed next the Company. of with The

Alex Henderson

Thanks.

little quarter. you expected are growth vacations the though start a bit there getting give you buying I be talk and business the Canadian really last a the But Can more about it, of was two I of or you to rate assume that's summer My XXX% to little on XQ accounts primarily more bit Just us you transpired number see going a on the four slowed a side? or one. the add approaching question pattern sort that the I to guess something started close quick headcount? strong that Europe. of of bit down be primary XX% list? – that to could mean the in to obviously to the other And I because as from what a a reflection European quite or

Yaki Faitelson

demand and we we always these good saw believe Alex quarter Hi it’s business the coverage. – across strong for is with New the very have year And as summer market make the ahead. strong, bit this teams, well that analysis it need said. can European XX% good a view is do multi We the the We Board. we QX but in exactly unpredictable. very We you see growth growth, business a and sorry very rates in good York go can a

Alex Henderson

rate into looking the would of kind as we’re that XX% quarter? the the Is you expect fourth

Yaki Faitelson

that XX% at and we multi always guided. that need No you the I guidance is quarter take we said view. are just the year-to-date to way

about You can't the we believe analyze and business business just do well. will overall on quarter-by-quarter basis. a And that it the feel comfortable European

Guy Melamed

just in actually or is more ended buying with your to questions, Alex more the year quarter two number more and of answer customers products the regards employees. this to first three we the X,XXX first And And products, the three we two or or products. added

color only because and not change and to we – showing and So us. basically more more alert analysts color products but have more from how buying edge, have the in the with provided investors more provided are we data and providing customers

and gone two more that is happy last the and more up or on that. in really from with or customers XX% buying from fact products to from great see us that year a indication and products; we're very products three So more we more we've the XX% XX% XX% the

Alex Henderson

Great, thank you.

Guy Melamed

Thank you.

Yaki Faitelson

you. Thank

Operator

your ahead Gur with from your proceed Talpaz question. line is go with questions. with question Stifel. Please please Next Gur the of

Gur Talpaz

Apologies I was about on mute, that. so sorry

for more a high next of products expect are With pipeline heading into into us about plan of that in you about on way products broader heading year? and you some indication of the Or we in talked taking level the the a Should thinking business XXXX. mind, can Edge? give of Varonis You suite you where suite portfolio? like evolution cybersecurity how the solutions about

Yaki Faitelson

lot and we something well of – we inside that the blocks of strings very, a building And to the also everything I that and This is way things is are add value works Cybersecurity constantly related doing one that's conclusive of unique extremely them. very in innovative the doing us forensics. we in just that for there. We’re APT think can and are of are very proposition. on expanding that rich

reporting obviously protection, data automation of cloud. effective lot On mediation the and a the and

a is a we And we believe there innovation us. of to there in of than that pipeline. terms is see us do. So more behind And ahead lot lot of

Gur Talpaz

renewal attribute the that's to your And customers about of and talked upstream than So better proposition base? selling Guy this rates. versus licenses installed much you understanding push sort How helpful. more general of the with value into you then X,XXX would employees just of improving across more

Guy Melamed

Hi, Gur.

sizes I think across we customers see buying more all licenses.

an really there and indication it's there's solve. think the to how of market I a problem are that we

are So large also than licenses And X,XXX but lifetime we see really the us focused Board. helped well. with only more on not very been commitments, But working has a the across we employees more customers with initial value. that's generating on customer

Yaki Faitelson

Gur terms lifetime deal sense the of more overall spend in makes more value time the And with just of economics them. customer in to the

the As we customers this right we we're can the above. budget problem, also level probability we solution things, will doing time the we higher more come But a motion. for mainstream, X,XXX that support us. that in towards spend coverage users becoming know And have large model us and and sales more will if right have and board budgeted again, is then that

we’re customers, of number talking of about terms development. tremendous In

Gur Talpaz

you. Thank on back. Congrats bounce Okay. the

Yaki Faitelson

you. Thank

Operator

with Please question. is your from John the DiFucci question next The Jefferies. proceed of with line

John DiFucci

cloud as out happening your Is deployments any now? I in far cloud-based you're you're Varonis know a have deployed. change can there customer a to seeing at any in you shifting Yaki question seeing Are where cloud Yaki, agnostic recently. I as right you Thank And you. for in the Guy. you there all follow and your talked base? environments environments. But talk up then what maybe more about is about hybrid or for

Yaki Faitelson

definitely, see more Azure see works for in that for we the adoption Hi, we John. us. XXX No, cloud – well very

and Azure primarily approach, you is If and reside now see extremely unstructured you doing VPN on-premises cloud with repositories, relevant proxies Box and see still The for we AD and data but DNS are is that active with and growing these now everything and you geo-location. have us. directory

repositories, in more servers, with of creating agnostic. see and everywhere the the a terms on-prem. tax some Varonis. more their of Azure and infrastructure complexity dev customers just we ops customers, AWS, In mean data of main are IDU bit someone just running workloads, more and I income It's use opportunity regular for We more

John DiFucci

Okay.

Okay great.

that's care to is. you hear, good So don't it where

accounts It to a Guy, when be here. to that guess I cash our uptick next those I across in valuation guess bit cash the nice flow flow that nice Can because I an big big assume nitpick you I want looking over in to quarter going And but going there. I bounce benefit get these expectations. collect is You're real board too we'll long-term. it a receivables. usually was see you'll but that's guess bit I the It uptick, a back a they're you drive look see your at at And results. uptick and see receivables talk I a for accounts would much listen, strong receivables. as and because below little about don't to And that?

Guy Melamed

John. Hi,

operations But in QX the timing XXXX. plan quarter is a obviously and operating the show cash continue – improvements one flow we the XXXX from to to you multi-quarter and other. on leverage. improvement and And the at numbers So get non-GAAP we two was some a business if take on to DSO DSO we we greater. are continue the points, from lower margin improvement nine and look cash the to the year. cash the you continue issues when the flow that over and show months flow our seen There those And compared as the view, have we've perspective, great for nice trend last overall I'll grow we've from seen to last

John DiFucci

to do collecting we and for look jump this it next me about those the within time bigger think is quarter, that over or Well, quarter it Okay. receivables, at but so? accurate

Guy Melamed

to a is just quarter quarter. is that Well, our the And if collection give the analogy you year you remember, for good still is some QX color QX. strongest collection

to to timing is improved the continue operations should there XXXX. to from better levels cash at expect be one And So quarter show other. again from flow we some for from year, the

John DiFucci

Okay.

a great. Okay, job. guys. Nice Thanks lot

Guy Melamed

Thank you.

Operator

Please of your comes next with Stanley. from Morgan Melissa with The proceed Franchi the line question.

Melissa Franchi

Okay, question. EMEA. thank to you. Thanks for taking on I wanted my follow-up just

level a that quarters. investment And but conversations want something up GDPR it's lumpiness to to in the that ramp I a was like comparable there So relevant if appreciate and region then wondering quarter, in but what is feel you've know over in you change that past few I extent the is if probably need put the you just driving that conversations region do the obviously investment? in with to of or if material becoming comfortable the that more you're difficult

Yaki Faitelson

Hi, criticality we cyber comfortable definitely marketing is us campaign. and marketing awareness. security effective of investment, with level and the in But of – response. lot the of – very terms conversation, Melissa. the It's front like and incident driving overall a definitely effective of protection GDPR the center a with feel very No, and data for it's

the and for a we a ours solution believe EMEA, overall good awareness there good a will situation overall cybersecurity, protection, long is for privacy and time. like the data think in it I for are for that be very for conditions

Melissa Franchi

sales Thanks. just force the That's wanted Okay. on up follow And then helpful. to deficiency. I

of you're well-known the getting just So in acquisition, marketplace. existing you're going better the in seeing more more get you're base. leverage becoming through to new wondering if scale naturally you're greater as But as and I'm leverage comes some customer business the

Yaki Faitelson

problem apps curve, have known. the in we known, the the more brand productivity is Definitely, is

I explained So And the can margins. think, gains the business. nice will in go we are we it they way as investing get productivity gradually gradually exactly believe a that but it's and did we see, overall we improve will just that that you it

is in and what this gradual So doing company bigger we we sales. are productivity we reps becomes cycles. and willing productivity are to the the more the more improvement customers And more, that have buy see in

Melissa Franchi

Okay. you. Great, thank

Yaki Faitelson

Thank you.

Operator

Eyal your of next the Shaul The is Oppenheimer. with from with question question. line proceed Please

Shaul Eyal

good you. on Jamie. the afternoon, Congrats Thank Hi and Guy quarter. Yaki,

Yaki Faitelson

you. Thank

Shaul Eyal

your this on prepared Talk this relates to company remarks. the greater and with and enterprise the it color high Can Yaki, and X,XXX understand with surrounding us? you also us in for Varonis? you about as focus we share employees. all incremental than dynamic Thank segment to specifically example end a a

Yaki Faitelson

to a size customer outstanding relatively we volume definitely, business. are – just lifetime do from of segment a value. want attacking, very it's And we impressive periods economics. It's enterprises. large a very sure We deals and But benefiting make we can high of very a are terms market that it's nice that still in

have and is coverage. customers salesforce to customers over, the slowly the and becoming we X,XXX right these bigger but within With surely XX,XXX the all so focus

of part the just we much parts on sure – the resources are that market doesn't everybody, on to the segments all sense. So to we in because covering sell way. want to we too we of the put make that the want of make market But don't it right can economics

of But are we just value we make this cloud, we they view, compliance quarters, volume, to XXXX large also and shop. needs have makes XXXX doable. This multi-quarter the as to and enterprises that cater And the we'll is business in very, will what use very they attention, through that right we the we’ll we customer, very XX,XXX them and cater way about talking in them when of call lot our the journey So that are can the over predictable very, to very to go the to want several overall, revenues that doing the to plus. will users the them address a have. enough what well product sure regulation all take with make give enough sure that

Shaul Eyal

new And the Understood. competitive some to step to landscape. big take of privates, the addressing Any attempting up newcomers, yes, that the got a on to – and data, guys I the products at market guys start-ups, boring the are… you Understood. anything that are

Yaki Faitelson

are the selling over Just where a and lot team ever. are is well situation competitive on see, data. than on them David situation from are we competitive we diligently the we the competition we of And evaluation an deals, XX% all see analyzing seeing and less evaluations and if our overall the we and evolving of same. even

We always are almost alone.

of sales of of our in or So – biters ever in presence ankle its in in better other landscape the any campaign. than the terms the competitors, competitive

Shaul Eyal

Good for that. you Thank luck.

Yaki Faitelson

Thank you.

Operator

proceed question. question from Craig-Hallum. Chad Next the with Please is Bennett with line of

Chad Bennett

Great. for question. Thanks taking my

vendors. conjunction enterprises. X,XXX kind metrics that to what those I customer, point? and for employee so you And customers a particular, security being at and three you plus be solution at look asking plus get you about per bucket, with And XXXX you kind asked integrating of at maybe guess employee the asked two other plus, in about plus, we are maybe Are into broader five are when products Yaki, you products I strategy think data is other feed fit part gather any mean that in valuable towards So security per I type customers. that if to systems. that Thanks. maybe think or in the guys you really customers that which the growing four their you are to that particularly of with plus that enterprise or of And and the think if

Yaki Faitelson

with solutions. plus integrating as as we solution are we other with to identity of with our one And is the going our and alerts the we can. see make definitely that security will There many discovery Yes, three. with to are working customers management, for that is are we there solutions, many working a one terms access systems in want on think equals just and lot sure integration in we

so the in realize investments some make us, investments and the some coming productive. get the of data and there, that very times and with for more them to time that we the is works that of previous for protection we any well So that classification much hard it things one are is we cybersecurity and

one customer it's doing, will together want of the make all that to things sure that yes our ecosystem and we're grow. that other So we whole the better solutions definitely their utilize

Chad Bennett

the the look December last But last this have year. this this maybe of the are end incremental you And guidance wouldn’t that believe gave, about great. quick seasonality Guy. And for talk a that the was year if differently up heading case. then the Thanks you at drivers updated quarter year drivers I you didn't any year Guy versus follow any maybe Okay you or into about thinking into year.

Guy Melamed

for the question. Thanks

at guidance manner. that the the guidance on we in we're of that how for beat hasn't same an philosophy of going into Our the kind terms of also and you guiding we the not same provided, the we raised fact the changed but in only the indication But way, look strong quarter. when philosophy, full is feel year

I the about think and an very the is feel and we business strong indication the results guidance that. of

Chad Bennett

Thanks guys.

Guy Melamed

you. Thank

Operator

question is your Daniel Please question. the Ives of Securities. next from The line state with Wedbush

Daniel Ives

partners, back and again West seen Congrats you've Coast. in just in Europe industry ramping force, to thanks. looking strengths some the you regards on are this question sales GDPR is bounce the in just of about those especially My how Yeah the given

Yaki Faitelson

the Can question. you repeat

Daniel Ives

Yeah XX in as terms strength to on in given the thinking your the Europe you're are of Street how well over months. increasing about just you The partnerships seeing that as six feet that next there

Yaki Faitelson

to demonstrate our and have it's proposition. understand and everybody. virtually, unique so a The sales we really value sell we from is to can we and for almost us big a motion you how and is, market to work need sales principles The first force, explain proprietary key

we really them So, them capacity and in the way need in the is we the sales are sales have account. that the market right the really doing large we digest people, just enable it right to The can so way are right the right that we sure the force with way. give but a management cater increasing make big, that we can can is we

will the people not problem just not want them in make them We or sure our And bring sure So to can the the right serving that if market margins. – size way bringing the in make us gradually in. and our market successful not demand enable that for is also if the way. we they be are responsibly that we customers that improving we are

the market market is not leading or this conditions So indicator size.

Daniel Ives

control given Gotcha back. that make you horizon. sure your just bump that follow-up, process, sales impressive that can Coast bounce you’ve maybe in is ahead and of not, there a there's the Is done thing just that just any no you’ve that Anything thing sort to differently instituted now this bounce back. process least on looking the West pipeline on speed

Yaki Faitelson

why a always this It's speed we business, that a will is view. some to bumps have you say multi-quarter but have need of kind you always

very view you If multi-quarter have a everything worked well.

are and the and in many So surprise. we playbook. are time, with us have a for problem, was coming it for with that There very long wasn't leaders us we a strong company a sales a

we and still you bouncing the tackle really good see I solve you is we will very capacity, know and management when cover. doable. We how usually need. air think time they will right if probably of doable, needed when, business that successful. we lot And that the what back any is issues The is sure that we team them fast. right have the give you problems make operator people, to place inject look be trenches and from a are also the business we’ll in are and the this in can There is be people very systematically

it we tackle Sometimes and but have have to system times multi-quarter very most we’ll fast. have had view good don't always are is we I organism problem a just we think why know this we saying business immune how view. In is problem. living multi-quarter that a And a

Daniel Ives

job. Thanks. great Yeah

Operator

with your The next Please line of from the question Suppiger Erik with question. Securities. is proceed JMP

Erik Suppiger

Yeah taking question. the thanks for

XX%. new your to targeting of new customer revenue cycle. because terms doing what Can the in licensing is And you sales do your expect revenue was license XX%. So that under I you're larger shift remain customer presume below customers. you comment on that's

Yaki Faitelson

just two us. for and customers us important new the quarter is are – growth and that to and remediation, for I of very can the very is usage drivers way level much we is did important just think move for are us for important fluctuate and are the very Thankfully balance customers are it also from we classification. well for time, bigger there then time it to different buying this that will very then cybersecurity, so and from quarter depend, is if for but upsell platform they deploying, the doing

Guy Melamed

percentage add to existing we that though continue customers increase. Just on license the time over to that from an expect

from the existing that a quarter was up view. of said on license new this existing. the customers the I we multi-quarter and we in did you year doing And good a very said go see on – from why take can job year kind like trend think I that And questions why both. customers first license and one is as last think maintenance customers got and both focused first maintenance we're new Yaki and quarter very continue the the of we're

Erik Suppiger

has accounts customers? just you comment versus in new the existing focus on sales Can can the how on terms larger that affecting sales you cycle then is of the made cycle. comment difference the exclusive Well of length of any

Guy Melamed

than any haven't We thousand focus working sales more and the has with companies the been on cycle strategy very a on change employees seen our well.

Erik Suppiger

good. Very Thank you.

Guy Melamed

Thank you.

Operator

state Please line next Mark your the from The Benchmark The question. of is Company. with question Schappel

Mark Schappel

you question. for thank Hi, taking my

in your know challenges or federal relatively I comments still but an the it's federal With your you. to is unlike in more Just commercial business sale some one could go the your have sector. question Yaki to that you're to it earlier educational sector. still in less better, new that of you just done federal respect could on sector it seeing the

Yaki Faitelson

just us. be day, all we a product have all business and several material not growth But for are for had deal. we they timed maturity need wins moving and need definitely we it programs very it's driver business sure small they that good we along. it's and that the education to nice in not and we've We a make that just us. the this validated and it's point the that indicators should like very product, the at believe all But have more No, we that can a no

Mark Schappel

Thank you.

Operator

Please A. the Davidson. Rishi Next question is from question. line your with Jaluria state D. of

Rishi Jaluria

taking between is you and you Yaki questions. that’s like got feedback is functionality customer that overlap dive wanted then as thank and you've of And little bit bounced a I’ve for that they on wanted. something I my touch the more Box look a what customers guys you into upcoming that I that got sort a wanted Box. from Hey to integration, to follow-up. tend just that had the to with

Yaki Faitelson

viable we our We time We is the want are security commercially want that It's sure data and see that's go added we and data. telemetry repository the we and that classify enterprise to protecting it. some will make to we starting to by, of This be anything is can use a there. customers another that make that wanted putting sure taking we just repository.

So to we customers know, need. this are is we saw catering we definitely, saying and enough there we need a saw that

Rishi Jaluria

Okay, that for you. great helpful. was And then Yaki again

mentioned What's the ramping development. and in cloud said wondering just increasing having integration else? area, and applications product or research spending way the up the one infrastructure looks or you with like? one to You development I it was And cloud a it more think right on if having side just that can cloud I priority building, is something where mentioned specifically the having in was Box you more like like expand and about is cloud

Yaki Faitelson

on. capitalize lot are provide a point is The of details completely that cybersecurity there we is it can here, a brave new for cloud Rishi and and the these world. repositories believe I definitely all the is The data everything. hybrid classification, world protection, is pain big can we real, but cloud data infrastructure. And

Rishi Jaluria

Wonderful. Thank you.

Guy Melamed

Thank you.

Operator

for question-and-answer our will We’ve reached now the management session. turn the to remarks. end closing floor I back of

Yaki Faitelson

I thank all of their and contribution and we looking are end our you to to like we all Thank thank support. with this our to you for speaking to our quarter. for their soon. of continued joining customers would all forward the I also partners and call employees like hard again for success us today Before work

Operator

This concludes conference. today's

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

Varonis Systems (VRNS) 29 Oct 182018 Q3 Earnings call transcript