VRNS - Earnings call transcript Q3 2020

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Operator

Greetings. Welcome to Varonis Systems' Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. is conference this note being recorded. Please now James Arestia, will turn the host, your to over Director conference I of Relations. Investor you. Thank

You begin. may

James Arestia

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

not important as Varonis herein. undertaking other described should upon and any our our and made statements we in securities call, related any earnings to our filed such encourage risk are in subsequent and Forward-Looking only These operating set of our projections this our reflect quarter forth release statements forward-looking During any filings. of these views in These section under may forward-looking to to Due are press all to statements. fourth number Securities actual as expressly updates Commission. differ factors, materially application forth We future relied business make a considered ending publicly factors the views today SEC statements be we may representing and with statements captioned of release XXXX. December of results the our results issued as that disclaims laws, be would date. Exchange any for to more that or Statements under today reports XX, read federal from including set or the fully investors revisions those factors

third related earnings and the quarter GAAP on compensation our FX associated and available payroll in for call, is excludes, costs updated amortization Also, the be financial at discount to an to Chief on non-GAAP which section. call Faitelson. a gains Yaki? in measures found most the to conference in Relations our convertible in press can Executive Additionally, directly presentation, issuance this May. reconciliation available measures and call Investor debt the notes www.varonis.com Relations well also investor issuance today's Investor as over will that, A the like release, turn of discussed XXXX that our I'd and tax, are of website our section. note financial Officer, be as which Yaki losses stock-based comparable please With webcast

Yaki Faitelson

the I in joining third Jamie, talk Thanks, expect expand We're seeing operating announce the to for continue extremely us afternoon, an will XXXX trends to over on and our our time. to update explain Security want Varonis business cloud also our and and Platform to you quarter Thank Polyrize how market and good Data discuss to how are cover additional it I'm agreement pleased we environment, excited results. everyone. acquire you give Varonis to results about applications and our benefit to current we infrastructure. with the

execute number well in VPN. the work-from-home sensitive number employees a of from third time, targets. data more bad increasing and more who financial actors At an to warning critical they Teams, a this in Companies world environment. on-prem data are abnormal ever customer of growing XXX from unsecure alerts vulnerable use employees before. elevated the than The computers will exposed Guy in the for I and seek engagement Remote advanced call same report external persistent threats data accessing face threats customer Office risk are as and ever insider discuss here hackers and to to our stay. ways. face access Finally, quarter team higher companies over significant results understand is inbound Sensitive to virtual to in With in detail. interest, our that continues turn regulated

initial Our of in front new with And available a the with in more is customers in their of is address who large data-centric we Doing new a that in the huge customer purchased onset greater by they increase in XX take understand are demonstrate security hospital has deal. the QX continue of that critical. example as the three demonstrated targeted The COVID, a deployment, Classification risks risk a their wins more Data existing cloud hybrid environment: approach our experienced result, initial address DatAlert. licenses ability I platforms, buying on-prem commitment customers clearer. resonate per share initial licenses to spend. unmatched a And and of us. enormous customer to security as opportunity never and to continue One license and well been U.S. a to over want to We all purchase to is platform important to DatAdvantage licenses Varonis ability consume our phishing The time. double-digit multiple this path in successfully highlight attack and as the including our who that for and assessments inherent

performance are this our with the business also of federal We pleased quarter.

was thousands identify Varonis the customer, across Remediate cross-sell. data our quickly of to of For they for subscription sensitive PII. results to realize example, key through material months, enterprise-wide the for they and for able lifetime users sensitive instances, in customers became on-prem stop new In every and a were driver data platform, licenses which future upsells a values employee permissions and to after exfiltration value in Office deploying healthy vulnerability. most renewals overexposed greater and discovered these centers XXX. license government be are open a of a agency PII purchase This XX with can

plan even stores. the We their had of from platform. just base. we -- opportunities their existing force QX resolved was initially team customer but to XXX focused was by to this They to data caught see response assessment, COVID closing value in example multiyear XXXX our large this incidence during a to company the Varonis needs, which also risk they for own-prem of they accelerated in so that licenses our alert due those purchased was in more attack, the meet they of technology good licenses Office A protect is XXX. team. a four threats total December XX data additional would remain a them Knowing subscription to protect expansion And underpenetrated on that seven know now and significantly Office licenses DatAlert within is a also have their move and customers brute on with purchased

our posture. leave further And Office addressable differentiate believe examples to Varonis our based know acquisition customers customer Polyrize. we view of very number a We allowing of engagement them strong data excited well-positioned Israel, innovation stores is our for security and trends healthy more about combined happy nicely first application All stores, Their including our we the XXXX addresses accelerate continued close maps market. in allowing in that are of Google Salesforce, plan in will strategy, these and the us into with platform. with turn expand tremendous the our introduce other cloud illustrate beyond. are is they for their between us and We data pipeline and to will and Amazon to to which that unified data software these expanding of Suite, us capabilities analyze new strong which adoption point data XXX join that We've seen in licenses, cloud, the momentum others. our to incorporate technology, users to organization's believe we the Polyrize a we development to Polyrize fits to in Slack, support. the and and product in and relationship pain cloud thereby the reduce follow acquisition. Okta, to offer And the have platform, in GitHub, Azure, market growing time SX family.

know need the that, we the Guy? As where platform. Guy. we on as capitalize critical. last and XXXX that long-term front we has are our are With is the turn to executions opportunity call cemented quarter, over in And of me believe continued the close this environment innovation let us. said we focused and for current We that

Guy Melamed

you our the everyone. that transition finished. hope and had And us afternoon, the We for the demonstrate Good subscription you, focus today. remind results the our joining business accelerating operating Yaki. families driving of we your for and subscription our leverage. and threefold. Thanks, combined healthy. a growth model is power quarter. Thank With the revenue To manage is quarter, demand platform discuss third the are safe you I with strong as let's that, is

second, with strong customers; finally, both customers; subscription expanding existing First, licenses. new of maintenance and perpetual enterprise and renewals landing of

trend This future new thought value resulting X front, average purchase On to the through compared under license of to be number more upsells. X renewals to than the on and initial customers see greater in licenses licenses perpetual healthy customer the continue model. X the the lifetime we is

behind ARR increase that we a our more employees our transition The maintenance more reflected unleashing of licenses the XX% are XX% XX%. X platform, of September and rapid is our metrics same as $XXX.Xmillion, Specifically, or while year purchased XX% the or from QX. renewal purchased be another XXX perpetual At in continued the confirmation of X time, ago. growth logic as is of customers XXth, of a up these or of more underscores the licenses, XX% above in end from year our XX% ago, to a of of also rates which potential of customers up licenses, with

nature, provides more As into were visibility future than a revenues. XX% of QX revenues recurring which result, our in

XX% $XX.X and strong Turning of X% was revenue referenced. year-over-year, to results. our rates XX% and to I $XX.X XX% Maintenance included a and were grew midpoint year compared revenues mix and million Subscription well reflect now a grew revenues were of quarter services million. XX% just $XX.X to the Total of ahead revenues growth. ago, our guidance the third million renewal subscription and

representing million, were total grew geographically, $XX.X Rest revenues of business Looking the EMEA, grew XX% North America or In of revenues million, to X% X% total million, revenues revenues. XX% total revenue. at or of revenues. to $X.X $XX.X world of XX%

compared be third out I'd results Operating a the third of was to totaled quarter third of going margin margin of Turning quarter negative XX.X% $XX gross income million. the million year. in last for income XXXX. an back discussing was of forward. to on operating third million, $X.X for same of the $XX.X quarter, in statement, quarter that to Operating non-GAAP the operating to operating on the like the an an profit representing loss XX.X% Gross point margin X.X% compared I'll $X.X period million X% in expenses

ahead at Our again the guidance, our midpoint. operating was was well which of margin negative QX X%

expenses driven COVID-related cost expansion, on customer due across and marketing During the benefited by quarter, travel existing larger new from meaningful of activities, savings we prudent the and outperformance business. the a and customer continued primarily management adoption top-line to

do Looking expect in-person will travel we ahead, the gradually responsibly to events and support resume the and we growth to to continue marketing business. both employee invest of

we XXXX. with $X.XX of is shares equivalents, for approximately earnings quarter quarter million of and per income per quarter, our deposits. net partially to interest basic XXXX on and for and of had ended basic quarter million outstanding share, loss diluted million, to XX.X QX income. on shares securities of XXXX, due XXXX. $X.X the million diluted marketable diluted the expense and million QX cash or share $XXX,XXX and primarily short-term outstanding based interest loss offset During expense of the a or cash for third in the XX.X Net third for convertible $XXX.X by of compared the a financial notes $X.XX We diluted was $X.X This

net same from three from XXXX, year. million of $XX.X We an used to we the X,XXX increase the from ended operations compared quarter operations last $X.X of cash cash the employees of period XXXX of of an with the XX quarter increase ended from in third using second XXXX. quarter XX, For September and employees, X% months the million new

business said, of As support we we with sales expect and particular growth continue have the on R&D. a hiring to to the focus

Varonis. welcome want to I to guidance, discuss Polyrize the team I Before

for platform. In material about excited to their are acquisition capabilities XXXX, revenues, are and and expenses. into potential or expect fiscal will technology not QX the of XXXX, our integrate do we their ARR We the contribute working any

Moving fourth for to XXXX. guidance quarter the of

million. $XX We to expect total million revenues of $XX

We diluted of million to the share between range million expect XX.X $X non-GAAP assumes range diluted This million income net non-GAAP outstanding. per $X to operating income $X.XX shares in to $X.XX. and

Let bit guidance a provide more Q&A. we on color before me for open

our direct of volatility the end low the quarter, for macroeconomic last to similar foreseeable considers First, possibility broader of again and given effects COVID. the future, the guidance indirect of potential

growth our of expansion thoughtful generation. and investing pace Second, our we with we'll in for will balance cash margin continue the to non-GAAP operating investments plan rate and show be flow and to

apples-to-apples, in XXXX. mix want this in everyone that remind XX% be more subscription the was as QX will I to Third, QX

we result, the the impacted. and a questions. at be our remain which power with happy an ARR increasingly today. Operator? us quarter, naturally joining and we With demand pleased will safe will As third and model for platform hope larger subscription healthy. summary, of percentage ones the scale. In growth you we're to take And the your Thanks be loved that, further demonstrates for

Operator

Thank you. [Operator Instructions].

Our first with is from question Saket Barclays. Kalia

Saket Kalia

Hey, guys. for Saket Kalia first from It's Yaki, maybe Barclays. you.

greater usage part just of of lot Does Can multiple security maybe anecdotally speak sort you these multi-product just of adoption? sense? You've about as environment talked both and subscription that you per a usage a And customers? finding make following about licensing that some from heightened are COVID. is licenses that customer post product

Yaki Faitelson

makes it how their great products it's is And the between of buy ability and a for us. correlation to very and there and value Definitely, they really that complete question. works have well amount sense, more. see Yes, customers get we much it

a this in and identify to I the understand compliance visibility right of that in lot to the In alerts. is for see approach lot that behavior automation, customers that and ability the in remediation, and privacy, forensics automation this classifying slowly, abnormal use data-first In fidelity what catering in approach are the response. but data cases and data, see have marketplace X security. is we in threat we a is and surely, high think protection, we of detection automation that the of

we thing is that -- usage see customer one more within the is So what mean I usage. much usage about and automated

the has us buying spend just stay lot with time of a So can will our get more. and they within are ongoing and extremely and more processes, more day-to-day they -- time the tremendous they a and just integrated well value, business. worked spend also they lot their seemingly more. don't And cloud to are and for more are for this Azure of seemingly And and need buying in XXX. we and customer, We this

and it and can -- for well. model buy and customers business move predictability licenses to they really the to and the their So overall is of really predictable is the the ability value subscription and more ability buy them become just supported the and working, very more more and more working

Saket Kalia

Got you. Guy, maybe for really follow-up it. for helpful. That's my

margin the subscription of complete, noted largely the more transition you about maybe we here that particularly becomes on should You Could be is the as here top-line. the talk about business recurring? anything trajectory thinking

Guy Melamed

Absolutely.

So QX get a first And results. and portion with the with of that place, margins. helps that you renewals we're obviously extremely as QX has all, the of larger mentioned, pleased into

capitalize in We There's want opportunity to invest. want Our we philosophy really changed. and significant to hasn't to of obviously ahead us continue a on market, the that.

same show balance year-over-year But the time, of expansion, tremendous at between the some and investing and to we kind we'll bottom-line. it we've So growth of want the there. we margin keep seen R&D a to such plan in top-line since bringing ROI to

Yaki Faitelson

that with opportunity. We're we Saket, to remember, we are all And have that catering what are for. always just when we going the we we following security more see to now everything tremendous cases do the with these really meet gradually. solving platforms use there to, are data. said. that we that And and adoption the are COVID, this trying is And it is uniquely cloud do But you threats

and it, are do very balance to on is we also we the innovation, predictable of a being a mindful to the very but that margin. by lot have opportunity, same we are So and going to capitalize other to it we but future, platform, believe going great

Operator

Our proceed. next question Auty Please is from Sterling JPMorgan. with

Sterling Auty

going I to questions into across new of the minds is earnings big all one the So ability software think on companies those customers. attract investors'

sell to of But metrics just You rates ability new deal and I'm the customers. around generation, customers just curious, your saw kind those each you able mentioned them pipeline beyond in close you what to terms new bringing more sell into did? being more with in, of typical to

Yaki Faitelson

build we was environment for ability market attentive. it's generation the to channels well So, demand this All is us. The and the -- pipeline, saw our strong. are working COVID very very very

ability in that have customers new see also We the we very size. attract to good right

our We this that base that are tremendous going the products. marketplace, more from to we from platform we our because the right customers the the need have much products. and -- of but customers and untapped, upmarket, is customer we so meets the of were unlock the our And right able also to need with in it -- customers prospects the to balance size, and potential this the customer transition more obviously subscription,

customers. to with our it sense So for spend more time makes us

So, In in on that also customers because the our really but is X and correlated, share Varonis, and they it's of, licenses. more both customers new just it’s ends more have acquiring gaining the product plus X market, one-to-one, are X. buying it's making using equals sure

more So their more have They They enrichment they licenses. learning, for have they get and more automation. more have value.

sides both well. model the work So of very

Sterling Auty

appreciate that. I

definitely the that think hits I question.

table give more on what Can Just a it within I little platform? the that clear, the brings technology, bit color, actually maybe of follow-up wasn't employees you already XXX% one do exactly and acquisition. number Varonis the to us doesn't the

Yaki Faitelson

and We adoption. about Azure, have talked market. and see about primarily I and it's with related XXX momentum to tremendous technology the the Office

to adoption application, starting just cloud build other obviously, cases worked infrastructure. very are the then use -- see of a we catering to cloud, well to. So the it's organizations these and of and that X then the And we're we lot technology adopting are

to drastically that massive time to part you and need events. we just acquisition is to that data activity doing very to the any to platform accelerating do was And and to They have and a well. that very place you and this cloud any really the everything you us. permissions the take have permission is are give market. the go the our ability and infrastructure of opportunity the for is connect fast this users company and doing what infrastructure So modeling roadmap and elements, And cloud and understand

already take this supporting, into Box cloud and AWS So the and and in deep and we we go can and wide obviously, Salesforce for Google and SX are GitHub. technology that

starting of users critical of -- we this to and what on very lot data this store. on-prem many with Azure you're doing a see work with can there. a are lot So XXX data And and well

So drastically the overall us, for fit very natural we that a really and are believe market. it's we addressable increasing It's excited.

Guy Melamed

to that and just that, the potential. excited the being things add in This on the mentioned the a I about apart And very tuck-in. remarks, one technology from of prepared technological is

QX don't very XXXX. we any expect revenue or happy from Varonis we in So the to perspective a team to Polyrize But welcome contribution the are family.

Operator

from Our Jefferies. Thill next question is Please Brent with proceed.

Brent Thill

to the you're I'm on a concern comfortable some leaving QX QX? What that work if kind from you And help just color like you anywhere. maybe been from work-from-home, looked us of terms short-term in overall that there's in the trends initial surge demand isn't of the environment, could this and we're just curious burst? Just just saw that demand what an signs we now moving the seeing are

Yaki Faitelson

Yes.

benefited anything and from short-term we us, from is benefiting never overall long-term. always the for that So

as to said, extremely what this in that, demand, is of is that and I it that hope us, this very a close surely, becoming business, understand I year that We our it’s worked progressed, think continue. it's well. approach that organizations -- And think something It better it for data-first terms what is just will ability well. slowly we standard. and of just worked I happens better and believe the

need you If and want you your you have Varonis. a protect in data modern enterprise to core your infrastructure,

You protection. for data need -- Varonis to

for You need Varonis forensics.

to that classify sophisticated that every standard, requirements. it's organization every compliance for the serve. believe data, becoming something for more privacy they need Varonis -- and your we and for that understand and You day, need to And very just we it's alerts more

So in year the for as progressed, demand environment better. the us, just overall become it

Guy Melamed

fact to customers, add to we compared than the When the or that employees at just sell X licenses on look our that. look to with points base licenses to new the XX% purchased the more We're happy data year this to is is subscription and are X consistent. companies how X of the year model more new customers, year under XX% customers model been of the indication And more rate, just X under on plus the sell at very selling we're to licenses, you and licenses but very fact KPI pillars and XXX When have going at to at a platform. buying X more can how than That's purchasing existing really that's the we some an indication. number you that going support great that can with perpetual of looking now the for XX% from the this look base, we last more and the strong, between that. very they're XX% the from X renewals to when much truly

Brent Thill

more, ones modules that buying the a there That's out? Which are X XX% uptick? follow-up. standing X is the bigger great. or are And are In just kind of X quick that or showing

Yaki Faitelson

are and use a licenses, Office buying more all It's about all And automation. and these it's of getting automation the but Azure more cases And are them. more and everything. exploding, they doubt, customers Without are X much it's XXX automation in value.

-- buy, just more. or they keep when they buying So once just

more. We So will for get to usually, X many, that to the key X, we us. if know they this licenses, to get many customers is

Operator

Hedberg proceed. from Please Capital is Markets. question Matt with next RBC Our

Matt Hedberg

really hear. Yaki, to was good it

specifically about but started XXX can the inbound And script a more I'm Azure Office you and if I lot saying wondering talk you particular. think interest. significant talk out I know Teams, about you in

deals of guys from accelerating into rate. some that deals, at hear is driving pulling channel to maybe We a and lot continue context an think you Teams

Slack and Atlassian? if specifically wondering Teams of tools support can and you then also like collaboration talk other about I'm So

Yaki Faitelson

client So there what’s is between data mainly day, at with that's a of happened this the everything always it related is use and online, of Exchange tremendous tension the -- of generating using is conflict, amount OneDrive it's a end security, care. and on top of which you the and protection. hands in there online the end Team is lot, productivity SharePoint user to and

you lot also They don't is of the have also So a have data. forget -- on-prem exploding.

you There we this is infrastructure the following. go more this over to the lot what them, of value in lot And collaboration have why in this doing more of did and volume and because repository Azure And in in the yes, they tools, cloud you to of and is acquisition on-prem amount a a have is critical more a place. we of So data data what all on like There we XXX the with many are value. top data see add GitHub. adoption we and a lot of we and store many, can SX. this platforms, core is and massive are can data

it. core much to data-first we to that more -- believe with and security that and cloud that digital for be A to just chances following -- data, We’re Varonis. going going first, and be opening a benefit it's good there from for are just going landscape. we it's change are transformation of it's going we And opportunity to believe infrastructure the tremendously the lot also this time tremendous is the

Matt Hedberg

can are this curious, that's guys And agency maybe changed little on for guys what's thing did quarter. then a that from sense vertical that about with I hear a just I penetrated on mentioned, basis? perspective in know to any more a really picked up well. you another environment? been And guys you an great. I'm Is follow-up, that maybe talk progress, but call as it's out how that been years, federal you a federal and that's today? driving issue for maybe anything there you've the That's government interest large making that bit good federal you steady you

Yaki Faitelson

have We Federal, they good an had North started business quarter. America a overall nice a quarter. to had federal. in very outstanding

space, unstructured. great a of is teams. we the lot have We data. have In This federal critical

extremely are it's a innings. opportunity we build are we we [ideation]. and just relevant, business a So believe big big in We the the We're can definitely for but in that early us.

Operator

Our next Sandler. from question proceed. Please with Piper is Rob Owens

Rob Owens

more could does little acquisition. Polyrize. on your market forward? to was I is opportunity. a does this I And first this cloud believe time bit relative hoping I your appreciate the for will bit And you little strategy the this tuck-ins where that to you touch accelerate change moving a fact look

a more a that guess you’ve forward? more we moving So the tuck-ins of I question is, now thing? built small platform, of one-off will Or this making in see terms be opportunistic type was of

Yaki Faitelson

It the at No. And so do the want to right on thing. depends opportunity, one. first we're always looking opportunities. We always

will -- do. time opportunity we'll time that will -- right can If if something to and market find have the it's the the So right we we to business. will company, that they for thing good shorten the bring

don't are for right is We do this have We any the just our was natural about it. just for religious want what very side business are We not And people. -- a just customers. step. to pragmatic we

Guy Melamed

acquisition that add that that, first on technological to the right just tuck-ins. acquisitions future when looked we And would is any that we been there at again, acquisition. And this to-date be, And expect have technological you're tuck-in.

Rob Owens

happy the the on lagged hoping a were last transition, quarter second, how mentioned Europe Europe you you think touch with then bit. little pipeline. you could still I And And

though, look at growth it's rate, in you still the the down If single-digits.

just I hoping was front. for So an update on that

Yaki Faitelson

months in adopting the North subscription that after were We America Europe grew model. X%. X Remember

So the flywheel in motion. is not completely

great Europe, very us, and market for there. market channel partners, very in it's excellent customers. well an we'll team for do -- us, good big a just believe great have a huge We It's that we and a

Operator

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

Shaul Eyal

is Yaki, on under XX question extension follows: another years. seems Varonis in is the modules family standalone question or X doing to one? product a as My be adding It a might is there If to align give been recent specific off, acquisition. many Polyrize mix? families, new Is or you've Polyrize nice has with licenses it strategic how take, everything to they a the be

Yaki Faitelson

both. So can supporting. stores the some to play run the can classifications. are products same To you other, we the mainly, that we data of To But stores, most do data can't. it's we of they that have

sure are do a content. new you the We it's alerting, The customers? get everyone. new of a good the but well, will going yes, and works we and our buy. be Forensics different economics work have a our of coverage. revenues, a customers easy make for protection we can they it of more And a content, very that it's very But How it products. data will to lot for bit lot lot to package for

Guy Melamed

there, to Just emphasize Shaul.

of licenses that the platforms additional on cover. we later are they plan terms to with sell, Polyrize that cover that In don't we

of not and with reason are that licenses acquisition. the offer, part top this of on expanding So that's licenses TAM existing the has Varonis of, instead it's to we the see that

Shaul Eyal

macro. going maybe And or back to Guy, also the Yaki

weeks that CTOs least in are April current CISOs, have and So Have currently some think seen incremental another recent at comfortable Or Europe, you or into specifically ramp-up security with short-cycle replicate lockdowns. we've demand countries, any could interest they the that seen hand? infrastructures May? you elevated heading in of in the at do round in feel back

Yaki Faitelson

very so is demand see it's -- good but we what far, unknown, an overall. So far just

Operator

with Fodderwala Hamza Please with is question [JPMorgan]. next proceed. Our

Hamza Fodderwala

transformation. from prior cloud is see This question you. Yaki, Hamza maybe wanted demand, you first we I if and especially could for comments expand Stanley. more digital as the see to the on on term longer Morgan Fodderwala

conversations a already But as environment? work architectures to into to those So with customers about CISO their that moving you Are little think sort some that. conversation? Varonis about those you more having And a of they spoke decentralized think about longer-term security longer is fitting bit how of term, making they are starting changes?

Yaki Faitelson

Where take more profile to that adoption usability that not it's and are this data about talking right they we the of with users core see and understand we accelerating we usually, and So that are infrastructure. to is them C-level what now. repositories And data prism. also new data, then X see that really critical certain this all see will the it the have about concern and the and looking a they get they level doing, years It's very that what it, is customers strategic. more have

So assets. the protection we that the how now are the is. very just organizations digital of about worried see understand They it

just very have for lot becoming You the when it's need are to the realize them. over more they compliance get And teams control and They all doing, and a more of these and hard teams these platforms, of we're strategic. what we automation. -- security

spend strategic to we How but more that are is and it. going we And believe are compliance are realizing that this but like and a going for multi-year budget it's they privacy more do. to they deploy tremendously. they are they see it, solution So how and are benefit willing they need the alone going to going it's what need market. information they cover need It's around all market, just it, officers to very just to enterprise in are data to and states, a Varonis, are officers and boards the to order. and they money I almost we understand on a Small becoming plan having ours, surely a that strategic, big how protect slowly CISOs, like asking platform

Operator

from question Blair. is with Please next William proceed. Ader Our Jason

Jason Ader

on data I helpful. if you structured think would something data time? Today, Do data. Any important wondering wanted with be support you to is it's you comments support the to about for or and ask over necessary you just platform your structured don't roadmap. structured that

Yaki Faitelson

We that more can exposed. it's we we very semi-structured the X -- support but SharePoint use data. cases are Don't and much do with anything exposing data we now believe we is are in and we really doing forget -- others, discussing unstructured API unstructured not is that the cloud, that roadmap data. that can to But

platform. intellectual we doing there that what And this long for right it's need, our part of So what is a what need will if of we customers We're address. the within property to and see more. our needs going as and always is are -- are is customers something and our as the

Jason Ader

world? for about using the or privacy not Varonis related, I and quick ask of And but some in you then to And mandates a you're a compliance wanted around seeing that just the data type in use new interest increase pipeline follow-up, of whether case? an

Yaki Faitelson

the more see we them, tell and you digital demand, order you And compliance the all the right have management be outcome don't and in are regulation for doing, sure are than just But teams in you place. can definitely protections this if it. they this else, them, to No, have world, anything what they just going organization disaster. and boards to need an a to you make manage in

many to collaborate just benefit business an from more you repositories to see protect of in data, they you everything from need it environment the need without that just just in can and need you going protect it. the data really from maximize data, is We explosion from the that's data, fact to to benefit to on enterprise, the and saying to of So the because everything need order value systems we that's cloud, how the on understanding you information the collapse. how protect they treat data that and regulation from the need from

Operator

Please Gur proceed. with Our question from is Talpaz Stifel. next

Gur Talpaz

this? data you to ransomware we've this of sharp driver you looking Yaki, several in seen Have push a customers for into Varonis seen over And as the business? growth a the stores because have past more months. seen

Yaki Faitelson

you and to is threating they exfiltrating bypassing much they’re times are your I going are a EDR of coming sophisticated that but data, with them then they it's are they take happened APTs. way, what lot a many in in ransomware, really Yes, this more They that data and think release holistic -- data. out or very are

critical want they what anything But the and are product it's a APTs, with with data that the doing So without directory is you doubt we you on our are everything, AD and that us we know obviously doing with advanced there. Azure these Edge that have are don't times customers cloud, threats, and also in active persistent yes, make you help with the are to in and data. protecting on-prem everything sure stores, Classification, just happens is many that

I the then and much that to you encrypt key announcing think as is with ransomware can as ransom. data that it's ask as for

way the get better it's a And that working data. campaign the than now can't is exfiltrating So marketing this. we

You can get the these your you knocks have organizations have that pay them you what for they to this and data do cyber to back. in ransom talk direct they order and can criminals to exactly that support

happened solve these problem is the something So solutions and from they respects is customers in in I solving be really and that understand very order it. to well to happen think broad limited what and to that, benefit things, of the that traditional that in And security can this we very need invest ahead them. it are

Gur Talpaz

helpful. little for talk can Varonis you the working about more That's And they demand environment environment think if up home? coming Edge, the of bit, customers think about as building users with and renewal then you on for a that especially risk about kind from

Yaki Faitelson

at VPN, are is cyber just because home through unsecured there much people computers, work-from-home just more No, us home, accessing helping data and crime. The networks no. is and

can So they bad just happen. things that understand

and rush all opened don't workloads applications that the they cloud in this a have in and organizations cloud configurations have place. You

do is and of lifeblood the the them understand higher they it's see is products, always a first the they many just for to organizations. So we And gradually but information to we to happened in priority, have, is just the understand we priority what that of order which they something us. that need this reacting that become higher And they that protect us that in and what then this very environment, realize do the fast, that business. they resources it's something with and There us -- with need I really like need need customers they badly. and

Operator

is question Chad proceed. with Please Craig-Hallum. next from Our Bennett

Chad Bennett

expansion Guy, number in did call? net you NRR speak the about

Guy Melamed

mentioned more quarter's quarter you, on We're within last call. happy the we provide greater number remind the our it annual in seeing continued and an provide earning really numbers. we're So color with quarter And that we expansion XXX%, had was QX than we'll last extremely base. To that will basis. next we

Chad Bennett

question. Okay. prior a And then or just maybe to that related

versus new net Just on the expansion.

-- has bookings that broken know that Just or last haven't even mix from you of it for quarters few has a out dramatically a last or to historically the ARR been relative standpoint? while But quarters what I is the couple -- changed now.

Guy Melamed

of years, last So base. the have strategically, couple when a larger we you think about much

revenue from by have And generating us”. way for our So we customers. cost from customers wanted impact existing coming to the is existing “cheaper that a of much larger

customers, going with about talked and in talked So other in prepared that's strategy, actually as up-market. new remarks our we're in the we we plan about the of our questions, as some

they're path on into consuming indication And the customer more than platform, us been So great getting it never on that X they're double-digit per consuming fact license are shows platform, right that average clear. also we're fact to new focused the is place. licenses customers that the has the the they that the buying a but

to want So everything continue and working planned, we kind as that. of we is doing

Yaki Faitelson

Once they moved to subscription, the company changed drastically.

they they're We realized had They're They buying need then to buying model buy. they platform. we it. the consume changed market that can that So platform this the and big, started more.

set very focused licenses, are right they value sure on the are the more. way predictable then they realize of them getting sell we a right buying in very So customers, make

and and to between we just the really for land of the that So we and became with the just these engagements. effort time, just the over and class the and just and attention output the the just it's But more and we of strategy penetration economy, and is amount the of expand changed need customers. customers the to will, customers time spending market our much current according just them if strategic the are for you working cater both plan, customers new

Chad Bennett

one Just me. maybe one, for last

contrast initial to to now on we X size exact I the compare deal would number need license X, then it again, maybe thought X, -- initial or it's more But expansion, you and you playing X accelerated how even going to ASP? from exactly just a like to and guys Just X on don't would license initially thought. just dollar deal license the out that expansion. relative than basis and

Guy Melamed

thought to and question. X, model. moving great about expected when that's the When we better a initially at we subscription look that's than So more expansion than a getting what to we actually

the consistent that been that's last happy couple and encouraging. is of of with extremely So quarters. We're that, very over kind

haven't showing we're firm levels but the and front, for a us which stayed discount you higher the new licenses that discount, initial consistent, have higher about ASPS, that actually We selling purchase. is talked not but more staying in really very doing driving well providing can I customer tell we're that on

Operator

with Erik JMP from is Please next Securities. Our question Suppiger proceed.

Erik Suppiger

but the comment On like said some introducing when be in sounds modules how won't 'XX, Polyrize, can can be you in revenue were revenue you It fiscal new at And you you many products? -- you 'XX? will introducing there be comment would people Polarize?

Yaki Faitelson

working terms, on well that a In be in yes, tirelessly it acquisition. the make are into very licenses we these integration and will successful sure XXXX, and

Guy Melamed

but XXXX, moving any platforms in have from in they of of extremely a terms people. as the you mentioned, on. them expect And together contribution perspective, less headcount, QX with than XX later excited we and don't or And revenue in additional introducing we're

Erik Suppiger

faced what to posed? you and from challenges any? been has that finding are then with if logistics very working the home? companies pandemic And you've Are the you of COVID pandemic the with Or issues Okay. effectively. navigate there that work able there But are what are that clearly challenges some

Yaki Faitelson

mod always customers, installation. or worked hold installations virtually with our We

is have many management a We years team together. that

-- efficient out. ability -- shorthand are communicate to COVID is People have very ability a hurting travel. our is one. -- our we the less So just But environment

is all very really us. and that is they need -- But And digital this repositories, many it. they has Varonis cemented they also all enterprise and with organizations a Varonis the benefiting understand because need like there modern just it's -- just So move fast definitely it just for need data these times, they the transformation is from just it definitely benefits fast understand to over and that it's the solution -- for happening here.

success. So ends, we that but it's them heads lot that feel there from there attacking but and challenges, a is are of we we coming are both on are

Operator

proceed. Our with next Berenberg. question Please Joshua is Tilton from

Joshua Tilton

way so, seems functionality you to think result about in really And in especially as as overlapping the It Just SailPoint up-market? you competition do the Is if it? quick. more with the move expect to that with future, SailPoint. is if going more acquisition right

Yaki Faitelson

just is -- making as There we’re and is understand maybe competitor. the data SailPoint data. no confusion, in don't and And for sure core It's infrastructure. where and accelerating relationship the but sales -- rare It’s protection, detection are the considered for related infrastructure, response to don't data applications and to SailPoint users we’ve that’s and about a needs they just that core, we from the see No. compliance more not. but existing between

Operator

question next proceed. from Our Please Daniel is Wedbush with Securities. Ives

Daniel Ives

acceleration the when an there. you're side, next So the success there how sales Is your or in clear just just just about mean doing. seeing the given there talk you numbers, think quarter with I on strategically you're given hiring what over just thoughts about without giving to the hiring, mean field? I months, X XX

Guy Melamed

customers bottom-line. to just Obviously, do and guidance continue opportunity. we hire balancing long-term hiring about it priority see think didn't other take that. the on we to of up in So to some capitalize hire departments about of we that kind results go quarter results But came, and of the just both really to it. We and market QX top-line because the way, was the -- how XX% continue talked good to to the want the growth of want the QX the that showing how in hiring when started We Dan, to I pipeline hold And versus improve to we with. The reemphasize front, measured after the in the and when to and very hire see of on of we terms we evolving. a both kind capitalize results. other hi, going plans want some But talked we sales the we're kind advantage to last X%, opportunity. this midpoint about in off and kind of we're continuing our departments QX, talked very of of in of but it top-line thought on happy we

expect department. So and mostly marketing hiring the and I should R&D in -- sales you

Daniel Ives

when Guy, at start for webinar going the to a transition? is move date? Are you subscription successfully how to that to

Guy Melamed

I'll send you again.

Operator

our of I James the end over the like reached to back question-and-answer would to closing conference have for turn session. We remarks.

James Arestia

interest much forward you speaking more So quarter. thank you to healthy, Have again. all and and for a this everyone very We night, everyone safe thank and look good we hope today. your stays with

Operator

today's conclude does This you. Thank conference.

time, this You thank you may at for lines your participation. your and disconnect

Varonis Systems (VRNS) 26 Oct 202020 Q3 Earnings call transcript