VRNS - Earnings call transcript Q4 2021

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Operator

Greetings. Welcome to the Varonis Systems, Inc. Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. this being note, Please Instructions] conference recorded. is [Operator conference your Relations. host, will now Arestia, to the turn Investor I James over Director of Thank you.

You may begin.

James Arestia

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

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

been our call. for will retroactively www.varonis.com release X-for-X effective quarter comparable on stock per of fourth impact adjusted note which please have the at press this most XX, A in share can and is that for Relations stock Investor in measures Additionally, non-GAAP XXXX. directly and be found also all common year full data the earnings be the discussed available financial XXXX split section. reconciliation measures Also, March GAAP financial the conference

an investor a webcast call I'd With the our the as note website Investor of like presentation our updated as section. Relations call in please on available to Chief that, Yaki? Lastly, Faitelson. that to are over Officer, Executive turn today's Yaki well

Yakov Faitelson

Thank Thanks, and you consistent performance, our to everyone. for our us by year Jamie well discuss good and QX results joining afternoon, team. of a executed the XXXX steady,

for are capitalize ahead, excited are focused see and beyond countless for long-term we durable Looking we on and to positioning opportunities XXXX Varonis on the growth.

Before I will themes guidance for review XXXX. I opportunities, these Guy key XXXX. by then want start the and results our for QX discuss our financial to reviewing

So let's jump in.

important stayed months, what has the is we As last data security to market the the about think XX what in stayed and changing? same. ask is it what same has the for Starting with

for our automated For protection another secular To many for that increasing a is scarcity of strong years, now global in-house growth organizations. trend and few, sophistication a data and threat which serving need a expertise. tailwind We significant regulation. actors we This the have growth, on explosive presents trends. for see of as added a name technical all is bet

which moment in continued demand spend our on for driving Let's platform. trend a this to accelerate XXXX,

Varonis. only founded to whether which cloud we or in during of growth greater which is on-prem first have companies about around slowing This signs showed data XXXX, no risk. talked the The since we opens world the

Cybercrime continue by become it sharpen growing than critical and environment, giving threat gets not profitable has their to and that the the every before. worse surprising data which is the is strategies. second ever dependence highly vulnerable. The actors more company makes on It threat refine day

these of regulation. trend that is trend seen is last in all teeth. And The have constantly in fines. regulations from stretched the thin scarcity. I allow need solution these byproduct attacks, earlier results with they exactly the security year, we third substantial past The noncompliance them that are prospects to environments. do sharp A too hear complex mentioned their automated what as have natural provides technical of platform that at experts and This IT customers and and more diverse Varonis We scale less. across is that and

technology for never today's has than a better market. fit been Our

of region. regardless As a to approach with result, data-first or resonate our continues size, customers industry

turn transformation has let's starting changing, how is approach what drastically to which security. with digital Now the must data impacted companies

to which and primarily harder. work-from-anywhere, the easier stores There explosion data is on-prem sensitive access and data in cloud. And serve both which stores, protect. to lives data has with much harder perimeter been now enterprise define an in the points collaboration as said, sanctioned have and even we security endpoints the hard As of makes to

security. for all solutions we when the be tension between the will easy their first managing files The decade problem not the found, problems XX day, necessary know, As often job. digital data-driven has and made believe over so organization on are the productivity access of employee most average to collaboration to million biggest for has new emerge. transformation next are We the that problems which

from misconfiguration vectors radius, so damage result, of data. that, It blast many sensitive potential only can this get gateway a through a call one. enormous. to As one and the top a we it is for or be an takes vulnerable compromised just the which On endpoint, have attackers widespread user

is we deeper XXXX for growth. on distinct expand we we how to the focus durable also massive with classification is and and as problem so much have plan to going already Cloud as is with This we Drive are SaaS and more Google and as stores. of the SaaS there For to the for data common automation. data now one automation into of platform, that the go impossible enormous can We it opportunity many market across every these efforts on expand positioning company and for and Box Salesforce, challenges transformational customers can and a provide just an do go learning are applications. DatAdvantage truly for our we Drive, our wider intend these The exactly long-term coverage both Google we addresses we surface and on AWS is believe our of data on protection solve meaningfully We we beyond theme opportunity. are market without integration. And they many scratching scale can company, laser-focused more and the be face. stores is and deeper which what

care time, number team a At with protection. issues their as The to mapping. strong They Varonis purchased briefly serve became Before to DA organization and I I Guy, incremental wins U.S. this but key risk number use the XX,XXX some XXX new our a had revenues. for expansion And our are to can employees service significant with Cloud want quarter, base it and access licenses health discuss initial us discussing existing the open customer continued customer in. licenses closing a to expanded the call deals. ransomware and It in Not the permissions also we as Microsoft quarter. viewed turn did outstanding assessments a customer QX. of validate only risk same a another of case source significant additional address already concern double-digit now they brought of expand how

hard significantly long-term year their the originally let for manufacturers, deployment to I and Prompted I platform QX. to effort more the turn These and perpetual world's With a with expanded how thank just call trend customer strategic We customers impacting believe those them when they the $X target. two fueled of two continued to the regulation want investments examples me that, data of only opportunity largest coupled Varonis today, have Guy? mission One comply in with our sensitive work number of Varonis team ARR of for across clear digital and it's we their know licenses. last need data, approach to a business. double-digit innovation speak are for now how auto path I by protecting excited I with billion I Guy. fulfill securing to take for licenses, XXXX. to our the have sensitive provides it's and by say a organizations a over our am great transformation, the

Guy Melamed

afternoon, you Good joining Thank Yaki. for everyone. today. us Thanks,

with pleased quarter results. extremely our are fourth We

growth Our ARR million. continued by execution resulted in highlighted to impressive performance XX% $XXX.X all key across metrics,

half We also beat our non-GAAP of achieved of total bringing of XX% down Similar QX guidance. we second bottom operating line. showed and line growth years, both XX.X%, leverage revenue top year, almost of our the the margin in ahead previous greater the to operating to all of

need existing whom to coming customers, to market, we see broad-based recognize demand growing and their the at pressing new the As data. for from sensitive continue of all and look secure our platform we

from easier Our to and belief more more Why? license from to is that licenses Because the buy, more it's get customer the our a experience customers than to one six five. licenses our strategic the confirms their as they that increasingly again value our and a the customers this And greater they view that likelihood longer realize, additional securing over over expand with to and higher we're seeing take data. licenses. more double-digit

four with As powerful more two XXXX, employees years and year a more of licenses, XXX up our of ago. or or is customers ago XX% XX% And purchased the from from even December XX% double XX, XX% and six in the licenses, ago those of XXXX, up setting further purchased XX% than just I stage for expansion the described. XX% that QX customers or more a more year more

XXX% dollar-based net year. of customers for the retention above subscription at rate was XXXX Lastly, end our the

This revenues XX%. over of were total our services to in now results revenues our more revenues Turning fourth $XX.X million. which rates, subscription to were detail; as renewal again, $XX included grew Maintenance XX% and million XX%. $XXX.X quarter million grew

dollars thousand from QX results several our DatAdvantage included Lastly, ARR hundred in Cloud.

total revenues. of revenues EMEA, America, grew XX% Looking we regions. XX% million or million of Rest revenues. World $XX.X to million In total or or saw performance all XX% North grew In X% across geographically; to XX% XX% grew revenues revenues. strong of of at total the $XX.X $X.X business to revenues

was back forward. a to statement; of expenses XXXX. XX.X% fourth gross non-GAAP results Operating discussing the compared the profit margin I'll million, be Turning quarter in $XX representing million. income of Gross the the XX.X% for quarter going to fourth totaled quarter fourth $XXX.X in

margin income or expansion XX.X% margin an same or period our result, margin million we top operating $XX.X the focus operating growth. year of maintain $XX.X in fourth line compares continue of to to income million XX.X%. an with on quarter a operating This last was operating as As balancing of

financial outstanding to share on compared income per the quarter income or expense Net shares fourth diluted During income on the $X.XX and per $XXX,XXX, diluted of diluted income of XXX.X million of had for net we respectively. for the is and QX XXXX notes. due primarily This of to fourth $XX.X our QX based of share of XXXX, XXXX million was quarter convertible $X.XX for quarter, approximately XXX.X million interest $XX.X or expense XXXX. million

equivalents million As of December cash we XX, $XXX.X in XXXX, deposits. and short-term had cash,

briefly quarter grew high results. XX, the Subscription the XX of increase ended last XX% employees end operations an of the in we $XXX.X well revenues employees negative XXXX above year the months $X.X to Total last XXX compared cash year XX December For guidance. third XXXX, million. X,XXX million net our recap grew $X.X our $XXX.X ended from months. generated same the year. and with We million, from XX now period million new an used XX% revenues in I to full of to increase the of employees, will

for X.X% was leverage transition. XXXX. validates about margin compared model to have operating year The that talked X.X% we XXX our improvement the basis negative the throughout full in point Our

and generated We by digital the transformation. opportunity long-term on continue accelerated with investments that to capitalize the ongoing discussed be by Yaki trends our that the thoughtful

leading move in even I to SaaS as that to I business, revenue Before important the guidance, indicator of recognition years our ARR to SaaS. the continues more will ratable given a as for increase our ahead, note want offering become

have shekel. our midpoint our point Additionally, basis program some our expansion exposure And to get of the for everyone points quarter expansion more In hedging points Israeli These good general, we to lock with just we basis year-over-year. to improvements color on of pronounced constant year-over-year. currency to the XXXX XXX guidance to point of the constant headwinds a shows margin XXXX, for benefited the year. follow early headwind. our XXXX to basis tailwind headwind our minimize as basis, could new as currency guidance a we as rates were program FX larger took with reflects through year want is try the points XXX on retrospect I our in the And a where advantage XXX for basis, volatility on midpoint full of hedging these favorable XXX you, margin XXX of On from we in approximately COVID-related in basis XXXX. impact of first XXXX guidance. approximately In control. the remind rates XXXX we focus related a that operating basis shows our remind volatility

Lastly, $XX will million. we for the XXXX expect CapEx in of be that $XX to million range

our range for in XXXX, we $XX.X $X.X non-GAAP XXX.X assumes net million, million diluted the basic million expect of guidance; per quarter total Non-GAAP and share of XX%. $X.XX to outstanding. This loss revenues $XX.X Moving diluted to $X.XX. loss basic of million of shares to the to representing first negative negative growth XX% operating million to and of $XX.X and

representing $X.X this growth million ARR non-GAAP we Non-GAAP million revenue $X of Total of $X.XX. million revenues per share XX% of XXX.X outstanding. XXXX, to ARR of to DA $X.XX $XXX from net assumes shares to operating income approximately million, year-over-year of million XX%. assumes representing XX% This diluted And $XXX diluted year million, growth assumes of full DA million from of of the For $XXX approximately to Cloud. the $XXX million $XX range XX%. and million Cloud. to to in This $XX income expect

challenges on during I take questions. we the margin cash to pandemic, overcome we the that, me is take last happy generated growth, the recent only and today. As have significant but clear that we opportunity would back full capitalize and positioning with while that expansion to ourselves ahead. joining by at posed to them us longer-term lies two look advantage for Thanks flow the improved And years not be Operator? have it

Operator

[Operator Capital. from Hedberg RBC Please Matt question. Instructions] Our proceed question first the with comes your with line of

Matt Hedberg

taking for a my really end of Thanks strong guys. Congrats Great, on question. year.

the we super-exciting. appreciate But added versus expansion? the guide what all your adds versus think think base? this should the of highlighted to expansion customers I year. Cloud ARR new about about how seems we new DA we algorithm think investments, about way wondering, that, When the right which think the just for you is with Obviously, customer

Yakov Faitelson

there DA all with definitely that data covering that is architecture see underlying that strategy with forming done. we we that is the are think sanctioned I have repository digital And this that in the that the transformation is working. we with Cloud data efforts is and concentrated the

licenses. before are we X,XXX really have in So plus. path cover customer our a said customers have places. to us and the very that, And us many was between see adds it's of extremely the the that, for will that value important customers Having XX important also but for to new right market XX also it

to Now to the licenses. above really X,XXX even them XX-plus focus and is and users then take

So need just are overall, sure make we it's working. places. We right that on to the focusing

as DA will We important believe that very it's it's Cloud. is huge sometimes, a see decide for engine, stationary opportunity definitely, year And form And with XXX XXX. innings and takes automation there early the it to really not we know, to a you just trends but always do. still tremendous what that But opportunity. with

is of see where data in data the the assets of more protect organizations also digital an more order Varonis We cybersecurity and on-prem just this efforts realization and are and all explosion the to over shines. and protections of world

but So the we of right of need is to the version the customers. it's size on short answer both focus

Operator

line comes JPMorgan. next proceed your of Please Our Sterling Auty question from with with question. the

Sterling Auty

I'm ARR guidance, again instead Thanks Hi, be appreciate $XX guys. turned if to $X million Thanks. Cloud it. wondering out million. just for of DA I Yeah. the

how words, DA million ARR? added impact on-prem does you what's So $XX you DA to $XX impact million Obviously, the ARR? But that subscription given traditional $XX from of kind get million of that more, asking mechanism? in is, every Cloud. net I'm treatment So Cloud, what what's the if other of the ARR for licenses,

Guy Melamed

question. the Sterling, So for thanks

think And the context. some the because mechanics and want I on touch that specific important before I question for to great I it's it's a think give I on of ARR color one. revenue

three especially business XXXX the will ARR providing and leading more recognition even important ratable that. be we're more ARR Cloud, guidance indicator the we becoming sell at is the DA comes and provide you eventually obviously, and and as XXXX, But revenue reasons. more mechanics revenue One transparency the want to with is think with are So important. we look the for that main when I of of ARR

revenue years, last than higher because professional component, ARR the of in the two So that was services. nonrecurring mostly

ARR mostly $X.X ARR component, revenue XXXX, And by than nonrecurring was again, in by revenue So million. professional that higher higher $X In was million. service XXXX, component. than was that it

Cloud As the ahead, and expect more to terms. And we're the $X will is ARR what's larger become of as the And dollar way contribution, in million that way narrowing the between in licenses, And that that approximately and half the kind ARR Cloud we we recognized gaps. number revenue because expect closing XXXX, we gap of as revenue. number, ahead, kind we're look more years component. we of DA that's of assuming bigger that sell That's about we're ARR ahead, thinking in really looking overtake it year's previous and DA revenue as perform. and it that's the

question. specific Now, digging deeper into your

only expectation, but year in that of $X roughly the we I mentioned, of full things put Cloud, I DA of a X%. there we're X% is million year, of offering obviously, out pleased Yaki of where takes think million perspective. That the there's assuming $X that confusion with for -- terms we're bit there in as time. momentum a licenses to and want our ARR have of it ARR the

to But to isn't responding lower five revenue are that are and we'll looking from transitioning in quarters. XXXX leading the investors But entire it perpetual that for that why where guiding we're the guidance this with we feedback year. that's not company indicator giving we ARR. throughout we're from the subscription for So expectation

is it's different. the So transition. XXXX not very This

Operator

from question the Jefferies. next proceed Our with of Please with comes question. Thill Brent your line

Joe Gallo

Hey, guys.

around on the a finally maybe constant components the XXXX? hiring be the year XXXX you basis can renewals? Guy, of appreciate more points little expansion. color you, you currency of XXX shouldn't You the out side? have massive margin op question. just uplift just maybe different investments a appreciate I Joe But from for on in Brent. I parse this see for And the the

Guy Melamed

So a that's I of question. you we that while even making was the kind when -- investments. expansion was that think that in XXXX, And were great look margin obviously, expansion. at showed had basis of the we XXX part of we And meaningful happening and points

the capitalize of I put same the at now for long-term and many is the that think in on we to So on We philosophy have bring and, we're time, line. it where bottom the investments the necessary make to opportunity. place want that focused years continuing, some

when at leave the at XXX that the the because from prudent almost table. we But time, expansion very margin way of to making on beat line anything QX, don't the bottom the down results, -- same those the and investments. we're beginning year's last look -- from entire the with came you So want we're to was the year,

improvement about basis, points And we're which XXX showing constant is our that margin on philosophy strategy. in a operating basis of with in So currency continue obviously, line will XXXX.

Operator

of Owens the your Rob with question. Sandler. proceed Please from comes Piper line question next Our with

Rob Owens

have of the like cycles is head Can you Great, ARR seen. we the seen look my that, net of This -- they've quarters year? And on now as of into question. and speak thanks strongest progressed maybe top new you've pipes 'XX? sales you guys right what to growth throughout how for that what taking one

Yakov Faitelson

cycles Sales stay same. the relatively

we think is And of order by platforms protection today, that is and happening, that this there the the assets. gradual and gradual protecting that digital infrastructure efforts concentrated I are invest gradually overall the have And process did on that in also is realization digital to platform when and the understanding and cybersecurity what efficiencies there in is you investment are to are return them. happening -- then that that of we assets the in is they what organizations just this in are are expanding. is and closest -- large, our most protect they tremendous data

are is lot is an the and a are the have that of think in just demand is what and adoption the points as just of are way concentrated stationary is on-prem data just customers the and market need. a I saw of pandemic and endpoints access center. they're after just acting are a that So, and -- once just trends, see and what a SaaS lot you architecture, data happened these of of what lot And And you lot we that doing, this expanding. applications in that buying,

the over this that we what data. that way So is in there realization time, best will be fourth quarter. to protect And saw this we the is believe a strong

Operator

comes with question Truist. the question. next your Please Joel with Our from of Fishbein line proceed

Joel Fishbein

results. I some XX the number licenses, considering great success. you good you're have seems a regarding us were it customers sold. Good question having you, Would giving really licenses upstream? like the consider of that And you're taking of number for Guy, more moving or evening and just

Guy Melamed

right. absolutely You're

numbers -- success talking of more that about lot more. a seeing showing are which the is we're that is of kind are We everything

very, we're metrics too us right and focused you think X-or-more out with when transparent been investors the there. don't because too kind But the being stick we numbers seen we've past, we the and have of and And generate X-or-more want providing. we the in with with I I provide licenses think that to of want much licenses time kind or the very analysts. and metrics confusion on think the to very I comes we're too many now metrics transparent for many generate as

Operator

Citi. comes of Boolani with line question next Our Fatima proceed question. with from the Please your

Fatima Boolani

to my taking question the questions. for you ARR Guy, Thank Hey. with for Good respect afternoon. the you guidance. is

guess, implied 'XX of calendar flat, $XXX new 'XX. in experienced I net million which at you what is ARR looking calendar relatively you're in So

us into from guidance? what helpful. standpoint you color walk specifically, some be you. you XX%-plus maybe So the there I would really think, guidance, decay Thank ARR help through for what ARR So maybe with said of the rate particularly puts a and context in maintenance renewal that that And a can any takes in maintenance? is of, embedded

Guy Melamed

Absolutely.

and I a And about think responsible philosophy We guidance that's great the the walked ago, question. kind full past. and when think ARR about the a couple terms revenue be through way the revenue minutes to the mechanics I for kind And guided of of that of of the want starting really, relationship point are year. at in you changed. we've highest just in hasn't we

in year revenue had number years. Our we've the is full highest

think that the Now, the of guidance the providing same the guidance be when new ARR terms the may of but old KPI you kind one. is ARR, of in giving person kind about

is So starting a that think we just -- way want the to us. we're for guide. And this good I we point make sure we in responsible

Operator

with question UBS. proceed from your of next question. Our comes with Boyd the Please line Roger

Roger Boyd

Hi. my operating gross margin Cloud, coming But question. infrastructure, Can the as just ARR? up the on on Thank gross the you nice expect that's taking very results. you 'XX? question Congrats on you calendar margins to on about of impact what margin, the see at of sort build in should impact the line in recognizing Guy. we from talk DA much about A for X% cloud

Guy Melamed

Definitely.

impact about continue XXXX, an impactful expectation of larger expectation in the for as mentioned sell not half XXXX. color. us. business, revenue part Cloud as significant But to And impact shouldn't coming that million. I incremental But about is $X from and of be ARR the that that. before, of we'll Therefore, a becomes we that's DA as for the So is margin provide the more

Operator

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

Alex Henderson

very much. you Thank

that's lot discovery. you So it's that, if whether in mean little a terms more is in single identity whether just It's in Is about just there Or removables, one. single a lot functionality could I that it's subscription. hoping it's talk identity I than the just there's DA privilege, stale in Cloud subscription a whether a bit of a of was one shadow subscription? there? packaged

Yakov Faitelson

It's it's licenses customers the our like work still with of But are several for bundles early. And way there are Cloud. And it, Engine. that also we a DA buying Classification realize and synergy several usually, with we there have lot licenses. we

are are of as it, provide how we forward. details with and So more to is more going color we it progressing moving

We are very encouraged believe opportunity huge quarter. still from it's the it's a but We beginning. that the first

Operator

from Our with Morgan proceed the of question. Stanley. Fodderwala Hamza next with question comes your Please line

Hamza Fodderwala

Is a that ARR back-end-loaded how my for taking either $X ARR pipeline going guys. Thanks to Yaki all generate Guy. around based for million XXXX? that ARR question seeing that you've for customers, versus $X the Hey, million more is versus or Thank color guided thanks that much to on a pipeline you're in front-end? in that and SaaS today, you. question lot Maybe perhaps 'XX the the guide. existing from of The guide, you're

Yakov Faitelson

new force. lot a of sales the to have and we our introducing Usually, product we're experience customers how to

-- everything comfortable with of said DA beginning. the success proceed Craig-Hallum. it's these we relevant a can just with I with experience we as Mattiacci the for And looking customers SaaS you're that But feel indicators of feel licenses your be Please Nick and comfortable few before, this -- lot that million the in We suite and next comes $X XXX with our Our that question. all we think that strong with can have we for from the experienced now, of ARR. next see, footprint. with next customers. very question our the have good Operator when Azure, we Cloud. we initial see we And years, Overall, not line the

Nick Mattiacci

is taking Thanks Bennett. Chad our this on Nick Hi, questions. for for

gross me in consider quarter. understand is strong business this margins forward? to we help else what Or improvements? XX% gross about gross margin is just really there So Can this margin gross again being margins the anything when going looked should the driving to about you thinking year? a And think

Guy Melamed

for the So a on I definitely very number were note. ended Gross a and a margins we positive year XXXX with. it roughly obviously, strong very very, pleased was and very we're think, us same

expect at As change being that addition don't mentioned as we incremental of you of recognized. being before, I ARR that Cloud, a on it look half $X around major DA margin front, of XXXX, the million and especially only gross because

in of range. for numbers those So XXXX, expect continue we in I to think the kind our view same

Operator

with your line question comes next Blair. proceed question. Ader with William from Our Please the Jason of

Jason Ader

you. priorities the Yeah. XXXX Thank question What company? as you. top Yaki, your are kind CEO for a for high-level for of

Yakov Faitelson

can see, in and But I growing tremendous is opportunity My add to sure need And automation. in see when opportunity. I can Yes. right there digital customer right and we think challenges in in do the are I make us. I when build I it the create can innovation terms is organization's the moving so of the create just and I to that people to to completely. company is the that places the needed believe are to and on us protect problem capacity see customers. the top behind company that to that share the tremendous I retain hire the strong, And repository in And data ahead to to for this to focusing talent the as this biggest is manage is Priority capacity than right it. so base. that forward. future, can universe. I sure the with right constant coverage, foundation and our security and value And we tension we product, And exceeding function with very automation, looking and it be And see coverage much I'm productivity just that where that tremendous the in see between the make trust is organizations serve a believe solve opportunity. to right the we And that, important for solve to of order going far information opportunity

Operator

proceed your Our Please question. of the Saket with with next line Barclays. from question comes Kalia

Saket Kalia

maybe still You've question, or just for sales to Okay, about you guys, extension strategy XXXX? specifically, here. great. about comp with as the value question thought with customer less? just maybe about XXXX more given they that, anything there can a versus an that maybe more Hey talk in early base to module licenses being that talked in lot my help just to existing Is changes adoption. thanks doing get last in any your taking that all you've Yaki, accelerate

Yakov Faitelson

terms No, we And be as with because lot are see automation us. When we that customers we focused The big that just of of on there XX you And alerting, -- a that scarcity and stuff comp can organizations one that is X,XXX customers that, have are within talent. then will customers you more and need to repositories have now above in more for productivity of of very model people better is the no to tremendous more just we that once -- you well only things solution have company, users is of gain XX There is see better problems. extremely and have remediation, path more in us, licenses. are more terms that licenses, just the there a complete. much you changes. a no is is have are real few change just working just a and many going that -- solve that on is classifying security and whole like they really,

gain value. of above buying it's So are to have a And to our they make lot customers really just automation that and and go sure licenses to enough X,XXX more. then

changes. more it's about gradual how The bit changes same coverage the So is this it's but overall, just a we change is thing. see

Operator

of with the proceed your Please with question Eyal question. line next Cowen. from Shaul comes Our

Shaul Eyal

Guy, Congrats And Thank 'XX? quarter on adding headcount you very you. what's for simple during question. very, afternoon, and outlook met XXXX. the you Good guys. on XXXX? for your plan hiring targets and fiscal Have quick the

Guy Melamed

plan headcount hiring in Shaul, were in going especially the there our we the when kind plan was and and XXXX, -- which year. department think into the hit I look sales we marketing increase our at So the able and all for to R&D of cylinders

we've the places. you don't on to especially done of in but us expectation the we see about that think people to headcount think guide I the is able XXXX, being very And also the us for in right So obviously, hire, but a and job the those help good to customers in and when plan functions over department, R&D not continue in years; it's departments: in the sales just supporting generated quota-carrying with two ROI for that reps the add value.

at right overall, So places. the able is and hire we're our working strategy I think people to

Operator

you. Thank

Nowinski proceed Andrew the your question from with of Please Fargo. next question. comes line Wells with Our

Andrew Nowinski

you. right, All thank

about five purchased was easier than customers XX to it You've get to from that And it's from have talked of pretty past go X that in or been percentage linear it them to how looks like each two the has the more six if licenses, get licenses you customers increase at now go quarter. look to to licenses. to

we where get percentage fact step that see show if they're or is licenses of Where do And of of that increase So, any I'm that will up? evidence six customers to to in buying that ever sort purchasing? number easier customers function more not, are it wondering would in double see the licenses? we

Guy Melamed

think, to significant. we all the per our I has seeing, been as XX we're from to licenses that our today And conversations, offering and average that over feedback platform licenses, ability customer So a all double-digit has on get increased. the has obviously, have

years right this has also XX% or of You're that, two the opportunity we that absolutely right. in the number When the significant, the fact end you year, the XX% have. look ago, there But shows year. at more at also licenses, XX% been six last you're increase that

XX% talks order, opportunity meat to or our grow. reverse that ahead have bone base just we that and on it in have it existing the much our have basically And we licenses we that about approximately at five customers look the continue customer to of how you less. means If within that have

as the all more the that to But indications we quarters clearer. from per in licenses obviously, that we never overall, years provide confusion. has the path customer fit and causing on think So average color ahead I find in and without double-digit been ahead we'll the have seen,

Operator

Our question Seyrafi of comes question. Please Shebly with Securities. from with next line your the proceed FBN

Shebly Seyrafi

much. very you thank Yes,

more move So of the to -- in currency I constant about more basis. 'XX a on you've operating post-COVID go for travel is improvement bps assume you're higher XXX a world expenses. think with to environment guided or going I you're assuming going margin to related and

basis So what margin travel currency I in want operating that you a 'XX? normalize improvement see would for increased when on be to constant

Guy Melamed

XXXX, return the assuming quarter-over-quarter. guide is will it and in absolutely And bake more up still I travel increasing related But level as a levels. question. in to assumption expense our below of total, it think pick right travel, we're in world. that great a that kind be to that's normal pre-pandemic gradual a you're gradually for the will But we

Operator

next line proceed question. of question Erik Suppiger the comes from Our JMP with Please your with Securities.

Erik Suppiger

for taking question. Thanks Yeah. my

On the marketing how targets? drive bit on and the from between to a OpEx, see to marketing. going marketing side? are talk more opportunity the R&D sales little versus and increased and sales about productivity what side? a productivity and driven your sales you the you Then this Is there spending Where perspective be is on

Guy Melamed

the part So start, your with the of permission, I'll second question. with

that there's of year improvement when And look meaningful a of we basis the can department think you in of cheaper significant at that's our the of year. the model, that still portion the came the with over to XXXX non-GAAP to sales are department. model. results, that we throughout sales margin our base that on on want investments that and that basis, are within make see leverage kind But When a leverage. marketing you our see out coming capitalize XXX and at investments, of marketing a opportunity. that And sure necessary existing can the coming significant from expansion lot investments customer that kind points and the allows of you mostly you longer-term generate have obviously us that, look we because to that I renewals make had of the

So I investments, our at and think look the focused on they as sales would the you R&D marketing and mostly front. be

Operator

the Jonathan with with of proceed from your Baird. Ruykhaver question. next question Our comes line Please

Jonathan Ruykhaver

more down drill you more Thank if where you've this platform this bit Maybe wondering this a you Yeah. perspective, been automation was highlighting good and just company on could a Yaki, evening. opportunity just I from across does see the we the that time? remediation see automation evening. on you benefiting standpoint response could an touch that product over suggest And the most. and innovation this solutions from type

Yakov Faitelson

And accelerate all that you -- automation in in resolution. an automation is in to the a phases. will plan is of Yes. lot our do to call what the to operational that just Overall, there automation see automation automation we opportunity classification, the remediation, time of

and there So for this is key a there. is see just opportunities us that too we many

Operator

with comes question Joshua your with from Our line of Tilton Research. next the question. Wolfe proceed Please

Joshua Tilton

perspective. I Hey, actually question earlier, to guys. just different my Thanks for taking Sterling's from on a want question. follow up from

purely is to it sales DA Or going term your incremental we selling this If from you more think of your sell detract traditional business? as that year, should Cloud to licenses? the current

Yakov Faitelson

sell limit buy but incremental. customers, sometimes it it's they going there as can how overall, Obviously, incremental. can think is primarily licenses to a about you when You be to much to

Operator

I James closing to of now over Ladies reached the have we for session. will and question-and-answer remarks. the gentlemen, call the end turn Arestia

James Arestia

for can look and good you, to out you quarter. joining. So reach a coming speaking Please we have don't helpful thank be Thanks to days we and the everyone, forward this hesitate night. in if with

Operator

disconnect today's concludes This time. you this participation for lines your may wonderful your and conference have at you day. a Thank and

Varonis Systems (VRNS) 8 Feb 222021 Q4 Earnings call transcript