Varonis Systems, Inc. and its subsidiaries (Varonis) operate as a leader in data security.
The company's offering's comprehensive data coverage and automation allows organizations to keep pace with the relentless data growth, sprawl and complexity. It started in 2005 with coverage for Windows file shares. The company offers coverage for most mission-critical cloud and on-premises data stores, cloud infrastructure environments, identity repositories and many critical SaaS applications. In 2022,...
Varonis Systems, Inc. and its subsidiaries (Varonis) operate as a leader in data security.
The company's offering's comprehensive data coverage and automation allows organizations to keep pace with the relentless data growth, sprawl and complexity. It started in 2005 with coverage for Windows file shares. The company offers coverage for most mission-critical cloud and on-premises data stores, cloud infrastructure environments, identity repositories and many critical SaaS applications. In 2022, it announced the availability of its flagship Varonis Data Security Platform as a SaaS, which offers simpler deployment, faster time-to-value, and groundbreaking automation capabilities that help customers prevent data breaches.
Varonis software enables enterprises of all sizes and industries to protect data stored in the cloud and on-premises, including sensitive files, emails and databases; confidential personal data belonging to customers, patients and employees; financial records; source code, strategic and product plans; and other intellectual property. Recognizing the challenge of protecting data with growing volume, velocity and variety, it has built an integrated platform to simplify and streamline data security, threat detection and response and data privacy and compliance.
The Varonis Data Security Platform helps enterprises protect data against cyberattacks from both external and internal threats. Its technology enables enterprises to analyze data, application and account activity and user behavior to help detect and prevent attacks. Varonis prevents or limits unauthorized use of sensitive information, detects and prevents potential cyberattacks and limits potential damage by automatically locking down data, allowing access to only those who need it, and automating the removal of stale data when it is no longer useful.
The Varonis Data Security Platform is driven by a proprietary technology, its Metadata Framework, that extracts critical metadata, or data about data, from an enterprise's IT infrastructure. Its platform uses this contextual information to map functional relationships among employees, data objects, systems, content, and usage. The company's platform provides real-time intelligence about an enterprise's massive volumes of data, making it more secure, accessible and manageable.
The broad applicability of the company's technology has resulted in its customers deploying its software for numerous use cases. These use cases include: automatic discovery and classification of high-risk, sensitive data; data security posture management; SaaS security posture management; automated remediation of over-exposed data; centralized visibility and risk analysis of enterprise data and monitoring of user behavior and file activity; security monitoring and risk reduction; data breach, insider threat, malware and ransomware detection with MDDR; automatic response to ransomware and other severe incidents to limit exposure and reduce recovery times; data ownership identification, assignment, and automatic involvement; forensics, reporting and auditing with searchable logs; meeting security policy and compliance regulation; automatic data migration; cloud migration; automation of retention and disposition policies; automatic data quarantine; intelligent archiving; and automated indexing for data subject requests related to privacy and compliance requirements.
The company sells substantially all its products and services to channel partners, including distributors and resellers, which sell to end-user customers, whom it refers to in this report as its customers. The company's products are also available to trial and purchase via the Azure Marketplace, AWS Marketplace, and Salesforce AppExchange. Its sales model, which combines the leverage of a channel sales model with its highly trained and professional sales force, has and will continue to play a major role in its ability to grow and successfully deliver its unique value proposition for securing enterprise data. While the company's products serve customers of all sizes, across all industries and all geographies, the marketing focus and majority of its sales focus is on targeting larger organizations who can make sizable initial purchases with it and, over time, have a greater potential lifetime value. The company's customers span leading firms in the financial services, public, healthcare, industrial, insurance, energy and utilities, technology, consumer and retail, education and construction and engineering sectors. Its existing customer base is a strong source of future incremental revenues given its broad platform of products, the growing volumes and complexity of their enterprise data and the associated security concerns.
Technology
The company's proprietary technology extracts critical information about an enterprise's data and its supporting infrastructure, and uses this contextual information, or metadata, to create a functional map of an enterprise's data and underlying file systems. Its Metadata Framework technology has been architected to process large volumes of enterprise data and related metadata at a massive scale with minimal demands on the existing IT infrastructure. At the end of 2022, Varonis announced the availability of its flagship Varonis Data Security Platform as a SaaS. In addition, the company's MDDR offering further reduces both the likelihood of a breach and its potential impact by enabling automated 24x7x365 monitoring with a service level agreement (SLA) that ensures Varonis will respond to alerts within a specified time frame. Its MDDR offering is only available for its SaaS customers because of the automation and visibility that's built into its SaaS platform.
On November 14, 2023, the company announced an expansion of its AI and machine learning capabilities with the launch of Athena AI, a new Gen AI layer within the Varonis Data Security Platform. The initial functionality provided by Athena AI, including an AI-powered security operations center (SOC) analyst that combines LLMs with Varonis' unique context about an organization's data, identities, devices and previous alerts to instantly generate tailored alert response playbooks and recommendations and a natural language search interface that lets users run reports, perform risk analysis and conduct security investigations without any domain-specific knowledge or product expertise.
Growth Strategy
The key elements of the company's growth strategy are to extend its technological capabilities through innovation and strategic transactions; grow its customer base; increase sales to existing customers; grow sales from its new products and functionality; expand its sales force; establish its data security platform as the industry standard; and continue international expansion.
Products
With the introduction of the company's flagship Varonis Data Security Platform as a SaaS, it is transitioning away from selling on-premises subscription licenses. The company's SaaS offering is sold as a platform license, providing the functionality of multiple core modules in a single license. Its on-premises subscription licenses, on the other hand, offers an array of modules that customers can purchase individually or as a bundle.
Software-as-a-Service (SaaS)
The company's SaaS product portfolio includes two product lines: Its flagship Varonis Data Security Platform, which protects Microsoft 365, Windows file shares, Active Directory, Edge devices (VPN, DNS, proxy), UNIX/Linux and hybrid NAS storage, and DatAdvantage Cloud, which protects IaaS environments and SaaS applications, such as Salesforce, AWS, Azure, Google Cloud, Google Workspace, Databricks, ServiceNow, Snowflake, Slack, GitHub, Okta and Box, Jira, Zoom, and databases.
Varonis Data Security Platform: The success of the company's license bundles under the on-premises subscription (OPS) model demonstrated that customers want to utilize and benefit from the majority of Varonis' core functionality from the start. It knows that customers who utilize a higher number of licenses see more value upfront through automation and synergy between modules. Therefore, the company drastically simplified its subscription licensing under SaaS, combining five of its most popular licenses into a single Varonis Data Security Platform license. The Varonis Data Security Platform SaaS license will include, by default, the functionality of five core modules: DatAdvantage, DatAlert, Automation Engine, Data Classification Engine and Data Classification Policy Pack. It will no longer refer to these licenses by name; rather, they will be considered built-in functionality of the Varonis Data Security Platform SaaS license. In addition to the functionality mentioned above, the Varonis Data Security Platform SaaS license includes new capabilities not available in its self-hosted product suite. The Varonis Data Security Platform SaaS license includes:
Data security posture management (DSPM): Provides customers with real-time visibility of their data security posture across their multi-cloud and on-premises data, helps prioritize remediation efforts, and tracks progress over time.
Data access intelligence: Combines data sensitivity, permissions, and activity to show customers who has access to critical data (i.e., their data blast radius), how they got access, and whether access is necessary.
Data discovery & classification: Automatically and continuously scans the contents of files, folders, and other objects to determine sensitivity with a high degree of accuracy and precision.
Discovery policy library: A frequently updated library for identifying and classifying personal information specific to GDPR, CCPA, and US federal controlled unclassified information (CUI).
Least privilege automation: Automatically and continuously remediates excessive data access granted via shared links, direct permissions, and group memberships without manual effort and without impacting business continuity.
Data activity monitoring: Gives customers a real-time view into who is accessing data directly or through AI (such as copilots) via a normalized and enriched log of data-centric events, such as create, open, read, move, modify, and delete. Varonis also tracks, among other things, permission changes, authentication events, password updates and shared link activity.
Data detection and response: Provides high-fidelity, data-centric alerts and automated response actions, including a web-based alerts dashboard and investigative interface, and seamlessly integrates with security information and event management systems (SIEM).
User & entity behavior analytics: Profiles users and devices and their associated behaviors with respect to systems and data, detects and alerts on meaningful deviations that indicate compromise. New UEBA threat models are automatically delivered to customers to guard against evolving tactics used by cybercriminals, insiders and advanced persistent threats (APTs).
Varonis Data Security Platform SaaS customers can decide which data stores, applications, and infrastructure environments they want to protect by purchasing 'Protection Packages'. The company's SaaS platform supports every resource covered by its self-hosted version, and its SaaS architecture will allow it to move quickly to add support for new resources. Additionally, SaaS customers can purchase MDDR which further reduces both the likelihood of a breach and its potential impact by enabling automated 24x7x365 monitoring with an SLA that requires Varonis to respond to alerts within a specified time frame.
The Protection Packages available for the Varonis Data Security Platform SaaS are:
Microsoft 365: Includes support for SharePoint Online, OneDrive for Business, Microsoft Teams, and Entra ID (formerly known as Azure AD). Customers can purchase add-on support for Exchange Online and Microsoft 365 Copilot.
Windows & NAS: Includes support for Windows/CIFS-based file shares and NAS storage, such as Nutanix, Nasuni, Panzura, Pure Storage, NetApp and Dell EMC. Customers can purchase add-on support for on-premises Active Directory, UNIX/Linux and Edge devices (VPN, DNS, proxy).
Hybrid: Combined support for the protected resources in the Microsoft 365 and Windows & NAS packages.
Varonis DatAdvantage Cloud: DatAdvantage Cloud is a SaaS platform that helps organizations protect data across SaaS applications and IaaS environments. DatAdvantage Cloud offers functionality similar to its flagship Varonis Data Security Platform, including data security posture management, SaaS security posture management, data classification, data access intelligence, data activity monitoring, data detection and response, and least privilege automation. The protected resources available for DatAdvantage Cloud are Salesforce, AWS, Azure, Google Cloud, Google Worskpace, Databricks, ServiceNow, Snowflake, Slack, GitHub, Okta, Box, Jira, Zoom, and databases.
On-Premises Subscription
The company's self-hosted product licenses utilize its core technology to deliver features and functionality that allow enterprises to fully understand, secure and benefit from the value of their data. This architecture gives its clients the ability to select the features they require for their business needs and the flexibility to expand their usage simply by adding a license, and the fully integrated nature of its products allows individual products to enhance the functionality of the others.
DatAdvantage: DatAdvantage, the company's flagship product, captures, aggregates, normalizes and analyzes every data access event for every user on Windows and UNIX/Linux servers, storage devices, email systems, Intranet servers, cloud applications and data stores, without requiring native operating system auditing functionalities or impacting performance or storage on file systems.
DatAlert: DatAlert profiles users and devices and their associated behaviors with respect to systems and data, detects and alerts on meaningful deviations that indicate compromise and seamlessly integrates with security information and event management systems (SIEM).
Data Classification Engine: Data Classification Engine identifies, and tags data based on criteria set in multiple metadata dimensions and provides business and IT personnel with actionable intelligence about this data.
DataPrivilege: DataPrivilege provides a self-service web portal that allows users to request access to data necessary for their business functions and allows owners to review accessibility.
Data Transport Engine: Data Transport Engine provides an execution engine that unifies the manipulation of data and metadata, translating business decisions and instructions into commands, such as data migration or archiving.
DatAnswers: DatAnswers provides a secure, relevant and timely search functionality for enterprise data and helps companies comply with data privacy regulations, eDiscovery requests and to facilitate data subject access requests.
Customers
The company has customers in over 95 countries. Its customers span numerous industries and vary greatly in size, ranging from small and medium businesses to large multinational enterprises and government agencies. The company's customers, including leading firms in the financial services, public, healthcare, industrial, insurance, energy and utilities, technology, consumer and retail, education and construction and engineering sectors, with hundreds of thousands of employees and petabytes of data.
Services
Maintenance and Support of Subscription and Perpetual Licenses
Maintenance and support associated with a term license subscription is included in the Term license subscriptions revenue line of the statement of operations. Maintenance and support associated with past perpetual licenses is included in the Maintenance and services line of the statement of operations. These maintenance agreements provide customers the right to receive support and unspecified upgrades and enhancements when and if they become available during the maintenance period and access to its technical support services. The company's renewal rate for 2024 continued to be over 90%. Due to the transition to a SaaS delivery model, it expects maintenance and support revenues related to term license subscriptions to continue to decline.
The company maintains a customer support organization that provides all levels of support to its customers. Its customers that purchase maintenance and support services receive guaranteed response times, direct telephonic support and access to online support portals. The company's customer support organization has global capabilities with expertise in both its software and complex IT environments and associated third-party infrastructure.
Professional Services
While users can easily deploy the company's software on their own, certain enterprises use its professional service team to provide fee-based services, which include training its customers in the use of its products, providing advice on network design, product configuration and implementation, automating and customizing reports and tuning policies and configuration of its products for the particular characteristics of the customer's environment.
Sales and Marketing
Sales
The company sells substantially all of its products and services to a global network of resellers and distributors that it refers to as its channel partners. The company's channel partners, in turn, to sell the products they purchase from it to customers. In addition, it maintains a highly trained professional sales force that is responsible for overall market development, including the management of the relationships with its channel partners and supporting channel partners in winning customers through operating demonstrations and risk assessments. The company's channel partners identify potential sales targets, maintain relationships with customers and introduce new products to existing customers.
Marketing
The company's marketing strategy focuses on building its brand and product awareness, increasing customer adoption and demand, communicating advantages and business benefits, as well as generating leads for its channel partners and sales force. The company markets its software as the Varonis Data Security Platform, a solution for securing and managing enterprise data. It executes its marketing strategy by leveraging a combination of internal marketing professionals, external marketing partners and a network of regional and global channel partners. The company's marketing organization is responsible for branding, content creation, demand generation, field marketing and product marketing, and works with its business operations team to support channel marketing and sales support programs. It provides one-on-one and community education and awareness and promote the expanded use of its software. The company hosts in-person or virtual Varonis Connect! customer events across sales regions, as well as free, online technical webinars across multiple regions. It focuses its efforts on highly relevant content, events, campaigns and activities that can be leveraged by its channel partners worldwide to extend its marketing reach, such as information regarding product awards and technical certifications, security training, regional seminars and conferences, webinars, podcasts and various other demand-generation activities. The company's marketing efforts also include public relations across multiple regions, industry analyst relations, customer marketing, account-based marketing, targeted advertising, extensive content development available through its website and content syndication, and its active blog.
Intellectual Property
As of December 31, 2024, the company had 89 issued patents and 31 pending patent applications in the United States. Its issued U.S. patents expire between 2025 and 2042. It also had 76 patents issued and 34 applications pending for examination in non-U.S. jurisdictions, and 18 pending Patent Cooperation Treaty (PCT) patent applications, all of which are counterparts of its U.S. patent applications.
Moreover, the company has registered the 'Varonis' name and logo and 'DatAdvantage', 'DataPrivilege', 'DatAlert', and other names in the United States and, as related to some of these names, certain other countries. In addition to company-owned intellectual property, it licenses software from third parties for integration into its solution, including open-source software and other software available on commercially reasonable terms.
Seasonality and Quarterly Trends
When selling on-premises subscription products, the company's quarterly results reflect seasonality in the sale of its products and services. Historically, it has experienced a pattern of increased sales in the fourth quarter (year ended December 2024). This trend makes it difficult to achieve sequential revenue growth in the first quarter of the following year. Because of purchasing trends, demand for its products and services is typically slowest in the first quarter, resulting in a decrease in quarterly revenues from the fourth quarter to the first quarter of the subsequent fiscal year. The company's gross margins and operating margins have been affected by these historical trends because the majority of its expenses are relatively fixed quarter over quarter.
History
Varonis Systems, Inc. was incorporated under the laws of the state of Delaware in 2004.
