Total Revenue

Increased by 19.7%: from $114.022M in Q1 2024 to $136.423M in Q1 2025

Total Revenue grew due to a dramatic increase in SaaS revenue that more than offset the decline in term license subscriptions, reflecting the ongoing strategic shift from traditional licensing to a subscription model. " "

SaaS Revenue

Increased by 160%: from $33.985M in Q1 2024 to $88.560M in Q1 2025

The surge in SaaS revenue is driven by the company’s transition to a SaaS delivery model, bolstered by strong new customer acquisitions, existing customer conversions, and increased average selling prices, which build on the momentum seen in previous periods. " "

Term License Subscriptions

Declined by 44%: from $55.980M in Q1 2024 to $31.488M in Q1 2025

The sharp drop in term license subscriptions is due to ongoing customer conversion toward SaaS, reflecting a deliberate shift from upfront revenue recognition to a subscription-based, ratable model, as observed in prior period trends. " "

Operating Loss

Narrowed by 8%: from $(47.633)M in Q1 2024 to $(43.766)M in Q1 2025

The modest improvement in operating loss indicates some operational efficiencies; despite increased revenue from SaaS, higher operating expenses and the timing of costs continue to impact margins, a challenge also noted in the previous period. " "

Net Loss

Improved by 11.7%: from $(40.490)M in Q1 2024 to $(35.783)M in Q1 2025

Net loss improved as the increased SaaS revenue and improved operating performance partially offset ongoing cost pressures. The reduction in net loss builds on a similar trend from the previous period where revenue mix improvements were starting to positively impact the bottom line. " "

Financial Income, net

Increased by 40%: from $8.545M in Q1 2024 to $11.951M in Q1 2025

The rise in financial income, net is attributed to higher interest income and favorable foreign currency gains, which overcame additional costs such as amortization on marketable securities and related expenses. This trend reflects improved financial management compared to the previous period. " "

Net Cash Provided by Operating Activities

Increased by 20%: from $56,723K in Q1 2024 to $68,000K in Q1 2025

The increase in operating cash flow is driven by higher revenue collections, improved working capital management, and seasonal collection patterns, building on similar positive trends seen in FY 2024. " "

Goodwill

Increased by 72%: from $23,135K in Q1 2024 to $39,750K in Q1 2025

The significant increase in goodwill resulted from the strategic acquisition of Cyral Inc., which added $16,615K to the balance sheet. This acquisition underscores the company’s commitment to growth via M&A, a development that did not occur in the previous period. " "

Total Stockholders’ Equity

Declined by 19%: from $452,349K in Q1 2024 to $367,743K in Q1 2025

The decrease in total stockholders’ equity is primarily driven by a net loss and share repurchases. Although stock-based compensation and new equity issuances provided some uplift, they were not enough to offset the negative impact observed in Q1 2025, continuing trends seen from the prior period. " "

Accelerated SaaS Transition & ARR Growth

Previously, the Q4 2024 call emphasized an accelerated SaaS transition—with SaaS ARR at 53% of total ARR, generous ARR growth expectations, and raised full‐year ARR guidance. " " " " Q3 2024 and Q2 2024 also highlighted progress (with SaaS mixes at 43% and guided around 48%) and strong customer conversions driving ARR growth. " " " " " "

In Q1 2025, the company reported an even higher SaaS ARR—61% of total ARR—with 19% YoY ARR growth, new product innovations such as “Varonis for Agentforce,” and continued momentum driven by strong customer demand. " " " "

Increasing emphasis and progress in the SaaS transition; ARR growth and SaaS mix metrics have improved consistently.

MDDR Adoption and Its Upsell Potential

In Q4 2024, MDDR was highlighted as a key growth driver with strong adoption and bundled upsell strategies. " " " Q3 2024 discussed its “no-brainer” appeal and ability to raise average selling prices, while Q2 2024 emphasized rapid adoption and pricing uplifts. " " " "

Q1 2025 reiterated MDDR’s status as the fastest adopted platform ever, underlining its critical upsell potential and contribution to converting customers to a more integrated SaaS offering. "

Consistent strong adoption and stable upsell opportunity; the positive sentiment remains high from previous periods with added momentum.

Generative AI and AI Integration

Q4 2024 saw AI-related purchases contributing meaningfully—with Copilot and MDDR bundled to drive growth. " " " In Q3 2024, AI’s small yet positive impact and rising customer demand on data security were noted. " " " Q2 2024 mentioned a healthy pipeline and early signs of AI integration improving security outcomes. " " "

Q1 2025 expanded on AI integration with the launch of “Varonis for Agentforce,” emphasizing Agentic AI’s rollouts in Salesforce and a deep focus on addressing generative AI–related data security challenges. " " " " "

Heightened focus and integration of AI; the company is clearly capitalizing on AI opportunities by enhancing product offerings and addressing security needs as AI adoption grows.

Revenue Recognition Volatility and Short-term Revenue Impact

Q4 2024 reported significant headwinds (up to 7–18%) owing to the ratable recognition of SaaS revenue versus upfront on-prem revenue. " " Q3 2024 noted around a 5% revenue growth headwind, and Q2 2024 highlighted roughly a 6% headwind due to the SaaS mix shift. " " "

In Q1 2025, while revenue recognition volatility remains due to the SaaS transition, the headwind has diminished to approximately 1%, indicating a smoother revenue mix and improved short-term metrics. " " "

Continued volatility coupled with improvement; the short-term revenue impact is mitigating as the transition matures.

Operating Income Guidance and Margin Pressure

Q4 2024’s guidance reflected operating losses with significant margin pressures (e.g., a 13% headwind and reduced gross margins), and Q3 2024 similarly reported lower margins due to increased SaaS adoption costs. " " Q2 2024 also noted headwinds from higher SaaS mix and associated cost escalations. " "

Q1 2025 showed a more positive picture with operating income guidance provided, improved gross margins (from 83.3% to 80.2% year-over-year) and a reduction in operating losses (from −9.3% to −4.7%), suggesting a trend toward normalization as the transition proceeds. " " "

Gradual normalization of margins and operating income metrics despite ongoing transition challenges; operating performance is set to stabilize over time.

Customer Acquisition and Conversion Dynamics

In Q4 2024, strong new customer momentum was noted alongside time-intensive conversions of self-hosted customers. Q3 2024 emphasized robust new business wins, enabled by the MDDR offering and healthy conversion rates; Q2 2024 highlighted significant pricing uplifts and shortened sales cycles driving new logo activity. " " " " " " "

Q1 2025 continued to deliver strong new customer acquisitions combined with improvements in conversion cycle times. Investments and process refinements have balanced acquiring new customers with effectively converting existing ones. " " " "

Consistent positive momentum with enhanced efficiency; the dual focus on new acquisition and conversion remains strong and even improves as operational lessons are implemented.

Upsell Challenges Amid SaaS Focus

Q4 2024 acknowledged that the intensive focus on converting on-prem customers to SaaS had temporarily deferred upsell opportunities, while Q2 2024 highlighted challenges with price sensitivity and execution in transitions. " " " Q3 2024 did not explicitly call out upsell challenges.

In Q1 2025, the narrative shifted towards effective upselling, noting that lessons learned have freed up sales capacity, allowing for additional platform sales to existing customers, indicating fewer obstacles in upsell activities. " " "

Shift from pronounced upsell challenges to a more favorable upsell environment as conversion processes mature and new efficiencies are realized.

Declining Emphasis on Traditional Segments (Federal Business)

Q3 2024 mentioned that the federal segment underperformed by several million dollars and constitutes only a mid-single-digit percentage of total ARR; restructuring efforts and management changes were underway. " Q2 2024 noted that federal remained important with on-prem sales still occurring, while Q4 2024 did not address the topic.

In Q1 2025, the federal business was reiterated as a small segment (approximately 5% of ARR), with Q1 being a typically smaller quarter for federal, and optimism expressed regarding upcoming FedRAMP certification. "

Continued limited emphasis; the federal segment remains a minor and stable component of the business with modest future prospects.

Macro Uncertainty Effects on SaaS Growth

Q2 2024 acknowledged a challenging yet stable macro environment, and Q3 2024 mentioned that the macro environment remained stable while SaaS and MDDR offerings resonated well; Q4 2024 did not mention macro factors. " " " "

In Q1 2025, despite ongoing macro uncertainty, strong customer demand, a bolstered pipeline, and an increased SaaS mix guidance (rising to 80%) helped mitigate concerns, reinforcing overall confidence in growth. " "

Macro uncertainty continues to be acknowledged but its impact is effectively mitigated by robust SaaS growth and a healthy pipeline, leading to a more resilient growth outlook.