Varonis Systems
VARONIS SYSTEMS INC (Form: 8-K, Received: 08/03/2017 16:12:29)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): August 3, 2017

 

VARONIS SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)

 

Delaware   001-36324   57-1222280
(State or Other Jurisdiction of Incorporation)   (Commission File Number)   (IRS Employer Identification No.)
         

1250 Broadway, 29th Floor

New York, NY

  10001  
(Address of Principal Executive Offices)   (Zip Code)  
               

(877) 292-8767
(Registrant’s telephone number, including area code)

 

N/A
(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

Item 2.02 – Results of Operations and Financial Condition

 

On August 3, 2017, Varonis Systems, Inc. (“Varonis”) issued a press release announcing its financial results for the quarter ended June 30, 2017. A copy of the press release dated August 3, 2017, reporting Second Quarter 2017 Financial Results is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

 

The information in this Current Report on Form 8-K and the exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.   Description
99.1   Press Release dated August 3, 2017 , reporting Second Quarter 2017 Financial Results

 

 

 

 

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

  VARONIS SYSTEMS, INC.
   

Dated: August 3, 2017

 

By:  /s/ Yakov Faitelson                                               
Name:  Yakov Faitelson
  Title:    Chief Executive Officer and President

 

 

 

 

 

 

 

 

EXHIBIT INDEX

 

Exhibit No.

 

Description

99.1   Press Release dated August 3, 2017 , reporting Second Quarter 2017 Financial Results

 

 

 

 

 

EXHIBIT 99.1

Varonis Announces Second Quarter 2017 Financial Results

Total revenues of $50.2 million, up 30% year-over-year
License revenues of $28.4 million, up 31% year-over-year

NEW YORK, Aug. 03, 2017 (GLOBE NEWSWIRE) -- Varonis Systems, Inc. (Nasdaq:VRNS), a leading provider of software solutions that protect data from insider threats and cyberattacks, today announced results for the second quarter ended June 30, 2017.

Yaki Faitelson, Varonis CEO, said, “This was another strong quarter for Varonis with both license and total revenues increasing 30% or greater.  We continue to experience strong demand drivers for our business and are executing well on our key goals of increasing awareness and adoption for our solutions, more effectively targeting companies with 1,000 or more employees with larger customer lifetime values, and innovating to expand the value we deliver to our customers. With the Varonis Data Security Platform, we are delivering a strategic approach to not only protect enterprise data from cyberattacks, but also from insider threats and data breaches.” 

Financial Highlights for the Second Quarter Ended June 30, 2017

Revenues:

Operating Income (Loss):

Net Income (Loss):

The tables at the end of this press release include a reconciliation of GAAP to non-GAAP net income (loss) from operations and net income (loss) for the three and six months ended June 30, 2017 and 2016. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

Balance Sheet and Cash Flow:

Recent Business Highlights

Financial Outlook

For the third quarter of 2017, Varonis expects revenues in the range of $50.0 million to $50.8 million, representing 22% to 24% year-over-year growth. The Company anticipates third quarter 2017 non-GAAP operating income in the range of $100,000 to $500,000 and non-GAAP net loss per basic and diluted share in the range of ($0.01) to $0.00, based on a tax provision of $450,000 to $650,000 and 27.5 million basic and diluted shares outstanding. Expectations of non-GAAP operating income and non-GAAP net loss per basic and diluted share exclude stock-based compensation expense and payroll tax expense related to stock-based compensation.

For the full year 2017, Varonis now expects revenues in the range of $205.0 million to $207.0 million, representing 25% to 26% year-over-year growth. The Company now anticipates full year 2017 non-GAAP operating income of $2.7 million to $3.7 million and non-GAAP net income per diluted share in the range of $0.07 to $0.09, based on a tax provision of $1.9 million to $2.3 million and 30.5 million diluted shares outstanding. Expectations of non-GAAP operating income and non-GAAP net income per diluted share exclude stock-based compensation expense and payroll tax expense related to stock-based compensation.

Conference Call and Webcast

Varonis will host a conference call today, August 3, 2017, at 5:00 p.m., Eastern Time, to discuss the Company’s second quarter 2017 financial results, current financial guidance and other corporate developments.  To access this call, dial 877-425-9470 (domestic) or 201-389-0878 (international).  The passcode is 13665665. A replay of this conference call will be available through August 10, 2017 at 844-512-2921 (domestic) or 412-317-6671 (international).  The replay passcode is 13665665.  A live webcast of this conference call will be available on the “Investors” page of the Company’s website (www.varonis.com), and a replay will be archived on the website as well.

Non-GAAP Financial Measures

Varonis believes that the use of non-GAAP operating income (loss) and non-GAAP net income (loss) is helpful to our investors. These measures, which the Company refers to as our non-GAAP financial measures, are not prepared in accordance with GAAP.

For the three and six months ended June 30, 2017 and 2016, non-GAAP operating income (loss) is calculated as operating loss excluding (i) stock-based compensation expense and (ii) payroll tax expense related to stock-based compensation. 

For the three and six months ended June 30, 2017 and 2016, non-GAAP net income (loss) is calculated as net loss excluding (i) stock-based compensation expense and (ii) payroll tax expense related to stock-based compensation.

Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company’s non-cash expense, the Company believes that providing non-GAAP financial measures that exclude stock-based compensation expense allow for more meaningful comparisons between our operating results from period to period. In addition, the Company excludes payroll tax expense related to stock-based compensation expense because, without excluding these tax expenses, investors would not see the full effect that excluding stock-based compensation expense had on our operating results. These expenses are tied to the exercise or vesting of underlying equity awards and the price of our common stock at the time of vesting or exercise, which factors may vary from period to period independent of the operating performance of our business. Similar to stock-based compensation expense, the Company believes that excluding this payroll tax expense provides investors and management with greater visibility to the underlying performance of our business operations and facilitates comparison with other periods as well as the results of other companies.

Each of our non-GAAP financial measures is an important tool for financial and operational decision making and for evaluating our own operating results over different periods of time. The non-GAAP financial data are not measures of our financial performance under U.S. GAAP and should not be considered as alternatives to operating income (loss) or net income (loss) or any other performance measures derived in accordance with GAAP. Non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on our reported financial results. Further, stock-based compensation expense and payroll tax expense related to stock-based compensation have been, and will continue to be for the foreseeable future, significant recurring expenses in our business and an important part of the compensation provided to our employees. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Varonis urges investors to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures included below, and not to rely on any single financial measures to evaluate our business.

Forward-Looking Statements

This press release contains, and statements made during the above referenced conference call will contain, “forward-looking” statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including regarding the Company’s growth rate and its expectations regarding future revenues, operating income or loss or earnings or loss per share. These statements are not guarantees of future performance, but are based on management’s expectations as of the date of this press release and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include the following: risks associated with anticipated growth in Varonis’ addressable market; competitive factors, including increased sales cycle time, changes in the competitive environment, pricing changes and increased competition; the risk that Varonis may not be able to attract or retain employees, including sales personnel and engineers; Varonis’ ability to build and expand its direct sales efforts and reseller distribution channels; general economic and industry conditions, including expenditure trends for data security solutions; risks associated with the closing of large transactions, including Varonis’ ability to close large transactions consistently on a quarterly basis; new product introductions and Varonis’ ability to develop and deliver innovative products; risks associated with international operations; and Varonis’ ability to provide high-quality service and support offerings. These and other important risk factors are described more fully in Varonis’ reports and other documents filed with the Securities and Exchange Commission and could cause actual results to vary from expectations. All information provided in this press release and in the conference call is as of the date hereof, and Varonis undertakes no duty to update or revise this information, whether as a result of new information, new developments or otherwise, except as required by law.

To find out more about Varonis, visit www.varonis.com

About Varonis

Varonis is a leading provider of software solutions that protect data from insider threats and cyberattacks. Through its innovative Data Security Platform, Varonis allows organizations to analyze, secure, manage, and migrate their volumes of unstructured data. Varonis specializes in file and email systems that store valuable spreadsheets, word processing documents, presentations, audio and video files, emails, and text. This rapidly growing data often contains an enterprise's financial information, product plans, strategic initiatives, intellectual property, and confidential employee, customer or patient records. IT and business personnel deploy Varonis software for a variety of use cases, including data security, governance and compliance, user behavior analytics, archiving, search, and file synchronization and sharing. With offices and partners worldwide, Varonis had approximately 5,750 customers as of June 30, 2017, spanning leading firms in financial services, healthcare, public, industrial, insurance, energy and utilities, media and entertainment, consumer and retail, technology and education sectors.

 

   
Varonis Systems, Inc.  
Consolidated Statements of Operations  
(in thousands, except for share and per share data)  
   
    Three Months Ended June 30,     Six Months Ended June 30,  
      2017         2016           2017         2016      
                                             
    Unaudited     Unaudited  
Revenues:                    
Licenses    $    28,420        $    21,742          $    47,575        $    35,586      
Maintenance and services       21,754           16,899             42,979           33,525      
Total revenues       50,174           38,641             90,554           69,111      
                     
Cost of revenues       4,878           3,721             9,550           7,217      
                     
Gross profit       45,296           34,920             81,004           61,894      
                     
Operating costs and expenses:                    
Research and development       11,498           8,905             21,907           17,742      
Sales and marketing       32,560           26,840             63,371           51,204      
General and administrative       6,582           4,760             12,095           9,322      
Total operating expenses       50,640           40,505             97,373           78,268      
                     
Operating loss       (5,344 )         (5,585 )           (16,369 )         (16,374 )    
                     
Financial income (expenses), net        950           (605 )           1,419           40      
                     
Loss before income taxes       (4,394 )         (6,190 )           (14,950 )         (16,334 )    
                     
Income taxes       (641 )         (303 )           (964 )         (509 )    
                     
Net loss    $    (5,035 )      $    (6,493 )        $    (15,914 )      $    (16,843 )    
                     
                     
Net loss per share of common stock, basic and diluted   $   (0.18 )     $   (0.25 )       $   (0.59 )     $   (0.64 )    
                                     
Weighted average number of shares used in computing net loss per share of common stock, basic and diluted     27,321,837         26,273,380           27,137,930         26,195,269      
                                             

 

Stock-based compensation expense for the three and six months ended June 30, 2017 and 2016   is included in the Consolidated Statements of Operations as follows (in thousands):
    Three Months Ended June 30,     Six Months Ended June 30,  
      2017       2016         2017       2016    
                                     
    Unaudited     Unaudited  
                     
Cost of revenues    $    273     $   172        $    500      $    318    
Research and development       1,301         793           2,431         1,458    
Sales and marketing       2,362         1,628           4,421         2,803    
General and administrative       1,323         780           2,311         1,418    
     $    5,259     $   3,373        $    9,663      $    5,997    
                                     

 

Payroll tax expense related to stock-based compensation for the three and six months ended June 30, 2017 and 2016 is included in the Consolidated Statements of Operations as follows (in thousands):
    Three Months Ended June 30,     Six Months Ended June 30,  
      2017       2016         2017       2016    
                                     
    Unaudited     Unaudited  
                     
Cost of revenues    $    12     $   9        $    45      $    22    
Research and development       13         2           28         10    
Sales and marketing       166         60           485         123    
General and administrative       8         8           43         22    
     $    199     $   79        $    601      $    177    
                                     

 

Varonis Systems, Inc.
Consolidated Balance Sheets
(in thousands)
           
    June 30,   December 31,
      2017         2016    
    Unaudited    
Assets          
Current assets:          
Cash and cash equivalents    $    53,539        $    48,315    
Short-term investments       68,039           65,493    
Trade receivables, net        41,313           53,861    
Prepaid expenses and other current assets       7,571           3,650    
Total current assets       170,462           171,319    
                 
Long-term assets:            
Other assets       818           609    
Property and equipment, net       11,160           9,910    
Total long-term assets       11,978           10,519    
                 
Total assets    $    182,440        $    181,838    
             
Liabilities and stockholders' equity            
Current liabilities:            
Trade payables    $    1,348        $    1,288    
Accrued expenses and other short term liabilities       30,769           28,479    
Deferred revenues       57,457           58,478    
Total current liabilities       89,574           88,245    
             
Long-term liabilities:            
Deferred revenues       3,889           3,562    
Severance pay       1,472           1,664    
Other liabilities       5,273           5,628    
Total long-term liabilities       10,634           10,854    
             
Stockholders' equity:            
Common stock       27           27    
Accumulated other comprehensive income (loss)       2,128           (479 )  
Additional paid-in capital       204,751           189,335    
Accumulated deficit       (124,674 )         (106,144 )  
Total stockholders' equity       82,232           82,739    
Total liabilities and stockholders' equity    $    182,440        $    181,838    
                 

 

Varonis Systems, Inc.  
Consolidated Statements of Cash Flows  
(in thousands)  
                 
    Six Months Ended June 30,  
      2017         2016      
    Unaudited   Unaudited  
Cash flows from operating activities:          
Net loss    $   (15,914 )      $   (16,843 )    
Adjustments to reconcile net loss to net cash provided by operating activities:          
Depreciation        1,284           1,066      
Stock-based compensation        9,663           5,997      
Capital gain from disposal of fixed assets       (2 )         -       
Changes in assets and liabilities:                  
Trade receivables       12,548           13,943      
Prepaid expenses and other current assets       (1,783 )         47      
Trade payables       60           (538 )    
Accrued expenses and other short term liabilities       2,769           16      
Severance pay       (192 )         21      
Deferred revenues       (694 )         (1,144 )    
Other long term liabilities       (355 )         (224 )    
Net cash provided by operating activities       7,384           2,341      
                   
Cash flows from investing activities:                  
Decrease (increase) in short-term investments       (2,556 )         4,750      
Increase in long-term deposits       (160 )         (27 )    
Increase in restricted cash       (49 )         (7 )    
Proceeds from sale of property and equipment       2           -       
Purchase of property and equipment       (2,534 )         (1,447 )    
Net cash provided by (used in) investing activities       (5,297 )         3,269      
           
Cash flows from financing activities:          
Proceeds from employee stock plans, net       3,137           1,251      
Net cash provided by financing activities       3,137           1,251      
                   
Increase in cash and cash equivalents       5,224           6,861      
Cash and cash equivalents at beginning of period       48,315           49,241      
Cash and cash equivalents at end of period    $    53,539        $    56,102      
           

 

Varonis Systems, Inc.  
Reconciliation of GAAP Measures to non-GAAP    
(in thousands, except share and per share data)  
                     
    Three Months Ended June 30,     Six Months Ended June 30,  
      2017         2016           2017         2016      
                                             
    Unaudited     Unaudited  
Reconciliation to non-GAAP income (loss) from operations:                    
                     
GAAP operating loss    $    (5,344 )      $    (5,585 )        $    (16,369 )      $    (16,374 )    
                                     
Add back:                                    
Stock-based compensation expense       5,259           3,373             9,663           5,997      
Payroll tax expenses related to stock-based compensation       199           79             601           177      
                                     
Non-GAAP operating income (loss)    $    114        $    (2,133 )        $    (6,105 )      $    (10,200 )    
                     
Reconciliation to non-GAAP net income (loss):                    
                     
GAAP net loss    $    (5,035 )      $    (6,493 )        $    (15,914 )      $    (16,843 )    
                                     
Add back:                                    
Stock-based compensation expense       5,259           3,373             9,663           5,997      
Payroll tax expenses related to stock-based compensation       199           79             601           177      
                                     
Non-GAAP net income (loss)    $    423        $    (3,041 )        $    (5,650 )      $    (10,669 )    
                                     
                                     
Non-GAAP net income (loss) per common share - basic    $    0.02        $    (0.12 )        $    (0.21 )      $    (0.41 )    
Non-GAAP net income (loss) per common share - diluted    $    0.01        $    (0.12 )        $    (0.21 )      $    (0.41 )    
GAAP net loss per common share - basic and diluted    $    (0.18 )      $    (0.25 )        $    (0.59 )      $    (0.64 )    
                                     
Non-GAAP weighted average number of common shares outstanding - basic      27,321,837           26,273,380             27,137,930           26,195,269      
Non-GAAP weighted average number of common shares outstanding - diluted      30,545,216           26,273,380             27,137,930           26,195,269      
GAAP weighted average number of common shares outstanding - basic and diluted      27,321,837           26,273,380             27,137,930           26,195,269      
                                     

 

Investor Relations Contact:
Staci Mortenson
ICR
646-706-7516
Email: investors@varonis.com

News Media Contact:
Mia Damiano
Merritt Group
703-390-1502
Email: damiano@merrittgrp.com