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): May 4, 2017
Varonis Systems, Inc.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-36324 | 57-1222280 |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
| 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 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). 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 May 4, 2017, Varonis Systems, Inc. (“Varonis”) issued a press release announcing its financial results for the quarter ended March 31, 2017. A copy of the press release dated May 4, 2017, reporting First 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) ExhibitsExhibit No. Description 99.1 Press Release dated May 4, 2017, reporting First Quarter 2017 Financial Results
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Varonis Systems, Inc. | ||
| Date: May 4, 2017 | By: | /s/ Yakov Faitelson |
| Yakov Faitelson | ||
| Chief Executive Officer and President | ||
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press Release dated May 4, 2017, reporting First Quarter 2017 Financial Results |
Exhibit 99.1
Varonis Announces First Quarter 2017 Financial Results
Total revenues of $40.4 million, up 33% year-over-year
License revenues of $19.2 million, up 38% year-over-year
NEW YORK, May 04, 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 first quarter ended March 31, 2017.
Yaki Faitelson, Varonis CEO, said, “I am pleased with our first quarter results. We saw solid contribution from both the US and Europe and strength across new and existing customers. With the Varonis Data Security Platform, we help companies take a more holistic and strategic approach to protecting the enterprise against insider threats, data breaches and cyberattacks by analyzing content, accessibility of data and the behavior of the people and machines that access data to alert on misbehavior, enforce a least privilege model and automate data management functions. The investments we have made across building awareness, driving adoption and innovation are working, and our focus on execution and consistently delivering against our stated goals is enabling us to deliver sustainable growth and drive leverage throughout the business."
Financial Highlights for the First Quarter Ended March 31, 2017
Revenues:
Operating Loss:
Net Loss:
The tables at the end of this press release include a reconciliation of GAAP to non-GAAP loss from operations and net loss for the three months ended March 31, 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 second quarter of 2017, Varonis expects revenues in the range of $47.0 million to $47.8 million, representing 22% to 24% year-over-year growth. The Company anticipates second quarter 2017 non-GAAP operating loss in the range of ($2.0) million to ($1.6) million and non-GAAP net loss per basic and diluted share in the range of ($0.09) to ($0.08), based on a tax provision of $0.3 million to $0.5 million and 27.2 million basic and diluted shares outstanding. Expectations of non-GAAP operating loss 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 $201.0 million to $204.0 million, representing 22% to 24% year-over-year growth. The Company now anticipates full year 2017 non-GAAP operating income of breakeven to $1.5 million and non-GAAP net income (loss) per basic and diluted share in the range of ($0.03) to $0.01, based on a tax provision of $1.4 million to $1.7 million and 27.2 million basic and 30.5 million diluted shares outstanding. Expectations of non-GAAP operating income and non-GAAP net income per basic and 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, May 4, 2017, at 5:00 p.m., Eastern Time, to discuss the Company’s first 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 13659309. A replay of this conference call will be available through May 11, 2017 at 844-512-2921 (domestic) or 412-317-6671 (international). The replay passcode is 13659309. 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 months ended March 31, 2017 and 2016, non-GAAP operating 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 months ended March 31, 2017 and 2016, non-GAAP net 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 more than 5,500 customers as of March 31, 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 March 31, | ||||||||||||
| 2017 | 2016 | |||||||||||
| Unaudited | ||||||||||||
| Revenues: | ||||||||||||
| Licenses | $ | 19,155 | $ | 13,844 | ||||||||
| Maintenance and services | 21,225 | 16,626 | ||||||||||
| Total revenues | 40,380 | 30,470 | ||||||||||
| Cost of revenues | 4,672 | 3,496 | ||||||||||
| Gross profit | 35,708 | 26,974 | ||||||||||
| Operating costs and expenses: | ||||||||||||
| Research and development | 10,409 | 8,837 | ||||||||||
| Sales and marketing | 30,811 | 24,364 | ||||||||||
| General and administrative | 5,513 | 4,562 | ||||||||||
| Total operating expenses | 46,733 | 37,763 | ||||||||||
| Operating loss | (11,025 | ) | (10,789 | ) | ||||||||
| Financial income, net | 469 | 645 | ||||||||||
| Loss before income taxes | (10,556 | ) | (10,144 | ) | ||||||||
| Income taxes | (323 | ) | (206 | ) | ||||||||
| Net loss | $ | (10,879 | ) | $ | (10,350 | ) | ||||||
| Net loss per share of common stock, basic and diluted | $ | (0.40 | ) | $ | (0.40 | ) | ||||||
| Weighted average number of shares used in computing net loss per share of common stock, basic and diluted | 26,951,205 | 26,117,073 | ||||||||||
| Stock-based compensation expense for the three months ended March 31, 2017 and 2016 is included in the Consolidated Statements of Operations as follows (in thousands): | ||||||||||
| Three Months Ended March 31, | ||||||||||
| 2017 | 2016 | |||||||||
| Unaudited | Unaudited | |||||||||
| Cost of revenues | $ | 227 | $ | 146 | ||||||
| Research and development | 1,130 | 665 | ||||||||
| Sales and marketing | 2,059 | 1,175 | ||||||||
| General and administrative | 988 | 638 | ||||||||
| $ | 4,404 | $ | 2,624 | |||||||
| Payroll tax expense related to stock-based compensation for the three months ended March 31, 2017 and 2016 is included in the Consolidated Statements of Operations as follows (in thousands): | ||||||||||
| Three Months Ended March 31, | ||||||||||
| 2017 | 2016 | |||||||||
| Unaudited | Unaudited | |||||||||
| Cost of revenues | $ | 33 | $ | 13 | ||||||
| Research and development | 15 | 8 | ||||||||
| Sales and marketing | 319 | 63 | ||||||||
| General and administrative | 35 | 14 | ||||||||
| $ | 402 | $ | 98 | |||||||
| Varonis Systems, Inc. | ||||||||||
| Consolidated Balance Sheets | ||||||||||
| (in thousands) | ||||||||||
| March 31, | December 31, | |||||||||
| 2017 | 2016 | |||||||||
| Unaudited | ||||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 51,070 | $ | 48,315 | ||||||
| Short-term deposits | 70,250 | 65,493 | ||||||||
| Trade receivables, net | 27,466 | 53,861 | ||||||||
| Prepaid expenses and other current assets | 7,792 | 3,650 | ||||||||
| Total current assets | 156,578 | 171,319 | ||||||||
| Long-term assets: | ||||||||||
| Other assets | 778 | 609 | ||||||||
| Property and equipment, net | 10,786 | 9,910 | ||||||||
| Total long-term assets | 11,564 | 10,519 | ||||||||
| Total assets | $ | 168,142 | $ | 181,838 | ||||||
| Liabilities and stockholders' equity | ||||||||||
| Current liabilities: | ||||||||||
| Trade payables | $ | 1,582 | $ | 1,288 | ||||||
| Accrued expenses and other short term liabilities | 21,579 | 28,479 | ||||||||
| Deferred revenues | 54,576 | 58,478 | ||||||||
| Total current liabilities | 77,737 | 88,245 | ||||||||
| Long-term liabilities: | ||||||||||
| Deferred revenues | 4,261 | 3,562 | ||||||||
| Severance pay | 1,445 | 1,664 | ||||||||
| Other liabilities | 5,429 | 5,628 | ||||||||
| Total long-term liabilities | 11,135 | 10,854 | ||||||||
| Stockholders' equity: | ||||||||||
| Common stock | 27 | 27 | ||||||||
| Accumulated other comprehensive income (loss) | 1,645 | (479 | ) | |||||||
| Additional paid-in capital | 197,237 | 189,335 | ||||||||
| Accumulated deficit | (119,639 | ) | (106,144 | ) | ||||||
| Total stockholders' equity | 79,270 | 82,739 | ||||||||
| Total liabilities and stockholders' equity | $ | 168,142 | $ | 181,838 | ||||||
| Varonis Systems, Inc. | |||||||||||
| Consolidated Statements of Cash Flows | |||||||||||
| (in thousands) | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2017 | 2016 | ||||||||||
| Unaudited | Unaudited | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | (10,879 | ) | $ | (10,350 | ) | |||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
| Depreciation | 622 | 497 | |||||||||
| Stock-based compensation | 4,404 | 2,624 | |||||||||
| Changes in assets and liabilities: | |||||||||||
| Trade receivables | 26,395 | 23,036 | |||||||||
| Prepaid expenses and other current assets | (2,497 | ) | (648 | ) | |||||||
| Trade payables | 294 | (1,910 | ) | ||||||||
| Accrued expenses and other short term liabilities | (6,421 | ) | (4,580 | ) | |||||||
| Severance pay | (219 | ) | (4 | ) | |||||||
| Deferred revenues | (3,203 | ) | (2,702 | ) | |||||||
| Other long term liabilities | (199 | ) | (521 | ) | |||||||
| Net cash provided by operating activities | 8,297 | 5,442 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Increase in short-term deposits | (4,757 | ) | (250 | ) | |||||||
| Increase in long-term deposits | (140 | ) | - | ||||||||
| Increase in restricted cash | (29 | ) | (17 | ) | |||||||
| Purchase of property and equipment | (1,498 | ) | (722 | ) | |||||||
| Net cash used in investing activities | (6,424 | ) | (989 | ) | |||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from employee stock plans, net | 882 | 761 | |||||||||
| Net cash provided by financing activities | 882 | 761 | |||||||||
| Increase in cash and cash equivalents | 2,755 | 5,214 | |||||||||
| Cash and cash equivalents at beginning of period | 48,315 | 49,241 | |||||||||
| Cash and cash equivalents at end of period | $ | 51,070 | $ | 54,455 | |||||||
| Varonis Systems, Inc. | ||||||||||||
| Reconciliation of GAAP Measures to non-GAAP | ||||||||||||
| (in thousands, except share and per share data) | ||||||||||||
| Three Months Ended March 31, | ||||||||||||
| 2017 | 2016 | |||||||||||
| Unaudited | ||||||||||||
| Reconciliation to non-GAAP loss from operations: | ||||||||||||
| GAAP operating loss | $ | (11,025 | ) | $ | (10,789 | ) | ||||||
| Add back: | ||||||||||||
| Stock-based compensation expense | 4,404 | 2,624 | ||||||||||
| Payroll tax expenses related to stock-based compensation | 402 | 98 | ||||||||||
| Non-GAAP operating loss | $ | (6,219 | ) | $ | (8,067 | ) | ||||||
| Reconciliation to non-GAAP net loss: | ||||||||||||
| GAAP net loss | $ | (10,879 | ) | $ | (10,350 | ) | ||||||
| Add back: | ||||||||||||
| Stock-based compensation expense | 4,404 | 2,624 | ||||||||||
| Payroll tax expenses related to stock-based compensation | 402 | 98 | ||||||||||
| Non-GAAP net loss | $ | (6,073 | ) | $ | (7,628 | ) | ||||||
| GAAP & Non-GAAP weighted average number shares used in computing net loss per share of common stock - basic and diluted | 26,951,205 | 26,117,073 | ||||||||||
| Non-GAAP net loss per share of common stock - basic and diluted | $ | (0.23 | ) | $ | (0.29 | ) | ||||||
| GAAP net loss per share of common stock - basic and diluted | $ | (0.40 | ) | $ | (0.40 | ) | ||||||
Investor Relations Contact:
Staci Mortenson
ICR
646-706-7516
Email: investors@varonis.com
News Media Contacts:
Jennifer LuPiba
Varonis
614-338-9889
Email: jlupiba@varonis.com