Varonis revenue rises to $189.5 million in third quarter amid acquisition deal
Key Facts
Varonis Systems said revenue reached $189.5 million in the third quarter of 2026, compared with $161.6 million in the same period a year earlier, according to an earnings release published after U.S. markets closed on November 3. The announcement came as the company prepares for a change of ownership under a cash acquisition agreement with Proofpoint valued at approximately $6.3 billion. Cloud subscription revenue rose to $185.1 million from $125.8 million a year earlier, while term license subscription revenue fell to $1.2 million from $24.8 million. The company said most of the decline in license and maintenance revenue was due to customers moving to its cloud platform. The available information did not confirm an earnings-per-share figure or compare it with analyst estimates.
The revenue figures show cloud business growth coinciding with a sharp decline in term license subscription revenue. SaaS revenue was about $185.1 million in the third quarter, compared with $125.8 million in the third quarter of 2025. By contrast, term license subscription revenue fell to $1.2 million from $24.8 million in the comparable period. Varonis attributed most of the decline in license and maintenance revenue to customers’ migration to its SaaS platform. The shift puts the revenue mix at the center of the results, as the company continues moving customers to cloud subscriptions.
Cloud subscription annual recurring revenue was $774.6 million at the end of the third quarter, up 42% year over year. Excluding conversions to SaaS, the metric grew 24% year over year. These figures offer two different readings of the business trajectory: reported growth includes the effect of customers moving to the cloud platform, while the rate excluding conversions isolates that effect. In the second quarter of 2026, the company reported revenue of $180.0 million, compared with $152.2 million in the same period of 2025. Cloud subscription annual recurring revenue then was $726.0 million, up 52% year over year, or 25% excluding conversions.
On a non-GAAP basis, Varonis generated operating income of $7.6 million in the third quarter, compared with $0.2 million in the third quarter of 2025. But its GAAP operating loss widened to $47.7 million from $35.9 million a year earlier. The gap between the measures highlights how results differ depending on the accounting basis: the company reported higher non-GAAP operating income while its GAAP operating loss increased. The earnings release did not provide further detail in the available information to explain the gap. Operating results therefore followed two different paths compared with the year-earlier period.
Cash flows declined in the nine months ended September 30, 2026, compared with the same period a year earlier. Cash generated from operations was $108.3 million, versus $122.7 million in the comparable period. Free cash flow was $94.8 million, down from $111.6 million. These figures cover the first nine months and are not limited to the third quarter alone. The declines in both measures came alongside the company’s quarterly results and growth in cloud subscription annual recurring revenue.
Proofpoint and Varonis announced a cash acquisition agreement for Varonis valued at approximately $6.3 billion on October 15. The deal announcement said third-quarter results would be released after U.S. markets closed on November 3, the date the earnings release was published. In light of the pending acquisition, Varonis said it would not provide forward guidance or update previous guidance. It also canceled the earnings call and webcast for its third-quarter results. The results were therefore released without an investor session to discuss them or a company update on its outlook.
The acquisition announcement said the deal is expected to close in the first half of 2027, subject to customary closing conditions. Those conditions include Varonis shareholder approval and regulatory approvals, according to the announcement. In the session before the results announcement, Varonis shares closed at $48.75 on November 2, according to EL7 data. The deal announcement links the third-quarter results to an acquisition process that remains subject to those conditions. The earnings release provided no new guidance for coming periods amid the deal.