Why Varonis Systems, Inc. Shares Sank Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Varonis Systems (NASDAQ: VRNS  ) fell nearly 13% Tuesday, despite the company's stronger-than-expected first-quarter results.

So what: Quarterly revenue rose 39% year over year to $17.5 million, which translated to an adjusted net loss of $0.30 per share. Analysts, on average, were looking for an adjusted loss of $0.44 per share on sales of $16.18 million.

What's more, Varonis expects full-year revenue in the range of $96.5 million and $98.0 million, which should result in an adjusted loss per share of $0.63 to $0.57. By contrast, analysts were modeling a wider 2014 loss of $0.68 per share on sales of $95.26 million.

Now what: Still, Varonis doesn't exactly look cheap, trading around 9 times last year's sales, and the company arguably still has work to do in convincing investors of the viability of its market for organizing human-generated enterprise data -- think things like spreadsheets, word processing documents, text messages, and emails. In the end, I'm still not convinced I should dive in as a long-term investor, and I prefer instead to simply keep tabs on Varonis Systems' progress over the next couple of quarters.

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  • Report this Comment On May 29, 2014, at 5:46 PM, therebewhales wrote:

    Perhaps the trouble Varonis is having is that people think their software "organizes human generated data." Their software is an audit and control system for unstructured data. To put it simply, if Target had been using Varonis, they could have immediately identified the breech and been able to stop it before any data was transmitted to the hackers. What would that have been worth to Target?

    Our company has to secure many terabytes of highly sensitive data. Varonis will easily allow us to know and adjust who has access to the data, who has looked at the data, who has changed or copied the data, and whether there is any abnormal change in the frequency or audience accessing the data.

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