On November 14, London-based Greenvale Capital disclosed a purchase of 1.28 million shares of Varonis (VRNS +0.02%), raising its position by approximately $76.30 million.
What Happened
According to a filing with the Securities and Exchange Commission (SEC) dated November 14, Greenvale Capital increased its stake in Varonis (VRNS +0.02%) by 1.28 million shares during the third quarter. The post-transaction holding stands at 1.73 million shares with a market value of $99.14 million as of September 30. The firm reported $1.27 billion in total U.S. equity positions across 16 holdings.
What Else to Know
Varonis now represents 7.8% of Greenvale Capital’s reportable AUM.
Top holdings after the filing:
- NASDAQ:RUN: $231.83 million (18.54% of AUM)
- NYSE:RBLX: $148.91 million (11.91% of AUM)
- NYSE:ZETA: $144.06 million (11.52% of AUM)
- NYSE:SN: $129.92 million (10.39% of AUM)
- NASDAQ:VRNS: $99.14 million (7.93% of AUM)
As of Monday, shares of Varonis were priced at $33.34, down 26% over the past year and well underperforming the S&P 500, which is instead up about 16% in the same period.
Company Overview
| Metric | Value |
|---|---|
| Revenue (TTM) | $608.68 million |
| Net Income (TTM) | ($114.54 million) |
| Market Capitalization | $3.93 billion |
| Price (as of Monday) | $33.34 |
Company Snapshot
- Varonis offers software solutions for data security, analytics, alerting, and management, including products such as DatAdvantage, DatAlert, Data Classification Engine, DataPrivilege, Data Transport Engine, and DatAnswers.
- The company generates revenue primarily through licensing its software products and providing related services to enterprise customers, focusing on protecting sensitive data across on-premises and cloud environments.
- Its primary customers are enterprises and organizations in North America and internationally, serving IT, security, and business personnel across various industries.
Varonis is a technology company specializing in data security and analytics, with a global customer base and a focus on enterprise-scale solutions. The company leverages proprietary software to help organizations protect sensitive information and manage data access efficiently. Its competitive edge lies in its comprehensive platform for monitoring, alerting, and automating data governance across complex IT environments.
Foolish Take
Varonis’ operating losses look messy, but its performance may be far stronger under the surface. The company grew annual recurring revenue 18% year over year to $718.6 million in the third quarter, with SaaS now accounting for roughly 76% of total ARR. That mix shift is why reported operating losses widened even as cash generation improved. In fact, the firm said the vast majority of the decline in its maintenance and services revenues was due to customers converting to its SaaS platform.
Year to date, Varonis generated $122.7 million in operating cash flow, up from $90.9 million last year, and $111.6 million in free cash flow. The firm also touted a newly authorized $150 million share repurchase program. That matters in a portfolio where the largest positions skew toward higher-beta growth names and China-linked equities. Varonis sits at the intersection of enterprise security, cloud migration, and AI driven data governance, marking a very different risk profile.
The stock’s 26% decline over the past year likely reflects investor impatience with near-term margins and softer renewals in legacy on-prem segments, which the firm cited in its earnings. But the long-term math is clearer. A recurring, SaaS-heavy security platform with rising cash flow and over $1 billion in liquidity is exactly the kind of asset that looks better a few years out than one quarter in.
Glossary
Assets Under Management (AUM): The total market value of investments managed on behalf of clients by a fund or firm.
Reportable Assets: Investments that a fund or manager must disclose in regulatory filings, typically above a certain threshold.
Stake: The total ownership or investment a person or entity holds in a company, usually measured in shares or percentage.
Filing: An official document submitted to a regulatory authority, often disclosing financial or ownership information.
Proprietary Software: Software owned and controlled by a company, not available for public use or modification.
Data Governance: The management of data availability, usability, integrity, and security within an organization.
Licensing: Granting permission to use software or intellectual property, usually in exchange for a fee.
On-premises: Software or systems installed and operated within an organization's own facilities, not in the cloud.
Cloud Environments: Computing resources and services delivered over the internet, rather than hosted locally.
TTM: The 12-month period ending with the most recent quarterly report.
Market Value: The current worth of an asset or company based on the latest price in the market.
Position Change: The increase or decrease in the number of shares or value held in a particular investment.
