Shares of Varonis Systems (NASDAQ:VRNS) slumped on Tuesday after the data security and analytics company reported disappointing second-quarter results. While Varonis' revenue was in line with expectations, the bottom line fell short of analyst estimates. The stock was down about 18.2% at 11:45 a.m. EDT.
Varonis reported second-quarter revenue of $62.2 million, up 26% year over year, in line with the average analyst estimate. License revenue rose 23% to $33.5 million, while maintenance and services revenue jumped 30% to $28.7 million. The company added 227 new customers during the quarter, down from the 242 it added in the prior-year period.
Non-GAAP earnings per share came in at a loss of $0.08, down from a loss of $0.01 in the prior-year period and $0.03 lower than analysts were expecting. The company lost $0.44 per share on a GAAP basis, more than double the loss in the second quarter of last year.
Varonis expects to produce third-quarter revenue between $64 million and $65 million, good for 20% to 22% year-over-year growth. The company expects non-GAAP EPS between a loss of $0.02 and a profit of $0.01. Both ranges were in line with analyst estimates.
With Varonis valued at roughly $2 billion before Tuesday's plunge, expectations were high. The stock traded for 7.5 times the midpoint of the company's full-year revenue guidance, a lofty valuation considering the slowing growth rate and persistent losses.
Following the report, analysts at both Stifel and Needham slashed their price targets on the stock. If Varonis can't accelerate its revenue growth, there may be more where that came from.