Shares of Varonis Systems (VRNS -4.57%) have popped today, up by 11% as of 1 p.m. EDT, after the company reported first-quarter earnings. The data security and analytics specialist beat expectations for both the top and bottom lines.
Revenue in the first quarter declined to $54.2 million due to the COVID-19 pandemic, which was slightly ahead of the $54.04 million in sales that analysts were expecting. That translated into an adjusted net loss of $17.4 million, or $0.56 per share. Wall Street was modeling for $0.59 per share in adjusted losses. Annual recurring revenue (ARR) increased 59% to $220.5 million at the end of Q1. The tech company finished the quarter with $126.3 million in cash on the balance sheet.
"The disruption that COVID-19 has caused to businesses globally is undeniable," CEO Yaki Faitelson said in a statement. "However, at the same time the associated risks to our customers -- specifically, the confluence of a distributed workforce, the elevated use of VPNs and unsecured home networks, and hackers seeking to take advantage of firms' vulnerabilities -- has heightened interest in our unique capabilities around data protection and threat detection."
Varonis has a "healthy cash position" that will help it weather the crisis, according to Faitelson, while the company exercises cost discipline. Though the transition to a subscription model will provide benefits like recurring revenue, the shift has also reduced operating cash flow in the near term.
For the second quarter, Varonis expects revenue of $56 million to $58 million, which should result in an adjusted net loss per share of $0.34 to $0.36.