Varonis Systems (VRNS 10.78%) stock dipped notably in price, with its shares ultimately closing the day nearly 11% lower. That was on the back of an earnings report that missed notably on net income guidance. Investors also seemed displeased about a looming acquisition.
A tale of two line items
In its fourth quarter of 2025, Varonis reported total revenue of nearly $173.4 million, up 9% year over year. Net income not in accordance with generally accepted accounting principles (GAAP) very much veered in the other direction for the data security specialist, declining by a steep 53% to $11.1 million ($0.08 per share).
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On average, analysts tracking the company were modeling $168.5 million on the top line, and $0.03 per share for non-GAAP (adjusted) net income.
The motor of Varonis' growth during the period was its key software-as-a-service (SaaS) offerings, the revenue for which nearly doubled to more than $142 million.
Separately, Varonis announced that it is acquiring privately held AllTrue.ai for an undisclosed price. This is a business which is, in the acquirer's words, "an artificial intelligence (AI) trust, risk, and security management (AI TRiSM) company that helps organizations understand and control how AI systems behave across the enterprise."
NASDAQ: VRNS
Key Data Points
A big miss with guidance
Varonis also proffered guidance for its current (first) quarter and the entirety of 2026. For the year, it's anticipating $722 million to $730 million, with the former number being 16% higher than the 2025 result. Per-share, adjusted net income is anticipated to be $0.06 to $0.10.
But investors are judging software companies harshly these days, particularly those that whiff on guidance -- analysts are collectively expecting Varonis to post $0.34 per share in adjusted profitability, although they might be low-balling revenue with an estimate just under $719 million.
I don't think that guidance miss is the end of the world for Varonis stock. The company operates in a promising niche (again, data security), which meets a need that should only grow in a world inundated with data. I'd be bullish on this company's stock after the Wednesday sell-off.
