Varonis(US:VRNS)2021-05-04 20:40Revenue Growth - As of March 31, 2021, annual recurring revenues (ARR) grew 39% year-over-year to $306.9 million, with 66% of customers with 500 employees or more purchasing four or more licenses, up from 55% a year ago [105]. - Total revenues grew approximately 38% for the three months ended March 31, 2021, compared to the same period in 2020, with 71% of revenues derived from North America [120]. - Subscription revenues for the three months ended March 31, 2021, were $44.8 million, a 120% increase from $20.4 million in the same period of 2020 [123]. - Total revenues for the three months ended March 31, 2021, reached $74.8 million, reflecting a year-over-year growth of 38% compared to $54.2 million in 2020 [123]. - Annual recurring revenues (ARR) as of March 31, 2021, were $306.9 million, up 39% from $220.5 million in 2020 [124]. - The percentage of total revenues derived from subscriptions increased to 59.9% in Q1 2021 from 37.6% in Q1 2020 [131]. - Subscription revenues increased 120.1% from $20.4 million in Q1 2020 to $44.8 million in Q1 2021, driven by new customer acquisitions and existing customers expanding their licenses [148]. - Total revenues rose 38.0% from $54.2 million in Q1 2020 to $74.8 million in Q1 2021, with Annual Recurring Revenue (ARR) increasing 39% to $306.9 million [148]. Customer Retention and Engagement - The perpetual license maintenance renewal rate remained over 90% for the quarter ended March 31, 2021, indicating strong customer retention [118]. - The perpetual license maintenance renewal rate remained over 90% in both Q1 2021 and Q1 2020, indicating strong customer retention [148]. - The company offers more than 25 licenses across six product families, with a focus on expanding its product offerings and enhancing customer engagement [105]. Financial Performance - The gross profit margin for the three months ended March 31, 2021, was 82.0%, compared to 81.2% in the same period of 2020 [145]. - Operating loss for the three months ended March 31, 2021, was $34.1 million, slightly higher than the $32.7 million loss in 2020 [123]. - Cost of revenues increased by 32.4% to $13.5 million in Q1 2021, primarily due to higher salaries and benefits for customer success personnel [149]. - Total operating expenses grew 24.4% to $95.4 million in Q1 2021, with research and development expenses increasing by 32.5% to $30.1 million [150]. Investment and Development - The company plans to continue investing in product development to deliver new products and enhance existing offerings [108]. - Research and development expenses for Q1 2021 were $30.1 million, an increase from $22.7 million in the same period of 2020 [145]. - Sales and marketing expenses rose to $51.5 million in Q1 2021, compared to $42.6 million in Q1 2020 [145]. Cash Flow and Liquidity - Net cash provided by operating activities was $20.4 million in Q1 2021, compared to $3.9 million in Q1 2020, driven by a $42.9 million decrease in accounts receivable [158]. - Net cash used in investing activities was $4.8 million in Q1 2021, primarily due to a $12.2 million increase in short-term deposits [161]. - Net cash provided by financing activities was $504.0 million in Q1 2021, mainly from $500.0 million in net proceeds from a public follow-on offering [163]. - As of March 31, 2021, cash and cash equivalents totaled $824.0 million, sufficient to fund operations and capital expenditures for at least the next 12 months [156]. - The company reported cash and cash equivalents, marketable securities, and short-term deposits of $824.0 million as of March 31, 2021, indicating strong liquidity [177]. Market and International Operations - Approximately 27% of revenues were derived from EMEA, while the Rest of World (ROW) accounted for approximately 2% of revenues for the three months ended March 31, 2021 [120]. - The company aims to expand its domestic and international operations, focusing on underpenetrated territories and hiring local sales personnel in international markets [121]. - Approximately 25% of the company's revenues for the three months ended March 31, 2021, were earned in non-U.S. dollar currencies, primarily in Euro and Pound Sterling [174]. Risk Management - The company employs foreign currency forward contracts to hedge against foreign currency risks, particularly for expenses in NIS and monetary items in Euro and Pound Sterling [176]. - The company does not hold financial instruments for trading or speculative purposes, managing market risks through established policies [173]. - A hypothetical 10% change in foreign currency exchange rates would not have a material impact on the company's consolidated financial statements [174]. Accounting and Compliance - The company is currently assessing the impact of the adoption of new accounting standards effective January 1, 2022, related to convertible debt instruments [170]. - The company had no outstanding obligations under its credit facility as of March 31, 2021, indicating no current debt pressure [179]. - The company has unrecognized tax benefit liabilities totaling $4.7 million, which are excluded from the financial table due to impracticality in estimating payment periods [167]. Corporate Actions - The company completed the acquisition of Polyrize in Q4 2020, enhancing its ability to analyze relationships between users and data across various cloud applications [116]. - The company announced a three-for-one stock split effective March 15, 2021 [165]. - The company issued $253.0 million in 1.25% convertible senior notes due in 2025, which are subject to interest rate risk and fluctuations in stock price [178].