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Varonis Systems – Securing Unstructured Data

Posted on Wednesday, Jul 9th 2014

According to an IDC study, 2.8 zettabytes of digital data was generated globally in 2012. The study estimates that the digital information that is created and replicated globally will grow 39% annually over the period 2012 through 2020. The study estimates that more than 90% of the data created in 2020 will be unstructured data, thus increasing the need for organizations to be able to effectively manage and utilize it.

Varonis Systems’ Offerings
New York-based Varonis Systems (NASDAQ: VRNS) is a Big Data software services provider that helps organizations manage this unstructured data generated by an organization. The company was founded in 2005 by Ohad Korkus and Yaki Faitelson in Delaware. Today, their solutions help organizations map, analyze, manage, and migrate unstructured data, which includes files in the form of spreadsheets, word processing documents, presentations, audio files, video files, emails, and text messages. While the speed at which data is created in an organization has grown, the ability to manage this data has not grown. As a result, most organizations suffer from the inability to secure the data and have difficulty in tracking who has access to read, write, and edit the data.

Varonis System claims that by using their Metadata Framework, even unstructured data will show searchable data structures and will be able to provide real-time intelligence about the organization’s volumes of human-generated content. It is able to make it more accessible, manageable, and secure. When I spoke with their VP of Marketing David Gibson last year, he highlighted how their Metadata Framework combines the information regarding the place where the unstructured data is stored with the information on user groups along with who is accessing the information and the content within these data forms. It combines these metadata streams together, normalizes, processes, and presents this information into actionable results to IT and the business.

The company even goes on to suggest that their solutions ensure such security that even the NSA could have prevented the Edward Snowden breach if they had deployed Varonis’ offerings at their sites.

Varonis Systems’ Financials
The company earns revenues by charging their customers a license fee or through maintenance and service fees. They reported revenues of $75 million last year, recording a growth of 40% over the year. Losses have increased during the period as well with the year’s loss at $7.5 million compared with $4.8 million reported a year ago.

In the recently reported quarter, Varonis Systems saw revenues grow 39% over the year to $17.5 million with license revenues growing 37% to $8.1 million and maintenance and service revenues increasing 40% to $9.4 million. Non GAAP Losses increased from $0.23 per share a year ago to $0.30 per share.

For the current quarter, the company projected revenues of $22.9 million-$23.4 million with non-GAAP loss per share of ($0.18)-($0.16). They expect to end the year with revenues of $96.5 million-$98.0 million and non-GAAP loss per basic share of ($0.63)-($0.57). Analysts were projecting a loss of $0.17 per share for the current quarter.

Till recently, Varonis Systems had been venture funded with $29 million in investments from EMC, Accel Partners, Evergreen Venture Partners, and Pitango Venture Capital. This March, they raised $106 million by selling 4.8 million shares at $22 each on the Nasdaq under the ticker VRNS. They plan to use these funds for product and market development.

Their stock is trading at $30.88 with a market capitalization of $755.1 million. It touched a high of $56.80 soon after listing.

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