Varonis lifts 2026 ARR outlook by 27% on AI security demand

Varonis Systems (NASDAQ: VRNS) boosted its full-year recurring revenue forecast after first-quarter results topped estimates, driven by a 29 percent jump in demand for its AI-focused data security platform.

"Our Q1 results reflect our strong performance as we execute on the growing need to secure data and safely enable the usage of AI," Chief Executive Officer Yakov Faitelson said on the earnings call.

The cybersecurity firm reported first-quarter revenue of $173.1 million, a 27 percent increase from the prior-year period. Net income was $7.5 million, or $0.06 per share, compared to $0.7 million, or $0.00 per share, in the first quarter of 2025. The key metric of SaaS Annual Recurring Revenue (ARR), excluding conversions from older on-premise licenses, grew 29 percent year-over-year to $522.6 million.

For the full year, Varonis raised its guidance for total SaaS ARR to a range of $814 million to $845 million, representing growth of 27 to 32 percent. The company also increased its total revenue forecast to between $731 million and $737 million. The results signal that corporate spending on data protection is accelerating as companies grapple with the security risks of deploying generative AI technologies.

Faitelson noted that companies face three main barriers to broader AI adoption: securing the data itself, protecting the AI systems that access the data, and fighting AI-powered adversaries. He argued that Varonis's automated platform is uniquely positioned to address these challenges, which is resonating with customers. The company highlighted a win with a global technology firm and an expansion with existing customer ServiceNow, both driven by the need to secure AI rollouts.

"AI is forcing companies to prioritize data and AI security, and Varonis is uniquely positioned to help," Faitelson added.

Chief Financial Officer Guy Melamed said the company's sales force is now more focused on acquiring new customers and upselling existing ones, following a period of converting clients from on-premise to SaaS licenses. "We saw an acceleration in the new customer contribution, which we're extremely happy with," Melamed said.

The guidance increase suggests management is confident that demand for its data protection services will strengthen as AI adoption becomes more widespread. Investors will monitor the company's second-quarter results for continued acceleration in new customer growth and further expansion from its SaaS offerings.

This article is for informational purposes only and does not constitute investment advice.