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VARONIS SYSTEMS. PROPRIETARY & CONFIDENTIAL.

Fighting a different battle than

conventional cybersecurity companies


Varonis Overview

February, 2019

VARONIS SYSTEMS. PROPRIETARY & CONFIDENTIAL.2

This presentation has been prepared by Varonis Systems, Inc. (the “Company”) solely for informational purposes. It is not, and should not be assumed to be, complete. This presentation is not an

offer to sell securities, nor is it a solicitation of an offer to buy securities. This presentation is not directed at, or intended for distribution to or use by, any person or entity that is a citizen or resident or

located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or

licensing within such jurisdiction. Persons into whose possession this presentation comes should inform themselves about, and observe, any such restrictions.

In considering any performance information contained herein, you should bear in mind that past or projected performance is not necessarily indicative of future results, and there can be no

assurance that any entity referenced herein will achieve comparable results or that illustrative returns, if any, will be met. Statements in this presentation are made as of the date this presentation is

made unless stated otherwise, and the delivery of this presentation at any time shall under no circumstances create an implication that the information contained herein is correct as of any time

after such date.

This presentation contains statements that, to the extent they are not recitations of historical fact, constitute “forward-looking statements.” Actual outcomes and results could differ materially from

those forecasts due to the impact of many factors beyond the control of the Company and its affiliates.

Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other

than statements of historical facts. The words “believe”, “expect”, “anticipate”, “intends”, “plan”, “estimate”, “aim”, “forecast”, “project”, “will”, “may”, “might”, “should”, “could” and similar

expressions (or their negative) identify certain of these forward-looking statements. Forward-looking statements include statements regarding: strategies, outlook and growth prospects; future plans

and potential for future growth; liquidity, capital resources and capital expenditures; growth in demand for products and services; economic outlook and industry trends; developments of markets;

the impact of regulatory initiatives; and the strength of competitors.

The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s

examination of historical operating trends, data contained in the Company’s records and other data available from third parties. These assumptions are inherently subject to significant

uncertainties and contingencies which are difficult or impossible to predict and are beyond its control and it may not achieve or accomplish these expectations, beliefs or projections. In addition,

important factors that, in the view of the Company, could cause actual results to differ materially from those discussed in the forward-looking statements include the achievement of the

anticipated levels of profitability, growth, the timely development of new projects, the impact of competitive pricing, and the impact of general business and global economic conditions. Past

performance should not be taken as an indication or guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance.

This presentation also contains market statistics and industry data that are not necessarily comprehensive or reflective of market conditions. These have been derived from third party sources and

have not been independently verified by the Company or its affiliates.

This presentation also contains non-GAAP financial measures which are not prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of historical GAAP and non-

GAAP financial measures can be found at http://ir.varonis.com.

The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of the products or services

of the Company.

Financial figures for FY16, FY17 and FY18 in this presentation are based on ASC 606 standards. Financial figures for FY15 and prior years are based on ASC 605.

Safe Harbor Statement

VARONIS SYSTEMS. PROPRIETARY & CONFIDENTIAL.VARONIS SYSTEMS. PROPRIETARY & CONFIDENTIAL.

Yaki FaitelsonCEO, President, Co-Founder and Chairman


Varonis Facts (Nasdaq: VRNS)

$25 $32$43

$58$71

$93

$120

$148

$14$22

$31

$43

$56

$73

$95

$123

$40

$53

$75

$101

$127

$166

$215

$270

2011 2012 2013 2014 2015 2016 2017 2018

License Revenues Maintenance and Services Revenues

25%GROWTH

Started operations in 2005

Fighting a different battle than conventional

cybersecurity companies

Approximately 6,600 Customers, from SMB to

Fortune 50

38% of revenues outside of North America in 2018

$270 MM 2018 Revenues

Headquartered in New York City with 1,460

employees worldwide


Transition to Subscription

In 2014 at our IPO, we had 10 licenses; today we have nearly two dozen, with more on the way

Subscription provides a pathway for our customers to adopt more licenses and realize greater

value from our platform more quickly

More licenses and use cases allow us to tap into more buckets of customer spend

CISOs have larger opex budgets for subscription licenses

Successful pilot program in the second half of 2018

Subscription provides Varonis with higher mix of recurring revenues, increased visibility and

predictability and greater customer lifetime value


DATA PROTECTION

COMPLIANCE

THREAT DETECTION & RESPONSE

Proven Technology

ENTERPRISE DATA STORES

AND INFRASTRUCTUREUSE CASESANALYTICS & AUTOMATION

PermissionsUsers & Groups

PerimeterTelemetry

Access Activity

ADTelemetry

ContentClassification

Windows Exchange

SharePoint

Office 365

NASUnix/Linux

Directory

Services

Edge

Services

Box


DETECT PREVENT SUSTAIN

insider threats by analyzing data,

account activity, and user behavior.

disaster by locking down sensitive and

stale data, reducing broad access, and

simplifying permissions.

a secure state by automating

authorizations, migrations, and disposition.

Proven Approach


Secular Trends

DATA GROWTH HYBRID CLOUD CYBER THREATS

The amount of data created in the

world will grow to 175 Zettabytes (or

175 trillion gigabytes) in 2025,

representing an approximately 27%

compound annual growth rate from

the amount created in 2018. (1)

Through 2020, more than 85% of

enterprises adopting a cloud-first

strategy will continue to host business-

critical applications in traditional data

center environments. (2)

By 2025, almost 90% of all data will

require a meaningful level of security,

but less than half will be secured. (1)

(1) IDC Research - Data Age 2025: The Evolution of Data to Life-Critical(2) Gartner Research - Deliver Data Center Modernizing Using Three-Cloud Complementary Approaches


Industry Changes

BOARD

AWARENESS

ADOPTION AND

STANDARDIZATION

REGULATION

Board of Directors are now required

to address cyber risks and

demonstrate appropriate awareness

and action.

A data-centric approach to security

is becoming a standard. Almost

every breach involves data assets in

the form of files, emails and video

that are stored in growing on-

premises and cloud file systems.

The confluence of notable attacks,

media attention, and public outcry

has led to new data-centric

regulations in the EU and North

America.


$5.4BNData Integration

$27.2BNIT Operations Management

$15.0BNStorage Management

$10.4BNInfrastructure Software

$23.6BNSecurity Software

$16BN+ TAM

Source: Market size estimates from Gartner Research (as of Dec 2018)

(1)

(1) Varonis Systems estimates that our total addressable market is approximately 20% of these combined markets.

Addressing $16BN+

Opportunity Across

IT & Security


6 Product Families and Over 20 Licenses (common code base)

Data ClassificationAutomatically identify GDPR eligible data to

discover, manage, and protect GDPR data

Data ClassificationDiscover where sensitive information is

vulnerable and safely lock it down without

interrupting business

Data Audit & ProtectionMonitor file activity and user behavior, prevent

data breaches, and make permissions

management and auditing a breeze

Alerting & User Behavioral AnalyticsDetect suspicious activity and prevent data

breaches across disparate platforms, visualize

risk and prioritize Investigation

Data Retention & MigrationAutomatically find, move, archive, or delete

data based on content type, age, access

activity, and more

Least Privilege on AutopilotAutomatically repair and maintain file systems so

that you’re less vulnerable to attacks, more

compliant, and consistently enforcing a least

privilege model

Enterprise Search & eDiscoveryDeliver relevant search results to the right

people without exposing sensitive

information

Extends Data Security to Edge DevicesSpot signs of attack at the perimeter with

telemetry from perimeter devices like VPN

concentrators, DNS and web proxies

Data Access GovernanceGive business users the power to review and

manage permissions without IT assistance

and automatically enforce business rules


Example: DatAdvantage Product Family Has Many Licenses

ON-PREMISES DATA STORES CLOUD DATA STORES REMEDIATION


History of Innovation

2005

2006

2008

2009

2010

2011

2012

2013

2014

2015 2017

2016

2018


Significant Cross-Sell Opportunity

Initial Security Driven

Deployment

3 licenses total

Hybrid On-Premises and

Cloud Deployment

7 licenses total

Enterprise Deployment

11 licenses total1 license

Note: Price ratios are based on list prices assuming DatAdvantage is 1X.

DatAdvantage for

WindowsDatAdvantage for

Windows

DatAlert Suite

Data Classification EngineDatAdvantage for

SharePoint Online

DatAdvantage for

OneDrive

DatAdvantage for

Windows

Data Classification Engine

DatAdvantage for

Exchange Online

Automation Engine

DatAlert Suite DatAdvantage for

Directory Services

Data Classification Engine

Automation Engine

DatAlert Suite

Edge

Data Transport Engine

DataPrivilege

DatAdvantage for

SharePoint Online

DatAdvantage for

OneDrive

DatAdvantage for

Windows

DatAdvantage for

Exchange Online

$1.0

$2.7

$6.5

$9.4


First-Mover Advantage

HIGH-FREQUENCY ITERATIONS

Close to 15 years of battle-testing, refinement, and innovation

DISCIPLINE

Sales process drove tens of thousands of production installs

COMPLEXITY

Data was stored in fewer places

DATA VOLUME

Data volumes were much smaller

2005


Channel resellers provide introductions to the right

buyers and help with closing

Sales force performs risk assessment and builds

business case

Installation takes up to 90 minutes (off-the-shelf

product), risk assessment process takes 2-3 weeks

Highly metrics driven

Usual Buyer:

CISO/CIO/CTO

Predictable Sales Motion

Channel Marketing

LEADS

RISK ASSESSMENT

CLOSING

NurturingVaronis Sales

Varonis SalesChannel


Varonis Risk Assessment

Where does my sensitive data live?

How much of it is over exposed?

What kind of sensitive data do I have?

(GDPR, PCI, SOX, HIPAA, etc.)The Varonis Data

Risk Assessment helped us identify our

at risk sensitive and classified data and

build a plan of attack to reduce the

likelihood of a data breach.(2)

“

”

(1)

34%OF USER ACCOUNTS

ARE ENABLED BUT

INACTIVE

88%OF ORGANIZATIONS

WITH OVER 1

MILLION FOLDERS

HAVE AT LEAST

100,000 FOLDERS

OPEN TO EVERYONE

41%HAD AT LEAST 1,000

SENSITIVE FILES OPEN

TO EVERY EMPLOYEE

21%OF FOLDERS OPEN TO

EVERYONE

74%HAVE OVER 1,000

STALE SENSITIVE FILES

95%OF OUR CUSTOMERS AGREED WITH

THE FOLLOWING STATEMENT

(1) https://www.varonis.com/learn/2018-varonis-data-risk-report/(2) https://www.techvalidate.com/product-research/varonis-data-security-platform


FINANCE PUBLIC SECTOR MEDIA &

ENTERTAINMENT

RETAIL & ENTERPRISE HEALTHCARE EDUCATION

Trusted by Customers Worldwide Across Key Verticals


Proven Management Team

Yaki Faitelson

CEO, President, Co-Founder & Chairman

Varonis since 2005

Jim O’Boyle

Sr. VP of Worldwide Sales

Varonis since 2006

David Gibson

CMO

Varonis since 2006

Dana Shahar

Chief Human Resources Officer

Varonis since 2013

Gilad RazCIO & VP of Technical Services

Varonis since 2006

Guy Melamed

CFO & COO

Varonis since 2011

David Bass

Executive VP & CTO

Varonis since 2005


Guy MelamedChief Financial Officer

Chief Operating [email protected]


Financial Highlights

SUCCESSFUL LAND

& EXPAND MODEL

STRONG REVENUES

GROWTH

HIGH CUSTOMER

SATISFACTION

Historically a perpetual license model and

making an active shift to subscription

licenses

High predictability for renewals and license

revenues from existing customers

Targeting larger customers with high

long-term value

ASP of ~$65K in 2016, ~$83K in 2017, ~$91K in

2018

Consistent growth in % of license and 1st year

maintenance from existing customers

Consistently high renewal rate >90%

As of December 31, 2018, 73% of customers

purchased 2 or more product families, and

40% purchased 3 or more product families


$25 $32$43

$58$71

$93

$120

$148

$14$22

$31

$43

$56

$73

$95

$123

$40

$53

$75

$101

$127

$166

$215

$270

2011 2012 2013 2014 2015 2016 2017 2018

License Revenues Maintenance and Services Revenues

25%GROWTH

Strong Revenue GrowthTotal Revenues | FYE December ($MM)


Quarter-Over-Quarter Growth Is StrongQuarterly Revenues | FYE December ($MM)

Q1 Q2 Q3 Q4

10 1418

25

1623

2733

1722

2936

2835

4653

13

17

22

28

13

17

22

29

14

19

24

31

16

20

27

34

23

30

40

54

29

40

49

62

31

41

53

67

44

55

73

88

2015 2016 2017 2018 2015 2016 2017 2018 2015 2016 2017 2018 2015 2016 2017 2018

Maintenance and Services Revenues

License Revenues


800900

1,0001,100

1,2001,300

1,4001,500

1,7001,800

1,9502,050

2,3502,500

2,6502,850

3,1503,300

3,5503,700

4,0504,250

4,5004,650

5,0005,150

5,3505,550

5,8506,000

6,2006,350

Strong Customer GrowthTargeting customers with 1,000 or more employees with larger potential Customer Lifetime Value

6,600


Customers Who Have Purchased 2 or More and 3 or More Product Families | % of Total Customers

Significant Upsells and Cross-sells

21%

29%

36%

40%

57%

65%

69%

73%

2015 2016 2017 2018

3+ Product Families

2+ Product Families


37%

42%

46%

50%

44%

54%

2015 2016 2017 2018 Q4 2017 Q4 2018

Existing Customers Spend MoreLicense and Associated First Year Maintenance Revenues from Existing Customers (%)


(7.1)

7.3

16.4

23.5

-8

-3

3

8

13

18

23

2010 2011 2012 2013 2014 2015 2016 2017 2018

Cash flow positive from operationsfor 4 years

Investments Show Strong ReturnsOperating Cash Flow | ($MM)

IPO(2/2014)

(2.7)


Annual Operating Margin Is Improving

* Percentages are presented on a non-GAAP basis. 2018 Operating Margin includes ~300 bps of FX headwind.

11% 10% 10% 10%

66%60% 58% 55%

23%

20%20% 22%

9%

9%9% 9%

-8.6%

0.7%

3.5% 3.6%

2015 2016 2017 2018

COGS

R&D

S&M

G&A


Solid Balance Sheet, No Debt

(USD in Thousands) As of Dec 31, 2018 As of Dec 31, 2017

Cash, Cash Equivalents, Marketable Securities & Short-Term Deposits $158,915 $136,557

Working Capital 112,750 109,918

Total Assets 284,978 245,638

Deferred Revenues, Current and Long-Term 94,216 80,101

Total Stockholders’ Equity 125,370 114,642


We plan to achieve our goal of

building a billion dollar business that

grows revenues meaningfully with

expanding profit and cash flow.


Thank You


fighting a different battle than conventional ... › 401483577 › files › doc... · david bass...

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