Do Varonis Systems’ (VRNS) Transparency Questions Reframe How Investors Judge Its ARR Quality?

• In late 2025, multiple law firms, including Robbins Geller Rudman & Dowd LLP and the Law Offices of Frank R. Cruz, filed securities class action lawsuits against Varonis Systems alleging that the company misrepresented its revenue outlook, growth prospects, and reliance on quarterly conversions.
• The cases center on claims that Varonis’s communications about its annual recurring revenue model and exposure to seasonality and macroeconomic conditions lacked sufficient transparency, raising fresh questions about how investors assess software business quality.
• With the lawsuits challenging Varonis’s disclosures around its ARR growth and conversion rates, we’ll explore how this shapes the company’s investment narrative.

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What Is Varonis Systems' Investment Narrative?

To own Varonis today, you have to believe its data security platform and growing web of cloud and AI partnerships can eventually justify a premium price-to-sales multiple despite ongoing losses. That story has been complicated by the recent securities class actions, which cut directly to the heart of the investment case: confidence in the annual recurring revenue model, conversion rates, and how management communicates seasonality and macro sensitivity. The sharp share price decline around the October guidance cut suggests these lawsuits are more than background noise, at least in the short term, because they may influence how investors read upcoming Q4 2025 results and any refresh to the buyback program. The core business opportunity has not changed, but near term, disclosure quality and credibility now sit alongside execution as key risks and catalysts.

However, there is a separate transparency risk around how Varonis reports and explains its ARR engine that investors should be aware of. Despite retreating, Varonis Systems' shares might still be trading above their fair value and there could be some more downside. Discover how much.

Exploring Other Perspectives

Three Simply Wall St Community members place Varonis’s fair value between US$49.60 and US$70.00, far above the recent price. You can weigh those optimistic views against fresh concerns over disclosure quality and ARR dependence, and decide how much uncertainty around the lawsuits you are prepared to live with.

Explore 3 other fair value estimates on Varonis Systems - why the stock might be worth over 2x more than the current price!

Build Your Own Varonis Systems Narrative

Disagree with this assessment? Create your own narrative in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Varonis Systems research is our analysis highlighting 2 key rewards that could impact your investment decision.
• Our free Varonis Systems research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Varonis Systems' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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