What Happened?
Shares of data security company Varonis Systems (NASDAQ: VRNS) fell 8.7% in the afternoon session after the company provided a weak earnings outlook for 2026 that overshadowed its fourth-quarter 2025 results, which had topped Wall Street's expectations.
The company reported strong fourth-quarter results, with revenue growing 9.4% year on year to $173.4 million and adjusted earnings per share of $0.08, both beating analysts' estimates. However, investors focused on the disappointing forecast. For the full year 2026, Varonis projected adjusted earnings of just $0.08 per share at the midpoint, which missed consensus estimates by a staggering 76.6%. The company's guidance for the upcoming first quarter also fell short of expectations. This weak profit outlook raised concerns about the company's cost structure and ability to translate revenue growth into profitability, leading to a significant sell-off in the stock.
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What Is The Market Telling Us
Varonis Systems’s shares are somewhat volatile and have had 13 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 8.3% on the news that a broad sell-off swept through the software sector, driven by growing concerns about the impact of artificial intelligence. This led to institutional repositioning as traders pivot away from traditional SaaS providers in favor of companies with more defensible, AI-integrated moats. The tech-heavy Nasdaq Composite index declined by 0.8%, while the broader S&P 500 also slipped.
Varonis Systems is down 26.3% since the beginning of the year, and at $23.61 per share, it is trading 62.7% below its 52-week high of $63.31 from October 2025. Investors who bought $1,000 worth of Varonis Systems’s shares 5 years ago would now be looking at an investment worth $379.80.
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