Varonis Systems shares tumbled nearly 11% after reporting Q4 revenue of $173.4 million, up 9% year-over-year and ahead of consensus estimates. The decline was fueled by a 53% drop in non-GAAP net income to $11.1 million, or $0.08 per share, down from $0.17 per share a year earlier. Investors also reacted negatively to the company’s 2026 adjusted EPS guidance of $0.06 to $0.10, which sits well below the average analyst projection of $0.34, raising concerns about margin pressure and cost investments related to its recent AI acquisition of Alltrue.ai.

In Q4 2025 Varonis surpassed earnings and revenue estimates, delivering adjusted EPS of $0.08 versus the Zacks Consensus of $0.03. While this marked a sequential decline from $0.18 in the prior year period, subscription revenue growth remained robust as ARR accelerated, driven by rising cloud workload deployments and increased AI security adoption among enterprise customers. The company cited double-digit ARR growth in its core data security platform and highlighted that cross-sell into cloud environments contributed over 30% of new bookings in the quarter.