Data Security Firm Varonis Sees Very Bullish Insider Activity

Insider transaction activity can help investors generate alpha. Insiders are some of the most informed participants in the market and their stock purchases and sales can provide valuable trading signals.

In this report, we are going to highlight some interesting insider buying at Varonis Systems Inc (VRNS:US). Varonis is a provider of data security and analytics. Its focus is on protecting valuable enterprise data. The company is listed on the Nasdaq and currently has a market cap of around $2.72 billion.

Insider Buying at Varonis

2iQ data shows that between May 4 and May 5, two insiders at Varonis purchased stock. Those who bought shares were:

• Co-Founder, Chairman, President and CEO Yaki Faitelson (6,479 shares @ $23.13 per share)

• Board member Avrohom Kess (2,700 shares @ $22.83 per share)

Combined, the two insiders invested around $211,500 in the company.

Purchase From Co-founder 

It’s the purchase from Mr. Faitelson that stands out here. The co-founder of the company, Mr. Faitelson is responsible for the strategic direction and execution of Varnonis’ vision. And under his leadership, the company has cultivated a worldwide customer base and forged a leading position in the cybersecurity market. Given his background, he is likely to have an excellent understanding of Varonis’ prospects.

It’s worth noting that Mr. Faitelson has made several well-timed stock purchases in the last six months. Back in November, he picked up VRNS stock when it was trading at $16.

Our Insider Model views the recent insider buying as very bullish.

Full-year Guidance Raised

Varonis recently posted a very solid set of Q1 results.

For the period, total revenues increased 12% to $107.3 million with subscription revenues amounting to $83.0 million, compared with $69.0 million in the first quarter of 2022. Meanwhile, free cash flow amounted to $35.7 million versus $21.0 million in the prior year period. Non-GAAP operating loss was ($4.3) million, compared to ($7.9) million in the first quarter of 2022.

On the back of this performance, the company upgraded its full-year guidance for SaaS mix and annual recurring revenue (ARR). It now expects SaaS to represent 35% of new business, compared to previous guidance of 15%, and ARR to be between $520 million and $528 million (growth of 12-14%)

"It is clear that the simplicity and the automated protection of Varonis SaaS is resonating with our customers and our sales force, which leaves me optimistic about our SaaS transition, in spite of the economic slowdown that is impacting our customers,” commented Mr. Faitelson.

In light of these solid results, we see the insider buying here as a bullish development.