Varonis Systems, Inc.

Greetings. Welcome to the Varonis Systems, Inc. 4th Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, James Arestia, Director of Investor Relations. Thank you. You may begin.

Thank you, operator. Good afternoon. Thank you for joining us today to review Varonis' fourth quarter and full year 2021 financial results. With me on the call today are Yaki Feidelson, Chief Executive Officer, and Guy Melamed, Chief Financial Officer and Chief Operating Officer of Varonis. After preliminary remarks, we will open the call to a question and answer session. During this call, we may make statements related to our business that would be considered forward-looking statements under federal securities laws. including projections of future operating results for our first quarter and full year ending December 31, 2022. Due to a number of factors, actual results may differ materially from those set forth in such statements. These factors are set forth in the earnings press release that we issued today under the section captioned Forward-Looking Statements, and these and other important risk factors are described more fully in our reports filed with the Securities and Exchange Commission. We encourage all investors to read our SEC filings. These statements reflect our views only as of today and should not be relied upon as representing our views as of any subsequent date. Varonis expressly disclaims any application or undertaking to release publicly any updates or revisions to any forward-looking statements made herein. Additionally, non-GAAP financial measures will be discussed on this conference call. A reconciliation for the most directly comparable GAAP financial measures is also available in our fourth quarter and full year 2021 earnings press release, which can be found at www.voronis.com in the investor relations section. Also, please note that all common stock and per share data have been retroactively adjusted for the impact of the three for one stock split effective March 15th, 2021. Lastly, please note that an updated investor presentation as well as a webcast of today's call are available on our website in the investor relations section. With that, I'd like to turn the call over to our Chief Executive Officer, Yaki Feidelson. Yaki?

Thanks, Jamie, and good afternoon, everyone. Thank you for joining us to discuss our Q4 2021 performance, the results of a steady, consistent, and well-executed year by our team. Looking ahead, we are excited to capitalize on the countless opportunities we see for 2022 and beyond and are focused on positioning Varonis for durable long-term growth. Before I discuss these opportunities, I want to start by reviewing the key themes for 2021. Guy will then review our Q4 results and our financial guidance for 2022. So let's jump in. As we think about the market for data security in the last 12 months, it is important to ask what has stayed the same and what is changing. Starting with what has stayed the same, for many years we have bet on secular trends. To name a few, explosive data growth, the sophistication of threat actors, and increasing regulation. We now see another trend which is serving as a strong tailwind for our growth, and that is a global scarcity of in-house technical expertise. This presents a significant need for added automated protection for all organizations. Let's spend a moment on these trends which continue to accelerate in 2021. driving demand for our platform. The first is data growth, which we have talked about since we founded Voronis. This showed no signs of slowing during 2021, whether on-prem or in the cloud, which only opens companies around the world to greater risks. The second is the threat environment, giving the growing dependence on critical data, which makes every company highly vulnerable. It is not surprising that threat actors continue to refine and sharpen their strategies. Cybercrime gets worse by the day, and it has become more profitable than ever before. The third trend is regulation. A natural byproduct of these attacks, all of these regulations have sharp teeth. And as we have seen in the past year, noncompliance results in substantial fines. The last trend that I mentioned earlier is technical scarcity. We constantly hear from customers and prospects that their IT and security experts are stretched too thin and that they need automated platform solutions that allow them to do more with less. This is exactly what Voronis provides at scale and across diverse and complex environments. Our technology has never been a better fit than for today's market. As a result, Our data-first approach continues to resonate with customers regardless of size, industry, or region. Now, let's turn to what is changing, starting with the digital transformation, which has drastically impacted how companies must approach data security. As we have said, with work from anywhere, the perimeter is hard to define and even harder to protect. There has been an explosion of endpoints, which primarily save as access points to enterprise data stores both on-prem and in the cloud, and sensitive data now lives in these sanctioned data stores, which makes collaboration easier and security much harder. As we all know, when solutions to problems are found, new problems often emerge. We believe the biggest problem for data-driven organization over the next decade will be managing the tension between productivity and security. The digital transformation has made collaboration so easy that the average employee has access to 17 million files on the first day, most of which are not necessary for their job. As a result, the potential for widespread damage from just one compromised user, which we call the blast radius, is enormous. On top of that, attackers have so many vectors to get to sensitive data. It can be through an endpoint, a vulnerable gateway, or a misconfiguration. And all it takes is one. For every company, the scale of the problem can be massive and it is impossible to solve without automation. This is exactly what we are laser focused on going into 2022 and beyond and how we are positioning the company for durable long-term growth. We intend to go both wider and deeper as we expand our platform With a distinct focus on SaaS data stores, Data Advantage Cloud meaningfully expands our market opportunity as we can now provide coverage for Google Drive, Salesforce, AWS, and many more SaaS data stores and applications. We can also go deeper on many of these, as we already have with classification for Google Drive and Box, and there is so much more we plan to do on alerting and integrations. The one common theme across these efforts is automation, which is truly transformational for our customers and addresses the data protection challenges they face. And we believe that we are just scratching the surface of an enormous market opportunity. Before I turn the call to Guy, I want to briefly discuss some key customer wins in Q4. A US healthcare service organization with 30,000 employees became a new Voronis customer this quarter. They viewed Microsoft 365 as a significant risk and brought us in. Not only did our risk assessment validate their concern, but it also expanded the initial use case to address ransomware open access issues and permissions mapping. They purchased a double-digit number of licenses, and we are now already discussing how they can expand with DA Cloud licenses for additional protection. At the same time, our existing customer base continued to serve as a strong source of incremental revenues, and the team had another outstanding quarter, closing a number of significant expansion deals. One of the world's largest auto manufacturers, originally a perpetual customer with only two licenses, significantly expanded their Voronis deployment in Q4, prompted by the need to comply with regulation and take more strategic approach to securing those sensitive data. They now have a double-digit number of licenses. These are just two examples of how the trend impacting organizations today fueled by the digital transformation provide Varonis a long-term opportunity to fulfill its mission of protecting sensitive data for its customers coupled with our platform innovation and continued investments across the business. We believe we have a clear path to our $1 billion ARR target. I want to thank our team for their great effort and hard work last year, and I know I speak for them when I say how excited I am for 2022. With that, let me turn the call over to Guy. Guy.