Varonis Systems, Inc.

Greetings and welcome to the Verona Systems, Inc. second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tim Perz, Investor Relations. Thank you. You may begin.

Thank you, operator. Good afternoon. Thank you for joining us today to review Varonis' second quarter 2026 financial results. With me on the call today are Yakov Faitelson, Chief Executive Officer, and Guy Melamed, Chief Financial Officer and Chief Operating Officer of Varonis. After preliminary remarks, we'll 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 third quarter and full year ending December 31st, 2026. 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 available in our second quarter 2026 earnings press release and our investor presentation, which can be found at veronis.com in the investor relations section. Lastly, please note that a webcast of today's call is 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 Faitelson. Yaki?

Thanks, Tim, and good afternoon, everyone. We appreciate you all joining us to discuss our second quarter of 2026 results. In Q2, SAS error excluding conversions increased 25% year-over-year to $598.1 million, and total SAS error including conversion was $726 million. The strong underlying trends We have seen in recent quarters continued in Q2, and we believe that our performance could have been even better if we had closed a few last deals that slipped due to the rumors in the news in the final week of the quarter. However, we have since closed some of those deals in July, and Q3 is off to a strong start, which gives us the confidence to raise our full year guidance for SAS ARR above the second quarter beat. We are also seeing momentum in our pipeline because of the secular tailwind from the need to secure AI and the data that's powered by it as well as benefits from our expanded offering. Let me spend a moment on the positive underlying trends that we saw in Q2. First, we saw SaaS ARR from new logos go by more than 20% in the quarter. which is an important signal that organizations are recognizing Veronis' ability to secure their data in AI environments. Second, we saw growing momentum from our newer products, including Atlas Interceptor and Database Activity Monitoring, which reinforces the breadth of our platform and the expanding set of use cases we can address for our customers. Guy will review our results and guidance in more detail shortly. Before discussing our key customer wins from the quarter, I want to step back from our near-term results and highlight why we believe Voronis is best positioned to help companies safely adapt AI and prevent data breaches. Our opportunity starts with a simple reality. As companies look to adapt AI, the value and risk associated with their data increases, customers want to move faster and but they cannot do that confidently if sensitive information is overexposed, permissions are too broad, and activity is not monitored or managed. This is exactly the problem Veronis was built to solve. We see three areas where this shift creating urgency. Understanding and securing the data itself, controlling how AI systems and agents interact with data, and defending against attackers that are using AI to move faster and operate at greater scale. First, customers need to know where their sensitive data lives, who can access it, and whether that access is appropriate. AI makes this more important because it reduces the friction between employees, agents, and the information those identities can reach. Data that was already exposed become easier to find, summarize, and act on. Second, organizations need guardrails around the models, agents, and pipelines that are being connected to enterprise data. It is not enough to know that an AI tool exists. Customers need to understand Thank you. Thank you. Customers are facing threats environments where adversaries are also using AI. Attackers can generate more convincing social engineering campaigns, automated their attacks, and scale techniques that used to require more time and specialized resources. The attack surface also expands as agents gain access to email, collaboration tools, applications, and data stores. This reinforces the need for security controls that are continuous, automated, and deeply connected to the data layer. These dynamics create a strong circular tailwind for Voronis. Customers are asking the same sets of questions with greater urgency. What sensitive data do we have? Where it is exposed? Who or what can access it? And how do we reduce risk without slowing the business down? Our answer is to secure data from the inside out through automation. This is also why data security and AI security cannot be treated as separate problems. AI inventory is more valuable when it's tied to the data that AI systems can access. Runtime guardrails are stronger when they have context around identity, data exposure, and accurate classification and labeling. Detection is more effective when it is informed by normal data access patterns. Customers want to move quickly, but they need confidence that the right controls are in place. Automation is the common thread, the traditional approach to security was built for a slower world. When humans could review access, investigate alerts, and manually clean up risk. That model does not work when data volumes are exploding, permissions are constantly changing, and AI agents can act at machine speed. In our view, the only practical way to manage AI-driven risk with AI-driven defense. With that, I would like to briefly discuss a couple of key customer wins from Q2 that show how these themes are translating into real demand. This quarter, a healthcare organization with more than 40,000 employees became a Voronis customer. This company was looking to deploy AI in order to deliver better patient care and needed to establish guardrails around AI usage, monitor how data was being leveraged across more than 100 AI projects, and automatically remediate overexposed HIPAA and PII data. A risk assessment uncovered significant exposure of sensitive data, including patients' record and HIPAA data, and the customer ultimately purchased Varonis for Atlas Complete to safely adapt AI tools, including co-pilot, cloud, and internally built LLMs, as well as Varonis for AWS, Azure, Databricks, Snowflake, Microsoft 365, and NVIDIA. Another highlight from this quarter was was a financial services company that expanded its Voronis deployment after performing a vendor consolidation review. The customer was using Voronis to secure on-premise file servers and wanted to consolidate multiple point products such as DEM and email security into our platform as part of the broader vendor rationalization initiative led by its CISO. They are also preparing to adapt AI and leverage automatic remediation to prevent attacks. We demonstrated how Voronis could secure data access across cloud, SAS, and AI environments while replacing several standalone tools. During the cloud evaluation, we automatically detected and prevented a significant security incident, which further validated the value of our platform. The customer ultimately expanded its coverage with Voronis for Atlas Complete, Interceptor, them, as well as Voronis for IaaS, Salesforce, and Microsoft 365. In summary, our Q2 results were highlighted by SaaS ARR, excluding conversion growth of 25%. from New Logos growing more than 20% and growing momentum from our newer products, including Atlas Interceptor and Database Activity Monitoring. Organizations are prioritizing data and AI security, and we are uniquely positioned to help customers secure sensitive data, govern AI, and automate risk reduction. With that, let me turn the call over to Guy.