By Senad Karaahmetovic
Shares of Varonis Systems (NASDAQ:VRNS) are down more than 30% in pre-open Tuesday after the data security company slashed its full-year guidance.
Varonis reported an in-line EPS of $0.06 for the third quarter while revenue missed the consensus by over $1 million after coming in at $123.3 million. Varonis also announced a $100 million share buyback authorization.
However, shares were hit by the slashed guidance. For this quarter, Varonis sees adjusted EPS between $0.17 and $0.18, below the $0.22 estimate. Revenue is seen at $140.5 million (the midpoint), missing the consensus of $155.5 million.
VRNS now expects full-year EPS to come in between $0.14 and $0.15, missing the consensus of $0.20. Full-year revenue is seen between $460 million and $463 million, again much lower than the $487 million consensus.
The Company said it is “adjusting its previous full-year outlook to reflect near-term headwinds from macroeconomic uncertainty and continued foreign currency weakness.”
Following the Q3 earnings report, at least three brokers slashed their ratings on VRNS stock. Wedbush analysts downgraded to Neutral from Outperform with a price target cut by 50% to $20 per share.
The analysts said Varonis delivered a “disaster quarter and guidance.”
“While the company has gone through some company specific challenges the last six months citing Russia headwinds and European challenges, this quarter felt like the company was blaming softness on everything except the weather,” they wrote in a client note.
Cowen analysts slashed the price target to $35 per share from the prior $53 while remaining Outperform-rated.
“We believe VRNS's data-centric offerings are critical for effective cybersecurity and that the current slowdown will prove temporary. Our new $35 PT represents 6x our FY23E revenue. In a rapidly consolidating cybersecurity arena, VRNS's profile (market leader, small cap, positive cashflow) and AH valuation may attract bidders,” they said.