Investment reports

Varonis Systems (VRNS) Reports Second Quarter Breakeven Results

Varonis Systems (VRNS) reported quarterly earnings per share that broke even against the Zacks consensus estimate of a loss of $0.01. That compares to a loss of $0.01 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents a 100% earnings surprise. A quarter ago, this data management software company was expected to post a loss of $0.10 per share when it actually produced a loss of $0.09, offering a surprise by 10%.

In the past four quarters, the company has exceeded consensus EPS estimates four times.

Varonis, which is industry-owned Zacks Security, reported revenue of $111.45 million for the quarter ended June 2022, beating Zacks’ consensus estimate by 0.04%. That compares to revenues of $88.42 million a year ago. The company has exceeded consensus revenue estimates four times in the past four quarters.

The sustainability of the immediate stock price movement based on recently released numbers and future earnings forecasts will primarily depend on management’s comments on the earnings call.

Varonis stock has lost around 47.9% since the start of the year compared to a decline of -13.3% for the S&P 500.

What’s next for Varonis?

While Varonis has underperformed the market so far this year, the question on investors’ minds is: what’s next for the stock?

There are no easy answers to this key question, but one reliable metric that can help investors answer it is the company’s earnings outlook. This includes not only the current consensus earnings expectations for the upcoming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track these revisions on their own or rely on a proven scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Upstream of this publication of the results, the trend of revisions of estimates for Varonis: mixed. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation translates into a No. 3 (hold) Zacks ranking for the stock. Thus, the shares should move in line with the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.06 on $124.76 million in revenue for the upcoming quarter and $0.18 on $488.48 million in revenue for the current fiscal year.

Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry rankings, security is currently in 24% of Zacks 250+ industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

Another stock in the same sector, Absolute Software Corporation (ABST), has not yet released its results for the quarter ended June 2022. The results are expected to be released on August 23.

This company is expected to post a quarterly loss of $0.01 per share in its next report, representing a year-over-year change of -106.3%. The consensus EPS estimate for the quarter remained unchanged for the past 30 days.

Absolute Software Corporation’s revenue is expected to be $53.7 million, up 68.9% from the prior year quarter.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.