Data security firm Varonis has announced a 5% workforce reduction, impacting around 120 employees, after a sharp decline in renewal rates for its on-premise subscription business sent its stock plunging nearly 49% to $32.34 per share—its lowest level since October 2023.
The company’s valuation dropped from $6 billion to $3.63 billion within a day. The layoffs—Varonis’ second since 2022—come just two months after it acquired email security startup SlashNext for up to $150 million.
CFO and COO Guy Melamed said the move aligns expenses with revenue expectations amid an underperforming federal vertical, which contributed only 5% to annual recurring revenue but caused significant drag on growth. “We’re uncovering every stone to address these headwinds,” he told investors.
CEO Yaki Faitelson said the company will downsize its federal team and reevaluate its government strategy, citing unpredictable renewal patterns. The decline in renewals, which began abruptly in late September, also affected commercial customers, prompting Varonis to revise its Q4 guidance downward.
Varonis recently completed its transition to SaaS and announced that self-hosted solutions will end support by December 2026, adding further renewal uncertainty.
Despite current turbulence, Forrester Research in March ranked Varonis as the top data security platform among 10 global vendors, praising its strength in data discovery, classification, and threat visibility, though customers cited high costs and room for UI improvement.
The company remains focused on stabilizing renewals and scaling its cloud-based offerings to offset the federal slowdown and restore investor confidence.
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