VARONIS SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) June 30, 2026 December 31, 2025 (unaudited) Assets Current assets: Cash and cash equivalents $ 233,643 $ 202,482 Marketable securities 426,474 681,225 Short-term deposits 38,149 37,259 Accounts receivable (net of allowances of $1,458 and $1,260 at June 30, 2026 and December 31, 2025, respectively) 150,896 242,822 Prepaid expenses and other short-term assets 147,790 134,767 Total current assets 996,952 1,298,555 Long-term assets: Long-term marketable securities 213,260 187,202 Operating lease right-of-use assets 61,826 57,677 Property and equipment, net 40,314 36,032 Intangible assets, net 56,006 16,687 Goodwill 215,082 135,276 Other assets 70,955 60,183 Total long-term assets 657,443 493,057 Total assets $ 1,654,395 $ 1,791,612 Liabilities and stockholders’ equity Current liabilities: Trade payables $ 12,328 $ 5,735 Accrued expenses and other short-term liabilities 173,413 225,411 Deferred revenues 420,198 427,811 Total current liabilities 605,939 658,957 Long-term liabilities: Convertible senior notes, net 453,278 452,259 Operating lease liabilities 62,854 59,749 Deferred revenues 15,368 14,406 Other liabilities 72,463 7,585 Total long-term liabilities 603,963 533,999 Stockholders’ equity: Share capital 1 Common stock of $0.001 par value - Authorized: 200,000,000 shares at June 30, 2026 and December 31, 2025; Issued and outstanding: 114,853,875 shares at June 30, 2026 and 117,546,852 shares at December 31, 2025 115 118 Accumulated other comprehensive income 27,159 23,132 Additional paid-in capital 1,370,361 1,444,885 Accumulated deficit (953,142) (869,479) Total stockholders’ equity 444,493 598,656 Total liabilities and stockholders’ equity $ 1,654,395 $ 1,791,612 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 VARONIS SYSTEMS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenues: SaaS $ 171,727 $ 105,895 $ 332,792 $ 194,455 Term license subscriptions 4,162 32,374 11,058 63,862 Maintenance and services 4,134 13,894 9,299 30,269 Total revenues 180,023 152,163 353,149 288,586 Cost of revenues 44,512 31,249 86,082 60,267 Gross profit 135,511 120,914 267,067 228,319 Operating expenses: Research and development 73,339 56,247 143,100 110,457 Sales and marketing 78,978 76,578 159,314 149,341 General and administrative 23,825 24,641 49,765 48,839 Total operating expenses 176,142 157,466 352,179 308,637 Operating loss (40,631) (36,552) (85,112) (80,318) Financial income (expense), net (763) 4,967 3,683 16,918 Loss before income taxes (41,394) (31,585) (81,429) (63,400) Provision for income taxes (5,415) (4,239) (2,234) (8,207) Net loss $ (46,809) $ (35,824) $ (83,663) $ (71,607) Net loss per share of common stock, basic and diluted $ (0.41) $ (0.32) $ (0.73) $ (0.64) Weighted average number of shares used in computing net loss per share of common stock, basic and diluted 114,818,267 112,054,715 115,300,485 112,347,961 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 VARONIS SYSTEMS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net loss $ (46,809) $ (35,824) $ (83,663) $ (71,607) Other comprehensive income (loss): Unrealized income (loss) on marketable securities, net of tax (916) 46 (2,604) 2,477 Income (loss) on marketable securities reclassified into earnings, net of tax 10 (123) 47 (161) (906) (77) (2,557) 2,316 Unrealized income (loss) on derivative instruments, net of tax (60) 17,073 (6,918) 11,504 Income (loss) on derivative instruments reclassified into earnings, net of tax 7,596 (1,337) 13,502 (1,999) 7,536 15,736 6,584 9,505 Total other comprehensive income 6,630 15,659 4,027 11,821 Comprehensive loss $ (40,179) $ (20,165) $ (79,636) $ (59,786) The accompanying notes are an integral part of these condensed consolidated financial statements. 4 VARONIS SYSTEMS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in thousands, except share data) Common stock Additional paid-in capital Accumulated other comprehensive income (loss) Accumulated deficit Total stockholders’ equity Number Amount Balance as of December 31, 2024 112,550,156 $ 113 $ 1,193,022 $ 2,676 $ (740,155) $ 455,656 Stock-based compensation expense — — 32,255 — — 32,255 Common stock issued under employee stock plans 1,808,876 2 7,161 — — 7,163 Taxes related to net share settlement of equity awards — — (26,447) — — (26,447) Repurchase of common stock (1,476,456) (2) (61,262) — — (61,264) Unrealized loss on derivative instruments, net of tax — — — (6,231) — (6,231) Unrealized income on available for sale securities, net of tax — — — 2,393 — 2,393 Common stock issued for debt conversion 32 — 1 — — 1 Net loss — — — — (35,783) (35,783) Balance as of March 31, 2025 112,882,608 113 1,144,730 (1,162) (775,938) 367,743 Stock-based compensation expense — — 33,859 — — 33,859 Common stock issued under employee stock plans 163,501 — — — — — Taxes related to net share settlement of equity awards — — (1,352) — — (1,352) Repurchase of common stock (1,003,885) (1) (38,735) — — (38,736) Unrealized income on derivative instruments, net of tax — — — 15,736 — 15,736 Unrealized loss on available for sale securities, net of tax — — — (77) — (77) Common stock issued for debt conversion 4,885 — 150 — — 150 Net loss — — — — (35,824) (35,824) Balance as of June 30, 2025 112,047,109 $ 112 $ 1,138,652 $ 14,497 $ (811,762) $ 341,499 Common stock Additional paid-in capital Accumulated other comprehensive income (loss) Accumulated deficit Total stockholders’ equity Number Amount Balance as of December 31, 2025 117,546,852 $ 118 $ 1,444,885 $ 23,132 $ (869,479) $ 598,656 Stock-based compensation expense — — 33,739 — — 33,739 Common stock issued under employee stock plans 2,622,743 2 7,968 — — 7,970 Taxes related to net share settlement of equity awards — — (17,386) — — (17,386) Repurchase of common stock (4,429,520) (4) (109,996) — — (110,000) Repurchase of common stock through options, net (925,925) (1) (20,008) — — (20,009) Unrealized loss on derivative instruments, net of tax — — — (952) — (952) 5 Unrealized loss on available for sale securities, net of tax — — — (1,651) — (1,651) Net loss — — — — (36,854) (36,854) Balance as of March 31, 2026 114,814,150 115 1,339,202 20,529 (906,333) 453,513 Stock-based compensation expense — — 34,619 — — 34,619 Common stock issued under employee stock plans 39,725 — — — — — Taxes related to net share settlement of equity awards — — (3,460) — — (3,460) Unrealized income on derivative instruments, net of tax — — — 7,536 — 7,536 Unrealized loss on available for sale securities, net of tax — — — (906) — (906) Net loss — — — — (46,809) (46,809) Balance as of June 30, 2026 114,853,875 $ 115 $ 1,370,361 $ 27,159 $ (953,142) $ 444,493 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 VARONIS SYSTEMS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Six Months Ended June 30, 2026 2025 Cash flows from operating activities: Net loss $ (83,663) $ (71,607) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 11,535 4,988 Stock-based compensation 68,358 66,114 Amortization of deferred commissions 30,570 25,141 Non-cash operating lease costs 5,401 4,952 Amortization of debt issuance costs 1,019 1,774 Amortization of premium and accretion of discount on marketable securities, net 1,511 414 Deferred income taxes, net (9,652) — Remeasurement of options to repurchase common stock 2,091 — Changes in assets and liabilities: Accounts receivable 91,926 39,004 Prepaid expenses and other short-term assets (4,129) 1,427 Deferred commissions (41,294) (35,592) Other long-term assets (8,786) (1,120) Trade payables 6,592 2,802 Accrued expenses and other short-term liabilities 13,635 15,953 Deferred revenues (6,669) 34,070 Other long-term liabilities 1,678 1,029 Net cash provided by operating activities 80,123 89,349 Cash flows from investing activities: Proceeds from maturities of marketable securities 240,895 126,000 Proceeds from sales of marketable securities 141,319 — Investment in marketable securities (157,589) (57,654) Proceeds from short-term and long-term deposits 96,517 99,750 Investment in short-term and long-term deposits (96,932) (96,388) Acquisitions, net of cash acquired (113,622) (18,584) Purchases of property and equipment (9,352) (5,716) Capitalized internal-use software (1,720) (975) Other investing activities — (1,500) Net cash provided by investing activities 99,516 44,933 Cash flows from financing activities: Repurchase of common stock (135,000) (100,000) Payment of deferred consideration for acquisition (3,502) — Proceeds from options to repurchase common stock 2,900 — Proceeds from employee stock plans 7,970 7,163 Taxes paid related to net share settlement of equity awards (20,846) (27,799) Net cash used in financing activities (148,478) (120,636) 7 Increase in cash and cash equivalents 31,161 13,646 Cash and cash equivalents at beginning of period 202,482 185,585 Cash and cash equivalents at end of period $ 233,643 $ 199,231 Supplemental disclosure of cash flow information: Cash paid for income taxes $ 562 $ 5,266 Cash paid for interest $ 2,301 $ 3,945 Supplemental disclosure of non-cash activities: Lease liabilities arising from obtaining right-of-use assets $ 6,869 $ 702 Liability related to acquisition holdback $ — $ 3,502 Common stock issued for debt conversion $ — $ 151 The accompanying notes are an integral part of these condensed consolidated financial statements. 8 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: GENERAL Description of Business Varonis Systems, Inc. ("VSI" and together with its subsidiaries, collectively, the “Company” or "Varonis") was incorporated under the laws of the State of Delaware on November 3, 2004, commenced operations on January 1, 2005 and has sixteen wholly-owned subsidiaries. The Company develops software for data and AI security, threat detection and response and data privacy and compliance. Varonis enables enterprises of all sizes and across industries to protect their most critical asset – data – wherever it lives: in the cloud, on-premises, in SaaS applications, and across AI-driven systems. That includes sensitive files and emails; confidential personal, patient, and employee data; financial records; source code; and strategic intellectual property. The Varonis Data Security Platform provides comprehensive visibility into how data is accessed, used, and exposed – including by AI systems and agents – and applies automated controls to reduce risk and contain threats before they become breaches. The platform analyzes data, applications, and account activity alongside user and AI-related behavior to detect anomalies, prevent unauthorized access, and automatically lock down sensitive data when risk is detected. Customers rely on Varonis to achieve three board-level outcomes: enabling secure AI adoption, preventing data breaches, and maintaining compliance with data-related regulations. Core use cases include: automated discovery and classification of sensitive data, emails, and databases; AI-readiness and AI system security; data security posture management (DSPM); database activity monitoring ("DAM"); SaaS security posture management; automated remediation of over-exposed data; centralized visibility and risk analysis across the enterprise; monitoring of user, file, email, and AI-related activity; insider threat, malware, ransomware, and phishing detection through Managed Data Detection and Response ("MDDR"); automated response to ransomware and other high-severity incidents; data ownership identification and assignment; forensics, reporting and audit logging; compliance and security policy enforcement; data migration and retention automation; and automated indexing for data subject requests and privacy regulations. Basis of Presentation The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with Article 10 of Regulation S-X, “Interim Financial Statements” and the rules and regulations for Form 10-Q of the Securities and Exchange Commission (the “SEC”). Pursuant to those rules and regulations, the Company has condensed or omitted certain information and footnote disclosure it normally includes in its annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). In management’s opinion, the Company has made all adjustments (consisting only of normal, recurring adjustments) necessary to fairly present its condensed consolidated financial position, results of operations and cash flows. The Company’s interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the 2025 consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2025 filed with the SEC on February 4, 2026 (the “2025 Form 10-K”). Significant Accounting Policies There have been no changes in the significant accounting policies from those that were disclosed in the audited consolidated financial statements for the fiscal year ended December 31, 2025 included in the 2025 Form 10-K, unless otherwise stated. Revenue Recognition The Company generates revenues primarily in the form of SaaS revenues, and, to a lesser extent, term license subscriptions and maintenance and services fees. SaaS revenues, including SaaS with MDDR, are provided on a subscription basis and allow customers to use hosted software for a specified period. Over the last few years, the Company has introduced new products and support for cloud applications and infrastructure environments, including the Varonis Data Security Platform delivered as a SaaS solution, which was previously only sold as a self-hosted solution. Term license subscription revenues are sold on-premises and are comprised of time-based licenses whereby customers use the Company's software (including support and unspecified upgrades and enhancements when and if they are available) for a specified period. Maintenance and services 9 primarily consist of fees for maintenance of past perpetual license sales (including support and unspecified upgrades and enhancements when and if they are available). The Company sells its products worldwide through a network of distributors and value-added resellers and payment is typically due within 30 to 60 calendar days of the invoice date. Deferred revenues represent mostly unrecognized fees billed or collected for SaaS and maintenance contracts. Deferred revenues are recognized as (or when) the Company performs its obligations under the contract. Pursuant to these contracts, customers are generally invoiced on an annual basis. The amount of revenues recognized in the period that was included in the opening deferred revenues balance was $285,984 for the six months ended June 30, 2026. Revenues allocated to remaining performance obligations represent contracted revenues that have not yet been recognized, which includes deferred revenues and non-cancelable amounts that will be invoiced in the future. The Company's remaining performance obligations were $1,084,497 as of June 30, 2026, of which it expects to recognize approximately 57% as revenue over the next 12 months and the remainder thereafter. For information regarding disaggregated revenues, refer to Note 8, "Geographic Information and Major Customer Data." Contract Costs The Company pays sales commissions to sales and marketing and certain management personnel based on their attainment of certain predetermined sales goals. The Company capitalizes sales commissions that are considered incremental and recoverable costs of obtaining a contract with a customer. Incremental sales commissions paid for initial contracts, which are not commensurate with sales commissions paid for renewal contracts, are capitalized and amortized over an expected period of benefit. Based on its technology, customer contracts and other factors, the Company has determined the expected period of benefit to be approximately four years. Incremental sales commissions which are commensurate, are capitalized and amortized over the related contractual period and aligned with revenue recognized from these contracts. Amortization expenses related to these costs are included in sales and marketing expenses in the accompanying condensed consolidated statements of operations. Derivative Instruments The Company’s primary objective for holding derivative instruments is to reduce its exposure to foreign currency rate changes. The Company reduces its exposure by entering into forward foreign exchange contracts with respect to revenues and operating expenses that are forecasted to be incurred in currencies other than the U.S. dollar. A majority of the Company’s revenues and operating expenses are transacted in U.S. dollars; however, certain revenues and operating expenses are incurred in or exposed to other currencies, specifically, the euro and pound sterling for revenues and the new Israeli shekel, euro and pound sterling for operating expenses. The Company has established forecasted transaction currency risk management programs to protect against the volatility of future cash flows caused by changes in exchange rates. The Company’s currency risk management program includes forward foreign exchange contracts designated as cash flow hedges. These forward foreign exchange contracts generally mature within periods of up to 24 months. The Company does not enter into derivative financial instruments for trading or speculative purposes. Derivative instruments measured at fair value and their classification in the condensed consolidated balance sheets are presented in the following table (in thousands): 10 Assets (liabilities) as of June 30, 2026 (unaudited) Assets (liabilities) as of December 31, 2025 Notional Amount Fair Value Notional Amount Fair Value Foreign exchange forward contract derivatives in cash flow hedging relationships for operating expenses included in prepaid expenses and other short-term assets $ 137,796 $ 24,978 $ 187,767 $ 21,605 Foreign exchange forward contract derivatives in cash flow hedging relationships for operating expenses included in accrued expenses and other short-term liabilities $ 47,689 $ (668) $ — $ — Foreign exchange forward contract derivatives in cash flow hedging relationships for operating expenses included in long-term other assets $ 52,534 $ 2,722 $ 123,959 $ 6,465 Foreign exchange forward contract derivatives in cash flow hedging relationships for operating expenses included in long-term other liabilities $ 58,981 $ (871) $ — $ — Foreign exchange forward contract derivatives in cash flow hedging relationships for revenues included in prepaid expenses and other short-term assets $ 105,697 $ 1,526 $ — $ — Foreign exchange forward contract derivatives in cash flow hedging relationships for revenues included in accrued expenses and other short-term liabilities $ 23,312 $ (49) $ 128,132 $ (2,515) Foreign exchange forward contract derivatives in cash flow hedging relationships for revenues included in long-term other assets $ 130,852 $ 1,923 $ — $ — Foreign exchange forward contract derivatives in cash flow hedging relationships for revenues included in long-term other liabilities $ — $ — $ 185,688 $ (1,691) Net gains (losses) related to cash flow hedges that were reclassified from accumulated other comprehensive income to the condensed consolidated statements of operations are presented in the following table (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 (unaudited) Revenues $ (800) $ 305 $ (1,468) $ 884 Cost of revenues 37 81 117 (111) Research and development 6,394 (869) 11,122 (1,605) Sales and marketing 76 172 228 (309) General and administrative 1,917 (231) 3,302 (427) Financial income (expense), net (28) (795) 201 (431) Total net gain (loss) related to cash flow hedges $ 7,596 $ (1,337) $ 13,502 $ (1,999) No material ineffective hedges were recognized during the three and six months ended June 30, 2026 and 2025 in the condensed consolidated statement of operations. Income Taxes The Company operates in the U.S. and in foreign jurisdictions and is subject to taxes in each country or jurisdiction in which it conducts business. Earnings from its non-U.S. activities are subject to local country income tax and may be subject to U.S. income tax. 11 Because of its history of operating losses, the Company has established a full valuation allowance against potential future benefits for deferred tax assets, including loss carryforwards. Accounting for income taxes for interim periods generally requires the provision for income taxes to be determined by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. For the three and six months ended June 30, 2026, a discrete effective tax rate method was used in jurisdictions where a small change in estimated ordinary income has a significant impact on the annual effective tax rate. In some foreign tax jurisdictions, the Company bases its interim tax accruals on the annual estimated effective tax rate applicable to the Company and its subsidiaries, adjusted for items which are considered discrete to the period. In each quarter, the Company updates its calculation and makes a year-to-date adjustment to its tax provision as necessary. The Company's fiscal 2026 annual effective rate differs from the U.S. statutory rate primarily due to research and development capitalization under the terms of Section 174, tax deduction for stock-based compensation, generation or utilization of carry forward net operating loss (NOL) and research and development tax credits resulting in a current provision expense without an offset to deferred expense, as the Company remains in a valuation allowance on its U.S. deferred tax assets. The Company's income tax provision could be significantly impacted by estimates surrounding its uncertain tax positions and changes to its valuation allowance. The Company reevaluates the judgments surrounding its estimates and makes adjustments as appropriate each reporting period. The Company remains open to federal and state examination to the extent net carry-over unused operating losses and tax credit attributable to those years remain unutilized. As of June 30, 2026, the Company's federal tax returns for the years 2010 through the current period, excluding the 2016 tax year which was audited by the Internal Revenue Service, and most state tax returns for the years 2009 through the current period, are still open to examination. In addition, the Company is subject to the regular examinations of its income tax returns by different tax authorities. The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes. Cash, Cash Equivalents and Marketable Securities The Company accounts for investments in marketable securities in accordance with ASC No. 320, “Investments—Debt Securities” and ASC No. 326, “Financial Instruments—Credit Losses.” The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of cash on hand, highly liquid investments in money market funds and other securities. The Company considers all investments and marketable securities purchased with maturities at the date of purchase of less than one year to be short-term. Investments and marketable securities purchased with maturities at the date of purchase greater than one year are classified as long-term assets, until the maturity date is in less than one year, at which point they are reclassified as short-term assets. Marketable securities are classified as available for sale debt securities and are, therefore, recorded at fair value in the condensed consolidated balance sheets, with any unrealized gains and losses reported in accumulated other comprehensive income (loss), which is reflected as a separate component of stockholders’ equity in the Company’s condensed consolidated balance sheets, until realized. Realized gains and losses are determined based on the specific identification method and are reported in financial income (expense), net in the condensed consolidated statements of operations. The amortized cost of securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion is included as a component of financial income (expense), net in the condensed consolidated statement of operations. Cash equivalents and marketable securities consist of the following (in thousands): 12 As of June 30, 2026 (unaudited) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash equivalents Money market funds $ 165,885 $ — $ — $ 165,885 Total $ 165,885 $ — $ — $ 165,885 Marketable securities US Treasury securities $ 426,882 $ 144 $ (552) $ 426,474 Total $ 426,882 $ 144 $ (552) $ 426,474 Long-term marketable securities US Treasury securities $ 213,911 $ — $ (651) $ 213,260 Total $ 213,911 $ — $ (651) $ 213,260 As of December 31, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash equivalents Money market funds $ 120,155 $ — $ — $ 120,155 Total $ 120,155 $ — $ — $ 120,155 Marketable securities US Treasury securities $ 679,959 $ 1,267 $ (1) $ 681,225 Total $ 679,959 $ 1,267 $ (1) $ 681,225 Long-term marketable securities US Treasury securities $ 186,971 $ 231 $ — $ 187,202 Total $ 186,971 $ 231 $ — $ 187,202 Unrealized losses associated with investments in available for sale securities have all been in a continuous unrealized loss position of less than one year as of June 30, 2026 and December 31, 2025. The gross unrealized gains and losses related to these investments were due primarily to changes in interest rates. If the amortized cost of an individual security exceeds its fair value, the Company considers its intent to sell the security or whether it is more likely than not that it will be required to sell the security before recovery of its amortized basis. If either of these criteria are met, then impairment is recorded to the fair value of the security. If neither of these criteria are met, the securities are assessed using the credit losses model for marketable securities to determine what portion of that difference, if any, is caused by expected credit losses. Expected credit losses on available for sale debt securities are recognized in financial income (expense), net in the condensed consolidated statements of operations. During the three and six months ended June 30, 2026 and 2025, the Company did not recognize impairment or an allowance for credit losses on available for sale marketable securities. Business Combinations The Company accounts for its business combinations using the acquisition method of accounting, which requires, among other things, allocation of the fair value of the purchase consideration to the tangible and intangible assets acquired and liabilities assumed at their estimated fair values on the acquisition date. The excess of the fair value of the purchase consideration over the 13 values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, the Company makes estimates and assumptions, especially with respect to intangible assets. The Company's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from such estimates. During the measurement period, not to exceed one year from the date of acquisition, the Company may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date. After the measurement period, any subsequent adjustments are reflected in the condensed consolidated statements of operations. Acquisition costs, such as legal and consulting fees, are expensed as incurred. Goodwill and Other Long-Lived Assets, including Acquired Intangible Assets and Right-of-Use Assets Goodwill represents the excess of the fair value of the purchase consideration in a business combination over the fair value of the net tangible and intangible assets acquired. Goodwill amounts are not amortized, but rather tested for impairment at least annually or more often if circumstances indicate that the carrying value may not be recoverable. The Company operates as one reporting segment, which consists of a single reporting unit. If the carrying amount of the Company's reporting unit exceeds its fair value, the Company recognizes an impairment loss in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. During the periods presented, no impairment of goodwill has been recorded. Acquired intangible assets consist of identifiable intangible assets, including developed technology, customer relationships and non-compete agreements, resulting from business combinations. Acquired finite-lived intangible assets are initially recorded at fair value and are amortized on a straight-line basis over their estimated useful lives. Amortization expense of the acquired intangible assets are recorded within cost of revenues and sales and marketing expense in the condensed consolidated statements of operations. The Company’s long-lived assets are reviewed for impairment in accordance with ASC No. 360 “Property, Plant and Equipment” whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. Recoverability of assets (or asset group) to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. During the periods presented, no impairment of long-lived assets has been recorded. Capitalized Internal-use Software Development Costs The Company capitalizes certain development costs incurred in connection with its internal-use software in accordance with ASC No. 350-40, "Intangibles-Goodwill and Other-Internal Use Software." These capitalized costs are related to the Company's SaaS platform. Costs incurred in the preliminary and post-implementation stages of development are expensed as incurred. Once internal-use software has reached the application development stage, direct internal and external costs are capitalized until the internal-use software is substantially complete and ready for its intended use. Capitalized costs are recorded as part of property and equipment, net in the condensed consolidated balance sheets. Management tests these assets for impairment whenever events or changes in circumstances occur that could impact recoverability of these assets. As of June 30, 2026, all capitalized internal-use software development assets were in the application development stage, as such, no amortization has been recorded in the condensed consolidated statements of operations related to these assets and no impairment has been recorded. Concentration of Credit Risks Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, marketable securities, short-term deposits and accounts receivable. The Company’s cash, cash equivalents, marketable securities and short-term deposits are invested in major banks mainly in the United States but also in France, Israel, the United Kingdom, Canada, Singapore, Ireland, Australia, Germany, the Netherlands, Luxembourg, India, Japan and Poland. Such deposits in the United States may be in excess of insured limits and are not insured in other jurisdictions. The Company maintains cash and cash equivalents with reputable financial institutions and monitors the amount of credit exposure to each financial institution. Accounts receivable is recorded when the right to consideration is unconditional. The Company’s accounts receivable is geographically diversified and derived primarily from sales through a network of distributors and value-added resellers (VARs) mainly in the United States and Europe, and to a lesser extent, in Asia. Concentration of credit risk with respect to accounts 14 receivable is limited by credit limits, ongoing credit evaluation and account monitoring procedures. The Company performs ongoing credit evaluations of its customers and establishes an allowance for credit losses based upon a review of all significant outstanding invoices, historical collection experience, customer creditworthiness and current economic and market conditions. The Company elected to apply the practical expedient and assumed that current conditions as of the balance sheet date would not change for the remaining life of the assets. The Company writes off receivables when they are deemed uncollectible and having exhausted all collection efforts. Basic and Diluted Net Loss Per Share Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potentially dilutive securities, including stock options, restricted stock units, performance stock units and the shares related to the conversion of the 1.25% Convertible Senior Notes issued by the Company on May 11, 2020 and matured August 15, 2025 in an aggregate principal amount of $253,000 (the "2025 Notes") and the 1.00% Convertible Senior Notes issued by the Company on September 10, 2024 and due September 15, 2029 in an aggregate principal amount of $460,000 (the "2029 Notes" and, together with the 2025 Notes, the "Notes"), to the extent dilutive. Basic and diluted net loss per share were the same for each period presented as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive. There were 9,180,863 and 8,102,463 potentially dilutive shares from the conversion of outstanding stock options, restricted stock units and performance stock units that were not included in the calculation of diluted net loss per share for the periods ending June 30, 2026 and 2025, respectively. Additionally, 6,781,660 shares underlying the conversion option of the 2029 Notes for the period ending June 30, 2026, and 14,966,942 shares underlying the conversion option of the Notes for the period ending June 30, 2025, are not considered in the calculation of diluted net loss per share as the effect would be anti-dilutive. Contractual Purchase Obligations and Contingent Liabilities Contractual Purchase Obligations The Company has contractual minimum purchase commitments with service providers through August 31, 2027, October 31, 2028 and May 31, 2031, which includes $2,505 related to the October 31, 2028 commitment due within the next 12 months and $10,500, $2,567 and $377,620 (with no specified annual commitments), respectively, due thereafter. Contingent Liabilities The Company accounts for its contingent liabilities in accordance with ASC No. 450 “Contingencies.” A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. From time to time, the Company is involved in claims and litigation in the ordinary course of business. The Company investigates these claims as they arise and legal provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Although claims are inherently unpredictable, as of June 30, 2026 and December 31, 2025, the Company was not a party to any litigation that it believes will have a material adverse effect on the Company’s condensed consolidated balance sheets, results of operations or cash flows. On January 7, 2026, the Company and certain officers of the Company were named as defendants in a putative securities class action captioned, Molchanov v. Varonis Systems, Inc. et al., filed in the U.S. District Court for the Southern District of New York. The complaint alleged that defendants made misrepresentations or omissions in its public disclosures about the Company’s expected annual recurring revenue for fiscal year 2025 and the Company’s ability to convert existing self-hosted customers to its SaaS offering, between February 4, 2025 and July 29, 2025, in violation of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, and further alleged that certain officers are liable as control persons under Section 20(a) of the Exchange Act. On July 17, 2026, lead plaintiffs filed an amended complaint, which, among other things, extended the purported class period from the original complaint’s period of February 4, 2025 through October 28, 2025 to a period of February 4, 2025 through February 3, 2026 and adds additional alleged misrepresentations by defendants. The substantive allegations of the amended complaint remain substantially similar to the original complaint. The amended complaint seeks monetary damages. Pursuant to a stipulation and order entered by the court on June 4, 2026, defendants' motion to dismiss the amended complaint is due on or before September 15, 2026. The Company believes these claims are without merit and intends 15 to defend the action vigorously. At this early stage of the proceedings, the Company can neither predict the ultimate outcome of the litigation nor estimate any range of possible losses. On April 23, 2026, a shareholder derivative action was filed, purportedly on behalf of the Company, against the Company’s directors and certain officers captioned Daks vs. Faitelson, et al., in the U.S. District Court for the Southern District of New York. The complaint alleges claims asserting violations of Sections 10(b), 14(a) and 20(a) of the Exchange Act, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment and waste of corporate assets against all individual defendants, as well as a claim for contribution under Section 10(b) and Section 21(d) of the Exchange Act against certain officers, based on substantially the same events and disclosures that are the subject of the above-referenced putative securities class action. On June 3, 2026, the Court entered a stipulation and order staying this action pending the resolution of the motion to dismiss the purported securities class action, Molchanov v. Varonis Systems, Inc. et al., described above. At this early stage of the proceedings, the Company cannot predict the ultimate outcome of the litigation nor estimate any range of possible losses. Recently Issued Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses. The ASU requires, among other items, additional disaggregated disclosures in the notes to the financial statements for certain categories of expenses that are included in the consolidated statements of operations. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating the effect of adopting the ASU on its disclosures. In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40) - Targeted Improvements to the Accounting for Internal-Use Software. The ASU was updated to consider different methods of software development and requires internal use software costs to be capitalized when management has authorized and committed to funding the software project and when significant uncertainty associated with the development of the software has been resolved. The amendments in this ASU are required to be adopted for annual and interim reporting periods beginning after December 15, 2027, with early adoption permitted, and may be applied either through a prospective, retrospective or a modified transition approach. The Company is currently evaluating the effect of adopting the ASU on its consolidated financial statements. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) - Narrow-Scope Improvements. The ASU was updated to improve the navigability of the required interim disclosures within ASC No. 270 and to clarify when the guidance applies. This ASU is not intended to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements. The amendments in this ASU are required to be adopted for interim reporting periods beginning after December 15, 2027, with early adoption permitted, and may be applied either through a prospective or retrospective approach. The Company is currently evaluating the effect of adopting the ASU on its condensed consolidated financial statement disclosures. NOTE 2: FAIR VALUE MEASUREMENTS The Company evaluates assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level to classify them for each reporting period. There have been no transfers between fair value measurement levels during the periods presented. The carrying amounts of cash and cash equivalents, accounts receivable, short-term deposits and trade payables approximate their fair value due to the short-term maturity of such instruments. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis, whereby inputs used in valuation techniques are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value: •Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. •Level 2: Observable inputs that reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. 16 •Level 3: Unobservable inputs reflecting the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. The following table sets forth the Company’s assets and liabilities that were measured at fair value as of June 30, 2026 and December 31, 2025 by level within the fair value hierarchy (in thousands): As of June 30, 2026 As of December 31, 2025 (unaudited) Level I Level II Level III Level I Level II Level III Financial assets: Cash equivalents: Money market funds $ 165,885 $ — $ — $ 120,155 $ — $ — Marketable securities: US Treasury securities — 426,474 — — 681,225 — Prepaid expenses and other short-term assets: Forward foreign exchange contracts — 26,504 — — 21,605 — Long-term marketable securities: US Treasury securities — 213,260 — — 187,202 — Long-term other assets: Forward foreign exchange contracts — 4,645 — — 6,465 — Financial liabilities: Accrued expenses and other short-term liabilities: Forward foreign exchange contracts — (717) — — (2,515) — Long-term other liabilities: Forward foreign exchange contracts — (871) — — (1,691) — Total financial assets (liabilities), net $ 165,885 $ 669,295 $ — $ 120,155 $ 892,291 $ — See Note 4, "Business Combinations," for the estimated fair value of acquired net tangible and intangible assets and liabilities and Note 6, "Convertible Senior Notes and Capped Call Transactions," for the carrying amount and estimated fair value of the Company's 2029 Notes, as of June 30, 2026. Marketable securities and derivative instruments are classified within Level 2, as these assets are valued using alternative pricing sources utilizing market observable inputs. NOTE 3: LEASES The Company has various operating leases for office space and vehicles that expire through 2035. The lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. Some leases include one or more options to renew. The exercise of lease renewal options is typically at the Company's sole discretion; therefore, the majority of renewals to extend the lease terms are not included in the Company's right-of-use assets and lease liabilities, as they are not reasonably certain of exercise. The Company regularly evaluates the renewal options, and, when it is reasonably certain of exercise, it will include the renewal period in its lease term. Below is a summary of the Company's operating right-of-use assets and operating lease liabilities (in thousands): 17 June 30, 2026 (unaudited) Operating lease right-of-use assets $ 61,826 Operating lease liabilities, current $ 12,242 Operating lease liabilities, long-term 62,854 Total operating lease liabilities $ 75,096 Operating lease liabilities, current are included within accrued expenses and other short-term liabilities in the condensed consolidated balance sheets. Minimum lease payments for the Company's right-of-use assets over the remaining lease periods as of June 30, 2026, are as follows (in thousands): June 30, 2026 (unaudited) 2026 $ 7,856 2027 15,280 2028 11,550 2029 13,321 2030 12,345 Thereafter 27,532 Total undiscounted lease payments $ 87,884 Less: Imputed interest $ (12,788) Present value of lease liabilities $ 75,096 As of June 30, 2026, the Company has an additional operating lease that has not yet commenced of $511. This operating lease will commence in the third quarter of 2026, with a lease term of approximately two years. 18 NOTE 4: BUSINESS COMBINATIONS 2026 Business Combinations AllTrue.ai, Inc. ("AllTrue.ai") On February 6, 2026, the Company completed the acquisition of the share capital of AllTrue.ai, a provider of AI system security software that delivers real-time visibility and control over AI agents, models, and the data they access across the enterprise. Since the acquisition, the Company has launched Varonis Atlas, which is powered by AllTrue.ai, and is continuing to further integrate the technology into its platform. The acquisition was accounted for as a business combination in accordance with ASC No. 805, "Business Combinations." The transaction price was for $180,276 in cash and comprised of the fair value of total consideration transferred of $114,505 and aggregate conditional consideration consisting of an amount up to $40,000 that is conditional on the satisfaction of certain performance targets and employee service periods and an additional $25,771 that is primarily conditional on employee service. The conditional consideration is primarily recorded as research and development compensation expense within the condensed consolidated statements of operations. The total purchase price was preliminarily allocated using information currently available to the Company and may be subject to change as additional information is received during the respective measurement period, up to one year from the acquisition date. During the three months ended June 30, 2026, measurement period adjustments were recorded that increased the developed technology and customer relationship intangible assets and the related deferred tax liability by $2,250, $36 and $518, respectively, to primarily reflect adjustments from the filing of income tax returns for periods prior to the acquisition date. Additionally, working capital adjustments were recorded that increased the fair value of net tangible assets acquired by $32 and increased the total consideration transferred by $80, to reflect facts and circumstances that existed as of the acquisition date. These measurement period adjustments had a corresponding net decrease to goodwill of $1,720. The following table summarizes the preliminary allocation of the purchase price to the fair value of the tangible and intangible assets acquired and liabilities assumed as of the acquisition date (in thousands, except useful life): Purchase Price Allocation Estimated Weighted Average Useful Life (unaudited) (in years) Net tangible assets acquired $ 378 Deferred tax liability (9,652) Developed technology intangible asset 43,271 5 Customer relationship intangible asset 736 2 Goodwill 79,852 Total purchase price $ 114,585 The fair values of the developed technology and customer relationship intangible assets were estimated using the multi-period excess earnings method, which utilizes various assumptions including projected future revenue, projected profit margin, discount rate and useful life. The excess of the purchase price and liabilities assumed over the fair value of tangible and identifiable intangible assets acquired was recorded as goodwill. The Company believes the goodwill represents the synergies expected from expanded market opportunities when integrating the business with the Company's offerings. The goodwill is not expected to be deductible for income tax purposes. During the three and six months ended June 30, 2026, acquisition-related costs of $10 and $1,086, respectively, are included in general and administrative expenses in the condensed consolidated statements of operations. On the acquisition date, the Company considered the deferred tax impact of the excess fair value of the assets and liabilities accounted for in the business combination over their historical cost basis. The Company recognized $9,652 of a deferred tax liability which relates to the fair value of intangibles, other than goodwill and the fair value adjustments for the tangible assets acquired over their historical cost basis. The Company will file a consolidated tax return in the U.S. to utilize the benefit of the Company’s loss carryforwards against future taxable profit and consequently decreased its valuation allowance in an amount equal to the deferred tax liability recognized in the business combination. The unaudited pro forma results of operations related to this acquisition have not been disclosed, as they are immaterial to the Company's condensed consolidated financial statements. 19 2025 Business Combinations SlashNext, Inc. ("SlashNext") On August 28, 2025, the Company completed the acquisition of the share capital of SlashNext, an AI-native email security provider that detects advanced phishing and social engineering attacks, which, together with MDDR, has been integrated with the Company's technology platform. The acquisition was accounted for as a business combination in accordance with ASC No. 805, "Business Combinations." The transaction price was for $105,953 in cash and comprised of an initial fair value of total consideration transferred of $105,447 and an aggregate conditional consideration of $4,662, conditional on employee retention, along with the settlement of a $4,156 pre-existing relationship. The conditional consideration is recorded as research and development compensation expense in the condensed consolidated statements of operations. During the three and six months ended June 30, 2026, which is within the acquisition measurement period, working capital adjustments were recorded that reduced the amount of consideration transferred by $77 and $425, respectively, and adjusted the amount of net tangible assets (liabilities) and goodwill acquired to reflect facts and circumstances that existed as of the acquisition date. The allocation of the purchase price for the acquisition is not finalized as of June 30, 2026, and is subject to adjustment as the Company completes the valuation analysis of the acquisition. The following table summarizes the preliminary allocation of the purchase price to the fair value of the tangible and intangible assets acquired and liabilities assumed as of the acquisition date (in thousands, except useful life): Purchase Price Allocation Estimated Weighted Average Useful Life (unaudited) (in years) Net tangible assets (liabilities) acquired $ (2,158) Developed technology intangible asset 8,400 7 Customer relationship intangible asset 3,400 10 Goodwill 95,380 Total purchase price $ 105,022 The fair values of the developed technology and customer relationship intangible assets were estimated using the following methods, respectively (including various valuation assumptions): relief from royalty (projected future revenue generated from the acquired developed technology, royalty and discount rates and the technology obsolescence curve) and the multi-period excess earnings method (projected future revenue generated from the acquired customers, projected profit margin, discount rate and the customer survival curve). The excess of the purchase price and liabilities assumed over the fair value of tangible and identifiable intangible assets acquired was recorded as goodwill. The Company believes the goodwill represents the synergies expected from expanded market opportunities when integrating the business with the Company's offerings. The goodwill is not deductible for income tax purposes. During the three and six months ended June 30, 2026 and 2025, there were no acquisition-related costs recorded. NOTE 5: GOODWILL AND INTANGIBLE ASSETS Goodwill Goodwill represents the excess of the purchase price over the identifiable tangible and intangible assets acquired less liabilities assumed arising from business combinations. The Company believes the goodwill represents the synergies expected from expanded market opportunities when integrating with its offerings. The change in the carrying amount of goodwill during the six months ended June 30, 2026 is related to the AllTrue.ai and SlashNext acquisitions. For additional information regarding the acquisitions, see Note 4, "Business Combinations." The following table reflects goodwill activity for the six months ended June 30, 2026 (in thousands): 20 Amount (unaudited) Balance at December 31, 2025 $ 135,276 Goodwill acquired 79,806 Balance at June 30, 2026 $ 215,082 Intangible Assets, net The total cost and amortization of the Company's intangible assets for the period ended June 30, 2026 is comprised of the following (in thousands): June 30, 2026 (unaudited) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Developed technology $ 57,571 $ (5,292) $ 52,279 Customer relationship 4,136 (432) 3,704 Non-compete 40 (17) 23 Total $ 61,747 $ (5,741) $ 56,006 Intangible assets are expensed on a straight-line basis over the useful life of the asset. The Company recorded amortization expense of $2,876 and $4,688 for the three and six months ended June 30, 2026, respectively, and $170 and $196 for the three and six months ended June 30, 2025, respectively. The following table summarizes estimated future amortization expense of the Company's intangible assets as of June 30, 2026 (in thousands): Amount Years ending December 31, (unaudited) 2026 $ 5,616 2027 11,231 2028 10,890 2029 10,850 2030 10,850 Thereafter 6,569 Total future amortization expense $ 56,006 NOTE 6: CONVERTIBLE SENIOR NOTES AND CAPPED CALL TRANSACTIONS 2025 Notes The Company issued the 2025 Notes in an aggregate principal amount of $253,000 pursuant to an indenture dated May 11, 2020 (the “2025 Indenture”). The net proceeds to the Company after issuance costs were approximately $245,158. The Company used $29,348 of the net proceeds from the offering to pay the cost of the capped call transactions described below. The 2025 Notes were settled prior to or on their maturity date of August 15, 2025 in accordance with the terms of the 2025 Indenture. The unconverted principal of the 2025 Notes and the accrued interest due at maturity were settled in cash. 21 2029 Notes The Company issued the 2029 Notes pursuant to an indenture dated September 10, 2024 (the “2029 Indenture”). The offering totaled $460,000 aggregate principal amount. The net proceeds to the Company after issuance costs were approximately $449,649. The Company used $55,522 of the net proceeds from the offering to pay the cost of the capped call transactions described below. The 2029 Notes will mature on September 15, 2029, unless earlier converted, redeemed or repurchased. Interest will be payable semi-annually in arrears on March 15 and September 15 of each year, beginning on March 15, 2025, at a rate of 1.00% per year. The initial conversion rate for the 2029 Notes is 14.7419 shares of the Company’s common stock for each $1,000 principal amount of the 2029 Notes, which is equivalent to an initial conversion price of approximately $67.83 per share. The conversion rate is subject to adjustment in specified events. The 2029 Notes are convertible into shares of the Company’s common stock, at the option of a holder, prior to the close of business on the business day immediately preceding March 15, 2029, under certain conditions. In addition, on or after March 15, 2029, a holder may convert all or any portion of its 2029 Notes at any time. Upon conversion, the Company may elect to repay the 2029 Notes in cash, shares of common stock, or a combination of both. As of June 30, 2026, the 2029 Notes were classified as long-term in the Company's condensed consolidated balance sheets. Effective September 20, 2027, the Company may redeem the 2029 Notes for cash, at its option, subject to the terms and conditions provided in the 2029 Indenture. In accordance with ASC No. 470, "Debt," the Company accounts for the 2029 Notes as a single liability measured at amortized cost. The carrying value of the liability is represented by the face amount of the 2029 Notes, less debt issuance costs. The total offering costs upon issuance of the 2029 Notes are amortized as interest expense over the term of the 2029 Notes, using the effective interest rate method. The net carrying amount of the 2029 Notes was as follows (in thousands): June 30, 2026 December 31, 2025 Liability (unaudited) Principal $ 460,000 $ 460,000 Unamortized issuance costs (6,722) (7,741) Net carrying amount $ 453,278 $ 452,259 During the three and six months ended June 30, 2026, the effective interest rate for the 2029 Notes was 1.46%. During the three and six months ended June 30, 2025, the effective interest rate for the 2029 and 2025 Notes was 1.46% and 1.86%, respectively. The interest expense recognized related to the Notes during the three and six months ended June 30, 2026 and 2025 were as follows (in thousands): Three Months Ended June 30, 2026 2025 2025 Notes 2029 Notes Total 2025 Notes 2029 Notes Total (unaudited) Contractual interest expense $ — $ 1,150 $ 1,150 $ 786 $ 1,150 $ 1,936 Amortization of debt issuance costs — 509 509 386 501 887 Total $ — $ 1,659 $ 1,659 $ 1,172 $ 1,651 $ 2,823 22 Six Months Ended June 30, 2026 2025 2025 Notes 2029 Notes Total 2025 Notes 2029 Notes Total (unaudited) Contractual interest expense $ — $ 2,300 $ 2,300 $ 1,572 $ 2,300 $ 3,872 Amortization of debt issuance costs — 1,019 1,019 770 1,004 1,774 Total $ — $ 3,319 $ 3,319 $ 2,342 $ 3,304 $ 5,646 As of June 30, 2026 and December 31, 2025, the total estimated fair value of the 2029 Notes was approximately $445,258 and $429,028, respectively. The fair values were determined based on the closing trading price of the 2029 Notes as of the last day of trading for the period. The fair value of the 2029 Notes is primarily affected by the trading price of the Company's common stock and market interest rates. The fair value of the 2029 Notes is considered Level 2 within the fair value hierarchy and was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data. Capped Call Transactions In May 2020 and September 2024, in connection with the pricing of the 2025 and 2029 Notes, respectively, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”). The Capped Call Transactions are generally expected to reduce the potential dilution to the Company’s common stock upon any conversion of the Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap initially equal to $47.24 and $104.36, for the 2025 and 2029 Notes, respectively. The Capped Call Transactions are considered a freestanding instrument in accordance with ASC No. 480, "Distinguishing Liabilities from Equity," as they were entered into separately and apart from the Notes and since the conversion or redemption of the Notes does not automatically result in the exercise of the Capped Call Transactions. As the Capped Call Transactions are considered indexed to the Company's stock and are considered equity classified, they are recorded in stockholders’ equity in the condensed consolidated balance sheets and are not accounted for as derivatives. The cost of the Capped Call Transactions for the 2025 and 2029 Notes were approximately $29,348 and $55,522, respectively, and were recorded as a reduction to additional paid-in capital. During 2025, in connection with the maturity of the 2025 Notes, the capped call transactions entered into in May 2020 were exercised and net share settled. The Company received and subsequently retired 2,604,434 shares of its common stock. NOTE 7: STOCKHOLDERS’ EQUITY Stock Plans On November 14, 2013, the Company’s board of directors adopted the Varonis Systems, Inc. 2013 Omnibus Equity Incentive Plan (the “2013 Plan”) which was subsequently approved by the Company’s stockholders. The Company initially reserved 5,713,899 shares of common stock for issuance under the 2013 Plan to employees, directors, officers and consultants of the Company and its subsidiaries. Since January 1, 2016, the share reserve under the 2013 Plan has been automatically increased by an aggregate of 27,579,672 shares. Awards granted under the 2013 Plan generally vest over four years. No awards were granted under the 2013 Plan subsequent to June 5, 2023, and no further awards will be granted under the 2013 Plan. On October 22, 2020, and as part of the Polyrize Security Ltd. ("Polyrize") acquisition, the Company’s board of directors approved the assumption of a certain portion of Polyrize Options pursuant to the terms and conditions of the Polyrize 2019 Share Incentive (“Polyrize Plan”). No further awards were or will be granted under the Polyrize Plan. On April 20, 2023, the Company’s board of directors adopted the Varonis Systems, Inc. 2023 Omnibus Equity Incentive Plan (the “2023 Plan”), subject to approval by the Company's stockholders. On June 5, 2023, the Company’s stockholders approved the 2023 Plan which became effective and replaced the 2013 Plan. The Company initially reserved 5,500,000 shares of common stock for issuance under the 2023 Plan to employees, directors, officers and consultants of the Company and its subsidiaries. Since June 5, 2023, the Company’s stockholders have approved an additional 12,682,279 shares under the 2023 Plan, including the Company's stockholders approval that occurred on June 1, 2026 for an additional 6,402,279 shares. 23 Restricted Stock Units ("RSUs") and Performance Stock Units ("PSUs") A summary of RSUs and PSUs for employees, consultants and non-employee directors of the Company for the six months ended June 30, 2026 (unaudited) is as follows: Number of shares underlying outstanding RSUs and PSUs Weighted- average grant date fair value Unvested balance as of January 1, 2026 8,562,645 $ 38.60 Granted 4,288,929 $ 29.72 Vested (3,146,588) $ 36.26 Forfeited (524,168) $ 39.68 Unvested balance as of June 30, 2026 9,180,818 $ 37.59 As of June 30, 2026, there was $265,203 of total unrecognized compensation cost related to employees, consultants and non-employee directors unvested restricted stock units and performance stock units which is expected to be recognized over a weighted-average period of 2.686 years. Employee Stock Purchase Plans On May 5, 2015, the Company’s stockholders approved the Varonis Systems, Inc. 2015 Employee Stock Purchase Plan (the “2015 ESPP”), which the Company’s board of directors had adopted on March 19, 2015. The 2015 ESPP became effective as of June 30, 2015. The Company initially reserved 1,500,000 shares of common stock for issuance under the 2015 ESPP. The number of shares available for issuance under the 2015 ESPP was increased on January 1, 2016 and has been increased each January thereafter through January 1, 2025. Since January 1, 2016, the share reserve under the 2015 ESPP has been automatically increased by an aggregate of 4,321,921 shares. There will be no further offering periods under the 2015 ESPP. On June 5, 2025, the Company’s stockholders approved the Varonis Systems, Inc. 2025 Employee Stock Purchase Plan (the “2025 ESPP,” together with the 2015 ESPP, the "ESPP plans"), which the Company’s board of directors adopted on April 17, 2025. The Company initially reserved 8,000,000 shares of common stock for issuance under the 2025 ESPP. The 2025 ESPP will continue in effect until the earlier of (i) the date when no shares of common stock are available for issuance thereunder, or (ii) June 5, 2035; unless terminated prior thereto by the Company’s board of directors or compensation committee, each of which has the right to terminate the 2025 ESPP at any time. The ESPP plans allow eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, at not less than 85% of the fair market value of the Company’s common stock on the first day or last trading day in the offering period, subject to any plan limitations. Stock-based Compensation Expense The Company recognized stock-based compensation expense in the condensed consolidated statements of operations as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (unaudited) (unaudited) Cost of revenues $ 1,645 $ 1,475 $ 3,084 $ 2,979 Research and development 13,378 10,885 26,104 21,461 Sales and marketing 10,187 10,652 20,042 21,128 General and administrative 9,409 10,847 19,128 20,546 Total $ 34,619 $ 33,859 $ 68,358 $ 66,114 24 Share Repurchase Programs In February 2025, the Company's board of directors authorized a share repurchase program of up to $100,000 of the Company’s common stock (the “February 2025 Share Repurchase Program”). Under the February 2025 Share Repurchase Program, the Company was authorized to repurchase shares through open market purchases, privately-negotiated transactions or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act. The Company completed its February 2025 Share Repurchase Program in April 2025. During 2025, the Company repurchased and subsequently retired 2,480,341 shares under its February 2025 Share Repurchase Program, for a total of $100,000. In October 2025, the Company's board of directors authorized a share repurchase program of up to $150,000 of the Company’s common stock (the “October 2025 Share Repurchase Program”). Under the October 2025 Share Repurchase Program, the Company was authorized to repurchase shares through open market purchases, privately-negotiated transactions or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act. The Company completed its October 2025 Share Repurchase Program in March 2026. During 2026, the Company repurchased and subsequently retired 5,355,445 shares under its October 2025 Share Repurchase Program, for a total of $135,000. The cost of the share repurchase was partially offset by $2,900 of premiums received from options to repurchase common stock. During 2025, the Company repurchased and subsequently retired 448,439 shares under its October 2025 Share Repurchase Program, for a total of $15,000. NOTE 8: GEOGRAPHIC INFORMATION AND MAJOR CUSTOMER DATA ASC No. 280, “Segment Reporting,” establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance. The Company manages its business on the basis of one reportable segment and unit and derives revenues mainly from SaaS revenues, term license subscriptions and maintenance and services fees (see Note 1, "General," for a brief description of the Company’s business and revenue recognition). The CODM of the Company is the Chief Executive Officer. The CODM assesses the performance of the Company and decides how to allocate resources based upon consolidated net loss that is also reported within the condensed consolidated statements of operations. The measure of segment assets that is reviewed by the CODM is reported within the condensed consolidated balance sheets as consolidated total assets. The CODM uses consolidated net loss to monitor period-over-period results and decides where to allocate and invest additional resources within the business to continue growth. The following is a summary of the significant expense categories and consolidated net loss details provided to the CODM (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (unaudited) (unaudited) Total revenues $ 180,023 $ 152,163 $ 353,149 $ 288,586 Less: Stock-based compensation 34,619 33,859 68,358 66,114 Other segment items (*) 192,213 154,128 368,454 294,079 Net loss $ (46,809) $ (35,824) $ (83,663) $ (71,607) (*) Other segment expense items included within net loss include payroll, financial income (expense), net (inclusive of interest income of $8,945 and $19,068 for the three and six months ended June 30, 2026, respectively, and $12,354 and $25,399 for the three and six months ended June 30, 2025, respectively, and interest expense of $1,151 and $2,301 for the three and six months ended June 30, 2026, respectively, and $1,939 and $3,877 for the three and six months ended June 30, 2025, respectively,) marketing activities, overhead and depreciation ($4,304 and $6,847 for the three and six months ended June 30, 2026, respectively, and $2,400 and $4,792 for the three and six months ended June 30, 2025, respectively,) travel and entertainment, income taxes, information technology and communication, department activities, amortization of acquired intangibles and other 25 miscellaneous expenses. See the condensed consolidated financial statements for other financial information regarding the Company’s operating segment. The following is a summary of revenues within geographic areas (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (unaudited) (unaudited) Revenues based on customer’s location: United States $ 129,014 $ 108,656 $ 253,015 $ 201,942 EMEA 36,364 31,755 72,148 61,294 Rest of the World 14,645 11,752 27,986 25,350 Total revenues $ 180,023 $ 152,163 $ 353,149 $ 288,586 During the three and six months ended June 30, 2026 and 2025, there were no revenues to a single customer exceeding 10% of the Company's total revenues. The following is a summary of long-lived assets, including property and equipment, net and operating lease right-of-use assets, within geographic areas (in thousands): As of As of June 30, 2026 December 31, 2025 (unaudited) Long-lived assets by geographic region: Israel $ 50,732 $ 49,914 United States 43,777 33,112 Other 7,631 10,683 Total long-lived assets $ 102,140 $ 93,709 26