Multiple firms sue Varonis after 48% stock plunge

Hagens Berman and other plaintiff firms have filed securities class actions against Varonis Systems, citing the company’s Oct. 28, 2025 earnings shock that revealed a 63.9% year‑over‑year decline in term license revenue and preceded a roughly 48–49% one‑day share drop. Investors who bought Varonis stock between Feb. 4, 2025 and Oct. 28, 2025 have until March 9, 2026 to seek appointment as lead plaintiff in Molchanov v. Varonis Systems, Inc., Case No. 1:26‑cv‑00117 (S.D.N.Y.).

The complaints, filed on behalf of shareholders by multiple firms including Hagens Berman and Berger Montague, allege that Varonis and certain executives made false or misleading statements and omitted material information about the company’s ability to convert on‑premises customers to its SaaS offering. The suits contend management publicly portrayed the SaaS transition as de‑risked while concealing renewal softness in its Federal vertical and legacy on‑prem subscription business, leaving the company unable to sustain annual recurring revenue growth without unusually high conversion rates.

The litigation centers on the company’s third quarter 2025 disclosure. Plaintiff notices reproduce Varonis’ statement that it was “reducing our full‑year ARR guidance to account for the underperformance of [its] on‑prem subscription business,” and that the on‑premises subscription business had become a “drag on total company ARR growth,” citing “sales process issues” and a “lower renewal rate of on‑prem subscription[s].” Rgrdlaw reproduces a statement by CEO Yakov Faitelson attributing the shortfall to the “final weeks of the quarter” when Varonis “experienced lower renewals in the Federal vertical and in our non‑Federal on‑prem subscription business, which led to a shortfall relative to our expectations.” Notices also say Varonis announced end‑of‑life for its self‑hosted solution and a 5% reduction in headcount.

Market fallout was immediate. Berger Montague and investor notices show the stock closed at $63.00 on Oct. 28, 2025 and plunged to $32.34 on Oct. 29, 2025, a $30.66 per share decline. Hagens Berman described the move as a 48% single‑day crash that wiped out approximately $3.8 billion in market value. Ktmc calculated the drop as 48.67%, while other filings describe it as nearly 49%. The complaints identify that day as the corrective event that revealed the alleged misstatements to the market.

Plaintiff firms urge affected investors to consider joining the litigation and to move by the March 9 lead plaintiff deadline. Hagens Berman posted a case page and said the firm’s investigation “focuses on the alleged contrast between Varonis’s claims of being ‘well on our way’ to a SaaS future and the alleged reality of a struggling Federal renewal cycle,” said Reed Kathrein, the partner leading the investigation.

The lawsuits add legal and financial uncertainty for Varonis as it pursues strategic moves including a reported purchase of AllTrue.ai for $125 million in cash to bolster AI trust and security capabilities. Plaintiffs frame the dispute around execution risk in the SaaS transition, a challenge made sharper by competition from larger security vendors pushing cloud platforms. Potential outcomes include settlement costs, prolonged litigation and management distraction while the company works to stabilize ARR growth and integration plans.

Investors seeking lead plaintiff status or more information are directed to contact the law firms handling the notices before the March 9 deadline.