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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
 
FORM 10-Q
____________________
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2023
 
or
 
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                      to                     
 
Commission File Number: 001-36324
____________________
VARONIS SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
____________________
 
Delaware57-1222280
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
1250 Broadway, 28th FloorNew YorkNY10001
(Address of principal executive offices)(Zip Code)
(877) 292-8767
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareVRNSThe NASDAQ Stock Market LLC
____________________
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ý  Yes    ¨  No




Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ý  Yes    ¨  No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filerýAccelerated filer¨
    
Non-accelerated filer¨ Smaller reporting company☐
    
  Emerging growth company☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      ☐
Yes    ý  No
 
As of October 27, 2023, there were 108,953,058 shares of common stock, par value $0.001 per share, outstanding.

 



TABLE OF CONTENTS
   
  
  
  
  
  
   
   
   
  
   
   
   
  
  



PART I.FINANCIAL INFORMATION

Item 1.Financial Statements

VARONIS SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 September 30, 2023December 31, 2022
 (unaudited)
Assets  
Current assets:  
Cash and cash equivalents$111,196 $367,800 
Marketable securities337,705 236,338 
Short-term deposits76,186 128,350 
Trade receivables (net of allowances of $3,517 and $3,453 at September 30, 2023 and December 31, 2022, respectively)
111,084 135,979 
Prepaid expenses and other current assets49,911 37,190 
Total current assets686,082 905,657 
Long-term assets:  
Long-term marketable securities206,440 — 
Operating lease right-of-use asset52,679 56,772 
Property and equipment, net34,396 39,043 
Intangible assets, net1,644 2,788 
Goodwill23,135 23,135 
Other assets16,333 16,337 
Total long-term assets334,627 138,075 
Total assets$1,020,709 $1,043,732 
Liabilities and stockholders’ equity  
Current liabilities:  
Trade payables$1,328 $2,962 
Accrued expenses and other short-term liabilities119,780 115,231 
Deferred revenues145,453 110,550 
Total current liabilities266,561 228,743 
Long-term liabilities:  
Convertible senior notes, net250,096 248,963 
Operating lease liabilities51,433 57,627 
Deferred revenues155 1,503 
Other liabilities7,891 4,771 
Total long-term liabilities309,575 312,864 
Stockholders’ equity:  
Share capital  
1

Common stock of $0.001 par value - Authorized: 200,000,000 shares at September 30, 2023 and December 31, 2022; Issued and outstanding: 108,953,058 shares at September 30, 2023 and 107,673,052 shares at December 31, 2022
109 108 
Accumulated other comprehensive loss(23,120)(9,557)
Additional paid-in capital1,111,076 1,055,048 
Accumulated deficit(643,492)(543,474)
Total stockholders’ equity444,573 502,125 
Total liabilities and stockholders’ equity$1,020,709 $1,043,732 
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
September 30,		Nine Months Ended
September 30,
 2023202220232022
Revenues:    
Subscriptions$97,679 $96,052 $271,743 $249,417 
Maintenance and services24,629 27,256 73,318 81,600 
Total revenues122,308 123,308 345,061 331,017 
Cost of revenues17,381 17,198 52,404 52,806 
Gross profit104,927 106,110 292,657 278,211 
Operating expenses:  
Research and development44,818 44,478 135,694 132,863 
Sales and marketing68,610 69,810 207,324 203,311 
General and administrative20,646 17,404 61,618 53,272 
Total operating expenses134,074 131,692 404,636 389,446 
Operating loss(29,147)(25,582)(111,979)(111,235)
Financial income, net8,634 2,431 24,872 6,143 
Loss before income taxes(20,513)(23,151)(87,107)(105,092)
Income taxes(2,504)(5,566)(12,911)(8,678)
Net loss$(23,017)$(28,717)$(100,018)$(113,770)
Net loss per share of common stock, basic and diluted$(0.21)$(0.26)$(0.92)$(1.04)
Weighted average number of shares used in computing net loss per share of common stock, basic and diluted109,429,722 109,996,589 109,187,063 109,303,835 
 
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
September 30,		Nine Months Ended
September 30,
 2023202220232022
Net loss$(23,017)$(28,717)$(100,018)$(113,770)
Other comprehensive loss:
Unrealized loss on marketable securities, net of tax(66)(11)(562)(33)
Income on marketable securities reclassified into earnings, net of tax6 13 11 16 
(60)2 (551)(17)
Unrealized loss on derivative instruments, net of tax(1,495)(5,952)(3,516)(19,808)
Loss (income) on derivative instruments reclassified into earnings, net of tax(3,546)1,512 (9,496)1,385 
(5,041)(4,440)(13,012)(18,423)
Total other comprehensive loss(5,101)(4,438)(13,563)(18,440)
Comprehensive loss$(28,118)$(33,155)$(113,581)$(132,210)

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 stockAdditional
paid-in capital		Accumulated
other
comprehensive income (loss)		Accumulated deficitTotal
stockholders’ equity
 NumberAmount
Balance as of December 31, 2021107,509,096 $108 $1,018,005 $6,083 $(427,603)$596,593 
Effect of adoption of ASU 2020-06— — (30,794)— 8,647 (22,147)
Stock-based compensation expense— — 35,998 — — 35,998 
Common stock issued under employee stock plans2,057,101 2 6,109 — — 6,111 
Taxes paid related to net share settlement of equity awards— — (28,825)— — (28,825)
Unrealized loss on derivative instruments, net of tax— — — (3,179)— (3,179)
Unrealized loss on available for sale securities, net of tax— — — (10)— (10)
Net loss— — — — (48,763)(48,763)
Balance as of March 31, 2022109,566,197 $110 $1,000,493 $2,894 $(467,719)$535,778 
Stock-based compensation expense— — 37,758 — — 37,758 
Common stock issued under employee stock plans320,000 — 5 — — 5 
Taxes paid related to net share settlement of equity awards— — (6)— — (6)
Unrealized loss on derivative instruments, net of tax— — — (10,804)— (10,804)
Unrealized loss on available for sale securities, net of tax— — — (9)— (9)
Net loss— — — — (36,290)(36,290)
Balance as of June 30, 2022109,886,197 $110 $1,038,250 $(7,919)$(504,009)$526,432 
Stock-based compensation expense— — 34,300 — — 34,300 
Common stock issued under employee stock plans327,659 — 5,393 — — 5,393 
Taxes paid related to net share settlement of equity awards— — (663)— — (663)
Unrealized loss on derivative instruments, net of tax— — — (4,440)— (4,440)
Unrealized income on available for sale securities, net of tax— — — 2 — 2 
Net loss— — — — (28,717)(28,717)
Balance as of September 30, 2022110,213,856 $110 $1,077,280 $(12,357)$(532,726)$532,307 

The accompanying notes are an integral part of these condensed consolidated financial statements.








5

 Common stockAdditional
paid-in capital		Accumulated
other
comprehensive income (loss)		Accumulated deficitTotal
stockholders’ equity
 NumberAmount
Balance as of December 31, 2022107,673,052 $108 $1,055,048 $(9,557)$(543,474)$502,125 
Stock-based compensation expense— — 35,811 — — 35,811 
Common stock issued under employee stock plans2,218,811 2 5,851 — — 5,853 
Taxes paid related to net share settlement of equity awards— — (16,864)— — (16,864)
Repurchase of common stock(100,000)— (2,519)— — (2,519)
Unrealized loss on derivative instruments, net of tax— — — (4,980)— (4,980)
Unrealized income on available for sale securities, net of tax— — — 156 — 156 
Net loss— — — — (38,304)(38,304)
Balance as of March 31, 2023109,791,863 $110 $1,077,327 $(14,381)$(581,778)$481,278 
Stock-based compensation expense— — 39,385 — — 39,385 
Common stock issued under employee stock plans233,974 — 36 — — 36 
Taxes paid related to net share settlement of equity awards— — (2,575)— — (2,575)
Repurchase of common stock(207,278)— (5,080)— — (5,080)
Unrealized loss on derivative instruments, net of tax— — — (2,991)— (2,991)
Unrealized loss on available for sale securities, net of tax— — — (647)— (647)
Net loss— — — — (38,697)(38,697)
Balance as of June 30, 2023109,818,559 $110 $1,109,093 $(18,019)$(620,475)$470,709 
Stock-based compensation expense— — 32,980 — — 32,980 
Common stock issued under employee stock plans327,868 — 5,457 — — 5,457 
Taxes paid related to net share settlement of equity awards— — (532)— — (532)
Repurchase of common stock(1,193,369)(1)(35,922)— — (35,923)
Unrealized loss on derivative instruments, net of tax— — — (5,041)— (5,041)
Unrealized loss on available for sale securities, net of tax— — — (60)— (60)
Net loss— — — — (23,017)(23,017)
Balance as of September 30, 2023108,953,058 $109 $1,111,076 $(23,120)$(643,492)$444,573 

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)
 Nine Months Ended
September 30,
 20232022
Cash flows from operating activities:  
Net loss$(100,018)$(113,770)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization8,736 8,125 
Stock-based compensation108,176 108,056 
Amortization of deferred commissions17,547 17,198 
Noncash operating lease costs7,087 6,974 
Amortization of debt issuance costs1,133 1,113 
Amortization of premium and accretion of discount on marketable securities (5,557)— 
Gain from sale of property and equipment— (21)
Changes in assets and liabilities:  
Trade receivables24,895 25,494 
Prepaid expenses and other current assets(11,118)(5,236)
Deferred commissions(18,338)(17,510)
Other long-term assets(963)1,338 
Trade payables(1,634)665 
Accrued expenses and other short-term liabilities(17,652)(17,125)
Deferred revenues33,555 (10,472)
Other long-term liabilities3,120 3,608 
Net cash provided by operating activities48,969 8,437 
Cash flows from investing activities:  
Proceeds from sales and maturities of marketable securities28,850 32,800 
Investment in marketable securities(331,651)(58,052)
Proceeds from short-term and long-term deposits170,925 6,882 
Investment in short-term and long-term deposits(118,605)(15,985)
Proceeds from sale of property and equipment— 21 
Purchases of property and equipment(2,945)(7,634)
Net cash used in investing activities(253,426)(41,968)
Cash flows from financing activities:  
Proceeds from employee stock plans11,346 11,509 
Taxes paid related to net share settlement of equity awards(19,971)(29,494)
Repurchase of common stock(43,522)— 
Net cash used in financing activities(52,147)(17,985)
Decrease in cash and cash equivalents(256,604)(51,516)
Cash and cash equivalents at beginning of period367,800 805,761 
Cash and cash equivalents at end of period$111,196 $754,245 
Supplemental disclosure of cash flow information:  
Cash paid for income taxes$6,231 $2,267 
Cash paid for interest$3,195 $3,166 
7

Supplemental disclosure of non-cash activities:
Lease liabilities arising from obtaining right-of-use assets$1,945 $1,614 

The accompanying notes are an integral part of these condensed consolidated financial statements.
8

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1:     GENERAL
a.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 twelve wholly-owned subsidiaries.
 
The Company's software specializes in data protection, threat detection and response, data privacy and compliance. Varonis software enables enterprises of all sizes and industries to protect data stored on-premises and in the cloud including: sensitive files and emails; confidential personal data belonging to customers, patients and employees; financial records; source code, strategic and product plans; and other intellectual property. Recognizing the complexities of securing data, the Company has built an integrated platform for security and analytics to simplify and streamline security and data management.

The Company offers coverage for more than 40 of the most mission-critical on-premises and cloud data stores and applications. Over the last two years, the Company began to offer Software-as-a-Service ("SaaS") solutions to its customers, including its (i) flagship Data Security Platform as a SaaS that was previously only sold as a self-hosted solution, which offers simpler deployment, faster time-to-value, and groundbreaking new automation capabilities, (ii) DatAdvantage Cloud hosted solution that centrally monitors and protects data across multiple cloud data stores, SaaS applications and Infrastructure-as-a-Service ("IaaS") environments and (iii) Data Classification Cloud to help automatically identify sensitive information.

The Varonis Data Security Platform helps enterprises protect data against cyberattacks from both external and internal threats. The Company's products enable enterprises to analyze data, application and account activity and user behavior to detect and prevent attacks. Its software platform prevents or limits unauthorized use of sensitive information, detects and prevents potential cyberattacks and limits potential damage by automatically locking down data, allowing access to only those who need it and automating the removal of stale data when it is no longer useful. The Company's products efficiently sustain a secure state with automation and address additional important use cases including data protection, data governance, Zero Trust, compliance, data privacy, classification and threat detection and response. The Varonis Data Security Platform is driven by a proprietary technology, our Metadata Framework, that extracts critical metadata, or data about data, from an enterprise’s information technology ("IT") infrastructure. The Varonis Data Security Platform uses this contextual information to map functional relationships among employees, data objects, systems, content and usage. In doing so, the platform provides real-time intelligence about an enterprise’s massive volumes of data, making it more secure, accessible and manageable.

b.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, except as otherwise indicated) 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 financial statements and accompanying notes should be read in conjunction with the 2022 consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2022 filed with the SEC on February 7, 2023 (the “2022 Form 10-K”). 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, 2022 included in the 2022 Form 10-K, unless otherwise stated.

c.Revenue Recognition:

The Company generates revenues primarily in the form of subscription licenses, SaaS revenues and maintenance and services fees. Subscription license 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. In the second half of 2021, the Company launched its first SaaS offering, introducing new products and
9

support for cloud applications and infrastructure. On October 31, 2022, the Company announced the availability of the Varonis Data Security Platform as a SaaS, which was previously only sold as a self-hosted solution. Maintenance and services primarily consist of fees for maintenance of past perpetual license sales (including support and unspecified upgrades and enhancements when and if they are available) and to a lesser extent professional services, which focus on both operationalizing the software and training its customers to fully leverage the use of the Company's products, although the user can benefit from the software without our assistance. The Company sells its products worldwide to a network of distributors and value-added resellers, and payment is typically due within 30 to 60 calendar days of the invoice date.

The Company recognizes revenues in accordance with ASC No. 606, “Revenue from Contracts with Customers.” As such, the Company identifies a contract with a customer, identifies the performance obligations in the contract, determines the transaction price, allocates the transaction price to each performance obligation in the contract and recognizes revenues when (or as) the Company satisfies a performance obligation.

Subscription software that is sold on-premises is recognized at the point of time when the software license has been delivered and the benefit of the asset has transferred. Maintenance associated with subscription licenses is recognized ratably over the term of the agreement and is included within the subscriptions line of the condensed consolidated statements of operations. The Company's SaaS offerings allow customers to use hosted software, and its revenue is recognized ratably over the associated contract period. Conversions from a license sold on-premises to the Company’s SaaS offering are accounted for on a pro-rata prospective basis.

The Company recognizes revenues from maintenance agreements ratably over the term of the underlying maintenance contract. The term of the maintenance contract is usually one year. Renewals of maintenance contracts create new performance obligations that are satisfied over the new term with the revenues recognized ratably over the period.

Revenues from professional services consist mostly of time and material services. The performance obligations are satisfied, and revenues are recognized, when the services are provided or once the service term has expired.

The Company enters into contracts that can include combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. The license is distinct upon delivery as the customer can derive the economic benefit of the software without any professional services, updates or technical support. The Company allocates the transaction price to each performance obligation based on its relative standalone selling price out of the total consideration of the contract. For maintenance, the Company determines the standalone selling prices based on the price at which it separately sells a renewal contract. For professional services, the Company determines the standalone selling prices based on the price at which it separately sells those services. For software licenses, the Company uses the residual approach to determine the standalone selling prices due to the lack of history of selling software license on a standalone basis and the highly variable sales price.

Trade receivables are generally recorded at the invoice amount mostly for a one-year period, net of an allowance for credit losses.

Deferred revenues represent mostly unrecognized fees billed or collected for maintenance and SaaS. Deferred revenues are recognized as (or when) the Company performs under the contract. Pursuant to these contracts, customers are not invoiced for subsequent years until the annual renewal occurs. The amount of revenues recognized in the period that was included in the opening deferred revenues balance was $96,719 for the nine months ended September 30, 2023.

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. The Company's remaining performance obligations were $259,574 as of September 30, 2023, of which it expects to recognize approximately 62% as revenue over the next 12 months and the remainder thereafter.

The Company does not grant a right of return to its customers, except for one of its resellers. In 2022 and for the nine months ended September 30, 2023, there were no returns from this reseller.

For information regarding disaggregated revenues, refer to Note 7.

d.Contract Costs:
10


The Company pays sales commissions to sales and marketing and certain management personnel based on their attainment of certain predetermined sales goals. Sales commissions earned by employees are considered incremental and recoverable costs of obtaining a contract with a customer. 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. Sales commissions for renewal contracts are capitalized and then amortized on a straight-line basis. Amortization expenses related to these costs are included in sales and marketing expenses in the accompanying condensed consolidated statements of operations.

e.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 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 expenditures are transacted in U.S. dollars. However, certain operating expenditures are incurred in or exposed to other currencies, primarily the New Israeli Shekel (“NIS”).

The Company has established forecasted transaction currency risk management programs to protect against fluctuations in fair value and 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 12 months. Over the last several quarters, the Company has closed forward foreign exchange contracts beyond 12 months to capitalize on more favorable rates. In addition, the Company enters into forward contracts to hedge a portion of its monetary items in the balance sheet, such as trade receivables and payables, denominated in Euro and Pound Sterling for short-term periods (the “Fair Value Hedging Program”). The purpose of the Fair Value Hedging Program is to protect the fair value of the monetary assets from foreign exchange rate fluctuations. Gains and losses from derivatives related to the Fair Value Hedging Program are not designated as hedging instruments. The Company does not enter into derivative financial instruments for trading or speculative purposes.

Derivative instruments measured at fair value and their classification on the condensed consolidated balance sheets are presented in the following table (in thousands):
 
 Assets (liabilities) as of September 30, 2023 (unaudited)Liabilities as of December 31, 2022
 Notional
Amount		Fair
Value		Notional
Amount		Fair
Value
Foreign exchange forward contract derivatives in cash flow hedging relationships included in prepaid expenses and other current assets$63,611 $300 $— $— 
Foreign exchange forward contract derivatives in cash flow hedging relationships included in accrued expenses and other short-term liabilities$72,445 $(8,931)$136,426 $(7,221)
Foreign exchange forward contract derivatives in cash flow hedging relationships included in long-term other assets$32,104 $83 $— $— 
Foreign exchange forward contract derivatives in cash flow hedging relationships included in long-term other liabilities$135,449 $(4,788)$107,210 $(2,060)
Foreign exchange forward contract derivatives for monetary items included in prepaid expenses and other current assets$3,249 $3 $— $— 
Foreign exchange forward contract derivatives for monetary items included in accrued expenses and other short-term liabilities$16,418 $(40)$32,066 $(226)
 
The unaudited condensed consolidated statements of operations reflect a loss of $3,546 and $9,496 for the three and nine months ended September 30, 2023, respectively, related to the effective portion of the cash flow hedges and a loss of $1,512 and $1,385 for the three and nine months ended September 30, 2022, respectively. No material ineffective hedges were recognized for the three and nine months ended September 30, 2023 and 2022 in operating expenses in the unaudited condensed consolidated statement of operations.

11

For the three and nine months ended September 30, 2023, the unaudited condensed consolidated statements of operations reflect a gain of $584 and $429, respectively, in financial income, net, related to the Fair Value Hedging Program. For the three and nine months ended September 30, 2022, the unaudited condensed consolidated statements of operations reflect a gain of $928 and $3,488, respectively, in financial income, net, related to the Fair Value Hedging Program.

f.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.

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 nine months ended September 30, 2023 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 2023 annual effective rate differs from the U.S. statutory rate primarily due to R&D capitalization under the terms of Section 174 and utilization of carry forward net operating loss (“NOL”) and research and development tax credits resulting in an increase to current provision expense without an offset to deferred expense as the Company remains in a valuation allowance on its U.S. deferred tax assets. For the three months ended September 30, 2023 and 2022, the Company recorded income tax expense of $2,504 and $5,566, respectively, and $12,911 and $8,678 for the nine months ended September 30, 2023 and 2022, respectively.

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 make 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 September 30, 2023, 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 assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes.

g.
Cash, Cash Equivalents, Marketable Securities and Short-Term Investments:   
 
The Company accounts for investments in marketable securities in accordance with ASC No. 320, “Investments—Debt and Equity 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 purchased with original maturities at the date of purchase greater than three months but less than one year to be short-term. Investments purchased with original maturities at the date of purchase greater than one year are classified as long-term assets. Marketable securities are classified as available for sale and are, therefore, recorded at fair value on the condensed consolidated balance sheet, with any unrealized gains and losses reported in accumulated other comprehensive income, which is reflected as a separate component of stockholders’ equity in the Company’s condensed consolidated balance sheets, until realized. The Company uses the specific identification method to compute gains and losses on
12

the investments. 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, net in the condensed consolidated statement of operations. Cash, cash equivalents, marketable securities and deposits consist of the following (in thousands):
 
 As of September 30, 2023
(unaudited)
 Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized Losses		Fair
Value
Cash equivalents    
Money market funds$41,709 $— $— $41,709 
Total$41,709 $— $— $41,709 
Marketable securities
US Treasury securities$267,237 $— $(363)$266,874 
US Government Agency securities55,995 — (101)55,894 
Commercial paper10,458 — (7)10,451 
Corporate bonds4,489 — (3)4,486 
Total$338,179 $— $(474)$337,705 
Short-term deposits
Term bank deposits$76,186 $— $— $76,186 
Total$76,186 $— $— $76,186 
Long-term marketable securities
US Treasury securities$196,829 $— $(335)$196,494 
US Government Agency securities9,965 — (19)9,946 
Total$206,794 $— $(354)$206,440 


 As of December 31, 2022
 Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized Losses		Fair
Value
Cash equivalents    
Money market funds$278,022 $— $— $278,022 
Total$278,022 $— $— $278,022 
Marketable securities
US Treasury securities$159,165 $2 $(211)$158,956 
US Government Agency securities55,967 5 (72)55,900 
Commercial paper13,679 — — 13,679 
Corporate bonds7,804 4 (5)7,803 
Total$236,615 $11 $(288)$236,338 
Short-term deposits
Term bank deposits$128,350 $— $— $128,350 
Total$128,350 $— $— $128,350 
13

 
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 September 30, 2023 and December 31, 2022.

The gross unrealized gains and losses related to these investments were due primarily to changes in interest rates. Available for sale debt securities with an amortized cost basis in excess of estimated fair value 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, net on the condensed consolidated statements of operations. As of September 30, 2023 and December 31, 2022, the Company did not recognize an allowance for credit losses on available for sale marketable securities.

h.Revolving Credit Facility:

On August 21, 2020, the Company entered into a credit and security agreement with KeyBank National Association (the “Credit and Security Agreement”), for a three-year secured revolving credit facility of $70,000 (the “Credit Facility”). The Credit Facility matured on August 21, 2023 and was not subsequently renewed. The fees incurred in connection with entering into the Credit and Security Agreement were amortized on a straight-line basis over the contractual term of the arrangement. Fees and interest paid were expensed as incurred and included within financial income, net on the condensed consolidated statement of operations.

i.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 due August 2025 in an aggregate principal amount of $253,000 (the "2025 Notes"), to the extent dilutive.
 
Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive. There were 9,012,612 and 8,815,124 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 period ending September 30, 2023 and 2022, respectively. Additionally, 8,239,254 shares underlying the conversion option of the 2025 Notes are not considered in the calculation of diluted net loss per share as the effect would be anti-dilutive for the period ending September 30, 2023 and 2022, respectively.

j.Recently Issued Accounting Pronouncements Not Yet Adopted:

The Company has reviewed recent accounting pronouncements and concluded that they are either not applicable to its business or that no material effect is expected on the condensed consolidated financial statements as a result of their future adoption.

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 measurements levels during the three months ended September 30, 2023. The carrying amounts of cash and cash equivalents, marketable securities, trade receivables, 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.
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•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.
•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 September 30, 2023 and December 31, 2022 by level within the fair value hierarchy (in thousands):
 
As of September 30, 2023
 (unaudited)As of December 31, 2022
 Level ILevel
II		Level IIITotalLevel ILevel
II		Level IIITotal
Financial assets:
Cash equivalents:
Money market funds$41,709 $— $— $41,709 $278,022 $— $— $278,022 
Marketable securities:
US Treasury securities266,874 — — 266,874 158,956 — — 158,956 
US Government Agency securities55,894 — — 55,894 55,900 — — 55,900 
Commercial paper— 10,451 — 10,451 — 13,679 — 13,679 
Corporate bonds— 4,486 — 4,486 — 7,803 — 7,803 
Prepaid expenses and other current assets:
Forward foreign exchange contracts— 303 — 303 — — — — 
Long-term marketable securities:
US Treasury securities196,494 — — 196,494 — — — — 
US Government Agency securities9,946 — — 9,946 — — — — 
Long-term other assets:
Forward foreign exchange contracts— 83 — 83 — — — — 
Financial liabilities:
Accrued expenses and other short-term liabilities:
Forward foreign exchange contracts— (8,971)— (8,971)— (7,447)— (7,447)
Long-term other liabilities:
Forward foreign exchange contracts— (4,788)— (4,788)— (2,060)— (2,060)
Total financial assets (liabilities), net$570,917 $1,564 $— $572,481 $492,878 $11,975 $— $504,853 

See Note 5 “Convertible Senior Notes and Capped Call Transactions” for the carrying amount and estimated fair value of the Company's 2025 Notes as of September 30, 2023.

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NOTE 3:    LEASES

The Company has various operating leases for office space, vehicles and office equipment that expire through 2032. The lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. Below is a summary of the Company's operating right-of-use assets and operating lease liabilities (in thousands):
September 30, 2023
(unaudited)
Operating right-of-use assets$52,679 
Operating lease liabilities, current$(9,581)
Operating lease liabilities, long-term(51,433)
Total operating lease liabilities$(61,014)

Operating lease liabilities, current are included within accrued expenses and other short-term liabilities in the condensed consolidated balance sheet.

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 our 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. Lease modifications result in remeasurement of the right-of-use asset and lease liabilities.

Some of the real estate leases contain variable lease payments, including payments based on a Consumer Price Index ("CPI"). Variable lease payments based on a CPI are initially measured using the index in effect at lease adoption. Additional payments based on the change in a CPI are recorded as a period expense when incurred.

The Company has deposit guarantees issued by a financial institution to secure various operating lease agreements in connection with its office space.

Minimum lease payments for the Company's right-of-use assets over the remaining lease periods as of September 30, 2023, are as follows (in thousands):
September 30, 2023
 (unaudited)
2023$2,863 
202411,169 
202510,234 
20269,272 
20279,478 
Thereafter23,483 
Total undiscounted lease payments$66,499 
Less: Imputed interest(5,485)
Present value of lease liabilities$61,014 

The weighted average remaining lease terms and discount rates for all operating leases were as follows as of September 30, 2023:
Remaining lease term and discount rate:
Weighted average remaining lease term (years)6.65
Weighted average discount rate2.85 %

16

Total operating lease cost for the three and nine months ended September 30, 2023 was $2,530 and $7,232, respectively, inclusive of sublease income of $435 and $1,336, respectively. Total operating lease cost for the three and nine months ended September 30, 2022 was $2,386 and $6,986, respectively, inclusive of sublease income of $184 and $482, respectively.

NOTE 4:    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.

There were no additions, impairments or any other changes to the carrying amount of goodwill during the three and nine months ended September 30, 2023 or during prior periods.

Intangible Assets

Total cost and amortization of intangible assets is comprised of the following (in thousands, except useful life):
Estimated Useful LifeSeptember 30, 2023
Intangible assets, net(in years)(unaudited)
Developed technology & trademarks4$6,110 
Total intangible assets6,110 
Less: Accumulated amortization4,466 
Total intangible assets, net$1,644 

Intangible assets are expensed on a straight-line basis over the useful life of the asset. The Company recorded amortization expense of $382 and $1,144 for the three and nine months ended September 30, 2023 and 2022, respectively.

The following table summarizes estimated future amortization expense of our intangible assets as of September 30, 2023 (in thousands):
Years ending December 31,Amount
(unaudited)
2023$381 
20241,263 
Total future amortization expense$1,644 

NOTE 5:    CONVERTIBLE SENIOR NOTES AND CAPPED CALL TRANSACTIONS

On May 11, 2020, the Company issued the 2025 Notes pursuant to an Indenture dated May 11, 2020 (the “Indenture”). The offering totaled $253,000 aggregate principal amount. The net proceeds to the Company after the initial purchaser discount and 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 will mature on August 15, 2025, unless earlier converted, redeemed or repurchased. Interest will be payable semi-annually in arrears on February 15 and August 15 of each year, at a rate of 1.25% per year.

The initial conversion rate for the 2025 Notes is 32.5668 shares of the Company’s common stock for each $1,000 principal amount of the 2025 Notes, which is equivalent to an initial conversion price of approximately $30.71 per share. The conversion rate is subject to adjustment in specified events. The 2025 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 February 15, 2025, under certain conditions. In addition, on or after February 15, 2025, a holder may convert all or any portion of its 2025 Notes at any time.

The 2025 Notes are not redeemable at the Company’s option prior to August 20, 2023. On or after August 20, 2023, the Company may redeem the 2025 Notes for cash, at its option, subject to the terms and conditions provided in the Indenture.
17


Prior to the adoption of ASU 2020-06 on January 1, 2022, the Company separated the 2025 Notes into liability and equity components. Following the adoption of ASU 2020-06 on January 1, 2022, which the Company elected to adopt using a modified retrospective approach, the Company no longer separates the 2025 Notes into liability and equity components. The cumulative effect of the accounting change as of January 1, 2022 was a decrease to accumulated deficit of $8,647, a decrease in additional paid-in capital of $30,794 and an increase in liabilities of $22,147 on its condensed consolidated balance sheets. Comparative prior year periods were not adjusted. In connection with the adoption, the Company calculated an effective interest rate of 1.87%.

The net carrying amount of the 2025 Notes was as follows (in thousands):
September 30, 2023December 31, 2022
(unaudited)
Principal$253,000 $253,000 
Unamortized issuance costs(2,904)(4,037)
Net carrying amount$250,096 $248,963 

The interest expense recognized related to the 2025 Notes for the three and nine months ended September 30, 2023 and 2022 was as follows (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
(unaudited)
(unaudited)
Contractual interest expense$791 $791 $2,372 $2,372 
Amortization of debt issuance costs379 372 1,133 1,112 
Total$1,170 $1,163 $3,505 $3,484 

As of September 30, 2023 and December 31, 2022, the total estimated fair value of the 2025 Notes was approximately $295,848 and $260,749, respectively. The fair value was determined based on the closing trading price per $100 of the 2025 Notes as of the last day of trading for the period. The fair value of the 2025 Notes is primarily affected by the trading price of our common stock and market interest rates. The fair value of the 2025 Notes is considered a 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, quoted price of the 2025 Notes in an over-the-counter market.

Capped Call Transactions

In May 2020, in connection with the pricing of the 2025 Notes, 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 2025 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2025 Notes, as the case may be, with such reduction and/or offset subject to a cap initially equal to $47.24 (the "Cap Price").

The Capped Call Transactions are separate transactions and are not part of the terms of the 2025 Notes and will not change the holders’ rights under the 2025 Notes. As the Capped Call Transactions are considered indexed to the Company's stock and are considered equity classified, they are recorded in stockholders’ equity on the condensed consolidated balance sheet and are not accounted for as derivatives. The cost of the Capped Call Transactions was approximately $29,348 and was recorded as a reduction to additional paid-in capital in 2020.

NOTE 6:    STOCKHOLDERS’ EQUITY

a. Stock plans:

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On December 30, 2005, the Company’s board of directors adopted the Varonis Systems, Inc. 2005 Stock Plan (the “2005 Plan”). As of December 31, 2013, the Company had reserved 14,139,957 shares of common stock available for issuance to employees, directors, officers and consultants of the Company and its subsidiaries. The awards generally vest over four years. No awards were granted under the 2005 Plan subsequent to December 31, 2013, and no further awards will be granted under the 2005 Plan.

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 pursuant to an evergreen provision 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 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 our 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.

A summary of employees’ stock options activities during the nine months ended September 30, 2023 is as follows:
 
 Nine Months Ended
September 30, 2023 (unaudited)
 NumberWeighted
average
exercise price		Aggregate
intrinsic value
(in thousands)		Weighted average
remaining
contractual life
(years)
Options outstanding as of January 1, 2023691,573 $7.533 $11,347 1.901
Granted— $— 
Exercised(80,096)$7.610 
Forfeited and expired(15,144)$5.585 
Options outstanding as of September 30, 2023
596,333 $7.572 $13,697 1.209
Options exercisable as of September 30, 2023
594,800 $7.577 $13,658 1.199
 
The aggregate intrinsic value in the table above represents the total intrinsic value that would have been received by the option holders had all option holders exercised their options on the last date of the period. Total intrinsic value of options exercised for the nine months ended September 30, 2023 was $1,653. As of September 30, 2023, there was $36 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2005 Plan, 2013 Plan and Polyrize Plan. This cost is expected to be recognized over a weighted-average period of approximately 0.483 years.

b. The options outstanding as of September 30, 2023 (unaudited) have been separated into ranges of exercise price as follows:
19

Range of exercise price
Options outstanding
as of
September 30, 2023
Weighted average remaining contractual life (years)Weighted average exercise price of options outstanding
Options exercisable as of
September 30, 2023
Weighted average remaining contractual life (years)Weighted average exercise price of options exercisable
$5.623 —6.50374,587 2.907 $5.636 73,054 2.862 $5.635 
$7.000 —7.337392,156 0.846 $7.074 392,156 0.846 $7.074 
 $9.960120,180 1.395 $9.960 120,180 1.395 $9.960 
 $13.2879,410 0.474 $13.287 9,410 0.474 $13.287 
   596,333 1.209 $7.572 594,800 1.199 $7.577 

c.Options issued to consultants:

The Company’s outstanding options granted to consultants for services as of September 30, 2023 (unaudited) were as follows:
 
Number of options outstanding and exercisable as of September 30, 2023
Range of exercise price
per share		Exercisable through
March 2014 - February 201618,150 $5.623 —$13.287 March 2024 - February 2026

d.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 nine months ended September 30, 2023 (unaudited) is as follows:
 
 Number of
shares underlying
outstanding
RSUs and PSUs		Weighted-
average
grant date
fair value
Unvested balance - January 1, 20238,340,732 $41.82 
Granted3,706,521 $28.30 
Vested(2,952,574)$40.19 
Forfeited(696,550)$40.05 
Unvested balance – September 30, 2023
8,398,129 $36.82 
 
As of September 30, 2023, there was $242,596 of total unrecognized compensation cost related to employees and non-employees unvested restricted stock units and performance stock units which is expected to be recognized over a weighted-average period of 2.528 years.

e.2015 Employee Stock Purchase Plan:

On May 5, 2015, the Company’s stockholders approved the Varonis Systems, Inc. 2015 Employee Stock Purchase Plan (the “ESPP”), which the Company’s board of directors had adopted on March 19, 2015. The ESPP became effective as of June 30, 2015. The ESPP allows 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. The Company initially reserved 1,500,000 shares of common stock for issuance under the ESPP. The number of shares available for issuance under the ESPP was increased on January 1, 2016 and has been, and will be, increased each January 1 thereafter, by an amount equal to the lesser of (i) one percent (1%) of the number of shares of common stock issued and outstanding on each December 31 immediately prior to the date of increase, except that the amount of each such increase will be limited to the number of shares of common stock necessary to bring the total number of shares of common stock available for issuance under the ESPP to two percent (2%) of the number of shares of common stock issued and outstanding on each such December 31, or (ii) 1,200,000
20

shares of common stock. Since January 1, 2016, the share reserve under the ESPP has been automatically increased by an aggregate of 3,402,705 shares. The 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 30, 2025; unless terminated prior thereto by the Company’s board of directors or compensation committee, each of which has the right to terminate the ESPP at any time.

f.Stock-based compensation expense for employees and consultants:
 
The Company recognized stock-based compensation expense in the condensed consolidated statements of operations as follows (in thousands):
 
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2023202220232022
(unaudited)(unaudited)
Cost of revenues$1,416 $2,382 $5,946 $8,484 
Research and development11,323 12,490 37,480 38,728 
Sales and marketing11,201 12,556 37,861 39,220 
General and administrative9,040 6,872 26,889 21,624 
Total$32,980 $34,300 $108,176 $108,056 

g.
Share Repurchase Program:

In October 2022, the Company's board of directors authorized a share repurchase program of up to $100,000 of the Company’s common stock (the “Share Repurchase Program”). Under the Share Repurchase Program, the Company is 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 has repurchased and subsequently retired 4,415,093 shares under its Share Repurchase Program, for a total of $99,967. As of September 30, 2023, the Company completed its intended repurchases under the Share Repurchase Program.

NOTE 7:    GEOGRAPHIC INFORMATION AND MAJOR CUSTOMER DATA

Summary information about geographic areas:
 
ASC 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 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 subscription licensing, SaaS revenues and maintenance and services fees (see Note 1 for a brief description of the Company’s business). The following is a summary of revenues within geographic areas (in thousands):
 
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2023202220232022
 (unaudited)(unaudited)
Revenues based on customer’s location:    
North America$94,664 $98,018 $260,427 $247,994 
EMEA
24,023 22,117 74,168 73,477 
Rest of World3,621 3,173 10,466 9,546 
Total revenues$122,308 $123,308 $