Company Quick10K Filing
Varonis Systems
Price62.03 EPS-2
Shares30 P/E-29
MCap1,891 P/FCF-177
Net Debt-53 EBIT-60
TEV1,838 TEV/EBIT-30
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-09-30 Filed 2020-10-27
10-Q 2020-06-30 Filed 2020-08-04
10-Q 2020-03-31 Filed 2020-05-05
10-K 2019-12-31 Filed 2020-02-11
10-Q 2019-09-30 Filed 2019-10-30
10-Q 2019-06-30 Filed 2019-07-30
10-Q 2019-03-31 Filed 2019-04-30
10-K 2018-12-31 Filed 2019-02-12
10-Q 2018-09-30 Filed 2018-10-30
10-Q 2018-06-30 Filed 2018-07-31
10-Q 2018-03-31 Filed 2018-05-01
10-K 2017-12-31 Filed 2018-02-13
10-Q 2017-09-30 Filed 2017-11-03
10-Q 2017-06-30 Filed 2017-08-04
10-Q 2017-03-31 Filed 2017-05-05
10-K 2016-12-31 Filed 2017-02-09
10-Q 2016-09-30 Filed 2016-11-04
10-Q 2016-06-30 Filed 2016-08-09
10-Q 2016-03-31 Filed 2016-05-05
10-K 2015-12-31 Filed 2016-02-12
10-Q 2015-09-30 Filed 2015-11-06
10-Q 2015-06-30 Filed 2015-08-07
10-Q 2015-03-31 Filed 2015-05-07
10-K 2014-12-31 Filed 2015-02-19
10-Q 2014-09-30 Filed 2014-11-10
10-Q 2014-06-30 Filed 2014-08-06
10-Q 2014-03-31 Filed 2014-05-08
8-K 2020-10-26 Earnings, Exhibits
8-K 2020-08-03 Earnings, Exhibits
8-K 2020-05-26
8-K 2020-05-06
8-K 2020-05-06
8-K 2020-05-04
8-K 2020-04-06
8-K 2020-02-10
8-K 2019-10-28
8-K 2019-07-29
8-K 2019-06-25
8-K 2019-05-02
8-K 2019-04-29
8-K 2019-02-11
8-K 2018-10-29
8-K 2018-08-27
8-K 2018-07-30
8-K 2018-04-30
8-K 2018-04-26
8-K 2018-02-12
8-K 2018-02-08

VRNS 10Q Quarterly Report

Part I.Financial Information
Item 1.Financial Statements
Note 1: General
Note 2: Fair Value Measurements
Note 3: Leases
Note 4: Convertible Senior Notes and Capped Call Transactions
Note 5: Stockholders' Equity
Note 6: Geographic Information and Major Customer and Product Data
Note 7: Subsequent Events
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Item 4.Controls and Procedures
Part II.Other Information
Item 1.Legal Proceedings
Item 1A.Risk Factors
Item 6.Exhibits
EX-31.1 vrnsq32020exh311.htm
EX-31.2 vrnsq32020exh312.htm
EX-32.1 vrnsq32020exh321.htm
EX-32.2 vrnsq32020exh322.htm

Varonis Systems Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
0.40.30.20.20.10.02014201620182020
Assets, Equity
0.10.10.0-0.0-0.1-0.12014201620182020
Rev, G Profit, Net Income
0.20.10.10.0-0.0-0.12014201620182020
Ops, Inv, Fin

vrns-20200930
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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, 2020
 
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, 29th FloorNew YorkNY10001
(Address of principal executive offices)(Zip Code)
(877) 292-8789
(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 23, 2020, there were 31,726,906 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
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 September 30, 2020December 31, 2019
 (unaudited)
Assets  
Current assets:  
Cash and cash equivalents$231,458 $68,929 
Marketable securities34,112 41,531 
Short-term deposits60,000 10,000 
Trade receivables (net of allowances of $1,283 and $637 at September 30, 2020 and December 31, 2019, respectively)
60,111 75,050 
Prepaid expenses and other current assets15,450 13,047 
Total current assets401,131 208,557 
Long-term assets:  
Other assets21,686 18,360 
Operating lease right-of-use asset43,683 55,057 
Property and equipment, net36,019 36,338 
Total long-term assets101,388 109,755 
Total assets$502,519 $318,312 
Liabilities and stockholders’ equity  
Current liabilities:  
Trade payables$767 $997 
Accrued expenses and other short-term liabilities66,483 62,607 
Deferred revenues81,192 95,975 
Total current liabilities148,442 159,579 
Long-term liabilities:  
Convertible senior notes, net216,791  
Deferred revenues3,300 5,460 
Operating lease liability48,377 57,040 
Other liabilities2,689 2,701 
Total long-term liabilities271,157 65,201 
Stockholders’ equity:  
Share capital  
Common stock of $0.001 par value - Authorized: 200,000,000 shares at September 30, 2020 and December 31, 2019; Issued and outstanding: 31,725,314 shares at September 30, 2020 and 30,583,311 shares at December 31, 2019
32 31 
Accumulated other comprehensive income (loss)3,665 (449)
Additional paid-in capital370,933 310,682 
Accumulated deficit(291,710)(216,732)
Total stockholders’ equity82,920 93,532 
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Total liabilities and stockholders’ equity$502,519 $318,312 
The accompanying notes are an integral part of these consolidated financial statements.
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VARONIS SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data) 

 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2020201920202019
Revenues:    
Subscriptions$44,084 $23,327 $98,535 $45,169 
Perpetual licenses373 8,269 1,001 35,304 
Maintenance and services32,294 34,053 97,956 101,157 
Total revenues76,751 65,649 197,492 181,630 
Cost of revenues11,284 8,768 31,799 25,492 
Gross profit65,467 56,881 165,693 156,138 
Operating costs and expenses:  
Research and development24,670 20,400 71,425 58,890 
Sales and marketing45,435 42,117 130,998 125,769 
General and administrative11,814 10,339 34,486 33,461 
Total operating expenses81,919 72,856 236,909 218,120 
Operating loss(16,452)(15,975)(71,216)(61,982)
Financial expenses, net(2,553)(482)(2,945)(545)
Loss before income taxes(19,005)(16,457)(74,161)(62,527)
Income taxes(220)(530)(817)(1,587)
Net loss$(19,225)$(16,987)$(74,978)$(64,114)
Net loss per share of common stock, basic and diluted$(0.61)$(0.56)$(2.39)$(2.13)
Weighted average number of shares used in computing net loss per share of common stock, basic and diluted31,614,242 30,380,154 31,336,125 30,167,161 
 
The accompanying notes are an integral part of these consolidated financial statements.
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VARONIS SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
 
 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2020201920202019
Net loss$(19,225)$(16,987)$(74,978)$(64,114)
Other comprehensive income:
Unrealized income (loss) on marketable securities, net of tax(103)(13)(57)37 
Income (loss) on marketable securities reclassified into earnings, net of tax32 4 59 (2)
(71)(9)2 35 
Unrealized income (loss) on derivative instruments, net of tax(1,944)883 (807)4,199 
Realized income on derivative instruments, net of tax2,271  4,742  
Loss (income) on derivative instruments reclassified into earnings, net of tax(127)(361)177 170 
200 522 4,112 4,369 
Total other comprehensive income129 513 4,114 4,404 
Comprehensive loss$(19,096)$(16,474)$(70,864)$(59,710)

The accompanying notes are an integral part of these consolidated financial statements.
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VARONIS SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED 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, 201829,576,880 30 266,941 (3,633)(137,968)125,370 
Stock-based compensation expense— — 8,961 — — 8,961 
Common stock issued under employee stock plans, net686,357  (4,642)— — (4,642)
Unrealized income on derivative instruments— — — 2,935 — 2,935 
Unrealized income on available for sale securities— — — 10 — 10 
Net loss— — — — (22,639)(22,639)
Balance as of March 31, 201930,263,237 30 271,260 (688)(160,607)109,995 
Stock-based compensation expense— — 14,796 — — 14,796 
Common stock issued under employee stock plans, net63,790  (1,055)— — (1,055)
Unrealized income on derivative instruments— — — 912 — 912 
Unrealized income on available for sale securities— — — 34 — 34 
Net loss— — — — (24,488)(24,488)
Balance as of June 30, 201930,327,027 30 285,001 258 (185,095)100,194 
Stock-based compensation expense— — 11,022 — — 11,022 
Common stock issued under employee stock plans, net155,425  3,028 — — 3,028 
Unrealized income on derivative instruments— — — 522 — 522 
Unrealized loss on available for sale securities— — — (9)— (9)
Net loss— — — — (16,987)(16,987)
Balance as of September 30, 201930,482,452 30 299,051 771 (202,082)97,770 

The accompanying notes are an integral part of these consolidated financial statements.
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 Common stockAdditional
paid-in capital
Accumulated
other
comprehensive income
Accumulated deficitTotal
stockholders’ equity
 NumberAmount
Balance as of December 31, 201930,583,311 $31 $310,682 $(449)$(216,732)$93,532 
Stock-based compensation expense— — 12,883 — — 12,883 
Common stock issued under employee stock plans, net882,959  4,316 — — 4,316 
Unrealized income on derivative instruments— — — 545 — 545 
Unrealized income on available for sale securities— — — 195 — 195 
Net loss— — — — (31,430)(31,430)
Balance as of March 31, 202031,466,270 31 327,881 291 (248,162)80,041 
Stock-based compensation expense— — 17,623 — — 17,623 
Common stock issued under employee stock plans, net77,249 1 497 — — 498 
Realized and unrealized income on derivative instruments— — — 3,367 — 3,367 
Unrealized loss on available for sale securities— — — (122)— (122)
Purchase of capped calls related to Convertible senior notes— — (29,348)— — (29,348)
Equity component of Convertible senior notes, net— — 30,794 — — 30,794 
Net loss— — — — (24,323)(24,323)
Balance as of June 30, 202031,543,519 32 347,447 3,536 (272,485)78,530 
Stock-based compensation expense— — 18,678 — — 18,678 
Common stock issued under employee stock plans, net181,795  4,808 — — 4,808 
Realized and unrealized income on derivative instruments— — — 200 — 200 
Unrealized loss on available for sale securities— — — (71)— (71)
Net loss— — — — (19,225)(19,225)
Balance as of September 30, 202031,725,314 32 370,933 3,665 (291,710)82,920 

The accompanying notes are an integral part of these consolidated financial statements.
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VARONIS SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Nine Months Ended
September 30,
 20202019
Cash flows from operating activities:  
Net loss$(74,978)$(64,114)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation7,319 4,320 
Stock-based compensation49,184 34,779 
Amortization of deferred commissions9,552 10,530 
Amortization of operating lease right-of-use asset7,226 7,009 
Amortization of debt discount and issuance costs2,427  
Capital loss from sale of fixed assets 24 
Changes in assets and liabilities:  
Trade receivables14,939 31,357 
Prepaid expenses and other current assets(1,862)(2,239)
Deferred commissions(13,172)(13,401)
Other long-term assets(250)50 
Trade payables(379)379 
Accrued expenses and other short-term liabilities(1,267)(7,675)
Deferred revenues(16,943)(11,749)
Other long-term liabilities4,708 54 
Net cash used in operating activities(13,496)(10,676)
Cash flows from investing activities:  
Decrease (increase) in short-term deposits(49,998)33,474 
Decrease (increase) in marketable securities7,419 (1,627)
Decrease (increase) in long-term deposits23 (16)
Proceeds from sale of property and equipment 10 
Purchases of property and equipment(7,001)(14,219)
Net cash provided by (used in) investing activities(49,557)17,622 
Cash flows from financing activities:  
Proceeds from issuance of convertible senior notes, net of issuance costs245,308  
Purchases of capped calls(29,348) 
Proceeds (withholdings) from employee stock plans, net9,622 (2,669)
Net cash provided by (used in) financing activities225,582 (2,669)
Increase in cash and cash equivalents162,529 4,277 
Cash and cash equivalents at beginning of period68,929 48,707 
Cash and cash equivalents at end of period$231,458 $52,984 
Supplemental disclosure of cash flow information:  
Cash paid for income taxes$1,308 $3,566 

The accompanying notes are an integral part of these consolidated financial statements.
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1:     GENERAL
 
a.Description of Business:

Varonis Systems, Inc. (“VSI” and together with its subsidiaries, collectively, the “Company”) was incorporated under the laws of the State of Delaware on November 3, 2004 and commenced operations on January 1, 2005.
 
VSI has ten wholly-owned subsidiaries: Varonis Systems Ltd. (“VSL”) incorporated under the laws of Israel on November 24, 2004; Varonis (UK) Limited (“VSUK”) incorporated under the laws of England on March 14, 2007; Varonis Systems (Deutschland) GmbH (“VSG”) incorporated under the laws of Germany on July 6, 2011; Varonis France SAS (“VSF”) incorporated under the laws of France on February 22, 2012; Varonis Systems Corp. (“VSC”) incorporated under the laws of British Columbia, Canada on February 19, 2013; Varonis Systems (Ireland) Limited ("VIRE") incorporated under the laws of Ireland on November 11, 2016; Varonis Systems (Australia) Pty Ltd (“VAUS”) incorporated under the laws of Victoria, Australia on February 28, 2017; Varonis Systems (Netherlands) B.V. ("VNL") incorporated under the laws of the Netherlands on March 13, 2018; Varonis U.S. Public Sector LLC ("VPS") incorporated under the laws of the State of Delaware on May 14, 2018; and Varonis Systems (Luxemburg) S.à r.l. (“VLUX”) incorporated under the laws of Luxembourg on August 5, 2019.

The Company’s software products and services allow enterprises to manage, analyze and secure enterprise data. Varonis focuses on protecting enterprise data: sensitive files and emails; confidential customer, patient and employee data; financial records; strategic and product plans; and other intellectual property. Through its products DatAdvantage (including the Automation Engine), DatAlert (including Varonis Edge), DataPrivilege, Data Classification Engine (including Policy Pack and Data Classification Labels), Data Transport Engine and DatAnswers, the software platform allows enterprises to protect sensitive data from insider threats and cyberattacks, and realize the value of their enterprise data in ways that are not resource-intensive and easy to implement.

VSI and VPS market and sell products and services mainly in the United States. VSUK, VSG, VSF, VSC, VIRE, VAUS, VNL and VLUX resell the Company’s products and services mainly in the United Kingdom, Germany, France, Canada, Ireland, Australia, the Netherlands and Belgium and Luxembourg, respectively. The Company primarily sells its products and services to a global network of distributors and Value Added Resellers (VARs), which sell the products to end user customers.
 
b.Basis of Presentation:
 
The accompanying unaudited 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”). Certain amounts in prior periods' financial statements have been recast and reclassified to conform to the current year's presentation.
 
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 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 financial statements and accompanying notes should be read in conjunction with the 2019 consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2019 filed with the SEC on February 11, 2020 (the “2019 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, 2019 included in the 2019 Form 10-K, unless otherwise stated.

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c.Revenue Recognition:

The Company generates revenues in the form of software license fees and related maintenance and services fees. Subscription revenues are comprised of time-based licenses whereby customers use the Company's software with related maintenance (including support and unspecified upgrades and enhancements when and if they are available) for a specified period. Subscriptions are sold on premises and are recognized from sales of subscription licenses to new and existing customers. When products are purchased as a subscription, the associated maintenance is included as part of the subscription revenues. Perpetual licenses have the same functionality as subscriptions and perpetual license revenues consist of the revenues recognized from sales of perpetual licenses to new and existing customers. Maintenance and services primarily consist of fees for maintenance services of 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 the Company’s customers to fully leverage the use of its products although the user can benefit from the software without the Company's assistance. The Company sells its products worldwide directly to a network of distributors and VARs, 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 and perpetual license revenues are 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 as part of the subscription revenues line item.
 
The Company recognizes revenues from maintenance of perpetual license sales 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 the Company separately sells a renewal contract. For professional services, the Company determines the standalone selling prices based on the price at which the Company 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 and other receivables are primarily comprised of trade receivables that are recorded at the invoice amount, net of an allowance for doubtful accounts.
 
Deferred revenues represent mostly unrecognized fees billed or collected for maintenance and professional services. 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 $84,630 for the nine months ended September 30, 2020.
 
The Company does not grant a right of return to its customers, except for one of its resellers. In 2019 and for the nine months ended September 30, 2020, there were no returns from this reseller.
 
For information regarding disaggregated revenues, please refer to Note 6.

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d.Contract Costs:

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 its 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 mostly included in sales and marketing expenses in the accompanying 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. 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 Pound Sterling and Euro 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 purposes.

Derivative instruments measured at fair value and their classification on the consolidated balance sheets are presented in the following table (in thousands):
 
 Liabilities as of September 30, 2020 (unaudited)Assets (liabilities) as of December 31, 2019
 Notional
Amount
Fair
Value
Notional
Amount
Fair
Value
Foreign exchange forward contract derivatives in cash flow hedging relationships included in accrued expenses and other short-term liabilities$77,369 $(1,101)$84,968 $(470)
Foreign exchange forward contract derivatives for monetary items included in prepaid expenses and other current assets and accrued expenses and other short-term liabilities$15,160 $(30)$26,995 $5 
 
For the three and nine months ended September 30, 2020, the unaudited consolidated statements of operations reflect a gain of $128 and a loss of $176, respectively, related to the effective portion of the cash flow hedges. For the three and nine months ended September 30, 2019, the unaudited consolidated statements of operations reflect a gain of $361 and a loss of $170, respectively, related to the effective portion of the cash flow hedges. For the three and nine months ended September 30, 2020, the realized gains from these derivatives were $2,271 and $4,742, respectively. The cash flows associated with these derivatives are reflected as cash flows from operating activities in the consolidated statements of cash flows. Effective with our January 1, 2019 adoption of ASU No. 2017-12, ineffectiveness of cash flow hedges is no longer recognized in financial income (expenses), net in the consolidated statement of operations. No material ineffective hedges were recognized for the three and nine months ended September 30, 2020 and 2019 in operating expenses in the consolidated statement of operations.

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For the three and nine months ended September 30, 2020, the unaudited consolidated statements of operations reflect a loss of $876 and $244, respectively, in financial income (expenses), net, related to the Fair Value Hedging Program. For the three and nine months ended September 30, 2019, the unaudited consolidated statements of operations reflect gains of $951 and $1,404, respectively, in financial income (expenses), net, related to the Fair Value Hedging Program.

f.
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 various deposit accounts.

The Company considers all high quality investments purchased with original maturities at the date of purchase greater than three but less than twelve months to be short-term deposits. Cash equivalents, marketable securities and short-term deposits are classified as available for sale and are, therefore, recorded at fair value on the consolidated balance sheet, 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 consolidated balance sheets, until realized. The Company uses the specific identification method to compute gains and losses on 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 (expenses), net in the consolidated statement of operations. Cash, cash equivalents, marketable securities and short-term deposits consist of the following (in thousands):
 
 As of September 30, 2020
(unaudited)
 Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized Losses
Fair
Value
Cash and cash equivalents    
Money market funds$10,658 $ $ $10,658 
Total$10,658 $ $ $10,658 
Marketable securities
US Treasury securities$34,087 $25 $ *)$34,112 
Total$34,087 $25 $ *)$34,112 
Short-term deposits
Term bank deposits$60,000 $ $ $60,000 
Total$60,000 $ $ $60,000 
 
*) Represents an amount lower than $1
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 As of December 31, 2019
 Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized Losses
Fair
Value
Cash and cash equivalents    
Money market funds$4,789 $ $ $4,789 
Total$4,789 $