12:55 PM EDT, 05/07/2024 (MT Newswires) -- Varonis Systems ( VRNS ) surpassed revenue and profit expectations in Q1 as the integration of generative artificial intelligence boosted efficiency and reduced costs despite challenges from model transition, Wedbush said in a note Tuesday.

The company's performance improved in Q1 with software as a service gaining "significant traction," increased recurring revenue, shorter sales cycles and higher margins, according to the note.

Transition to a subscription model can accelerate profitable growth and provide sustainable cash flow, the firm added.

Wedbush expects the company's partnership with Microsoft (MSFT) Copilot to drive growth in H2 and beyond due to an increasing need for data security products.

"We continue to believe that Varonis ( VRNS ) is an under-the-radar AI play with further accelerating SaaS adoption through leveraging generative AI in its security platform as the company now has a clear path of reaccelerating its growth throughout 2024 and beyond," the firm noted.

Wedbush maintained its outperform rating on Varonis' ( VRNS ) stock and kept the price target at $65.

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