12:27 PM EDT, 07/30/2024 (MT Newswires) -- Varonis Systems ( VRNS ) reported "robust" Q2 results on "healthy" demand for software products and a successful shift to a subscription model, Wedbush Securities said Tuesday in a report.

On Monday, Varonis Systems ( VRNS ) reported a surprise Q2 profit and a sales beat while boosting full-year earnings and revenue guidance. Wedbush raised its price target on the company to $67 from $65 and kept its outperform rating.

"The company is showing clear improvements" with software as a service "picking up significant traction," along with more recurring revenue, shorter sales cycles and higher margins, Wedbush said.

The shift to a subscription model is expected to be completed by 2026, providing "a clear tailwind," Wedbush said.

The company in Q2 got the FedRAMP "In Process" designation, opening up more opportunities with the US federal government, Wedbush said. Varonis Systems ( VRNS ) is also expanding its partnership with Microsoft's ( MSFT ) Copilot, which will drive growth in H2 and beyond amid increasing demand for data security solutions, the report said.

"We continue to believe that Varonis Systems ( VRNS ) is an under-the-radar AI play with further accelerating SaaS adoption while leveraging generative AI in its security platform as the company now has a clear path of reaccelerating its growth throughout 2024 and 2025," Wedbush said.

Shares of Varonis Systems ( VRNS ) rose 10% in recent trading Tuesday.

Price: 53.13, Change: +4.64, Percent Change: +9.57