Varonis Systems (NASDAQ:VRNS) & Zscaler (NASDAQ:ZS) Head-To-Head Analysis

Zscaler (NASDAQ:ZS) and Varonis Systems (NASDAQ:VRNS) are both computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, profitability, analyst recommendations, institutional ownership and valuation.

Insider & Institutional Ownership

46.5% of Zscaler shares are held by institutional investors. Comparatively, 95.7% of Varonis Systems shares are held by institutional investors. 18.1% of Zscaler shares are held by insiders. Comparatively, 2.3% of Varonis Systems shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility & Risk

Zscaler has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500. Comparatively, Varonis Systems has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500.

Profitability

This table compares Zscaler and Varonis Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Zscaler	-1.52%	-0.59%	-0.18%
Varonis Systems	-15.88%	-20.01%	-5.84%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Zscaler and Varonis Systems, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Zscaler	0	8	28	1	2.81
Varonis Systems	0	5	13	1	2.79

Zscaler currently has a consensus price target of $294.03, suggesting a potential downside of 6.32%. Varonis Systems has a consensus price target of $55.06, suggesting a potential upside of 8.10%. Given Varonis Systems’ higher possible upside, analysts plainly believe Varonis Systems is more favorable than Zscaler.

Valuation & Earnings

This table compares Zscaler and Varonis Systems”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Zscaler	$2.17 billion	22.54	-$57.71 million	($0.26)	-1,207.12
Varonis Systems	$550.95 million	10.35	-$95.76 million	($0.81)	-62.88

Zscaler has higher revenue and earnings than Varonis Systems. Zscaler is trading at a lower price-to-earnings ratio than Varonis Systems, indicating that it is currently the more affordable of the two stocks.

Summary

Zscaler beats Varonis Systems on 11 of the 14 factors compared between the two stocks.

About Zscaler

Zscaler, Inc. operates as a cloud security company worldwide. The company offers Zscaler Internet Access solution that provides users, workloads, IoT, and OT devices secure access to externally managed applications, including software-as-a-service (SaaS) applications and internet destinations; and Zscaler Private Access solution, which is designed to provide access to managed applications hosted internally in data centers, and private or public clouds. It also provides Zscaler Digital Experience that measures end-to-end user experience across business applications, as well as provides an easy-to-understand digital experience score for each user, application, and location within an enterprise. In addition, the company offers Posture Control solutions comprising Cloud Security Posture Management that identifies and remediates application misconfigurations in SaaS, infrastructure as a service, and PaaS to reduce risk and ensure compliance with industry and organizational benchmarks; Cloud Infrastructure Entitlement Management that detects and remediates excessive or unused cloud permissions and enforces least privileged access without disrupting productivity; Infrastructure as Code (IaC), which analyzes IaC templates to identify misconfigurations and other security issues prior to deployment to cloud infrastructure; and Vulnerability Scanning and Data Loss Prevention solutions. Its platform modules include Zscaler Central Authority, Zscaler Enforcement Node, and Zscaler Log Servers. The company serves customers in airlines and transportation, conglomerates, consumer goods and retail, financial services, healthcare, manufacturing, media and communications, public sector and education, technology, and telecommunications services industries. The company was formerly known as SafeChannel, Inc., and changed its name to Zscaler, Inc. in August 2008. Zscaler, Inc. was incorporated in 2007 and is headquartered in San Jose, California.

About Varonis Systems

Varonis Systems, Inc. provides software products and services that allow enterprises to manage, analyze, alert, and secure enterprise data in North America, Europe, the Middle East, Africa, and internationally. Its software enables enterprises to protect data stored on premises and in the cloud, including sensitive files and emails; confidential personal data belonging to customers, and patients and employees' data; financial records; source code, strategic and product plans; and other intellectual property. It offers DatAdvantage that captures, aggregates, normalizes, and analyzes every data access event for users on Windows and UNIX/Linux servers, storage devices, email systems, intranet servers, cloud applications, and data stores; and DatAlert that profiles users, devices, and their behaviors related to systems and data, detects and alerts on deviations that indicate compromise, and provides a web-based dashboard and investigative interface. It also provides data Classification engine that identifies and tags data based on criteria set in various metadata dimensions, as well as provides business and information technology (IT) personnel with actionable intelligence about data; and DataPrivilege. In addition, the company offers Data Transport Engine, an execution engine that unifies the manipulation of data and metadata, translating business decisions, and instructions into technical commands, such as data migration or archiving; and DatAnswers that provides search functionality for enterprise data. It serves its products to financial services, public, healthcare, industrial, technology, insurance, energy and utilities, consumer and retail, education and construction, and engineering sectors. The company sells its products through a network of distributors and resellers. Varonis Systems, Inc. was incorporated in 2004 and is headquartered in New York, New York.