REGISTERED NUMBER: 06159129 (England and Wales)

STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED

31 DECEMBER 2025

FOR

VARONIS (UK) LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

7

Profit and Loss Account

10

Balance Sheet

11

Statement of Changes in Equity

12

Notes to the Financial Statements

13

DIRECTORS:

M Barreiros

D M Gottlieb

SECRETARY:

D M Gottlieb

REGISTERED OFFICE:

100 Wood Street

2nd Floor

London

EC2V 7AN

REGISTERED NUMBER:

06159129 (England and Wales)

AUDITORS:

Melinek Fine LLP

Chartered Accountants

Statutory Auditors

First Floor, Winston House

349 Regents Park Road

London

N3 1DH

Business overview

Varonis is a data security company focused on protecting what matters most to organizations: their data. Modern enterprises run on data that is created, copied, shared and accessed across cloud services, SaaS applications and on-premises environments, often faster than security teams can see, understand or control. We started Varonis around a simple observation that we believe has only intensified over time: the ability to create and share data scales far faster than the ability to secure it. Our strategy is built around closing that gap, giving organizations the deep visibility and automated controls to deeply understand their enterprise data, reduce exposure and respond to threats quickly, wherever their data lives.

Data growth itself is not new. What has changed is the combination of scale, sprawl and speed. Cloud transformation and artificial intelligence ("AI") initiatives are pushing data into more systems, across more environments and making it accessible to more users, applications and AI agents. As adoption of software-a-service ("SaaS") and infrastructure-as-a-service ("IaaS") has accelerated collaboration and productivity, it has also expanded and fragmented the enterprise data footprint. In many organizations, data security controls have not kept pace, increasing the likelihood that misconfigurations or credential compromise can lead to significant data exposure, threats and regulatory penalties.

We believe the adoption of AI materially raises the stakes for security and risk. Copilots, agents and automated workflows are now embedded in widely used enterprise platforms such as Microsoft 365, Salesforce, Google Workspace and Box and they increasingly act on data at machine speed. These systems typically rely on existing access controls to determine what data can be surfaced, summarized or acted upon. When those controls are overly permissive, poorly understood and unmonitored, AI can unintentionally amplify risk by scaling access faster than organizations can manage manually. As companies customize AI agents and train their own small and large language models, we believe the security of data, identities, agents and underlying infrastructure will increasingly require automated solutions.

In this environment, access becomes the risk multiplier. When too many people, systems or automated agents can reach sensitive data ungoverned, small incidents can quickly become large ones. We refer to this risk as the "blast radius." We believe organizations must continuously reduce their blast radius - limiting unnecessary ability to access, move or misuse data - to reap the tremendous benefits of AI. Achieving this consistently and at scale isn't possible through manual processes, making automation essential.

At the same time, threat actors continue to refine their methods of monetizing sensitive data, and regulatory expectations around privacy, data protection, and AI governance continue to evolve. Many organizations are also operating under real constraints - the demand for skilled security professionals continues to exceed supply, and teams are expected to manage growing complexity with limited resources. We believe these pressures will continue to drive adoption of automated approaches that reduce data exposure by default and enable faster detection and response.

Enterprises today rely on many combinations of data stores, cloud services and SaaS applications, making it difficult to understand data exposure holistically or control breach risk without a unified approach. We believe comprehensive coverage and automation are required to keep pace with the scale and complexity of modern data environments. Our platform has expanded from an initial focus on Windows file shares to cover a broad range of mission-critical cloud and on-premises data stores, cloud infrastructure environments, identity repositories, and key SaaS and AI applications. In 2022, we introduced the Varonis Data Security Platform as a SaaS offering to simplify deployment, accelerate time-to-value, and enable continuous cloud-delivered automation for protecting data.

Varonis software helps organizations of all sizes and industries protect sensitive data stored in the cloud and on-premises, including: files, emails and databases, confidential personal data, financial records, source code, strategic and product plans, and other intellectual property. As the volume, velocity and variety of enterprise data continues to grow, we have built an integrated platform designed to simplify and streamline data security, threat detection and response, and privacy and compliance workflows.

PRINCIPAL RISKS AND UNCERTAINTIES

Market Risk

The parent company bears the majority of any non-routine market risks associated with fluctuations in costs, demand, and pricing in respect of the group's products. The company is directly engaged in the sale of these products as a distributor, its associated market risks are limited to those of a routine distributor.

Warranty Risk

The company does not bear any warranty related risks associated with the distribution of the group's products as this is borne by the parent company.

Product Liability Risk

The parent company bears the product liability risk, accordingly, the company is not exposed to product liability risk.

Credit and Collection Risk

The company extends terms of payment to its customers and is therefore tasked with handling all credit and collection activities with respect to its accounts. Accordingly, it bears the credit and collection risk with respect to the sale of the parent company's products to its customers, which may include the risk of late or non-payment. A material non-payment by a customer would hinder the company's ability to pay the parent company for the purchased group's products.

Liquidity risk

The ability of the company to meet its current obligation needs to be continually considered. The business relies on the parent for support to manage this risk.

Currency Risk

The company's exposure to currency risk is limited to foreign exchange fluctuations on foreign denominated bank accounts.

FINANCIAL KEY PERFORMANCE INDICATORS

The results for the year and the financial position at the year end showed solid performance with an increase in customer numbers and the director remains positive about the future trading prospects of the company. The company uses two key performance indicators (KPIs), these are as follows:

a) Revenue

b) Days' sales outstanding

The movement in revenue has been discussed above while Debtor days decreased over the course of the year.

FINANCIAL PERFORMANCE

Turnover increased in the year by 24% to £34,807,866. This increase is mainly driven by a change in business strategy initiated in 2022. Prior to 2022, the company sold mainly license subscription software sold on-premises ("OPS") for its software, with a significant upfront revenue amount recognized. Since 2022, the company started the transition to a SaaS subscription model for its software, with revenues recognized rateably over the associated contract period. SaaS sales increased from £12,828,951 in 2024 to £24,256,389 in 2025, while OPS sales decreased from £10,442,042 in 2024 to £3,192,871 in 2025. During the period the company carried out R&D services in UK to support the parent company under the cost plus agreement. Total sales under the cost plus agreement in 2025 are £5,204,399. Varonis added 60 new customers, compared to 56 new customers added in 2024. There has also been a change in staff numbers with an increase in average employees to 149 from 112 in the prior year and an increase in staff costs to £22,409,556 compared to £14,967,446 in the prior year.

FINANCIAL POSITION

There continues to be an investment in IT equipment. Also, during the year, there was incremental investment in leasehold improvements due to a new lease contract which has improved the company's net asset position.

GOING CONCERN

At 31 December 2025 the company had net liabilities of £896,158 but had generated a profit for the year of £1,279,136. The deficit on shareholder's funds arises because of the significant charge back for share based compensation that was received in the year. The company continues to be profitable and cash generative. In addition, the company is able to draw upon the support of its parent company (Varonis System Inc, "the Parent Company") if required.

The directors considers that there are no non-financial performance measurements relevant to the business.

ON BEHALF OF THE BOARD:

M Barreiros - Director

8 July 2026

The directors present their report with the financial statements of the company for the year ended 31 December 2025.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of cyber security services.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2025.

There were £Nil distribution of dividends in 2024.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2025 to the date of this report.

M Barreiros

D M Gottlieb

MATTERS COVERED IN THE STRATEGIC REPORT

As permitted by s414c(11) of the Companies Act 2006, the directors have elected to disclose, in the strategic report, information required to be in the directors' report by Schedule 7 of the 'Large and Medium-sized Companies (Accounts and Reports) Regulations 2008'.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Melinek Fine LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

M Barreiros - Director

8 July 2026

Opinion

We have audited the financial statements of Varonis (Uk) Limited (the 'company') for the year ended 31 December 2025 which comprise the Profit and Loss Account, Balance Sheet, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2025 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page five, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience; through verbal and written communications with those charged with governance and other management; and via inspection of the company's regulatory and legal correspondence.

We discussed with those charged with governance and other management the policies and procedures regarding compliance with laws and regulations.

We communicated identified laws and regulations to our team and remained alert to any indicators of non-compliance

throughout the audit, we also specifically considered where and how fraud may occur within the company.

The potential effect of these laws and regulations on the financial statements varies considerably.

Firstly, the company is subject to laws and regulations that directly affect the financial statements, including the company's constitution, relevant financial reporting standards, company law, tax legislation and distributable profits legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

Secondly, the company is subject to other laws and regulations such as environmental regulations, health and safety regulations, and data protection regulations, where the consequences of non-compliance could have a material effect on the amounts or disclosures in the financial statements, for instance through the imposition of fines and penalties, or through losses arising from litigation.

International Standards on Auditing (UK) (ISAs (UK)) limit the required procedures to identify non-compliance with these laws and regulations, and no procedures over and above those already noted are required. These limited procedures did not identify any actual or suspected non-compliance with laws and regulations that could have a material impact on the financial statements.

In relation to fraud, we performed the following specific procedures in addition to those already noted:

- Challenging assumptions made by management in its significant accounting estimates;

- Identifying and testing journal entries, in particular any entries posted with unusual nominal ledger account combinations,journal entries crediting cash or any revenue account;

- Performing analytical procedures to identify unexpected movements in account balances which may be indicative of fraud;

- Ensuring that testing undertaken on both the performance statements and the Balance Sheet includes a number of items selected on a random basis

These procedures did not identify any actual or suspected fraudulent irregularity that could have a material impact on the financial statements.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with International Standards on Auditing (UK)(ISAs (UK)). For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the procedures that we are required to undertake would identify it. In addition, as with any audit, there remains a high risk of non-detection of irregularities, as these might involve collusion, forgery, intentional omissions, misrepresentation, or the override of internal controls. We are not responsible for preventing non-compliance with laws and regulations or fraud, and cannot be expected to detect non-compliance with all laws and regulations or every incidence of fraud.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Aryeh Melinek (Senior Statutory Auditor)

for and on behalf of Melinek Fine LLP

Chartered Accountants

Statutory Auditors

First Floor, Winston House

349 Regents Park Road

London

N3 1DH

9 July 2026

TURNOVER

3

34,807,866

28,137,300

Cost of sales

2,229,302

5,995,785

GROSS PROFIT

32,578,564

22,141,515

Administrative expenses

31,464,789

21,571,384

OPERATING PROFIT

6

1,113,775

570,131

Interest receivable and similar income

7

167,293

133,334

1,281,068

703,465

Interest payable and similar expenses

8

1,932

3,023

PROFIT BEFORE TAXATION

1,279,136

700,442

Tax on profit

9

-

-

PROFIT FOR THE FINANCIAL YEAR

1,279,136

700,442

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,279,136

700,442

FIXED ASSETS

Tangible assets

10

1,242,522

192,090

CURRENT ASSETS

Debtors

11

16,831,196

10,388,831

Cash at bank

7,058,400

9,296,307

23,889,596

19,685,138

CREDITORS

Amounts falling due within one year

12

23,879,708

21,385,215

NET CURRENT ASSETS/(LIABILITIES)

9,888

(1,700,077

)

TOTAL ASSETS LESS CURRENT LIABILITIES

1,252,410

(1,507,987

)

CREDITORS

Amounts falling due after more than one year

13

2,148,568

776,832

NET LIABILITIES

(896,158

)

(2,284,819

)

CAPITAL AND RESERVES

Called up share capital

15

100

100

Other reserves

16

(5,725,515

)

(5,835,040

)

Profit and loss account

16

4,829,257

3,550,121

SHAREHOLDERS' FUNDS

(896,158

)

(2,284,819

)

The financial statements were approved by the Board of Directors and authorised for issue on 8 July 2026 and were signed on its behalf by:

M Barreiros - Director

Called up

Profit

share

and loss

Other

Total

capital

account

reserves

equity

£

£

£

£

Balance at 1 January 2024

100

2,849,679

(4,521,737

)

(1,671,958

)

Changes in equity

Profit for the year

-

700,442

-

700,442

Total comprehensive income

-

700,442

-

700,442

Share based comp expense

-

-

2,223,557

2,223,557

Share based comp charge back

-

-

(3,536,860

)

(3,536,860

)

Balance at 31 December 2024

100

3,550,121

(5,835,040

)

(2,284,819

)

Changes in equity

Profit for the year

-

1,279,136

-

1,279,136

Total comprehensive income

-

1,279,136

-

1,279,136

Share based comp expense

-

-

2,443,720

2,443,720

Share based comp charge back

-

-

(2,334,195

)

(2,334,195

)

Balance at 31 December 2025

100

4,829,257

(5,725,515

)

(896,158

)

1.	GENERAL INFORMATION

Varonis (Uk) Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

The Company's software specializes in data security, threat detection and response and data privacy and compliance. Varonis software enables enterprises of all sizes and industries to protect data stored in the cloud and on-premises 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 challenge of protecting data with growing volume, velocity, and variety, the Company has built an integrated platform to simplify and streamline data security, threat detection and response, and data privacy and compliance.

The Company offers coverage for most mission-critical cloud and on-premises data stores and cloud infrastructure environments, and many critical SaaS applications. In 2022, Varonis announced the availability of its flagship Varonis Data Security Platform as a SaaS solution, which offers simpler deployment, faster time-to-value, and new automation capabilities that help customers prevent data breaches.

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 and AI-related 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.

Customers rely on the Company's technology to achieve three board-level outcomes: preventing data breaches, complying with data-related regulations and enabling secure AI usage. Within each of these major areas, Varonis enables numerous use cases. These use cases include: automatic discovery and classification of high-risk, sensitive data, emails and databases; AI-readiness; data security posture management (DSPM); database activity monitoring ("DAM"); SaaS security posture management; automated remediation of over-exposed data; centralized visibility and risk analysis of enterprise data and monitoring of user behavior and file, e-mail and AI-related activity; security monitoring and risk reduction; data breach, insider threat, malware, ransomware and phishing detection with Managed Data Detection and Response ("MDDR"); automatic response to ransomware and other severe incidents to limit exposure and reduce recovery times; data ownership identification, assignment, and automatic involvement; forensics, reporting and auditing with searchable logs; meeting security policy and compliance regulation; automatic data migration; cloud migration; automation of retention and disposition policies; automatic data quarantine; intelligent archiving; and automated indexing for data subject requests related to privacy and compliance requirements.

The financial statements are presented in Sterling (£), which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

The preparation of financial statements in compliance with FRS102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the company's accounting policies.

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of paragraph 3.17(d);

•

the requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);

•

the requirements of paragraphs 26.18(b), 26.19 to 26.21 and 26.23;

•

the requirement of paragraph 33.7.

This information is included in the consolidated financial statements of Varonis Systems Inc as at 31 December 2025 and these financial statements may be obtained from www.varonis.com.

The following principal accounting policies have been applied:

Revenue

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognized:

The Company generates revenues primarily in the form of SaaS revenues, term license subscriptions and maintenance and services fees. SaaS revenues, including SaaS with MDDR, are provided on a subscription basis and allow customers to use hosted software. Over the last few years, the Company has introduced new products and support for cloud applications and infrastructure environments, including the Varonis Data Security Platform delivered as a SaaS solution, which was previously only sold as a self-hosted solution. Term license subscription 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. 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), although the user can benefit from the software without its assistance. The Company sells its products worldwide through 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 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.

SaaS revenue is recognized rateably over the associated contract period, as this service has a consistent and continuous pattern of transfer to a customer during the contract period, beginning when access is provided and the benefit of the service is available. Conversions from a license sold on-premises to the Company's SaaS offering during the original subscription period are accounted for on a prospective basis.

Term license subscription software sold on-premises is recognized at the point in time when the software license has been delivered and the benefit of the asset has transferred. Maintenance associated with term license subscription software is recognized rateably over the term of the agreement since these services have a consistent continuous pattern of transfer to a customer during the contract period, and is included within the term license subscriptions line of the consolidated statements of operations.

The Company recognizes revenues from maintenance agreements rateably over the term of the underlying maintenance contract, as these services have a consistent continuous pattern of transfer to a customer during the contract period, which is usually one year.

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. SaaS, term license subscriptions (including maintenance associated with term license subscriptions) and maintenance and services are generally distinct since the customer can benefit from the products and services either on its own or together with other resources that are readily available and the promise to transfer these products and services is separately identifiable from other promises in the contract. 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 software licenses and maintenance included in term license subscriptions, the Company determines the standalone selling prices based on the price at which it separately sells maintenance renewals for past perpetual licenses.

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods or services to the customer. In instances of contracts where revenue recognition differs from the timing of invoicing, the Company generally determined that those contracts do not include a significant financing component. The primary purpose of the invoicing terms is to provide customers with simplified and predictable ways of purchasing the Company's solutions, not to receive or provide financing.

The Company uses the practical expedient and does not assess the existence of a significant financing component when the difference between payment and revenue recognition is a year or less. Revenue is recognized net of any taxes collected from customers which are subsequently remitted to the tax authorities.

Deferred revenues represent mostly unrecognized fees billed or collected for SaaS and maintenance contracts. Deferred revenues are recognized as (or when) the Company performs its obligations under the contract. Pursuant to these contracts, customers are generally invoiced on annual basis. Revenues allocated to remaining performance obligations represent contracted revenues that have not yet been recognized, which includes deferred revenues and non-cancellable amounts that will be invoiced in the future.

The company has received £5,204,399 of revenue from the provision of R&D services during the year ended 31.12.2025.

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives.

Depreciation is provided on the following basis:

Short-term leasehold property - in line with the length of the lease

Fixtures and fittings - 15% straight line

Computer equipment - 33% straight line

Short leasehold under construction are not yet completed and not available for use. No depreciation has been recognised.

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

Financial instruments

The company has elected to apply Sections 11 and 12 of FRS 102 in respect of financial instruments.

Financial assets and financial liabilities are recognised when the company becomes party to the contractual provisions of the instrument.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

The company's policies for its major classes of financial assets and financial liabilities are set out below.

Financial assets

Basic financial assets, including trade and other debtors, cash and bank balances, intercompany working capital balances, and intercompany financing are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate.

Such assets are subsequently carried at amortised cost using the effective interest method, less any impairment.

Financial liabilities

Basic financial liabilities, including trade and other creditors, bank loans and loans from fellow group companies are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Impairment of financial assets

Financial assets measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the profit and loss account.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between the asset's carrying amount and the best estimate of the amount the company would receive for the asset if it were to be sold at the reporting date.

For financial assets measured at amortised cost, the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If the financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets and financial liabilities

Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) despite "having retained some significant" risks and rewards of ownership, control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.

Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.

Offsetting of financial assets and financial liabilities

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Taxation

The tax expense comprises current and deferred tax. Tax is recognised in the profit and loss account, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

Current tax is the amount of income tax payable in respect of taxable profit for the year or prior years.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the company operates and generates income.

Deferred tax

Deferred tax arises from timing differences that are differences between taxable profits and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:

- The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and

- Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax assets are not recognised as we cannot predict the utilisability of deferred balances.

Foreign currency translation

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the profit and loss account within 'administrative expenses'. All other foreign exchange gains and losses are presented in profit or loss within 'administrative expenses'.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

Interest income

Interest income is recognised in profit or loss using the effective interest method.

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

Pension costs and other post-retirement benefits

The company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the balance sheet. The assets of the plan are held separately from the company in independently administered funds.

Share-based payments

The company's employees participate in share-based payment arrangements operated by its ultimate parent company, Varonis Inc. ("the Parent"), under which the Parent grants restricted stock units ("RSUs") and performance stock units ("PSUs") over its own equity shares. The Company accounts for these arrangements in accordance with Section 26 "Share-based Payment" of FRS 102.

As the awards are granted over equity instruments of the Parent, and the Parent has the obligation to settle the awards by issue of its own shares, the arrangements are accounted for as equity-settled in the company's individual financial statements, with a corresponding credit recognised directly in equity as a capital contribution from the Parent.

For RSUs, which are generally subject only to a service-based vesting condition, fair value is measured at the market price of the Parent's shares at the grant date. The resulting fair value is recognised as an expense on a straight-line basis over the vesting period.

For PSUs, which are subject to both a service-based vesting condition and a performance-based vesting condition, fair value is measured at the market price of the Parent's shares at the grant date. Where vesting is subject to a performance condition, the number of awards expected to vest is reassessed at each reporting date, with any adjustment recognised in profit or loss.

At each reporting date, the company revises its estimate of the number of awards expected to vest, taking account of service and performance conditions. The impact of any revision is recognised in profit or loss

Share capital

Ordinary shares are classified as equity.

Cash at bank

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours.

Going concern

At 31 December 2025, the company had net liabilities of £896,158 but had generated a profit for the year of £1,279,136. The deficit on shareholder's funds arises because of the significant charge back for share based compensation that was charged in the year. The company continues to be profitable and cash generative.

The company has received a letter of financial support from its ultimate parent undertaking and the directors have considered post year end trading and cash reserves of the group and company. As a result, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence and meet its liabilities as they fall due for the foreseeable future, being a period of at least twelve months from the date the financial statements were approved. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

3.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

An analysis of turnover by class of business is given below:

2025

2024

£

£

Term license subscriptions

3,192,871

10,442,042

SaaS

24,256,389

12,828,951

Maintenance and services

2,154,207

4,258,998

Cost plus revenue

5,204,399

607,309

34,807,866

28,137,300

An analysis of turnover by geographical market is given below:

2025

2024

£

£

United Kingdom

25,846,506

26,366,447

Rest of Europe

1,071,684

26,396

Rest of the world

7,889,676

1,744,457

34,807,866

28,137,300

Cost Plus revenues of £5,204,399 are charged to the parent company relation to research and development costs incurred by the company.

4.	EMPLOYEES AND DIRECTORS

2025

2024

£

£

Wages and salaries

19,211,298

12,530,091

Social security costs

2,851,992

2,175,455

Other pension costs

346,266

261,901

22,409,556

14,967,447

The average number of employees during the year was as follows:

2025

2024

Sales and marketing

89

105

Administrative

24

5

Management

6

2

R&D

30

-

149

112

5.	DIRECTORS' REMUNERATION

The directors do not receive any remuneration from the company in respect of their services to the company. Instead, they are employed and paid by other related entities. Due to the nature of the services provided and the number of entities to which it relates, it is not possible to meaningfully allocate the directors' remuneration in respect of qualifying services to the company.

6.	OPERATING PROFIT

The operating profit is stated after charging:

2025

2024

Depreciation of tangible fixed assets

133,566

105,399

Fees payable to the company's auditor and its associates for the audit of the company's financial statements

22,000

22,000

Exchange differences

173,673

24,582

Other operating lease rentals

576,459

338,615

Employer's pension costs

346,266

261,901

7.

INTEREST RECEIVABLE AND SIMILAR INCOME

2025

2024

£

£

Deposit account interest

167,293

133,334

8.

INTEREST PAYABLE AND SIMILAR EXPENSES

2025

2024

£

£

Other interest

1,932

3,023

9.

TAXATION

Analysis of the tax charge

No liability to UK corporation tax arose for the year ended 31 December 2025 nor for the year ended 31 December 2024.

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below:

2025

2024

£

£

Profit before tax

1,279,136

700,442

Profit multiplied by the standard rate of corporation tax in the UK of 25% (2024 - 25%)

319,784

175,111

Effects of:

Expenses not deductible for tax purposes

84,333

50,998

Capital allowances in excess of depreciation

(1,391

)

(3,867

)

Utilisation of tax losses

(430,107

)

-

Amortisation of commissions

Share scheme deductions

27,381

(328,326

)

Unrelieved tax losses carried forward

-

106,084

Total tax charge

-

-