“As a reminder, we expect that the ramp-up of this phase will not be linear and momentum should grow in each quarter and further accelerate in 2025 and 2026.”

In context

“nse that comes with an SLA and assurance that Varonis will respond to ransomware attacks within 30 minutes. MDDR has been extremely well received in the first quarter, driving new business, increasing deal sizes and simplifying the conversation with customers. In addition to MDDR, nearly every customer conversation, we have touches on generative AI, which reinforces our view of this secular tailwind. We're seeing healthy leading indicators with respect to the opportunity. But as we discussed previously, we continue to expect the adoption of Gen AI will be measured. As we look ahead of the rest of this year, we're excited to begin Phase 2 in earnest in the second half of 2024, which will be focused on converting our installed base of on-prem subscription customers to our SaaS platform. As a reminder, we expect that the ramp-up of this phase will not be linear and momentum should grow in each quarter and further accelerate in 2025 and 2026. In the first quarter, ARR grew 17% year-over-year to $560.3 million, and we generated $56.4 million of free cash flow, which was up from $35.7 million over the same period last year. These metrics demonstrates our commitment to balancing top line growth with improving cash flow generation during the transition. Turning now to our first quarter results in more detail. As a reminder, the leading indicators of our transition are ARR, free cash flow and ARR contribution margin. As we have said many times, the faster we progress through the transition, the more headwinds we will experience to our traditional income statement metrics, but we view this in a positive light. In the first quarter, we continue to see stabilization of the macro environment. Heightened deal scrutiny persisted, bu”