Sign in

    AvePoint Inc (AVPT)

    Q1 2024 Earnings Summary

    Reported on Feb 28, 2025 (After Market Close)
    Pre-Earnings Price$8.10Last close (May 9, 2024)
    Post-Earnings Price$8.20Open (May 10, 2024)
    Price Change
    $0.10(+1.23%)

    What went well

    • Net new Annual Recurring Revenue (ARR) grew by 29% in Q1, driven by both new customers and significant expansion within the existing customer base, with Net Retention Rate (NRR) reaching 110%. This strong ARR growth reflects the company's ability to drive revenue expansion and customer retention.
    • Increased upsell and cross-sell opportunities, with a 25% increase in upsell deals in Q1 compared to last year, and a 40% increase in deals over $100,000, indicating strong customer engagement and expansion within existing accounts. This demonstrates the effectiveness of AvePoint's go-to-market strategy and the high demand for its products among existing customers.
    • Growing demand for AI readiness solutions, positioning AvePoint to capitalize on the increased interest in AI adoption among enterprises. The company's solutions help organizations prepare their data estates for AI applications like Microsoft Copilot, which could drive future growth as AI adoption becomes more widespread.

    What went wrong

    • The company's net new Annual Recurring Revenue (ARR) growth is expected to decelerate, with guidance implying only 10% year-over-year growth in net new ARR for the rest of the year, compared to a 29% growth in Q1. ,
    • The strong Q1 net new ARR growth was partly due to an easy comparison with a weak prior-year quarter, suggesting that such growth may not be sustainable in future quarters.
    • Despite discussing AI-related opportunities, the company acknowledges that significant revenue impact from AI initiatives is unlikely before 2025, indicating limited near-term financial benefits from AI.

    Q&A Summary

    1. Net New ARR Growth
      Q: How will net new ARR grow this year?
      A: Management expects net new ARR to be $55 million, up about 10% year-over-year. Despite a strong 29% increase in Q1 net new ARR, they anticipate steady growth through the year, focusing on achieving a 21% annual ARR growth target.

    2. SaaS Growth Drivers
      Q: What's driving the impressive SaaS growth?
      A: Strong SaaS growth is driven by both new customers and expansion within the existing customer base, leading to a 110% NRR. Growth is broad-based across the platform, not limited to one product or migration. Management is confident in achieving 17% year-over-year revenue growth and increasing ARR growth to 21%.

    3. SMB Segment Demand
      Q: Are you seeing SMB weakness or MSP budget constraints?
      A: The SMB segment remains the fastest-growing area, with no significant softness observed. It accounts for under 20% of total recurring revenue, compared to Microsoft's 40%, indicating significant headroom for growth. There's strong demand from MSPs, especially for products like Policy Insight and Opus.

    4. ARR Growth Deceleration Concern
      Q: Is net new ARR growth decelerating?
      A: Management doesn't view it as a deceleration. The 29% growth in Q1 was against a weak prior-year quarter. They expect steady performance to meet the 21% annual ARR growth target and are pleased with the guidance.

    5. GenAI Monetization Timeline
      Q: When will GenAI readiness impact revenues?
      A: Substantial revenue from GenAI readiness is expected in 2025. Currently, significant experimentation is underway, but meaningful monetization is anticipated next year.

    6. Customer Upselling Momentum
      Q: What's the progress with multi-product customers?
      A: There was a 25% increase in upsell deals in Q1, contributing to a 110% NRR. About 50% of customers use two or more products, and 24% use four or more, with cross-selling driving growth.

    7. Product Suite Performance
      Q: Which product suites are performing well?
      A: The Control Suite, focusing on information management and access control, is the most active. Upsell deals increased by 25%, and deals over $100,000 rose by 40% compared to last year. The Copilot readiness initiative leverages all three suites.

    8. Cost Optimization and AI Funding
      Q: How is cost optimization trending and funding AI projects?
      A: Customers are consolidating with platform vendors to reduce costs, continuing this year. AvePoint helps maximize ROI on existing cloud investments, having consumed about $100 million of Azure over a three-year period. Conversations are shifting from IT budgets to business budgets, facilitating AI investments.

    9. Go-to-Market Evolution
      Q: How is the go-to-market strategy evolving?
      A: With GenAI raising awareness of data management needs, customers are proactively seeking AvePoint's solutions. Their platform's three-step approach—prepare, secure, optimize—for Copilot readiness enhances cross-selling opportunities.

    Related Publications