AvePoint, Inc. (AVPT) Q1 2025 Earnings Summary

Executive Summary

• Q1 revenue $93.1M (+25% y/y) with SaaS $68.9M (+34% y/y), non-GAAP operating income $13.4M, and non-GAAP gross margin 75.0%; management said revenue and non-GAAP operating income were above the high end of guidance, and raised FY25 ARR, revenue, and non-GAAP operating income outlooks .
• ARR reached $345.5M (+26% y/y) with record net new ARR of $18.5M; reported GRR 88% and NRR 111%; 55% of total ARR via channel and 63% of incremental ARR via channel, supporting efficient growth .
• Q2 guide: revenue $95.3–$97.3M and non-GAAP operating income $13.2–$14.2M; FY25 guide raised to ARR $411.8–$417.8M, revenue $397.4–$405.4M, and non-GAAP operating income $61.4–$64.4M, with FX tailwinds incorporated and prudent macro assumptions maintained .
• Product momentum and channel leverage are catalysts: launched Risk Posture Command Center and expanded Elements for MSPs; closed Ydentic acquisition to deepen MSP platform capabilities .

What Went Well and What Went Wrong

• What Went Well

  • Outperformance vs guidance with raised FY25 outlook: “Total revenues in Q1 were $93.1 million, up 25% year-over-year and above the high end of our guidance” and non-GAAP operating income $13.4M; FY25 ARR, revenue, and non-GAAP operating income all raised .
  • Record net new ARR momentum and enterprise traction: net new ARR $18.5M (organic +57% y/y), 689 customers >$100K ARR (+23% y/y), reflecting stronger large-deal execution and platform land/expand (Control suite-led) .
  • Strategic channel and platform progress: channel comprised 55% of total ARR and 63% of incremental ARR; CEO: “AI-driven strategies are beginning to shift from experimental testing to practical implementation,” boosting governance-led “Control” suite demand .

• What Went Wrong

  • Cash flow softness in Q1 from one-time tax items: cash from operations $0.5M vs $7.8M prior-year due largely to ~$7M one-time taxes tied to December 2024 earn-out share distributions; free cash flow ≈ -$1M .
  • Macro/geopolitical caution embedded in ARR stance despite strong Q1: management maintained prudence in ARR outlook (constant-currency) given second-half geopolitical risks; revenue beat partly aided by term-license mix, which does not change underlying ARR .
  • Cash used for acquisitions and buybacks: net cash used in investing $(16.9)M including $(14.9)M for acquisitions; repurchased 800K shares ($12M) in Q1, tempering net cash build despite $87.3M warrant proceeds .

Financial Results

Revenues and Margins (prior two quarters and current, oldest → newest)

EPS (GAAP)

Q1 2025 Actual vs Company Guidance (from Feb 27, 2025)

Segment/Revenue Line Breakdown

KPIs and Operating Metrics

Additional notes:

• CFFO: $0.5M in Q1 2025 vs $7.8M in Q1 2024 (one-time tax payments drove the decline) .
• Cash and short-term investments: $351.8M at March 31, 2025 .

Guidance Changes

Management noted FX tailwinds embedded in raised FY25 guidance and prudence given geopolitical risks in 2H25 .

Earnings Call Themes & Trends

Management Commentary

• “Our first quarter results were an excellent start to the year…including outperforming our guidance and delivering strong growth in total ARR and record growth in net new ARR.” – CEO, Dr. Tianyi Jiang .
• “SaaS continues to drive our business…first quarter revenue of $68.9 million (+34% y/y)…and 74% of total revenues.” – CFO, James Caci .
• “Adjusted for FX, our trailing 12-month gross retention rate…was 89%…FX-adjusted net retention rate was 111%…We are pleased to show steady progress on these critical customer metrics.” – CFO .
• “AI-driven strategies are beginning to shift from experimental to operational…creating an urgent need for data governance frameworks that can support innovation while maintaining security and compliance.” – CEO .
• “The corresponding incremental FX tailwinds are reflected in our updated full-year guidance…Additionally, our updated full-year guidance…includes the respective first quarter beats.” – CFO .

Q&A Highlights

• Demand and macro: “Demand environment remained the same versus prior quarters…top needs remain AI and security,” while monitoring potential second-half macro impacts .
• Competitive/land motion: Governance (Control suite) increasingly the “tip of the spear” as customers move from experimentation to deployment, especially preparing for Microsoft Copilot .
• MSP trajectory: MSP ARR was 14% of total at YE’24 with ~60% CAGR (2020–2024); Ydentic adds important IP; Elements platform expanding use cases beyond SMBs into large enterprises .
• ARR guidance prudence: Q1 revenue beat partly due to term-license mix; maintained prudent full-year ARR stance excluding FX despite strong start .
• AI deployment: ~80% of customers testing Copilot; <10% fully deployed; broader AI services adoption rising regardless of Copilot license approach .
• Large deals: 40 deals >$100K in Q1 (+43% y/y) across all regions, aiding license outperformance .
• FX and guidance: Raised FY guide reflects Q1 beat and FX tailwind; otherwise prudently conservative given uncertainty .

Estimates Context

• We attempted to retrieve S&P Global (Capital IQ) consensus for revenue/EPS/EBITDA for Q4’24, Q1’25, Q2’25, and FY’25; data were unavailable via our tool, so we cannot benchmark reported results against Street consensus for this quarter (S&P Global consensus unavailable) [Values retrieved from S&P Global].
• Company vs guidance: AVPT beat Q1 revenue and non-GAAP operating income guidance and raised FY25 ARR, revenue, and non-GAAP operating income, with FX tailwinds noted .

Key Takeaways for Investors

• Governance-led platform wins are driving durable ARR growth as AI adoption migrates from pilots to deployment, with Control suite as a key cross-sell lever and record net new ARR this quarter .
• Channel strategy is compounding efficiency and reach (55% of total ARR; 63% of incremental ARR), supporting margin expansion and sales productivity improvements over time .
• Q1 results materially exceeded company guidance; FY25 outlook raised across ARR, revenue, and non-GAAP operating income with FX tailwinds embedded and prudent macro assumptions—de-risking near-term expectations .
• Cash flow headwind in Q1 was primarily one-time tax related; underlying balance sheet remains strong ($351.8M cash/short-term investments) enabling continued investment, M&A (Ydentic), and buybacks .
• Product cadence remains a catalyst (Risk Posture Command Center; Elements enhancements; Google data security solutions), broadening multi-cloud data security/governance TAM and strengthening competitive moat .
• Near-term trading implication: positive setup from beat-and-raise and record net new ARR, tempered by management’s prudent ARR stance on macro and FX normalization risk; watch Q2 execution versus updated guide and services mix impacts on margins .
• Medium-term thesis: platform consolidation, channel leverage, and AI governance tailwinds support sustained ARR growth and margin improvement toward long-term targets (GRR 90%+, NRR ~115%) .

Appendix: Additional Financial Detail (Q1 2025, GAAP)

• GAAP gross profit $69.2M; GAAP operating income $3.3M; GAAP net income $3.6M; diluted GAAP EPS $0.02; shares diluted 224.6M .
• Balance sheet: cash & cash equivalents $351.5M; total assets $598.8M; total liabilities $237.4M; equity $361.5M .
• Cash flow: net cash from operating activities $0.5M; net cash used in investing $(16.9)M (including $(14.9)M for acquisitions); net cash from financing $76.2M (warrants, buybacks) .