Q4 2023 Earnings Summary
- AvePoint's shift towards SaaS revenue, increasing from 50% to 59%, enhances revenue predictability and confidence in their future outlook. This transition makes revenue more predictable and provides greater confidence over the years.
- AvePoint's fastest-growing segment is the SMB market, where they are experiencing continued very fast growth due to their unique approach through Managed Service Providers (MSPs). This strategy differentiates them from other vendors facing softness in SMB demand.
- AvePoint is well-positioned to benefit from the increasing adoption of AI and Microsoft's Copilot, as their solutions are integral to AI project deployments, especially in data aggregation, cleansing, and data governance. They are involved in numerous conversations and proof of concepts globally and are very bullish about the medium-term outlook.
- AvePoint is projecting a deceleration in revenue growth for fiscal 2024, guiding for 22% year-over-year growth in Q1 but only 15% growth for the full year, suggesting slowing growth in later quarters.
- The company's AI-related opportunities are currently in the experimentation phase, with no enterprise-wide deployments yet, indicating that significant revenue contributions from AI may not occur in the near term.
- While AvePoint has not yet seen a softening in SMB demand, there is a risk that SMB demand could weaken, potentially impacting AvePoint's fastest-growing segment that relies on managed service providers serving SMBs.
-
Growth Outlook and SaaS Shift
Q: Why is growth higher in Q1 but lower for full year?
A: The company is shifting more revenue to SaaS, increasing from 50% to 59%. This boosts Q1 growth to 22%, following 17% growth in Q4, due to the benefit of SaaS revenue roll-in. Over the year, the impact lessens, leading to a 15% growth guidance for the full year. The shift to SaaS reduces term licenses and services, making revenue more predictable and increasing confidence in the outlook. -
SMB Demand Resilience
Q: Why isn't SMB demand softening for AvePoint?
A: AvePoint's approach relies on managed service providers (MSPs) to serve SMBs without IT departments. MSPs use AvePoint's Elements product to manage multiple clients, which is driving fast growth in this segment—the company's fastest-growing area. Even small MSPs can generate $1 million ACV annually with AvePoint , helping to lower costs, improve margins, and offer enterprise-grade solutions to SMBs. -
AI Demand and Future Growth
Q: How will AI and Copilot impact AvePoint's growth?
A: There's significant experimentation and proof of concepts around AI deployments, involving data management solutions like AvePoint's. While current deployments are small-scale, the company is bullish about medium-term impact as AI adoption grows. AvePoint plays a core role in data management for AI projects, positioning it well for future opportunities.
Research analysts covering AvePoint.