• Total Revenue: $89.2 million in Q4, representing 20% year-over-year growth.
• SaaS Revenue: $64.8 million in Q4, 43% year-over-year growth, representing 73% of total Q4 revenues.
• Total ARR: $327 million as of December 31, 24% year-over-year growth.
• Net New ARR: $18.1 million in Q4, 30% year-over-year growth.
• Gross Margin: 75.5% in Q4, compared to 75.2% in Q4 of 2023.
• Non-GAAP Operating Margin: 16.2% in Q4, a year-over-year improvement of more than 240 basis points.
• Operating Cash Flow: $32.8 million in Q4, nearly $90 million for the full year.
• Free Cash Flow Margin: 26% for the full year, more than doubled from 12% in 2023.
• Gross Retention Rate: 89% adjusted for FX, improved by 2 percentage points year-over-year.
• Net Retention Rate: 111% adjusted for FX, improved by 2 percentage points year-over-year.
• Cash and Short-term Investments: $290.9 million at the end of Q4.

• Warning! GuruFocus has detected 7 Warning Signs with SOLV.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• AvePoint Inc (NASDAQ:AVPT) reported a strong Q4 with total revenues of $89.2 million, representing a year-over-year growth of 20%.
• SaaS revenue grew 43% year-over-year, making up 73% of total Q4 revenues, indicating a successful shift towards a SaaS-based model.
• The company achieved a non-GAAP operating margin of 16.2%, surpassing the high end of their guidance and showing significant profitability improvement.
• AvePoint Inc (NASDAQ:AVPT) ended the year with over 25,000 customers, including significant expansions with major global companies, demonstrating strong customer retention and acquisition.
• The company generated $32.8 million in operating cash flow in Q4, contributing to a total of nearly $90 million for the full year, highlighting strong cash flow generation.

Negative Points

• Despite strong ARR growth, the gap between ARR and revenue growth is expected to widen in 2025, partly due to FX impacts and a decline in term license revenue.
• The company anticipates a flattening of non-GAAP EBIT margin in 2025, indicating a potential slowdown in margin expansion.
• AvePoint Inc (NASDAQ:AVPT) faces a competitive landscape in the data security posture management market, which could impact future growth.
• The company's federal business exposure is limited to 2% of total ARR, which may limit growth opportunities in the public sector.
• Investments in sales, marketing, and R&D are expected to increase, which could impact short-term profitability despite long-term growth potential.

Q & A Highlights

Q: Can you disclose what your US federal exposure is, and how are you thinking about that business in light of what's going on in D.C. right now? A: Tianyi Jiang, CEO: Our federal business is part of a global public sector division, including federal, state and local, education, and DoD. The exposure is about 2% of our total ARR. Despite staff reductions, digital transformation and AI deployments continue to drive active discussions with agencies.

Q: Why is there a wider gap between ARR growth and revenue growth in 2025 compared to 2024? A: James Caci, CFO: FX is a factor, but the mix of revenue types, particularly the decline in term license revenue, also contributes. As term licenses decline, the gap between ARR and revenue widens due to the shift towards more SaaS revenue.

Q: How have price increases impacted ARR and NRR in 2024? A: James Caci, CFO: The main driver of NRR growth is customers consuming more of the platform, not price increases. While we did increase prices across multiple products, it represents a small percentage of our overall NRR improvement.

Q: Can you elaborate on the integration goals with the Ydentic acquisition and your M&A strategy? A: Tianyi Jiang, CEO: Ydentic enhances our MSP offerings, allowing us to expand into SMB and medium-sized customers efficiently. We focus on profitable growth and have a strong cash position to support active M&A targeting.

Q: How are you approaching investments in sales and marketing for 2025? A: James Caci, CFO: Investments will be across direct sales, channel, and marketing initiatives. These investments are forward-looking, aiming to support growth in 2026 and beyond, while maintaining a focus on profitable growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.