Avepoint, Inc. ((AVPT)) has held its Q4 earnings call. Read on for the main highlights of the call.
AvePoint’s recent earnings call painted a picture of robust growth and strategic advancements, with a strong emphasis on their impressive ARR and SaaS revenue growth. The company showcased improved profitability and strategic expansion into multi-cloud environments, bolstered by the acquisition of Ydentic. Despite facing challenges with term licenses and U.S. federal exposure, AvePoint’s outlook remains optimistic, driven by strong demand and strategic investments.
Accelerated Annual Recurring Revenue Growth
AvePoint reported a significant acceleration in their Annual Recurring Revenue (ARR), which grew by 24% year-over-year, with a 25% increase when adjusted for foreign exchange. Notably, the net new ARR growth was 30% year-over-year, closely matching the previous quarter’s record growth of 31%.
Strong SaaS Revenue Performance
The company’s SaaS revenue for the fourth quarter reached $64.8 million, marking a 43% increase year-over-year and accounting for 73% of total Q4 revenues. When adjusted for constant currency, the SaaS revenues grew by 44% year-over-year, highlighting the company’s robust performance in this segment.
Improved Profitability and Cash Flow Generation
AvePoint’s Q4 non-GAAP operating margin stood at 16.2%, surpassing guidance and improving from the previous year. The company also achieved record cash flow generation of $32.8 million from operating activities in Q4, contributing to nearly $90 million for the full year.
Successful Strategic Acquisition
The acquisition of Ydentic was a strategic move to enhance AvePoint’s multi-tenant management capabilities for Microsoft Managed Services Providers. This acquisition is expected to drive competitive differentiation and economic opportunities for MSPs.
Expansion into Multi-Cloud Environments
AvePoint reinforced its commitment to data security with the release of new solutions for Google Workspace and Google Cloud. This expansion into multi-cloud environments underscores the company’s dedication to securing and protecting data across various platforms.
Record Gross and Net Retention Rates
Both gross and net retention rates reached all-time highs, with the gross retention rate at 89% and net retention rate at 111% when adjusted for foreign exchange. These metrics reflect the company’s strong customer retention and satisfaction.
Decline in Term License and Support Revenue
There was a noted decline in term license and support revenue, which fell to $9.4 million, representing 11% of Q4 revenues. This decline is attributed to more customers opting for SaaS offerings.
Challenges in U.S. Federal Exposure
AvePoint faces challenges in the U.S. federal sector due to potential staff reductions and renewal cycles, which now account for about 2% of total ARR. This exposure poses a risk to the company’s revenue from this sector.
Impact of Foreign Exchange
The impact of foreign exchange was highlighted as a factor affecting revenue growth relative to ARR growth, contributing to a wider gap between ARR growth and revenue growth projected for 2025.
Forward-Looking Guidance
Looking ahead, AvePoint provided robust guidance for 2025, projecting total ARR growth between 23% to 25%, with net new ARR expected to grow by 24% year-over-year at the midpoint. The company forecasts total revenues of $380 million to $388 million, indicating a growth rate of 15% to 17%. They plan to achieve a non-GAAP operating income of $52.3 million to $55.3 million, emphasizing their commitment to profitable growth while maintaining a Rule of 40 score in the range of 37 to 39, adjusted for FX.
In conclusion, AvePoint’s earnings call reflects a positive sentiment, driven by strong ARR and SaaS revenue growth, improved profitability, and strategic expansion into multi-cloud environments. The company’s strategic acquisition and robust forward-looking guidance underscore their focus on long-term success, despite facing some challenges. Investors and stakeholders can remain optimistic about AvePoint’s future prospects.