AvePoint, Inc. Q3 FY2024 earnings call

• TJ Jiang highlighted that Q3 was exceptional, building on momentum from the first half, with AvePoint outperforming expectations for the seventh consecutive quarter. The AvePoint Confidence Platform is in demand for data security, governance, and resilience. - Discussed key customer wins across various verticals including financial institutions, insurance, healthcare, public sector, and higher education. - Jim Caci detailed financial results, noting SaaS as the driver, regional performance, ARR growth, gross margin improvement, operating expenses, cash flow generation, and achievement of GAAP profitability in Q3 and first 9 months of 2024.

For the third quarter ended September 30, total revenues were $88.8 million. SaaS revenue was $16.9 million, growing 45% year-over-year and comprising 69% of total revenues. Term license and support was $14.1 million, maintenance revenue was 3% of total revenues, and services revenue was $10.8 million, 12% of total. Regionally, North America, EMEA, and APAC all saw SaaS growth over 40%. Total ARR ended the quarter at $308.9 million, a year-over-year growth of 23%. Net new ARR in Q3 was a record $18.8 million. Gross profit for Q3 was $68.4 million with a gross margin of 77%, and operating income was $17.8 million.

• For full year, total ARR is expected to be $324.9 million to $326.9 million (23% year-over-year growth). - Total revenues are expected to be $327.8 million to $329.8 million (21% year-over-year growth). - Non-GAAP operating income is expected to be $45.8 million to $46.8 million. - Q4 total revenues are expected to be $86.5 million to $88.5 million.

Q: Provide relative growth rates across different suites sold.

A: Jim Caci stated that suites are relatively similar to last year, with more focus on control but overall similar to past performance.

Q: Summarize what's driving net new ARR performance.

A: TJ Jiang mentioned multiple strong segments, with the SMB segment focusing on managed service providers driving outsized net new logo acquisitions and ARR, and governance and security suites working hand-in-hand.

Q: How GenAI transforms privilege access from user centric to data centric related to control suite.

A: TJ Jiang explained that access control and privilege access with Microsoft 365 Copilot is tied to Office Graph, and AvePoint's control suite is involved in permission management and lifecycle governance for GenAI deployments.

Q: Acceleration in IT spending budget reprioritization.

A: TJ Jiang noted there's a bit of both, with AI experimentations using separate budgets initially and firm rollouts of M365 Copilot moving into primary IT spend buckets, highlighting the importance of data governance and control for AI deployments.

Q: Implied guide for fourth quarter operating margins.

A: Jim Caci said Q4 is typically a higher spend quarter due to budgeting and programmatic spend, with a $1 million spend moved from Q3 to Q4 contributing to the guidance.