AvePoint, Inc. (AVPT) Earnings

Management highlights

- Overall Q2 2026 Performance * Total revenue hit $124.5 million, 22% YoY growth, above the high end of prior guidance. Constant currency total revenue growth accelerated to 21% YoY. * Ending total ARR was $465.1 million, 27% YoY growth (24% YoY after FX adjustment), an acceleration from Q1 2026. Net new ARR hit a record $29.9 million, 35% YoY growth, also accelerating from Q1. * AvePoint achieved its 8th consecutive quarter of GAAP operating profitability, with expanding GAAP operating margins even as strategic investments increase. Trailing 12-month GAAP operating margins reached 10%, and the company hit a Rule of 40 of 45 (47 when using revenue growth + free cash flow margin), both well above the 40 threshold. * Adjusted gross retention rate was 89% and net retention rate was 110% (adjusted for FX), both in line with Q1. Migration products continue to create a 2-point headwind to gross retention due to their naturally lower retention rates. * Gross profit hit $91.7 million (73.7% gross margin). Software product gross margins held steady at 83% year over year. Non-GAAP operating income was $20.3 million (16.3% operating margin), above the high end of guidance. * The company spent ~$50 million repurchasing 4.9 million shares in Q2, bringing year-to-date 2026 repurchases to $121.5 million, nearly 9 times the share volume purchased in the first half of 2025 at ~70% of the 2025 cost per share. - AI Strategic Positioning and Product Innovation * The company identifies unmanaged AI agent sprawl and shadow AI as a critical unmet market need: 88% of global organizations have had at least one AI-related security incident in the past year, nearly 20% cannot identify unsanctioned AI agent use, and 90% have delayed AI deployments an average of 6 months due to lack of trust and governance. * AvePoint launched AgentPulse (GA in Q1 2026), a platform-agnostic unified AI agent discovery, governance, and cost control solution that addresses shadow AI sprawl across multi-cloud environments. AgentPulse became available as a standalone product in early July 2026, following strong bundled demand. * The company recently announced new kinetic classification and rapid recovery intelligence capabilities at the Black Hat security conference, which complement existing AI governance and resilience offerings by enabling real-time data sensitivity monitoring and fast machine-speed incident recovery. * Gartner projects the enterprise agent management platform market will exceed $15 billion by 2029, creating a large long-term growth opportunity for AvePoint's unified AI trust layer.

Guidance

- Full-year 2026 ARR guidance is raised to $522.1 million to $528.1 million, 26% growth at the midpoint. A $1 million upward revision from prior guidance is offset by $2 million in incremental FX headwinds, leaving constant currency ARR growth expectations at 26% at the midpoint (a modest acceleration from prior guidance). - Full-year 2026 total revenue guidance is set at $508.5 million to $512.5 million, 22% growth at the midpoint. Q2 outperformance of $3.7 million is offset by $5.6 million in incremental FX headwinds, bringing constant currency revenue growth expectations to 21% at the midpoint (an acceleration from prior full-year guidance). - Full-year 2026 non-GAAP operating income guidance is set at $86.4 million to $88.4 million. Q2 outperformance of $1.2 million is offset by $1.9 million in incremental FX headwinds and planned increased strategic investments, leaving the midpoint Rule of 40 at 43. - Q3 2026 total revenue guidance is $128.2 million to $130.2 million (18% growth at the midpoint), including $2.4 million in incremental FX headwinds, for a constant currency growth expectation of 19% at the midpoint. Q3 non-GAAP operating income guidance is $21 million to $22 million. - The company is increasing 2H 2026 expense plans focused on two priority areas: 1) technology investments to accelerate R&D transformation and extend engineering productivity gains across the business, and 2) go-to-market investments to add sales capacity, improve partner enablement, and boost brand awareness to capture growing market demand. These incremental investments are expected to drive longer-term sustainable growth rather than only hitting 2026 targets. - Long-term operating margin target of 25% to 30% by fiscal 2029 remains unchanged. Management expects margin improvement to be gradual with some near-term volatility, with current investments increasing confidence in hitting the long-term target.

Segment performance

By product type: - SaaS revenues: $98.5 million, 27% YoY growth, representing 79% of total Q2 2026 revenues. On a constant currency basis, SaaS revenues grew 26% YoY. - Term license and support revenue: Flat YoY, representing 8% of total Q2 2026 revenues (down from 10% YoY). - Services revenue: $15.7 million, representing 13% of total Q2 2026 revenues (down from 14% YoY). By region: - North America: Total revenue grew 23% YoY, with SaaS revenue growing 27% YoY. ARR grew 21% YoY. - EMEA: Total revenue grew 27% YoY (24% YoY in constant currency), with SaaS revenue growing 28% YoY (26% YoY in constant currency). ARR grew 34% YoY. - APAC: Total revenue grew 16% YoY (16% YoY in constant currency), with SaaS revenue growing 27% YoY (27% YoY in constant currency). APAC surpassed $100 million in ARR in Q2, growing 25% YoY. All three regions now hold over $100 million in ARR. By customer segment: - Channel: 59% of total ARR came through the channel (up from 56% YoY), with 2/3 of incremental Q2 ARR generated through the channel. The MSP (MSP-focused Elements platform) segment is AvePoint's fastest growing area, currently representing ~20% of recurring revenue, with 2,000 total MSP partners out of a total 6,000 AvePoint partners. - Large customer cohorts: 911 total customers with ARR over $100,000 (26% YoY growth, the highest growth in over 3 years), and all cohorts larger than $250,000, $500,000, and $1 million ARR grew at or above 30% YoY. Q2 saw a record number of net new logos for these large cohorts, as well as a record number of net new SMB logos.

Risks & headwinds

- Foreign exchange rate fluctuations remain a material headwind to reported top-line and operating results, with incremental FX headwinds offsetting Q2 outperformance and upward ARR growth revisions in the 2026 full-year guidance. - Unmanaged AI agent sprawl, shadow AI, and AI-related security incidents create growing industry-wide risk that AvePoint aims to address, but rapid growth of ungoverned AI could slow overall enterprise AI adoption and indirectly reduce demand for AvePoint's solutions if the market does not adopt third-party governance tools at scale. - AI token consumption cost overruns are a growing concern for enterprise customers, which could lead to delayed or scaled-back AI deployments that reduce demand for governance and resilience solutions. - Dynamic and fragmented LLM ecosystem development creates uncertainty around enterprise adoption patterns, with rapid shifts in provider and model preference that could require faster product adaptation than currently planned. - AI-enabled cyberattacks can cause damage at machine speed, creating higher operational and security risk for AvePoint's customers, which increases demand for resilience tools but also could lead to larger than expected incident impacts if solutions do not scale quickly enough.

Analyst Q&A

• Q: How much pipeline uplift comes from AgentPulse, and how does standalone pricing interact with the existing ControlPlus bundling strategy? /

  A: AgentPulse has driven strong customer interest and significantly lifted demand for Control bundles, which is why the standalone SKU was launched in July due to high unmet demand. The number of Control package customers doubled in Q2 versus the prior quarter, and deals including AgentPulse have an average dollar value 2-3x higher than earlier Control bundle deals. On average, AgentPulse customers already manage over 5,000 AI agents, and the number of agents per customer is doubling every quarter. It is still early for standalone adoption, but demand is expected to accelerate going forward.

• Q: Why has NRR stayed at 110% despite large high-margin expansion deals from AgentPulse, and when will it move toward the 115% long-term target? /

  A: AgentPulse only launched midway through Q1, and most of the newly created pipeline from the product has not yet closed and contributed to NRR. The standalone SKU just launched in July, so it has had no impact on Q2 results yet. Management is satisfied with the current 110% NRR level, and still expects the product pipeline to drive steady improvement toward the 115% long-term target over time as deals close.

• Q: How does AvePoint position AgentPulse against Microsoft's Agent 365, and what headwinds could come from the E7 bundle that includes Agent 365? /

  A: AvePoint works hand-in-hand with Agent 365, but provides deeper cross-cloud governance capabilities, agent cost tracking, and ROI visibility that go beyond Microsoft's native offerings. Many enterprises have mixed Microsoft license types, and not all users are upgraded to the higher-cost E7 bundle that includes Agent 365, creating sustained demand for AvePoint's platform-agnostic, competitively priced solution. AgentPulse standalone has two tiered price points (base visibility, advanced governance) priced on a whole-enterprise per-user basis (not per-agent, to give customers pricing certainty), similar to other AvePoint products, and is competitively priced to attract both new and existing customers.

• Q: Are the incremental 2H 2026 investments for 2026 targets or longer-term growth? /

  A: Both the technology and go-to-market investments are focused primarily on driving sustained longer-term growth in 2027 and beyond, rather than hitting 2026 guidance. Technology investments are extending engineering productivity gains from current transformation work across the whole business, which will drive longer-term margin improvements. Go-to-market investments are built to capture the fast-growing AI governance market opportunity, and will not produce immediate revenue results. The investments create a small near-term hit to operating income in exchange for stronger long-term top-line growth and margin efficiency.

• Q: How big can the MSP-focused Elements platform business become for AvePoint? /

  A: The MSP segment is currently AvePoint's fastest growing area, and currently corresponds to the company's ~20% SMB recurring revenue share. Management expects the SMB segment, driven by MSP channel growth, could grow to 30% to 40% of total revenue over the next few years. There are ~20,000 MSP partners in North America alone, and AvePoint currently only works with ~2,000, leaving substantial greenfield opportunity for expansion.