AvePoint, Inc. Q3 FY2025 earnings call

TJ Jiang discussed AvePoint's approach to governing agentic AI, including providing visibility, unified protection across multi-SaaS and multi-cloud, robust operational metrics, embedded responsible AI practices, and collaboration. Highlighted customer wins such as a large financial service corporation, a major food and beverage company, and a Japanese telecommunication company. Jim Caci noted strong financial performance with quarterly records for net new ARR, $100,000 ARR customer adds, operating cash flow, and non-GAAP operating income. Emphasized strategic investments in innovation and go-to-market capacity while driving operating leverage.

Total revenues for the third quarter were $109.7 million, up 24% year-over-year. SaaS revenue in Q3 was $84 million, growing 38% year-over-year and representing 77% of total Q3 revenues. Services revenues of $13.8 million were 13% of total revenues and grew 27% year-over-year. Term license and support declined 21% year-over-year and represented 10% of revenues. Maintenance revenue was approximately $840,000, 1% of total revenues. Recurring revenues made up 87% of total revenues in Q3. ARR ended the third quarter at $390 million, representing year-over-year growth of 26%. North America SaaS revenues grew 36% year-over-year, EMEA SaaS revenues grew 42% year-over-year, and APAC SaaS revenues grew 34% year-over-year. Net new ARR in Q3 was $22.4 million.

For the fourth quarter, AvePoint expects total revenues of $110 million to $112 million (23% to 26% growth). Full-year total revenues are expected to be $414.8 million to $416.8 million (25.8% midpoint growth). Full-year ARR is expected to be $412.8 million to $418.8 million (27% midpoint growth). Non-GAAP operating income for the full year is expected to be $77.3 million to $78.3 million (18.7% midpoint margin). Guidance factors in potential impact from the government shutdown on deal timing.

Impact of public sector softness on retention rates and growth. Uncertainty from the government shutdown affecting deal timing, particularly in North America, which impacted ARR and growth metrics.

Q: On AI governance use cases and next year's critical use cases.

A: Urgency on AI readiness for deployments, with agentic AI as the next significant opportunity.

Q: Impact of federal downsell on ARR, GRR, NRR.

A: Public sector softness affected gross retention rate and upsell, with the impact baked into Q4 guidance.

Q: Non-Microsoft related business size and upside.

A: Less than 10% today, potential 30% by 2029, focusing on Google, Salesforce, ServiceNow ecosystems.

Q: Sales capacity and contract length.

A: MSP continues to be the fastest-growing segment, and average contract length has improved this year.

Q: Customer agent launch stage and governance.

A: Agents already in use, but full-fledged digital employees are still in development phase.

Q: ARR guidance conservatism.

A: ARR is more sensitive to deal timing than revenue, leading to conservative ARR guidance while raising revenue guidance.

Q: AI in platform for efficiencies.

A: AI used in product enhancements, internal development, and security to drive efficiencies.

Q: Google solution momentum.

A: Expanding Google offerings, deepening relationships, with bundles performing well for customers