Avepoint at Public Technology Conference: Navigating Growth and AI Readiness

On Thursday, 29 May 2025, Avepoint Inc. (NASDAQ:AVPT) presented at the Public Technology Conference, outlining a robust strategic vision marked by strong financial performance and ambitious growth plans. The company highlighted its role in AI readiness and data governance, while acknowledging challenges in macroeconomic conditions affecting certain sectors.

Key Takeaways

• Avepoint achieved GAAP profitability a year ahead of schedule and is targeting $1 billion in annual recurring revenue (ARR) by 2029.
• The company is focusing on AI readiness, particularly within the Microsoft and expanding Google ecosystems.
• Avepoint plans strategic acquisitions centered on intellectual property (IP) integration and has a share repurchase program of up to $150 million.
• Geographic expansion is strong in APAC and North America, with Japan and Canada showing significant growth.
• The company maintains a competitive edge through a platform approach, enhancing product stickiness and net retention rates.

Financial Results

• Double-digit growth was observed across enterprise, mid-size, and SMB segments.
• North America contributes 43% of recurring revenue, with EMEA and APAC regions following closely.
• Japan is noted as the fastest-growing market.
• AI readiness and data governance are the fastest-growing verticals, now over 20% of ARR.
• Achieved a 38 on the rule of 40 scale in 2024, with the goal of meeting the rule of 40 by the end of 2025.

Operational Updates

• The APAC region has seen success through localized approaches, particularly in Japan and Singapore.
• In North America, Avepoint is investing in channel partnerships to expand its SMB and mid-market presence.
• The US public sector accounts for a quarter of the business, with a strong presence in defense and state/local sectors.
• Avepoint is a key partner within the Microsoft ecosystem and is expanding into multi-cloud integration, including Google.

Future Outlook

• Avepoint is committed to profitable growth through organic initiatives and strategic M&A focused on IP.
• The company aims to reach $1 billion ARR by 2029, with a 25% compound annual growth rate (CAGR).
• Continued investment in AI readiness solutions to support enterprise data management needs.

Q&A Highlights

• Competition remains intense, but Avepoint benefits from not having a singular competitor.
• The company’s acquisition strategy prioritizes IP over revenue, focusing on seamless integration into their platform.

For further details, readers are encouraged to refer to the full transcript below.

Full transcript - Public Technology Conference:

Tim Ripke, Jefferies Tech Software Investment Banking, Jefferies: Everybody, welcome. Tim Ripke here from Jefferies Tech Software Investment Banking. We have the pleasure and honor to be with a co founder, I like to call the OG of data governance and data security for the last twenty five years across all the software. TJ Zhang, very pleasure to have him here. And CFO, Jim Casey, as well.

Thanks everybody for joining. I’ll kick off TJ, if that’s okay, with a few questions. Congratulations on a great quarter. This is getting to be a broken record with that point, nine consecutive quarters of outperformance. Maybe just a few minutes on recapping the key takeaways for the group here.

And then anything from the macro perspective that maybe helped or hurt, and how that impacted maybe your guidance for the year?

TJ Zhang, Co-Founder: Yeah. We’re pleased with the double digit growth across enterprise segment, which is we define as 5,000 above employee size companies, as well as mid size and SMB. SMB is 500 and below. And we also see double digit growth across all major regions that we operate in. So 43% of our recurring is in North America, and then 30 plus percent is in EMEA and then 20 plus percent is APAC.

So all regions grew. APAC actually grew fastest. It’s also a smaller number from a recurring revenue perspective. And Japan is continuing to be our fastest growing country. So we see we’re very encouraged by the continued strong demand in data governance, data control and as well as data resiliency.

But our fastest growing vertical, if you will, is the AI readiness data governance and control.

Tim Ripke, Jefferies Tech Software Investment Banking, Jefferies: With that, just to focus on the APAC region a little bit, because it’s been such a power rally for the business for the last few years, with SaaS growth well over 40%. What are some of the things, maybe from a right to win perspective, or you’re beating some of the big incumbents that you’ve done such a good job at specifically recently, but also in the course of the last few years? What favorable dynamics or things that you’re doing that others are clearly not doing?

TJ Zhang, Co-Founder: I think we did a decent job in truly localizing a card in the local demand. So, for example, Japan, mentioned, we’ve been there ten plus years. We’re treated pretty much like a local vendor. We are in all prefectures and central government as well as a large commercial account. Japan is actually very much of an enterprise and government story.

The mid to small businesses in Japan because 90 plus percent of our revenue today is Microsoft ecosystem. So Microsoft themselves are actually historically, we’re not very successful in small to medium businesses in Japan. It’s really just the OEM story with a laptop deployment where you bundle in Office. But since GenAI, a lot of the medium to small businesses are now moving to cloud in droves and we start to see that small to medium business growth in Japan. So so far, the the big growth over there is the commercial large enterprise and government.

In Singapore specifically, that’s where we do most of our services. So, today, 12% of our revenue is in services, majority of that is in Singapore. We leverage that to do IP generation. So, we do these eight digit, nine digit deals actually with Singapore government. These are TCV deals and we use that to generate IP and then sell in Japan, US, Australia, Europe, etcetera.

So that’s kind of our differentiation. And whereas Australia, New Zealand is very much like our EMEA approach, % channel, fast growth flywheel in small to medium segment and then continue to go after the public sector and commercial strong history that we always had.

Tim Ripke, Jefferies Tech Software Investment Banking, Jefferies: Maybe staying on the geographic theme, because one of the beauties in the business is the balance that you have globally across different regions and customer bases. North America, obviously, is your biggest at 44% of the total ARR. But maybe just a comment or two around strategy there. Any issues with some of the things that have happened with the macro perspective that maybe have impacted you as clearly a true global business, but in the spirit of the geography in North America as kind of your biggest and then kind of what’s next for that segment?

TJ Zhang, Co-Founder: Yeah. North America historically has been a direct sales approach for us. Since we’ve gone public, we really invest into channel. So finally, America, the whole SMB and mid market channel flywheel is going. So what that does is allow us to go after new markets faster at a far more efficient sales and marketing cost than we would be doing with direct.

The direct organization really focused on large enterprise wins. So you saw in Q1, we have a record number of large ARR wins as well. So, for example, all big fours are our customers and even in Q1, we have a large multimillion dollar ARR win with one of our upsell win with that one, our big four client. But so North America, we’re we’re very pleased with our continued expansion of even new Canada as a new territory. There’s fast growth there.

In specific, you’re talking about some of the macro impact. We have a very strong public sector practice. It’s a global public sector practice, but also US public sector, it’s quarter of our business. But within the public sector, there’s three distinctive business divisions. One is defense, DOD, and that continue to be very strong.

One is stay and local, that continue to be very strong as administration try to push decision and budget to the stay and local level. The impacted side is really the federal agencies. And we’ve seen, for example, IRS staff reduction because we licensed by a number of employees. We already saw that and forecast that back in February when we did the year end quarter earnings before Q1 earnings. However, our team’s effort, reengaging our customers and at the end of day, whether you’re cutting staff or not, the need for technology upgrades, the need to use AI to do more, Every every agency and every commercial entities are doing that.

So even with significant staff cut, happy to say that even at IRS, for example, we were able to maintain our total multimillion dollar contract value by having a completely different type of conversation with them to help them upgrade their systems and and be able to give them a fixed outlook on the on the budget allocation despite the variability they may have in head counts. So we’re kind of changing the conversation there. And also, lastly, would just say, in public sector, it’s interesting. A lot of the big SIs are hurting, like you can see from Bruce Allen Hamilton Booz Allen and and sorry, Booz Allen and because 80% of their business there. So that actually created a lot of opportunity for medium sized vendors like us to go after more business because there’s an intentional move away from the very large defense contractors.

Tim Ripke, Jefferies Tech Software Investment Banking, Jefferies: Yeah. Makes sense. You’re feeling a vacuum. Jim, maybe a second on the beauty another part of the beauty of the business is not just the balance around the geography and the revenue contribution, but in the growth and the margin profile in the company. A lot of people talk about rule of 40s.

Maybe you want to take a second on the spirit of how you’ve been able to profitably grow over the course of time and do it in a very consistent and disciplined, deliberate manner.

Jim Casey, CFO: Yeah. No, I think it’s a really good point. I mean, I think if you look back to 2022, which seems like forever ago now, but it was only a couple years ago, we saw some uncertainty back then. And in fact, more than uncertainty, we saw companies laying off a ton of people, put pressure on, obviously, customers renewing with us at the time. And we made a decision at that point, it was really late twenty two, that we wanted to focus on profitable growth.

And the idea that, we should be growing, we still think we’re in a high demand market, but we wanted to do it in a profitable way. And, at that point, we were not profitable. And so we really focused on really two things going into 02/2023. ’1 was, as you said, achieving the rule of 40 by 02/2025. And, obviously, the rule of 40 encompasses those two metrics.

Right? It it encompasses a growth metric and also a profitability metric. And then we also focused on GAAP profitability by the end of 02/2025. So it was those two key metrics that we said coming out of 02/2022 really into 02/2023 that we wanted to focus on. Proud to say that in 02/2024, we achieved one of those.

We achieved GAAP profitability, so a year ahead of schedule. And we achieved a 38 in terms of the rule of 40 scale. So we were right there. Now, obviously, going into q one, we think we’re on path and on target to achieve rule of 40 by the end of this year. And our definition of the rule of 40 is ARR growth and non GAAP operating income as a percentage of revenue.

A lot of other folks in the industry use, let’s say, ARR growth or revenue growth and free cash flow. And if we use those metrics, we would already be a rule of 40 company. So we feel good about the progress we’ve made. We feel really confident in achieving that objective by the end of twenty twenty five.

Tim Ripke, Jefferies Tech Software Investment Banking, Jefferies: Yeah, we always laugh because you guys are more conservative about that definition than others are.

Jim Casey, CFO: True.

Tim Ripke, Jefferies Tech Software Investment Banking, Jefferies: We can’t have a conversation with TJ about data security and data resilience and data governance without talking about AI for a little bit in the spirit of everybody’s talking about it. And he’s one of the leaders of it for years now. But you think about your customer journey and how customers are moving across AppPoints platform that you have today. Any commentary around where you guys fit in, where you feel like you’re differentiated, where you can actually really drive penetration inside that customer base?

TJ Zhang, Co-Founder: Yeah. So I think there was a recent study come from Gartner that looked at industry sector adoption of AI. And the one of the conclusion is that regular industry actually tend to have a smoother AI deployment path because, in general, compared to non regular industry, their data are better curated and managed. So there lies the crux of it. So AI is not magic.

It’s a training of data. So it doesn’t matter what commercial model you use or open source model you use. At the end of the day, for your AI deployment to know and speak intelligently about your business, about your industry, your vertical, it needs to be refined and trained with your own data. So most enterprise data is actually quite messy. It’s everywhere.

It’s across different data silos. And we we are very focused on unstructured data, which is your emails, your contracts, your chats, your projects, etcetera. And those are 80% of all data out there. And, of course, increasingly 10% of all data are generated by AI as well. So they’re so enterprise need to adopt a better way to collate and classify, tag, permission management, and really life cycle management of their corporate dataset before they actually pump it over to refinement training.

Otherwise, you’re going to have higher hallucination rate, you’re going to have higher misinformation rate, and also you’re going to have risk of AI recommending things you’re not supposed to have access to. So we have a number of clients that actually deploy our solution and including JPMorgan Chase, one of the largest financial institutions globally. Before they turn on Teams Copilot, they actually turn on our Teams governance solution. Because what Copilot does, especially for Office Copilot, it leverages Office Graph behind the scenes to look at permission. It assumes all your enterprise data set permission is set properly.

I tell you, nobody have their data set properly. So many, many We all heard the stories, right? Many enterprises, when they turn on Copilot, they get surprises recommending things that people are not supposed to have access to or elevated stuff that of makes people nervous, it was actually elevated like a retrenchment plan. So those are things we help our customers remediate by having the proper control and governance of their data before they turn on AI.

Tim Ripke, Jefferies Tech Software Investment Banking, Jefferies: One thing I’ve always been enamored at the company about, and specifically how you guys have been able lead through, is Microsoft has kind of been a part of your DNA for a long time. And you’ve constantly innovated alongside Microsoft and always been in a position to create new products and new innovation alongside whatever they might do in a really neat parallel way. Is there anything that you feel positive, negative, any sort of Microsoft driven commentary, knowing that that is still a primary part of your product set?

TJ Zhang, Co-Founder: Yeah. We’ve been in this ecosystem for twenty plus years. Again, we don’t compete against Microsoft. We compete within this multi trillion dollar ecosystem. And all hyperscalers have their ecosystem.

Ecosystem is an important aspect of their competitive moat against each other. So we are an important part of the Microsoft cloud ecosystem. And because of that, we actually sit on their product advisory councils as partners providing feedback. We’re oftentimes the launch partner. Anytime they have new releases, whether it’s back express, Most recently at the dev conference at Build, Satya had a slide of all third party agentic AI offerings and we are at the top right.

So it’s nice. So we’re often the launch partner. So we we basically see where Microsoft’s roadmap is and then we actually be able to kind of forecast where the monetization opportunity come. So, again, hyperscalers will always incrementally improve their base offering, but every time they expand the overall offering, there’s a lot more opportunity for monetization for ecosystem players. So having said that, we are also now expanded into the Google ecosystem in an aggressive way.

So, we announced those investments and new product sets in marketplaces because now Google, as you all know, are very, very serious about enterprise segment. So, the Wizz acquisition, it’s a very strong signal. So, we think there’s massive opportunity there to replicate our success in the Microsoft ecosystem when it comes to enterprise grade data management governance solution and bring that to the Google ecosystem. So, multi cloud is here to stay. It’s really a artifact of our customers.

We’re following our customer demand because they will say, hey, Appoint, you have a confidence platform to manage and curate my data across Office Cloud, but I also have Salesforce. I also have stuff, application and data set on AWS. And then part of my subsidiaries are also using Google. This happens. So can you help us?

So those are massive opportunities. So for us, see that investment to multi cloud is another way to not only get new net new market acquisitions, but also as a way to expand our existing footprint, thereby increasing NR.

Tim Ripke, Jefferies Tech Software Investment Banking, Jefferies: It seems like a natural way that you guys have been able to prove out a scripting way of creating monetization through an ecosystem, and then slowly but surely, in a disciplined but smart way, work your way through different ecosystems. Very impressive. A couple more questions before I turn over. But competition wise, do you feel anybody specifically that is maybe out there that’s undermining you? Or do you feel very confident kind of where you’re at in your position, whether it’s geography based or channel direct, any of the customers segment specifically?

How do you feel about competition?

TJ Zhang, Co-Founder: Competition has always been fierce in B2B software. That dynamic has not changed. But the good thing is we don’t have a singular competitor. We have point competitors in different spaces across different geos and across different segments. So that actually makes it easier for us to deal with.

So we sell the platform. The the product is our new go to market messaging is beyond secure and the platform is the product. So we we see that every time we sell two or more products into accounts, we’re far more stickier and that NR goes much higher. So so the the mantra is we don’t just we we may land with a singular product. We have different tip of the spear, if you will.

We can get in from a data analytics migration perspective. We can get in from governance control perspective. We can also get in from backup and ransomware detection recovery perspective. But once we do, the moment we start upselling additional product, that allow us to make the platform much more stickier. So that’s always been our competitive advantage.

Tim Ripke, Jefferies Tech Software Investment Banking, Jefferies: That makes sense. Jim, maybe last question. In terms of capital allocation, through over $300,000,000 of cash in the balance sheet today, cash flow positive story, clearly no requirement for raising money. But in the spirit of M and A, thinking about distribution, however you think about it, maybe a comment or two on that would be helpful.

Jim Casey, CFO: Yeah. Yeah, we refer to it as kind of capital allocation. And you’re right, we’re sitting on about $350,000,000 of cash. Right? Good free cash flow generation.

So we expect that number to only increase. Yeah. We we think about it really three vectors. Right? One is, first and foremost, making sure that our teams are adequately staffed.

They have the right resources, the right technologies to continue to grow, execute, and deliver. Obviously, they’ve been delivering over the past nine quarters very efficiently and effectively. We wanna see that continue to happen. So we wanna make sure they they have the right resources to do that. So that’s first and foremost.

Second, as you alluded to, we’ve done six small tuck in acquisitions over the past couple years. M and a is definitely part of our road map in terms of we do think there’s an opportunity to continue to invest organically, but also there there are great companies being created every day. There’s really smart people out there coming up with great technology that we should be taking advantage of, and we have a route to get it to market and helping customers. So we’re continuously looking at opportunities to do that. And we feel like m and a is is definitely a use of cash moving forward.

Like I said, we’ve done small tuck in acquisitions. I do think we now have the muscle to do larger acquisitions. So I wouldn’t be surprised if if we do bigger deals moving forward. And then the third kind of pillar in our capital allocation strategy is our share repurchase program. You guys may have seen we’ve done share repurchases in the past.

We do have a program in place right now that allows us to purchase up to a hundred and $50,000,000 worth of stock over the next three years. And so, you know, that’s an opportunity for us to to look at our own stock as an investment and take advantage of that where we think it’s appropriate. But it’s probably the third in those three pillars as we look at our capital allocation.

TJ Zhang, Co-Founder: I I would add additional is that our guiding principle when it comes to acquisition is never going to be revenue acquisition. So yes, we’ve given targets to get to 1,000,000,000 ARR by 2029. That means 25% top line CAGR and we’ll do this profitably. But that’s mostly with our own organic growth initiatives. We have multiple high growth initiatives internally.

If all of them hit, we’ll do much better. So but our acquisition is really focused around IP, very interesting IP expansion. And whenever we do acquisition, we’re very focused on organic code integration. So refactor the code and integrate it into our confidence platform so then we can deliver to our existing customers and existing channels in a seamless way. So what we’re acquisition in tech space often fall apart is often this tech debt, lack of integration.

Then over time, that tech debt would just weigh down a company’s velocity Because customers are very smart, they don’t want a separate experience, they don’t want a separate support and use this experience with a completely different product. So for us, it’s super important to have that organic native integration when we do our acquisition so that because we’re a technology first approach. We’re all tech background, so we want to make it much more of a seamless upgrade experience, expansion experience for our customers.

Tim Ripke, Jefferies Tech Software Investment Banking, Jefferies: That makes sense. It’s good optionality for the financials that you do. Well, I’ll turn over. Is there any questions from the audience, please?

TJ Zhang, Co-Founder: So, yeah. So the AI readiness, the control and governance piece is over 20% our AR. It is our fastest growing suite. On the compute side, we we actually again, we say we don’t compete against Microsoft. We complement what they offer.

So Purview is part of the e five license. Seven years since e five deploys, only less than 20% of the seats are covered by e five. Oftentimes, you’ll find customers have mixed license types. Not everybody need e five. There’s E3, e one, f one.

So how do you actually coalesce all that different license types with a consistent data management strategy? And that’s where we come in. We will leverage purview labels when it makes sense, when customer have purview. But oftentimes you’ll be it’s rare for a customer to have every single employee covered by that. So it’s very much of a complement and surround strategy rather than a head to head compute strategy.

Tim Ripke, Jefferies Tech Software Investment Banking, Jefferies: Any others? Great. T. J. Jim, thanks again for joining and supporting Jefferies.

TJ Zhang, Co-Founder: This presentation has now finished. Please check back shortly for the archive.

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