Earnings call transcript Q2 2023

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Operator

Good afternoon, welcome to the AvePoint Second Quarter 2023 Earnings Conference Call. [Operator Instructions].

Now I'd like to turn the conference over to Jamie Arestia, Vice President, Investor Relations. Please go ahead.

James Arestia

Thank you, operator. to Quarter welcome Earnings and afternoon, AvePoint's XXXX Second Call. Good afternoon on the me is call With this Dr. Chief Caci, Chief Jiang, Financial TJ Executive Officer. Officer; and Jim a remarks, session. preliminary we open call After will for the question-and-answer

All call will AvePoint that press harbor management's in statements the property uncertainties actual material current Please note We cause complete for that include statements a you risks copyright could materially that differ and to is our with safe encourage webcast contained release the rights forward-looking more results expectations. reserved. all in and involve from description. the review this to sole of

for, The note this in this measures as with management means from, income measures not are how operating be investors margins, are considered These GAAP. we measures Please with non-GAAP presentation evaluates U.S. the substitute which superior evaluating provide understanding isolation non-GAAP believe describes GAAP. presentation of not measures measures, operating accordance performance. non-GAAP including prepared in non-GAAP in should operating or non-GAAP the presented in and presented accordance they certain to financial U.S. and company's with a

of these financial is XXXX the our are which in Investor section most measures directly the Relations measures our quarter as comparable of earnings website. presentation, our GAAP second well release of both to available press as reconciliation investor A updated available in

me let that, turn With to the over call TJ.

Tianyi Jiang

exceeded margin on guidance. joining once call well that XX% everyone Thanks, highlighted thank total growth us the as performance to Jamie, our and you and again as ARR today, revenue by

of the for demand Our our demonstrate our second the results business model. and strength platform quarter

and their improve profitable bottom continue quarter reduce top workplaces. in customers both This coupled on uncertainty expectations see confidence on that our and they business more with the growth, demand, the Amidst informed costs, make drove platform advance depend focus surpassed as to decisions on to the sustained environment, digital line. AvePoint's macro we rapidly productivity ongoing another

Jim X I financial shortly, results first, will our but to want dive discuss topics. into main

them continued massive that positioning and we're our where First, generative of and optimization the their stage abilities platform journey competitive of remains for key and in cloud to dynamic set how changes this every AvePoint advantage AvePoint journey and workplace transformation of the with success customers quarter. long-term amidst a AvePoint's digital partner second, AI, to another strong results our are led happening environment; in and for

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our our I've conversations customers, are X things partners had In abundantly my peers, with clear. and

impactful from on for of of which success unprecedented solutions AI sources and commercial customer AI models, will together powerful bedrock foundational the data unique is especially First, the combination gathered the proprietary data, pave top for satisfaction. way

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the world from journey. where unique are proposition industry in platform can any these transformation offers digital confidence their you see companies to AvePoint regardless size, As in they located the examples, in of any value a to lead to will that workplace establish going commonly most underpin customer And their empower more and greater the and companies today. digital and solutions automation optimize that even secure efficiency. the forward, We anywhere collaboration we believe

that long-term success QX our with critical clear is with Our customers made work. do results continue whom our our incredible the to with to who we both partners and and strategy are resonating

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data In taking cost on with reduced more is time breach clear there a benefit investigating posture, proactive addition spent to events.

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of hope the success, clear made As equally generative value and remarks opportunity of drive critical the innovation. maximize ahead massive I unlock well ready boost AI and to productivity my for we're to positioned us today have continued efficiency, we're increase to

detail. over that, more I'll in it Jim financial discuss With turn results to our to

James Caci

unless everyone. joining quarter And review Thank you, remind me our otherwise strong to Thanks non-GAAP afternoon, and good us referring results. that we I'll second as metrics. you let be TJ, noted, for

XXXX, high revenue quarter ago. again XX% year total up was XX% compared revenues, year-over-year total second and Within For in XX% XX% $XX.X a million, once up SaaS end our revenues QX, And of the to the XX, quarter year-over-year. were of total $XX.X guidance. revenues million, comprised SaaS June second ended above

In APAC, currency SaaS by grew the our North business. grew while XX% geographically, in XX%, In total saw basis, grew Looking grew currency solid total revenue across grew a driven business EMEA, revenues XX%, revenues America, on revenues at a regions, in currency all SaaS revenues total constant XX%. revenues basis, on grew we constant growth XX%. XX%. basis, while constant once And on a SaaS again while SaaS year-over-year performance

quarter second $XXX.X of the with XX% the of impact adjusted As growth over from with of year-over-year up FX. ARR customers representing growth XX% June XX, prior XXX for and XXXX, $XXX,XXX, of when year total million, We of ARR was the XX% ended period.

the As a of compared our end channel XX% of through XX% and of at channel QX. of XX% ARR ARR of QX. year the came for And to ago QX XX% total for incremental through our XX% QX, end specifically, the came compared the to

fluctuate may in continue percentage overall this channel operating to and driving growth efficiencies. contribution we While turn, expect from increasing, ARR quarter-to-quarter, the

XXX% to XX%, of our and area primary as rates, was of FX, growth the for second now retention Turning which, you our rate versus us with focus for quarter XX-month QX trailing line a pleased are our critical FX gross at quarter. the strategies. long-term retention to of Adjusted to that net for retention impact in the of know, are we adjusting as XXX% end what the at impact was improved for QX. rate reported our for end NRR the first the of compared And QX after we

as basis compares XXX% gross and GRR the quarter, expansion, our net rate QX TJ we rate of and of And XX%, and is more the like NRR customer this XXX% respectively. was was remind reported trend retention and at GRR to for To plus you, as is NRR expect XXX%. target we to retention Both a favorably This net to XXX%. and gross examples on rates for see described, first continue. end of reported XX% more XX% improved QX retention medium-term and

X% year-over-year Gross on the the decline $XX.X The income result lower to margin for statement. margin gross a representing the XX.X% or revenues revenues dollars gross ago, totaled and compared profit was of XX% services. growth of back QX compared only $XX.X XXXX. XX% margins primarily of as expenses million percentage million, million representing in gross of is to significant of year-over-year to XX.X% revenue. reduction or a Turning quarter a QX a in year $XX.X a of operating

margin above the sustained an year growth a an operating ago of or expansion or $X.X non-GAAP million of X.X%, points. once negative QX profitable This million end X.X% as basis of $X.X XXX result, more to loss income guidance. margin high drove an was a compares operating As operating again focus on of margin of year-over-year operating our our than

Turning We ended to the and cash quarter investments. and sheet with the short-term million in balance $XXX.X flow. second cash

June ended of flow This months for operations was $X.X $X.X free was used X months cash of the $X.X negative $X.X XXXX. XXXX, XX, cash generated For free and million cash XX, million, flow cash compares to ended June million million. the X while from

in of Lastly, with X.X of million ended And total months total trading a $XX.X million of a share X XXXX. through cost have for XXth, the a X.X far repurchases, approximately close repurchased repurchased of shares million total to so $XX cost yesterday, regard during the for approximately shares we June million. we

our $XX year for reminder, plan utilize million in repurchasing to shares. the a As is

to for again total the like year, are where income. once now raise would for operating outlook we I and financial revenues to to our ARR, expectations total our full pleased turn

For or the growth X% third expect year-over-year quarter, $XX.X of revenues the we $XX.X midpoint. at million million total to

$X $X at midpoint. $XXX revenues million growth approximately of and now We now or to full million to million, $XXX $XXX.X total million for to the We year, total million $XXX.X expect operating income ARR non-GAAP year-over-year or midpoint. growth we million expect the XX% the XX% year-over-year at of expect of

expect $XX.X Lastly, income we of non-GAAP $XX.X to now million million. operating

wanted a moment, on additional on balance but our We'll expectations I to focus for color with cost Q&A of open year. in the the guidance some our for provide a first,

beginning investments growth make and to in the monitor. to well continued we closely of see XXXX we While trends to positioned demand some in such, ensure as still some are are early, signs stabilization for we are beyond. And starting incremental we

XX, necessary to filer meet deemed Second, XXXX. we large conditions December a as accelerated will be of

costs result, guidance. some a expect and relative QX we as And QX incremental prior our in to

margin basis and extremely are X factoring full the of not nearly beyond guidance XXX are factors are income expansion represents in outperformance we that this after but XXX our year operating even pleased represents why these QX, new full together, guidance Taken in, raising expansion we margin points. QX achieved operating we year-over-year points, operating year our year-over-year of guidance approximately basis our

of and momentum summary, this In was continuation a from our quarter strong a QX.

in today. by profitable beyond to by mindful opportunities Thanks and value of to joining the the workplace, uncertainty, deliver remain markets While we and economic we capturing near-term digital growth. advancing shareholder continue be excited us see growing we XXXX large prioritizing and for

take questions. And with be to that, we'd happy Operator? your

Operator

[Operator question Instructions]. And first Gabriela today's Goldman with Sachs. Borges comes from

Unidentified Analyst

[indiscernible] environment, over us you're of A Gabriela. and in customer color you signs what early things standpoint Could for you budget from trended said And a how give couple stabilization. few macro on seeing from on is This have the months? seeing more past you're the general us.

So signs what seeing? you are are the that

Tianyi Jiang

we from a remain perspective, cautious. macro Yes,

achieved have far momentum with in the happy we are so We QX.

we than see growth continue mid-market but deal see worse that, remain QX, continued elongation enterprise continue we On However, cautious. see segmentation, SMB, so very we cycles. our our It's scaling. on of not and we through the to channel to strong still

James Caci

that data they're how of we're our just looking are not And we progressing the not getting life things those cycle at bookings obviously, of necessarily of to, information, looking do the pipeline. happened improving, at and lot a also to TJ And but of alluded through also time at worse. are add as things that CRM at on past looking that, we in by this terms terms seeing metrics, in Yes. to a of quarter just in the including, spent that look number our bookings,

So process, are little comfort see at through things that how things there don't a us we evolving when look we some gives and the is stabilization, worse. getting

Unidentified Analyst

broadly, And And environment? as then you are Gen tailwinds helpful. of implementations, investing you balancing follow-up, terms especially very also That's thinking profitability anticipate headcount? you as this in more how you growth a enter from versus as are AI new how about

Tianyi Jiang

Yes, that's a question. great

investing first So foremost, in and product. the

that's very great by mentioned as customers improvements well results as preview showing our in EMEA and very we in So it's our good received product well example field, the records in Australia. been already of a productivity in

We and to in in imbue Shifthappens Conference more AI play. will how upcoming our iteration machine D.C. learning the to October disclose product we our at of showcase latest into platform the highlight

as to be and Second, on optimization. we I this year for theme mentioned, win do play continue the platform the cloud

our in solutions, platform orchestration short, leveraging our to ROI our engine the So to in cloud. maximize help be customers the of data able

save drive as we the how this their major across essentially will of and is that's outcome existing overall, shine. theme to to we out -- see be and companies all continue economic to more investments, more So where

we'll to third, good years. we and we especially few see you And us scale, results just clearly of for selling in really And as really, and in of before the segment, to alone last massive channel into to continue greenfield articulated the invest -- SMB couple MSPs. years a

to So to invest there, we'll continue achieve profitable overall growth.

Operator

next the ISI. Materne comes question with Evercore from And Kirk

Chirag Ved

is customers for AI Kirk. as away This IT. to around Ved on Congratulations in from concerns other that the spend TJ, are areas interest on strong Chirag reprioritize some results. may that grow, continues there

comment gross any Gen retention to discussion in like you're concern you're that terms look on maybe rates. your what that on seeing of right related based your doesn't can and it So and AI of net seeing you now? But

Tianyi Jiang

question. great that's Yes, a

across actually sources right strategy. properly effective sure you cycle. your prepared good have making on management the sure AI stated life you data deployment it's the also that really all enterprise. collated we classified, that the And foundations data to information making from are and your intact in various that actually As based have have remarks, means the That the premise

in, that out when get trash trash of models. foundation on modeling in you to you issues proprietary So don't of layer top build generative

can is data, So worth decades form of better outcome. of today proprietary domain drive doing purposeful then to every this enterprise-owned their enterprise ensure capabilities that they top innovation own to on AI actually and to leverage data

in, So very well that's we've actually past we enterprises play doing for decades. and a space the been for this

we're In stranger fact, machine AI. to learning, a not

background As learning, many AI. machine my know, of is you

a and been for AI on-prem governments, We have scenarios. Azure Cognitive of open and capabilities Services, source long-time -- for especially deployment other hybrid consumer

management information So importance all back these points actually things of the to capabilities.

case from AI of it's use enterprise. workable very a So separate to same and for effective It's not motion make AI. the much really

Chirag Ved

And like Jim. your perspective rate FX needs the one hit to for targets you speak net what the to then to retention to from maybe outlined? happen sequentially, It rate to excluding retention you function looks And net XXX%. what increased increase? contributed Can step that

James Caci

Yes, great question.

a So quarter terms growth strong customer in was additional of existing us this for quarter ARR. for

first base. our that For we're quarter, XX% time, came incremental ARR customer from our the over the for existing of over

So the addition who as so us a to which so, And us. we had strong definitely customers purchase, less than strong were contributed adding more base. original of related with we for existing saw NRR strong quarter to that, a even and their it growth, for quarter indicator then a existing in that really year, that kind customer to is to a

see providing, are not services that consuming but almost full the enjoying Number that more. for the with leading our year. a We our year, first a won't sale one, indicator does the it's we're it's in because that impact that impact uptick software when providing, also we're interesting NRR. And customers the

to for or when because to it's year, a we trailing sell NRR. well indicator. indicator think And customer when really it's So leading within future first XX-month lagging NRR, it's really we of that bode a going a a

lot targets a do do get good think to So to still to we XXX% to medium-term back to of XXX%. out I put feel have months work a that couple March we those in that we about of get to that.

see So far. what continue we've we been continued doing definitely to on want to so execution

Operator

Chokshi Maxim Nehal question Group. And the next with from comes

Nehal Chokshi

But a to of moving just or to alluded NRR sort signature Markets. had increasing be Capital is drivers that up for a positive. of customers strong you the existing of was Jim functionality? being of really That the result incremental NRR We clear, Northland increasing that one ARR. already fee was

James Caci

demand it More a the different strong. board, the receiving. they're things. It's functionality terms we of look from XX% Nehal, if quarter had latter growth the strong in for really But that SaaS at we of in terms really a platform, of across was of couple additional the

came rate saw across same strong about the all particularly side, our in at each Geographically, really segments, consolidated we on ARR where growth, X growth of that the X XX%. of rate for just segments the

We XX% of on really talked about ARR So channel coming through target. our channel. the We saw really right strong. incremental

before, and that -- base a I referred So again, strong quarter. to really customer existing that

it throughout So existing and customer both not of across from new but we saw kind just board, really the existing. base, the

Nehal Chokshi

guidance Okay. beat is to bearing And looks but ARR. then see, your it's like it in ARR largely the raise great

And improvement so is that the sales motion you're in a quarter-by-quarter basis. reflection that a as taking it

James Caci

Yes.

quarter. guidance, It to accordingly. -- I going for the that think be into about uncertainties strong out We when growth, year of We a trying we take of -- ARR as a a the think was meaningful fact be we in this was be there, uncertain. to the we to over to the to lumpy. cash strong was trying beginning talked quarter, year. quarter we first going as guidance, factor take and what the good the had is we leverage, It account really that in had going and bumpy. still And our think that obviously, generated we but at of well half that lot we're to about operating into trying macro are ARR had there's plan we're year

into a quarter, factor and -- very the prudent that of our to guidance. remainder had really that. the remaining we're be we We're excited trying over good about the And also so although year

Operator

Blair. next from with William Jason And Instructions]. the [Operator Ader question comes

Jason Ader

and you getting talk of and Could not SMB about I X to meant SMB just things of is you stabilized? also little seeing that channel your seeing wanted through -- while demand, to getting and better? business, a business for just good segments enterprise, clarify the being growth getting is the and worse. elongation on mid-market. the wanted as SMB are mid-market if mid-market actually all I see enterprise comments said on worse the Or that enterprises bit piece -- are or

Tianyi Jiang

enterprise she steady different as than QX. it's goes, segmentation, so no Yes, Jason.

where we that's see. So

However, we -- cautious. do we remaining are

On before. the a it just mid-market SMB, continues rate we've as faster seen growth

So everything are is much -- the pretty we factors. because cautious being macro

However, deterioration. stabilization. why we a are not we talk about That's seeing

Jason Ader

Okay.

comment bookings QX? So -- was a bookings, QX? it Jim, ticked and then, in bookings versus rate growth on your is Or similar the implication growth up that actually bookings as QX

James Caci

an of We to improvement point. which in see our bookings kind actually your uptick did was saw We expectation. significant QX, in

on side. was the We be quarter. right line in stronger expected QX, QX definitely with QX a and to was expectations And for that lighter

Jason Ader

Great.

TJ, that key portfolio existing or and Okay. were seeing you of products are call you some product new on products. And right your either customers. Maybe when interest a XX-plus wins out customers lot then, could it's your part adding about think product a that for now of few or a of

Tianyi Jiang

Great Jason. Yes. question,

data product. something archiving machine classification storage better much a optimization, only management. continue leveraging perspective more high-performance our So also AI learning cost do leading customers product. it gain out actually cycle Cloud to I Records and that from life our but That's a traction. called does to save from and Not to It's

entitlement the reduce of being hybrid third is call basically scenario employee operations cloud C-level deployments, how optimization would management. Customers are these terms And to operations? again, about can and worry licenses and engagement management The cost Every used, tyGraph, a I one, in about perspective. your as sentiment want today cycle, from how management out of goes one other it to interest, right? on know is work talk which analysis that we

Jason Ader

other forward. Great. element even that at costs. going from AI Great. products the separate And Copilot maybe and I how you when and around help out might incorporating it AI, you're your you there's internally like and accelerate of GitHub But using can about guys into talk related there, tools AI Gen SKUs all talk understand Gen having some an Gen you about development Gen to of that lower kind things technologies that of AI

Tianyi Jiang

Yes, absolutely.

in mentioned the on Copilot GitHub we even side. Dev earnings, think I the last So already we utilize

more see to are less so. for up ropes the are learning still material the boosts We senior who developers The efficiency who XX%. newer using developers are

So make to the know actually and the -- the for to user, of be useful need generated truly just more whatever feature for actually marketing is across efficient as it's working sophisticated you're Dev support because other segment across a to -- that a side, marketing is customer deploying for and developer. you across we're content again, AI, leveraging But success customer not Gen things efficient. actually on

into and to X have And that interface course, we Tier user guides X and support, for can do up So user even level of X ChatBot use can support. for -- example, Tier the alleviate decades Tier load customers ingest the also support of actually in customer case -- Intelligent through all support, we premier X Tier our of X responsiveness. into through our X then to go

much content intelligent to more efficient. drafting more And generate as a markets tool folks to be content content on of the well, as and our make marketing able course, much side product

So overall, overall deliver leveraging AI to allow of the up to as the generative line shorten us results. time bring quality well work as

up, various level we So of ultimately, improve can line. company think really bottom it's our we to these aspects are the

Operator

comes And the Knoblauch with Brett from Cantor question Fitzgerald. next

Brett Knoblauch

in material It talking June I appears been that? that's guys a about companies the am a guess right like the of given didn't lot quarter, something framing slowdown. in in have see has reported that of back I'm half kind you of I you're that how software the strength

Tianyi Jiang

slowdown. a see don't We right. That's

Brett Knoblauch

a the guide XQ quarter. was XX%. guess, I ARR stronger And And you macro guess uncertain talked guys year full but the I being very year, than about first growth about

pretty in XQ AR up XQ You XX%. growth at guys nicely held and

what's into conservatively. baked guess, numbers to going we're XX%? quarters Is larger call expect or coming the I call to it, just, guidance that, So that it see over to the it,

James Caci

Yes.

looking out still And we're sitting in we -- there, there see can both, that little comfortable in And I the accordingly and out some think just feel is think although good, prudent guidance we're again, for any of there plan right I thinking we I see don't we're of in we're but and don't and it's year. what the put year, prudent here and August, terms to pipeline, uncertainty think of now, looks guidance maybe to but although we terms be see I guidance the said, us still a deceleration. macro We rest deterioration we're out as it's really the And just right? thoughtful it the accordingly. providing. to be environment. think TJ real as trying bit think for It's -- manage of we think the -- be raised a we that with I in we've this

Brett Knoblauch

Understood. that how the immediate targets? that for? should And force we you force. how of your goes like when when guess I kind maybe you pickup it and did something sales of announced we what that think pipeline? you that sales see frame example, something should Is think to new about backup Is demand like can you adding for just that, you an about out kind for functionality, that help this cloud announced

Tianyi Jiang

Yes.

support multi-cloud the focused clearly, us. So be for continue to

build. but in a more So our on there's also curve that record to for to when record sell we for strengthen will not selling our centers sellers managers. to to different learning is data selling depends section, audience, sector some We're example, the we're just support right? announce government being for actually There oriented the IT, able traditional to the force, clients we support, secure FedRAMP pipeline different help especially sell -- do to sales

us to So be able onboarding new on features the for base. to ramping the our that NRR for there's customer you're strengthen familiarize and to products the way and of goal upsell absolutely to for But bit existing and cross-sell the goes training new sellers be ultimately, long out a to a and deployment to pipeline. do But These in improve able our there. right. is overall,

Operator

for any closing floor like the And comments. to the to this Jiang question-and-answer would session. concludes turn TJ I

Tianyi Jiang

Thank you.

to workplace, prioritizing opportunity been America want team these well I us. AvePoint to growth. and our in continue capturing with overviews, growing to business confident on and their entire the management the First, regional dedication are the profitable in meeting weeks advancing last North digital our markets I've thank during teams front capitalizing APAC, in few person positioned quarterly of we EMEA, I'm for

host Lastly, to upcoming as to Shifthappens format, return in-person our you and Day, D.C. to October. an excited We're I our attend. shared we're in I in to Investor especially thrilled encourage conference Washington, during

our coming for from the innovation speakers In leaders our in us workplace experiences, you'll best the and you about around addition topics information weeks. that other and We'll to AI, define practices hear Thank about more industry release digital strategies today. and team continued transformation. more joining

Operator

you concluded. attending The your you now you. for lines. today's conference has may Thank presentation, Thank disconnect and now

AvePoint (AVPT) 9 Aug 232023 Q2 Earnings call transcript