AvePoint, Inc. Q2 FY2024 earnings

AvePoint's second quarter of fiscal 2024, ended June 30, 2024, delivered total revenue of $78.0 million, up 20.2% from the prior-year quarter. Year-to-date revenue was $152.5 million, up 22.5% from the prior-year period. Total ARR reached $290.1 million as of June 30, 2024, up 23% year over year. The company also reported dollar-based gross retention rate of 86% and net retention rate of 109% on a reported basis, or 87% and 110% adjusted for FX. The adjusted numbers are slightly better than the reported ones.

Gross profit was $59.0 million for the quarter, up 30.9% from the prior-year quarter. Gross margin rose to 75.7% from 69.5%. On the bottom line, GAAP operating loss narrowed to $2.1 million from a loss of $7.1 million in the prior-year quarter. Operating margin improved to negative 2.7% from negative 10.9%. Non-GAAP operating income was $8.7 million, compared with $2.9 million, and non-GAAP operating margin was 11.2%, compared with 4.4%. The gap between GAAP and non-GAAP results remains wide because of stock-based compensation and amortization of acquired intangible assets.

Net loss widened to $12.9 million for the quarter from $12.5 million in the prior-year quarter. Year-to-date net loss narrowed to $14.9 million from $21.7 million. Diluted EPS was negative $0.07 for the quarter and negative $0.08 for the six months. The quarterly net loss did not improve even as operating loss narrowed. The year-to-date trend is more favorable, with both the net loss and the operating loss smaller than in the prior-year period.

Cash generation strengthened. Operating cash flow was $16.2 million for the quarter, up 101.8% from $8.0 million in the prior-year quarter. For the six months ended June 30, 2024, operating cash flow was $23.9 million, up 158.4% from $9.3 million. Capital expenditures were $0.4 million for the quarter, down 30.1% from $0.6 million, and $0.9 million for the six months. Deferred revenue was $126.2 million, up 22.6% from the prior-year quarter, while remaining performance obligations were $323.5 million, up 21.3%.

Guidance points to more growth. For the third quarter of 2024, management expects total revenue growth of 14% year over year at the midpoint, and non-GAAP operating income of $11.0 million to $12.0 million. For the full year 2024, the company raised its outlook for total ARR to $319.0 million to $323.0 million, for total revenue growth of 19% at the midpoint, and for non-GAAP operating income of $38.3 million to $39.8 million. Full-year ARR growth is expected at 21% at the midpoint. The company also won its sixth global Microsoft Partner of the Year award and was named to Inc.'s Best Workplaces list in the software industry.

Risks remain. AvePoint operates in a highly competitive software market, and demand is tied to global macroeconomic and geopolitical factors that could raise costs, disrupt sales, or affect currency exchange rates. A significant portion of revenue and expenses is international, so foreign exchange moves can matter. Maintenance and term license revenue are declining as customers shift to SaaS. The company also flagged the risk of a valuation allowance on deferred tax assets. The quarter's headline numbers show revenue growth, wider gross margin, and higher operating cash flow, but the GAAP net loss and the gap to non-GAAP income are still part of the story.