Talking about the elevators here.
Oh, it's crazy.
They're crazy. Clearly, I'm trying to apologize to the webcast here. Well, just jumping right in. We have the CFO, Jim Caci, and we have the Chief Strategy Officer, Mario. I hope I pronounce this right.
Carvajal.
Good job. There we go. With an H and a J. You know, we're at that point. Let's just jump right in. I don't know, Mario, if you want to take this one in terms of just the 60-second version, but you know, just remind people, you know, what is the problem that AvePoint's solving? I think it's required, too. AvePoint's not a popular, you know, kind of like household name.
Thank you for having us first of all.
Of course.
Good morning to everyone. It is good morning, it's still yeah. AvePoint, we're a software business global leader in managing enterprise organizations data set. We bring to market a platform that focuses on security governance as well as the resilience of information and data. The data stream that we tend to work on mostly is the unstructured data. Think of all the, you know, chats, communications, emails, messages that you are creating as you're interacting with colleagues, with partners. All of that information we know today comes from different applications. Our platform sits and creates a trust layer for the organization to then, you know, have the policies and watch what's happening. To give even more context to today's environment, we're also the trust layer that's managing now how agents are operating in the environment.
If you think of an agent executing tasks and actions, that agent needs identity, it also needs access. We actually yesterday announced at Nasdaq our AgentPulse technology, which we brought to market on a soft launch in November, and it's part of that trust layer. Now if an organization comes to us and says, "We'd like a policy that not only watches how Jim is interacting or sharing information, but also how the five agents we built yesterday are working," you can all do it from the same platform. The platform is called the Confidence Platform. You know, like I said before, we're a global business, and we primarily work with the buyers which are in the CIO office, the CISO office.
Your security teams that really are saying, "We need a central pane of glass to watch and monitor the environment." It's been, you know, a product that's been very successful for us in regulated industries. So we also have done a lot of work to secure the platform, and we now can ship it in a, for example, a FedRAMP certified environment for agencies in the public sector that have really high requirements for security. That's just a testament to the work that we've put it in the, in the way we've built the architecture. We think about privacy of information as well as data lineage. Yeah, it's a pretty comprehensive set of products, and we offer it in sort of a thematic layout in the platform.
It's a diverse global platform. We'll get to some of these questions in a moment in terms of the diversity of the go-to-market, and the products. Just maybe double-clicking on AI, Mario, if we stay with you for a second about you just to address for the investors AI beneficiary or is there AI risk? Obviously, you mentioned there's some new AI-related products, but just maybe addressing head-on, you know, can you be disintermediated by, you know, coding related agents? Is there a seat-based element that is at risk with storage? Maybe go one layer deeper with regard to AI beneficiary or risk.
Sure. I'll start first by mentioning infrastructure. I think infrastructure is where we're part of that layer. Because as I said before, we work on deploying the controls for data, AI for us is actually an enabler. What we do with technologies like AgentPulse is advance the opportunity for companies to use AI. The ability for us to also work across the models that are coming out of the frontier labs or even the technology that's available in what Google's doing with Gemini or Microsoft has done with the Copilot brand. That's all for us, part of this idea that if an organization is transitioning now to be more agentic driven, we're the right product and platform to come in as the trust layer. We see it as an opportunity.
In fact, the work that we've done over the last probably two and a half years is help organizations get ready for this moment. When it comes to licensing, as you mentioned, you know, licensing it's an evolution for us. We, you know, traditionally have license per user seat, basically, because most of the management and operating elements were done by humans. Now when you think about agentic systems, it's important for us to support a hybrid licensing. For us, it's an evolution. We do have capabilities and platform that can be metered. We can watch how, for example, governance activities are taking shape and how to measure outcomes.
We're really working in a way where organizations can really think about how do we see the value of what your solution drives, and as that unit of value changes, we're prepared for that. It is, as I said, an evolution. Today, this hybrid licensing gives us the opportunity to, you know, support that story.
Okay, Jim, turning to you. You just reported 2025 results and gave your strong end to the year, gave your initial outlook for 2026. Maybe just kind of level set before we get to further questions. What are the key takeaways investors should be looking for in terms of driving that 2026 growth?
Yeah, I mean, you're right. We just reported Q4 results, really strong results, too, maybe it was a good way to round out a strong year. We felt really good about that. I do think you're right. We continued with a strong set of guidance for 2026. You know, again, I think for us it's been about execution. We have, you know, pretty good visibility. What we're seeing at both our customers as well as prospects as well, as Mario alluded to, I think we're solving customers challenges and problems. That gives us the confidence to kind of anticipate and really guide to another strong year. We feel really good about that.
You know, one of the things that we just wrapped up, really in 2025 is we made two commitments back in 2023 around, really profitable growth. We've been talking about that for quite a while. We've continued that in 2025. Those two things that we talked about back in March of 2023 were, really, you know, hitting this Rule of 40, which so many software companies really try to do. Really happy to report that in 2025 we achieved the Rule of 46. We committed to get here in 2025 to hit the Rule of 40, delivered 46. Then the second was really around GAAP profitability, which again would really focus on this profitable growth story we committed to do. We, you know, committed to be GAAP profitable by 2025.
We actually achieved that a year earlier in 2024. We're happy to report that in 2025 we accelerated that GAAP profitability, where now we have GAAP profitable margins of 7.9%. Really that continued acceleration really is a testament to the teams and their execution and ability to not only deliver the top line growth, which in 2025 we delivered 27% ARR growth, 27% revenue growth, but then also delivering that profitability piece. Again, that GAAP profitability is something unique for companies our size. A lot of software companies are not yet GAAP profitable. I think we've done a really good job of executing on delivering the operations of the business and then managing things like SBC, which is the biggest single topic.
Yeah, that's top of mind.
For sure.
Do you want to comment on SBC while you're on it?
Sure. Since we're on it. You know, I think for a long time, software companies, we're almost treating SBC as not an expense and just saying that, "Hey, we're gonna grow at all costs in one aspect, and then if we're managing our costs, well, we don't have to worry about SBC because, you know, it's an add back. We'll treat it as a non-GAAP add back. You know, we're not being held accountable to this SBC." You see a lot of companies, including us, by the way, when we went public, we were at 20-something plus SBC as a percentage of revenue. This year, we've steadily had that come down. This year we're under 10% in 2025, and we would expect that to continue to decline in 2026.
For us, we treat it as a real expense because ultimately for your shareholders it is a real expense. It's ultimately dilution to your existing shareholder base. You clearly want to motivate your employees and motivate your talented people to both acquire them and retain them. There's an element there that's required. But I do think it's part of management's responsibility to be a very good steward of your how much stock-based compensation you're actually utilizing, because it is diluting your existing shareholder base. So I think we've been very focused on managing that. Like I said, you know, starting out at 20+% when we went public, now being under 10%, we're really proud of and happy that the team's been able to execute really well on that.
They should be proud of that from companies I've seen. Mario, one of your responsibilities as the CSO is overseeing the company's M&A efforts. If you want to maybe just kind of remind us, you know, some of, you know, what those efforts and kind of the principles entail. You know, what areas are you still looking at today and where, you know, where does the AvePoint platform, which is a very diverse platform today with changing agentic needs, maybe need going forward?
Sure. First, we're really proud of the fact that the majority of the platform has been organic. I think that's given us an advantage in integration interoperability. As an example, if an organization signs up to the platform, you can wire up the platform within hours and get it all working. One of the key criteria for us when we think about M&A is, you know, the architecture. Is it a modern architecture stack? How is it gonna interoperate so we can create more value for our clients? We also know that, you know, time to market is something that, you know, we must be looking at constantly. We feel that there are some adjacencies that could really round off certain parts of the product. An example is the work we've done with our channel.
We happen to go to market in two routes, direct as well as through channel. In channel, you know, we were able to create an edition of the platform that has a different architecture for managed service providers. Now, the managed service provider is the person that shows up and says, "I'm gonna take over and manage all your, you know, IT operations." They need a certain role-based access to look at the environment and be able to manage multiple clients from the same interface, the same application. We have that architecture, but we give them all the capabilities that your direct customer would get. In that category, we think that there's an opportunity to add more value. You know, we've done 6 acquisitions since we became a public company.
We, you know, we've developed that muscle of integration and making sure we can get it to market quickly. Now what we see is an opportunity to advance work for our MSPs. One area in particular that's really interesting to us is the management of infrastructure resources, especially for cloud computing. We have in market two capabilities now, one for GCP and one for Azure. We think that, you know, with all of the investments going into your AI build out, we believe that giving MSPs a perspective where they can manage multiple resources in the infrastructure side will be key. That's an area that we'll continue to, you know, look at targets and see what makes sense. Like a FinOps layer.
Could be a FinOps, it could be something that's very vertical specific, or it could also be you know areas in which the organization is struggling to manage cost, right? Cost efficiency is something that we've learned as a builder on hyperscalers, that over time there's different ways for you to build really great tech that performs well to keeping costs manageable. We're taking all that experience, pumping it into you know capabilities that our MSPs can use. Cost optimization is really important for them. The goal with the MSP is they use our platform to create a revenue stream. For us, that's sustainability. We really like that motion. That's an area for sure.
You know, in general, we, as I said before, one of the, you know, value propositions we bring is that trust layer. That trust layer is only complete if you have a governance model in place. We've been very fortunate that our governance framework started years ago supporting the digital workspace. Now we're including in that digital workspace how agents behave, so it's more wholesome. We look at now identity management or anything that's really been a blend of subcategories to be a value add. There could be some targets that could be adjacencies that are attractive to us. You know, in conclusion, I think we are active in the M&A front. We have a pretty active pipeline.
As you know, I think the most important thing for us is to make sure it's the right fit and that at integration time we can really see it, you know, be meaningful in terms of the business.
Great. Jim, maybe turning back to you. One of the call outs on the quarter was higher than typical demand for migration products. Just maybe, you know, talk about what's driving that and what we should be looking forward to, you know, into the 2026 guide related to, you know, maybe potential growth headwinds or NRR impact?
Yeah. I mean, I think, you know, the beauty is that we've seen really good demand across our product suite. It's not any one product in particular that's tremendously outperforming others. We did notice, as you pointed out in Q4, that migration itself had definitely an uptick in terms of demand, which is great. Happy to be satisfying our customers as they're trying to, you know, execute on their strategies. One of those is really to consolidate, you know, maybe repositories where they have data. You know, a lot of the stuff that Mario is referring to of customers' journey in terms of how they're thinking about AI, how they're thinking about reasoning over their data. One of the things that does simplify that is consolidation of data.
As people look to do that, whether it's on-prem to the cloud or consolidating cloud environments, we did see an uptick of that, particularly in Q4, but even in somewhat Q3, which is great. Again, customers doing what they need to do. We're happy to help them and solve those challenges. Our migration products do allow them to efficiently move data back and forth. For us, migration products definitely have a little bit higher, you know, churn rate. They don't retain as much as our other products.
For us, as we think about the business moving forward, that just creates an opportunity for us to not only deliver more solutions to that customer, because ultimately that migration product has a life cycle that's shorter than some of our other products, like our governance products or some of the new stuff we rolled out yesterday in terms of, you know, AgentPulse, where we're really, you know, evaluating environments. The migration, if you think about it just like any other, like, project, it definitely has more of a unique start and stop compared to our other products. Again, great opportunity for us to satisfy our customer demand and meet their needs.
It just then is incumbent upon our teams to ensure that not only do our customers get the full value out of, say, a product like Migration, but then also they take advantage of the full platform so they can consume additional products and solve additional challenges.
Yeah. I mean, if I'm understanding correctly, as a follow-up to that migration should be. Are there instances where it's an accretive, you know, you talk about lifetime value where you do have a very diverse product set? If you're migrating data, and I assume this is increasing maybe the data on the platform.
That's right.
Outside of the accounting.
Right.
You know, revenue timing type of instances, what does that look like? What could this portend in terms of like growth later on if you see, if we continue to see these uptick in migrations?
Yeah. It is a good opportunity. It can and often is a tip of spear into an account where they're having a challenge, let's say, of consolidating data. We have a solution that works very well for them, so it's an opportunity for us to enter a client. Then again, having a platform of solutions for them and not just a point solution that we then have the opportunity to have a new customer that we can then, you know, potentially upsell or what we would refer to as cross-sell other solutions to help them in their journey. You're right. It's an opportunity for us to have new customers and, you know, bring them into the AvePoint family and then have them expand their relationship with us. Definitely an opportunity for us going forward.
We'll turn to the audience. About 10 minutes left. Any questions there? Anybody? No. Maybe just maybe sticking on the consolidation theme, Mario. You know, as a CSO, like, where are you seeing, like, that spend come from? You know, I mean, a lot of software vendors, right? We over the years have talked about consolidation. Again, just given the breadth of your platform, you know, what kind of pockets of spend is it? Are you moving in terms of different buying personas? You know, where is some of that spend coming from? As you know, understanding the way, you know, the AvePoint single pane of glass management layer.
Maybe I'll share this. I think it's what Jim was just saying was kind of like bringing me back to the customers. Imagine the work we do, and then let's say your business comes and says, "We're gonna move you guys from this platform." You're gonna be like, "Oh, what a pain. They're gonna, like, move my data. Am I gonna lose my information?" A lot of times when we work with a client, we'll say, "When you wanna move data, let's say you're trying, I don't know, you wanna maybe you guys are gonna use Claude, and there's a new model coming in. You wanna move data." The conversation for us is, "Let us move the data. But guess what?
When we move the data, what if we also cleaned up some data and reduced your cost?" Now your CISO goes, "That's a really interesting value proposition. Tell me about it." We say, "Well, we're gonna move your data, and we have a mechanism to identify data that's redundant, obsolete, maybe data that doesn't get used. We can help you. We could maybe re-archive it. Maybe there's a records policy. We could apply retention to it. We're also gonna move the data, and we're not gonna lose the fidelity so that the new system actually understands the data and so that your users don't get disrupted." The legacy that we have in all the connectors, we have over 30 connectors over, you know, the years that we've been in business, figuring out how to move data and not mess things up.
The next question then is usually, "Do you guys have policies so that when you move the data to the new environment, maybe there's a policy, maybe you need to be regulated? The new system needs to have a trust layer. We could build that trust layer for you. It's in the platform." That conversation pulls in your security officer or your audit team. We talk to them. We show them that part of the product. What's happened is you have now this, like, process where you've talked to probably three different key stakeholders because the organization doesn't wanna have to talk to one vendor, another vendor, another vendor, and then have to integrate all that.
Our narrative and how we've been successful is, and as I said before, a lot of this came out of organically just innovating, building these pieces, we'll go in, and we often will say to that team, "You can do it all with one platform, and we can actually turn these modules on as we're moving that project forward." What that's doing is reducing cost. We're in many cases ripping out legacy point competitors or solutions that are not adequately suited to give you the full view. That's the environment that we're in because interoperability, it's really one single layer. When you walk into work and you're using a chat communications tool, and then you wanna work on your document, are you thinking about which app you're using? No.
If you think about now with AI, you're probably gonna just go into a chat interface in natural language and say, "Go get me this file, set up a meeting with Jim, and tell me what I need to be ready for my meeting at 2:00 P.M. today." Behind the scenes, all that information is working across different applications. We are building a platform to basically create a trust layer so that all of these different key stakeholders can realize that, wow, we have one technology that is now interoperable with the other major providers we use, and it's given us, you know, that single pane of glass. It's kind of pretty, you know, traditional in the way we're going to market. Now of course, as Jim said before, we could start in certain areas.
Our goal is to basically say, you don't have to buy the entire platform at once, but know that in this platform you could actually get the next workload addressed, and it's gonna be more cost-effective than going out and trying to find a point competitor just for that solution.
Right. Great answer to the, you know, the more efficiency side of the consolidation and the value proposition that you bring to the bottom line in terms of moving on to AvePoint and the manageability and the governance. A leading question to this, to the derivative benefit of AI. You mentioned there could be a window that maybe potential clients are going to, for example, maybe Microsoft 365.
Yeah.
You know, that's the core purpose. Where are your clients in that journey, right? We hear from Microsoft that there's tens of millions of folks using this. Any type of range or color you can give in terms of your install base, your clients, whether they're through the efficient MSP channel? You're a global company. What do you see when you kinda look at that bottom-up in terms of, you know, from an opportunity set perspective? Where's AvePoint on that journey in terms of helping customers better use Microsoft 365?
Think of the Microsoft 365 as a productivity cloud. That productivity cloud, and you see Microsoft doing this, you know, obviously the Copilot piece, 15 million users. Okay, it's really small. They just did the Anthropic, you know, sort of partnership. Now Claude Cowork is inside there. It's because they want you to start using a new productivity tool, whether it's, you know, Anthropic one or it's a Microsoft, it doesn't matter. That productivity stack for us is very good because that productivity stack is what needs to be protected. The good news is that for us, whether it's a Microsoft 365, you know, traditional Copilot or any new capability that Microsoft's gonna put in there, we're already supporting that.
We also go beyond that, and we have been very purposeful in making sure other productivity clouds are part of that, experience we give you. It could be that an organization says, "Well, there's a department over here that has Google Workspace, and we are using that." In the creative world, there's a lot of this or retail. We'll go in and say, "With the same product, we can also support your Google Workspace and your Microsoft 365." There's another dimension to that. What if the organization uses DocuSign, for example? Or what if the organization build an agent? The story is we are able to work across all these different productivity surfaces. I think it's because that experience is gonna change for us.
Perhaps there will be one window that becomes your favorite that you go into, and that's where you do your work. The idea is that behind the scenes, your data's still being stored somewhere. Your information still needs to be moved somewhere. You probably use a communication tool to actually interact or a real-time transcription service. All those data elements are read by our platform, watched. When you're using our policy or governance, it's working across. That seamless experience I think for us is a really unique differentiation.
It's not a matter of just looking at, you know, penetration rate of your customers using a particular product instead of using all of these products, and they're all on that journey in some way, shape. Okay. Maybe we'll check with the audience one more time. Any questions? We have a few minutes left. Okay. Maybe the federal-
Sorry.
Sorry, Justin, go ahead.
On AI, just works in accelerating, I think, the issue of security, especially enterprise directionally. Social organizing, rising safety, data, LLM, especially with the release of ScaleOut. It just has to be about this because the change, you know. Tell us where we are in terms of where you think, you know, what's changed even just in the last three-four months?
Just in terms of where that's headed.
I'll share one signal. You know, we were working with this large enterprise. They had built 26,000 agents across a global workforce. Most of the agents were doing a lot of sort of like task automation, right? They came to us and said, "Now that we have them out there in production, we do need to watch how the agents are interacting, where we have issues with, you know, wrong data being pulled." We shipped inside of our platform the ability to govern that entire agent architecture. So for us, it was a great opportunity to test and say, "This is actually gonna be really important to organizations." It's an indicator that when you can govern now what is happening in a communication that's fully automated, regulators still wanna see that.
Companies still wanna make sure that the regulatory requirements that apply to their industry are also being factored in. What that means is audit trails, you know, Sarbanes-Oxley, you name it, right? Especially if you're in a context where you operate in different countries. Companies are saying to us, "We have, you know, sovereignty of information. We care about that." To answer your question, it's an indicator that we are providing the technology capability, the controls in the direction where the market's moving. For us, that just gives us more confidence that down the road that creates more value and that gives us more pricing power, right? Over a long, you know, that period of time.
In that example, like what does that do to like the secure private side of the business? Is that 10%, 20%? Is it just zero? I mean, so from that piece, just so we understand how that.
Yeah. I mean, so generally speaking in a contract like that, you know, this was a great customer, been with us for a number of years. It was a workload that they were not thinking about until they started building out the entire agentic architecture. They realized we have another, you know, situation where we, which is we now need to live this in production, but now we need to make sure we control this. It gave us an uplift in the contract. It allowed us to do an expansion sale, and it gave us now an indication that when we go to the next client that has similar setups, we can now price it at a certain point.
You know, I think it's hard to say right now whether it's a 10% or 20% uplift, but we believe that, you know, AgentPulse and the technologies that will come to support AgentPulse in our platform, just like it happened to us, like when we started supporting companies when cloud services were starting to move to, you know, hyperscaler infrastructure. We see an opportunity to keep adding that value, and we recalibrate our pricing within the platform.
I would just want to add one other thing. I think you mentioned about where do you think we are? I still think we're very early in terms of this cycle, in terms of adoption across the enterprise, but I do think we're moving very quickly. I was talking to somebody last week, and it does feel like we're on 2x speed if we're playing this game from the past cycles we've seen whether it was, you know, migrating to the web or even the SaaS migration, all that kind of those transformations. It feels like this one we're on 2x speed. I do think it's early but moving very fast.
Well, we only have 20 seconds left, but maybe in a minute if we go a minute over, because the federal vertical is important to you. There's some, you know, things going on in the world today. If you wanted to maybe make a comment, update your, you know, any impact maybe to AvePoint in terms of your federal business.
Yeah. Well, I think we've all seen. Well, first of all, our public sector, federal is part of our public sector practice. We have a global public sector practice. The U.S. federal is a component of that. Obviously, we all know that this past year, 2025 was a challenging year for the federal sector. Both started with the election, with all the DOGE activity, then went on to a government shutdown, which also created some volatility. We think that 2026 is gonna be a much better year. Obviously, the recent events kinda create a little bit more chaos and a little more uncertainty, but we still feel like we're in the right spot. We've heard other companies say that they're bailing on public sector, which makes no sense to us.
We think it's a vital component of our growth strategy. We think we have lots of technology that not only our federal government but the global governments can benefit in protecting data, governing that data. We think it's a vital important aspect of our growth strategy of getting to $1 billion. We think that the public sector, and in particular the federal sector, will be a nice growth complement to us getting to $1 billion.
Excellent. Well, thank you, Jim, Jamie, Mario.
Thank you very much.
Thank you.
Thanks for having us.
Appreciate your time. Okay. Thanks, everybody.