Okay. We're gonna get started here. Good morning, everyone. Welcome to AvePoint's 2023 Investor Day, our first ever. I'm Jamie Arestia, Head of Investor Relations. On behalf of the entire AvePoint team, just wanna thank all of you for coming in person, and for everyone who's on the webcast as well, thanks so much for your participation. I just wanna quickly run through the agenda and some logistics, and then we can get started. Here's a quick look at the agenda for today. We're gonna start with our CEO, TJ, who's gonna give an overview of AvePoint, the trends and some of the growth opportunities that we see, and our strategic priorities for the next few years.
We're then gonna turn to Mario Carvajal, our chief strategy officer, who's gonna take you through the AvePoint Confidence Platform and really show you the same demo that our customers see. After that, we're gonna take a short break, when we come back from that, you'll hear from Tom Lin, who's our chief revenue officer. Tom's gonna talk about our go-to-market approach and really share how our execution on four key strategies is really gonna drive strong ARR growth and really improved efficiencies across the company. When Tom finishes, we'll end with Jim Caci, our CFO, who's gonna give a review of our financial performance, some updates to the financial disclosures that we're gonna be making going forward, and then an updated view of our long-term financial targets and outlook.
Once that wraps, we'll take a short break, and then we'll go right into kinda Q&A. Then just in terms of a few other logistics, the Wi-Fi is up here as you can see. You know, we're gonna have a Q&A session over lunch. As I mentioned, after that short break, there should be lunch available, and we can just go right into Q&A. You can feel free to grab that and come sit back down. If you wanna submit questions along the way, if you scan this barcode, for those of you in the room, you can do that. Then for everyone who's listening on the webcast, In the webcast platform, you'll see you'll be able to submit questions.
We'll be monitoring those, and then, you know, during the Q&A session, we'll obviously take questions from the room. And if time permits, we can cover kinda the questions that come in throughout the day. Before we start, I have to say, you know, we'll be making a number of forward-looking statements in today's presentations. Any statement that refers to expectations, projections, outlook, or any sort of forward commentary is a forward-looking statement based on today's assumptions, and our actual results may differ materially due to a number of risks and uncertainties which are outlined in our SEC filings. Now that all that has been said, let's welcome TJ and get started.
Thank you, Jamie. Good morning. Welcome to our first Investor Day. We're very excited to have you here, and thank you again. We treasure your time. Thank you to be here, and for those of you online, thank you as well. I look forward to sharing with you, with everyone, our mission, our vision, key highlights, and also why we're extremely excited about the durable long-term opportunity that lies in front of us. We're gonna cover quite a bit today. You will hear about our technology platform, how it advances digital workplace, how we plan to capture this large growing market, and also how we're prioritizing profitable growth over the next few years.
I hope that by end of today's presentation, you will share our conviction and excitement to have a clear understanding of our strategy to drive shareholder value. Let's start by setting the stage. As company embrace the new normal, that's hybrid work, they need to deliver a seamless, enhanced digital workplace experience, one that's centered around extensive portfolio of SaaS applications and productivity solutions, and also improve collaboration across organizations. Adopting this portfolio of solution is substantial and ongoing challenge for companies. For decades, they rely on a few number of multipurpose on-prem applications to achieve business outcome. Today, to build and drive efficient digital workplace, companies must address this abundance of application and the explosive growth and sprawl of data with a platform that's well-governed, fit for purpose, easy to use, and built on automation. That's where we come in.
AvePoint's Confidence Platform empowers organizations of all sizes in all regions and across all industries to organize, to optimize SaaS operations and secure collaboration. Our customers depend on AvePoint's Confidence Platform to rapidly, to reduce costs, to improve productivity, and make more informed business decisions. I'm excited for you to learn more today about AvePoint and our future. First, let's quickly recap 2022 and call a few highlights. I'll keep this brief as these are metrics that were shared at the recent March 9th earnings call. In 2022, we continued to advance our mission by helping our diverse global customer base overcome complex digital transformation, governance, and compliance challenges. Our ARR at end of 2022 was $201.7 million, representing a growth of 27% year-over-year. Adjusted for FX impact, 2022 ARR grew 32%.
Our SaaS revenue continued to expand at a rapid clip, growing 46% in 2022. As a result, 82% of our revenue today are fully recurring, providing greater visibility and predictability into our future performance. We continue to expand our global customer base, and Tom will talk a lot more about that segmentation and global footprints today. With over 17,000 total customers around the world in 100 countries. We support this growing customer base with approximately 2,200 employees across 25 global offices. While we're proud of the growth we continue to experience, we understand that many organizations are just at the beginning of their digital transformation journey, especially to the cloud. With estimated $43 billion addressable market, which is expected to grow 21% year-over-year through 2026, we see tremendous opportunity to solve their complex modern workplace challenges.
That was 2022, but I wanna briefly look backward and spend a minute on how we found AvePoint more than 20 years ago. I wanna start by asking question: How can technology positively transform collaboration? I asked myself that question back in 2001 when I was writing trading system at Lehman Brothers and before we founded the company. I have been asking myself that question every single day since. It is about connection. It's about finding the thread that ties together the day-to-day interactions we often taken for granted. It's a reason we found our company back in 2001 and named it AvePoint. My co-founder and good friend, Kai, was on his daily commute to New York City when he saw Times Square through a new lens.
As I walk in this morning, I was again reminded that Times Square is where avenues merge, bringing together people, ideas, and energy. AvePoint came from the dream that we could also be this point where all avenues come together to empower everyone in the workplace to collaborate with confidence. As I travel and meet our customers, prospects, and partners, this dream is alive even more today. I hear often that the last few years have reshaped how we think about work. It's prompt us to reimagine how we work together and create an environment better than we had before. None of us can control or predict what the next disruptive event will be. However, there's one thing I do know. By working together, our collective resilience will enable us to overcome what we as individuals cannot.
Wherever work takes place, it's technology that connects us, it's technology that brings us together. It helps us to collaborate and innovate in ways we never thought possible. This connection is important. This connection is worth protecting and cultivating. I made a commitment nearly 2 years ago here at Nasdaq that we'll secure and sustain these connections you have worked so hard to forge, and that as a public company, we can do that at scale. No matter what cloud services you use, we empower you to collaborate confidently no matter what challenges lies ahead. This is the bedrock of who we are, and it's the foundation of how digital workplace will continue to evolve in the years to come. Today, we see several trends that are serve as very strong tailwinds to support our mission and approach going forward.
We're mindful of the uncertainty in our economy in 2023, we are encouraged that organizations and businesses continue to think for the long term. They know that the move to cloud is real, are equally aware that technology can be a major deflationary force to improve collaboration and productivity. We're in the early stages of digital transformation, when I speak to our customers and partners, many are just scratching the surface on how they can connect their people and improve their business processes. Let's talk about these trends, which we believe will continue to benefit AvePoint. The first is the proliferation of software and the relentless growth of data. As people increasingly depend on software applications to meet, collaborate, and share, organizations are experiencing explosion in the number of applications their people use.
Over 65% of spending on application software by 2025 will be for cloud technologies. At the same time, this explosion has led to a tremendous amount of data stored in cloud. By the way, this also includes data generated by the new generation of generative AI technologies, where Satya Nadella of Microsoft recently stated that by 2025, 10% of all data produced will be done by generative AI. In addition, research find that the average organization stores data on as many as six different platforms. With that growth comes challenges on how data is managed, controlled, and protected. Challenges that AvePoint is uniquely well-positioned to address.
For example, a large British multinational retailer needed our ability to implement end-to-end life cycle and information management capability to help them avoid substantial excess storage costs, while at the same time understand the ownership of workspaces and content for their 16,000 employees and contractors. The second trend is the need for business optimization. The headlines are all around us. In today's uncertain macroeconomic environment, the call for every business is to ensure sustainable, profitable growth. Whether they want to move faster, reduce costs, improve productivity, or make more informed business decisions, we see tremendous opportunity to help companies become more digitally resilient and build the right foundation for innovation. This is how we actually gain the confidence of the second-largest investment bank in the world by revenue last year.
Our ability to take smart data inventory will save them time and add more efficiency to their digital operations as they move to cloud. Last, certainly not least, is the compliance and threat landscape, which every management team and board seeks to address. More countries are implementing and enforcing laws to ensure data collected and used by organizations is protected, secure, and compliant. The global zero-trust security market is expected to grow to nearly $61 billion by 2027. The average cost of data breach was about four and a half million dollars. Almost every other week you hear about hacking incidents, data leak incidents, even across some of the today's premier private data management companies. These doesn't even consider the damage and loss of data, reputational harm, and business disruption.
One of our customers, a global recruiting leader, can lose up to EUR 5 million a day if their Salesforce environment experience downtime. Taking this all together, it's no surprise that nearly 90% of company boards regard cybersecurity as a top priority business risk rather than an IT problem. Amidst these trends come enormous opportunity for continued growth. Let me give you a sense of how I have been thinking about our strategic priorities for the next few years. I'll quickly touch on these, and you will hear more about them throughout the day from Mario, from Tom, and from Jim. Priority number one, we'll continue to expand our AvePoint Confidence Platform offerings, both organically as well as inorganically. We see customers looking to consolidate vendors in this challenging environment.
We also see them looking to have one platform built off of a common data engine, which provides cost benefits and integrated functionality benefits. AvePoint customers receive greater cost optimization as well as automation benefits, both of which are especially critical today. In his overview about AvePoint Confidence Platform, our Chief Strategy Officer, Mario Carvajal, will talk about how we approach our research and development as well as our M&A approach in detail and allow us to expand our global footprint and launch more industry focused and line business solutions. Priority number two, accelerate customer adoption of our Confidence Platform. Once customers install and use our platform, it is mission critical. Given the workloads that we service and the cost and functionality benefits we offer. In a time of doing more with less and being flexible in our workplace delivery model, these are reasons customers come to AvePoint.
You'll hear in more detail from Tom Lin, our Chief Revenue Officer, on our approach to continue to expand adoption with customers who view us as a strategic partner as they manage their digital transformation. Well, also priority 3, we want to continue to broaden our market and geographic presence. We are focused on driving greater adoption and expansion opportunities within our growing customer and partner ecosystem. We're gonna drive net new logo acquisitions in the regions where we already have physical established presence, as well as working with our channel network to enter new markets where cloud adoption is starting to rise. Certainly, last but not least, it's our channel ecosystem expansion. Our expanding channel ecosystem deepens our relationship with existing partners and accelerates our market growth. The expansion of this ecosystem will be critical part of our profitable growth and efficiency in the years ahead.
As you can see, these trends and opportunities for growth provides a clear path forward to help us penetrate the significant market opportunity we see to enable companies to digitally transform. It's about leveraging technology to short-circuit actionable business intelligence from the front office to the boardroom. It's also about accelerating digital transformation. Most importantly, it's about helping businesses realize rapid ROI on their digital workplace initiatives. Every business must be a tech business moving forward. I was speaking with Jeff Teper, President of Microsoft Collaborative Apps and Platforms, about the conversations he's having with clients on today's competitive global environment. Here's what Jeff had to say about how he views the space, and then you will hear more from Mario on our AvePoint Confidence Platform.
Good morning, everyone. It is great to be here as part of the AvePoint Investor Day. Organizations around the world has transformed fundamentally in the last few years. As the pandemic hit, we all figured out how to work remotely, and as things subsided, work had changed permanently. People want the flexibility to work from any place, any time with everyone. Different organizations are adapting differently based on their needs and their industry. The pace of technology continues to advance in collaboration tools, in AI, in security, and it's more important than ever as the workplace changes and as the technology changes, companies are able to take advantage of it to achieve their mission and their goals. You know, there's a lot of churn around this, and so one of the things we've tried to do is research periodically what's going on and share it in the industry.
We have something called our Work Trend Index, where we get to talk to senior business leaders, technology leaders, employees, information workers, frontline workers, and digest what's going on as work evolves, especially with some of the newer technologies like AI. It is more critical than ever that we provide great tools, great guidance, and great support for these organizations. You see this in the rapid pace of innovation in Microsoft 365, whether it's our collaboration tools like Microsoft Teams or the work we've recently announced around AI with our Copilot technologies that will be coming soon.
A critical part of the solution is making sure we've got great technology partners like AvePoint, who are leading the way with a complete set of technologies for solutions and management and governance, and working closely with organizations around the world of all sizes to make sure that the technologies we deliver are adapted and manageable by all these organizations, so that you can digest them and address your security and compliance needs at low cost. We're very, very excited about the partnership with AvePoint around the next generation of digital workplaces and excited to be here part of the AvePoint Investor Day. Thank you very much for your time and all the best in your digital workplace.
All right. Thank you, TJ, and thank you, Jeff, for those remarks. Good morning, everyone. It's such a pleasure to be here with you all today. Hopefully, the information we prepare this next session will allow you more of some of the approach that we take when we think about providing value to our customers. First, I'm gonna discuss what it takes to foster the digital workplace for success. I'll also discuss our approach from a product offering and walk you through three business scenarios that are really gonna help us understand how customers actually really get to experience our technology. Finally, I'm going to wrap up with some strategic initiatives. Let's get started. Okay. Sorry about that.
The digital workplace is really an interesting place to start the discussion, as TJ mentioned before, because there is a lot of information coming into the workplace. It's happening both with a lot of apps as well as a lot of data. When we think about digital workplace, we also think about the strategies that make the digital workplace effective. There are a number that are designed to help build a working environment that empowers the workforce. These strategies possess the ability to improve efficiency, connectivity, and flexibility in any industry. Basically, they are the blueprint for the digital workplace. What is common thread through all of this is the knowledge worker. To go from a digital living to actually a digital workplace, one must experience the applications in real time.
Making this shift requires connecting knowledge workers' experience to positive business outcomes by putting workers at the center of design. That is exactly what AvePoint is doing. When we think about designing our applications, we kinda think about this graphic you see here. Now, most of us utilize technologies today in our daily roles, but the challenge is that it's quite fragmented, the experience. Typically, when we send files or when we share information or we communicate through email, we are jumping from different apps, and that actually creates complexity for IT organizations to manage at scale. As a result, what we think about is: How do we power automation behind the scenes to improve the lives of the worker to actually get work done? That's what I'm gonna cover today when I walk you through a few of the, these scenarios.
First, I wanna talk to you about the disjointed collaboration and file share challenge that many customers talk to us about. Many will say to us, "Where an activity as common as sharing files can constantly lead to toggling apps, this is actually happening at least 10 times an hour. That's very costly to our organization. The challenge there is that people are not getting to the information quick enough, and when they don't get to the information, it doesn't keep the flow of work. Please help us solve this." Many will also say to us, "Dispersed resources are also a challenge.
They create a burden for our IT support program, they slow down the actual experience of the application for our end users, and more importantly, the onboarding time of new employees and new hires is very challenging for us, especially when we have to transfer individuals from roles to roles. Please help us solve this." Lastly, many will also say to us that we have a problem with shadow IT. You probably heard this term before, shadow IT. The reason shadow IT exists is because we become impatient. You become so impatient that we will say, "I'm going to open up a new account with Dropbox or, you know, Box or any other third-party service that may not be approved by the organization." When that occurs, what I'm actually doing as an end user is I'm introducing more complexity into the environment.
IT sits there and says, "Well, how do we operate all of this and how do we govern that?" The idea is to come up with a more pragmatic approach to actually deploying policies that help you actually govern the environment. Please help us solve this, AvePoint. Well, as TJ mentioned, our commitment is to help our customers build and sustain a robust digital workplace environment, provide bite-sized curated information in the flow of work, instantly resolve issues that enable self-service so that we can get to actually work on the work that's most important to us, inform decision-making and drive connectedness to the appropriate digital workspaces where our subject matter is. Lastly, transition experiences from reactive to proactive to predictive. How do we do this? Well, at AvePoint, we're doing it with the Confidence Platform.
The Confidence Platform really delivers a comprehensive set of SaaS solutions that empower organizations to operationalize the environment. They also secure the collaboration that's happening through those applications we support. The platform powers a set of applications organized into three interconnected suites that offer true functionality and business drivers. Let me cover the three suites very quickly for you. The first is Resilience. Resilience enables organizations to efficiently and effectively comply with data protection regulations, preserve critical records, and ensure business continuity. Now, this provides regulatory, audit, and risk management teams with the assurance that the organization is meeting its compliance obligations. Next, our Control Suite, which ensures sustainability and operational capacity. The digital workplace now can operate more effectively and efficiently. We need to deploy the right governance controls.
We need to do it in a way in which it is not intrusive to the end user experience. We have a list of applications that are designed to do that very same thing. Today, I'm super excited to announce that there's an evolution to the platform, and it starts with our Fidelity Suite. Our Fidelity Suite, as many of you that have been learning our story, is really about data transformation and migrating data from one source to another. Today, I'm actually announcing that we are moving our Fidelity Suite to be more of a Modernization Suite. The reason for this is because now we're including industry solutions.
As TJ mentioned before, this incredible opportunity to help companies deliver value is by building industry applications or composite applications that work off of our platform and integrate with that same digital workplace experience that users are used to. I'll show you a couple examples of that. As you see today, we're not only providing value, but we're constantly thinking about how is this digital workplace environment changing. The Modernization Suite, you can expect from us to keep shipping more and more industry solutions that's gonna allow us to transition from the back office all the way into the front office. The front office is really important because nowadays, democratization of technology is what every organization wants. They want end users to not have to go to IT to get access to information or support.
They wanna be able to actually, you know, have really seamless experience. Now, I wanna add some context to these great offerings, I'm gonna spend a few minutes illustrating the power of the platform with a small set of examples. Let's first start with Resilience. Now, we also heard from TJ how the global zero-trust security market is expected to grow to nearly $61 billion by 2027. You know, ransomware attacks continue to rise, putting companies without proper security measures at risk of data breaches. To prevent attacks, organizations are relying on a zero-trust model to protect both on-premise and cloud assets. Guess what? We actually started our business on-premise. When we started our business on-premise, we actually concentrated on protecting information.
We've not lost sight of that, and as we've been thinking about the digital revolution, we've brought some of that design thinking with us to ensure that we could also think about cloud assets and the on-premise environment. Why is that? Because many organizations will continue to live in a hybrid world. Very few vendors actually understand and appreciate that. We do here at AvePoint. To prevent such attacks, organizations are relying on a zero trust model. Many buy our solutions because our solutions are part of the zero trust framework. That makes us mission-critical, as TJ mentioned. We're working with customers to enable their proactive defense strategy. We know that some of the realities of ransomware is that they tend to separate the worker from the data. They leave the user vulnerable.
Now, with our Cloud Backup offering, we're actually addressing this with three key capabilities. First, we do early detection. The second is we do quick investigation, and the third, which is really important, is we come and give you access to an original good copy of your data. You know, ransomware is about taking and locking down your machine or taking information. We're able to provide organizations business continuity with that data. Think about how important that is. Now, with early event detection, what we actually do is we have machine learning algorithms to detect unusual activities as well as potential ransomware attacks. This allows the organization to remain in a proactive stage. Additional capabilities include anomaly detection, which really is about patterns that we recognize over time because our software is running with incremental backups.
Once we have this anomaly detection, we actually can also look for encryption detection. Encryption detection is really critical because once that happens, you really can't get to the data. You know, we track heuristics over time for each storage repository you use. Many organizations use more than one storage repository. Remember I mentioned before, shadow IT? Organizations struggle with this, and so we are, you know, stepping up. We decided to not only ship this solution to help organizations, but we also offer a ransomware protection warranty. For the remediation, we believe our tools are strong enough to actually help you remediate the problem. Now, once we have a baseline of information based on those capabilities of early detection, we allow you to do your investigation. Investigation is important because oftentimes you wanna find out where there is suspicious activity.
If there is suspicious activity, you can also identify other issues. Why is someone downloading so many files today? This has helped organizations, again, not only identify a ransomware attack, but also prevent other sort of suspicious activity that does lead to data breaches. Whether it's on the OneDrive, on Teams, on a Google Drive, our application covers all those sources. One of the biggest risks to set to ransomware attack is synchronized data to your laptops, right? Many of you here today are actually using your laptops. We use our mobile devices, and every time we sync to the cloud, we actually increase the threat surface for an organization. We make it harder for your security teams to actually monitor what you're doing and ensure you're doing it in a safe manner.
Here on the screen, we also can drill down, in this case, we're actually looking at a single OneDrive on January sixth. We're able to identify if there are any suspicious activity. We can actually pull a report. We have dashboards. Again, this becomes very important. You know, many years ago, I had the privilege of going to a really large retailer, I was so impressed that they had this actual security center in the center of the actual working environment. I was really proud to see that our application was being used by their incident management team, part of their critical response program. It was a proud feeling because I know at that point our teams worked really hard to try to solve problems. We're proud to say that with our platform, we've not had any data breaches.
This is a business that's been around for 20-plus years, again, it speaks to how seriously we take these matters. Also, if suspicious activity is identified, before any changes take place, we do also wanna make sure we send notification out. The platform, the application actually allows us to notify the appropriate parties. Organization and coordination to remediate is also a challenge, right? Change management. How do we, you know, triage the situation? We're also empowering organizations to address these issues with the software. Remember, for us, the equation is early investigation equals proactive compliance. Our customers' IT and security teams need to perform incident investigation as soon as possible, once that occurs, they can also often, you know, jump to other capabilities in our platform to address other problems if need so.
Again, by allowing optimal recovery point, as I mentioned before, the third capability is bringing you back a good copy of your data that's allowed by our product. We actually give you suggestions into which is the best recovery point time. We also give you the option to store the data, probably not in the same location. Oftentimes the request is, "Can you actually now restore the copy and move it somewhere else?" Again, this is all part of a remediation and response approach. We're very proud of this application, and this is actually what is the differentiation in our solution. You know, many of you in conversation with me have asked, you know, "You offer a backup as a service solution, what is the differentiation?" Well, this is it, right? We think about it very differently than most of our competitors do.
The other thing I want to mention is that the solution works not only within the Microsoft 365 set of services, but you know, as we've mentioned many times, we follow our customers, and our customers are using more and more different sources and providers for their data repositories. To us, it's really all the same, right? The idea is to build a platform that has interconnectedness to all of these sources. Again, just wanted to show you that here. Now that we saw that, we can see how a company like Asian Development Bank really trusts what we do. You know, they are benefiting from the solution with a full-service, worry-free backup. Today they're backing up over 15 terabytes of data to about a 6,400 user organization.
This is helping them minimize the burden on IT, again, for these sort of response attacks and remediation, but it also helps them provide, you know, efficient restores. This is also an organization that is moving into the next sort of stage of the life cycle of adopting more products from us. They're actually looking at the next product that I'll be showing you, which is how do we govern the digital workplace. I did wanna just make mention of how excited we are to be partnering with the Asian Development Bank. Now let's take a look at another important factor in what it takes to operationalize successful digital workplace environment. By looking at these capabilities, let's really look at what we're doing in Control. First let me set the stage.
In 2018, Gartner published this really interesting report. What it said at the time was, you know, Microsoft Teams will be as common as Outlook, right? Email. The reason for that is because eventually most users will begin their day in a Microsoft Teams interface. That's actually happened. I think that's the first application I open up. The reason for that is because it makes it easy for me to chat with my colleagues, my partners, but also I can send messages. You know, the reality is that the Microsoft experience is a digital workplace experience. It's an application that actually is changing the way we communicate with each other. It is not only, you know, fantastic as a communication tool, but now we see that it's also a video conferencing tool.
The direction that Microsoft is headed in is really interesting to us, and the reason for that is because behind what it creates for organizations is a challenge in how they actually govern the workspaces that are within Microsoft Teams. I'm gonna talk to you a little bit about that. As a wise person once said to me, you know, with great power comes great responsibility, right? The Gartner report here highlights the importance of a comprehensive governance strategy, and that's really why I wanted to put this report here. Many of you may say, "Well, what is exactly a governance strategy?" The governance strategy is make sure you have the right automated controls to actually operate the environment, because once the solution is released to the workforce, it's actually gonna grow very quickly.
That's actually what's happened with Microsoft Teams. I think there are over 280 million users now on that application. The goal here for us is to make it easy to do the right thing when you're actually working within these applications. I wanted to start off with an analogy. This picture here of this young child is bowling, right? It's a very familiar function to us. I'm sure everybody here has been bowling. Really what's making the experience great for him is that the guardrails are up, and because the guardrails are up, you know, he's probably thinking he's ready for the bowling team, right? He's gonna be throwing strikes. You know, this is really interesting because we think of technology the same way.
How do we provide guardrails for organizations so that they can do the right thing without getting in the way of collaboration? We know that guardrails, in this case, are going to prevent the ball from going into the gutter. If it goes into the gutter, guess what? He's probably going to get bored and want to go somewhere else. Same thing happens with users. When they get bored of a tool, they actually stop using the tool, and they may create problems for shadow IT, right?
The idea for organizations when they come to us, and as I mentioned before, besides those three conditions of why they need our help, they'll say, "Please help us govern the environment, the digital workplace environment." This was the image I showed you earlier, which really set the stage as to, look, these are the things that we do in our communication norms. The idea here is that this creates a lot of confusion and is cumbersome at times. The best way to do this is to actually start your work and your day in a curated experience. What I'm showing you here on the screen is actually, some of you that may use Microsoft Teams, is the Microsoft Teams interface, right? What's happening is MyHub is an AvePoint application within the Control Suite.
MyHub is a product that was designed to create hubs. Now remember earlier I mentioned that technology, really digital workplace, is almost like a business' technology hub. Well, what's happening is that this kind of hub creates a very easy way for me to actually start my workday because I can personalize this with cards. Where am I spending most of my time? Where are my priority projects? This is an application that's really helping organizations not only transform the way they communicate, but also the way they operate in the environment. That's not the guardrail part. That's just the end user actually having a curated experience. The guardrail part is where now, in this case, Adele, who signed in here, wants to create a digital workspace.
In this case, let's say that she's part of an M&A team, and let's say she actually wants to create a team where she's gonna share sensitive files, documents, create a file directory, and she wants to do it all within Teams. She wants to create a Microsoft Teams with different channels, different categories, where she stores information. How does she do that? How does she do that knowing that I'm probably gonna be sharing sensitive information, I'm also probably gonna be collaborating with external parties, right, for my due diligence process? Here's how she does it. The first thing we do is we offer her the opportunity to actually start being guided through a wizard. What kind of project are you gonna be using this for? Who are you gonna be collaborating with?
What's happening behind the scenes is that AvePoint is actually powering an automated workflow that's making all the decisions for her. Why? The IT organization, when they deployed our solution, decided any time Adele creates an M&A Microsoft team, it will have sensitive information, so we wanna make sure the information is classified with high sensitivity. We also wanna make sure that the people that she collaborates with are only part of the M&A program. Naturally, she's gonna be handling sensitive information of the company. All of those decisions are made by the software. Adele doesn't have to make those decisions. All simply Adele does is fill some of the, you know, questions that are being asked by her application.
The idea here is that easily, we're able to prevent incorrect classification, incorrect sharing if we were to leave this in the hands of Adele, using the tool with out-of-box capabilities. Here what's happening is our application is integrated, in this case, with Microsoft Teams, but it could also be integrated with Google Workspace. We do this for a lot of clients. At any time someone's creating this digital workspace environment, we are providing the appropriate controls. We are providing the guardrails, right?
If we provide the guardrails, we will not only make it easy for Adele to actually get to her work, but we also will make it super easy for IT operations, security teams to know that as the organization is actually growing and as these teams or sites are actually growing, there's no concern that we're actually gonna have a lot of sprawl, unstructured data with no classification, which often leads to data breaches, consequences, so on and so forth. Again, the power here with what we're doing is that we're not only allowing, in this case, Adele to create a crisis management team, she called it Crisis Management because probably she's thinking, this is the best way to raise urgency. The choices of where she's actually sharing information and who she's sharing it with are being made here.
The other thing that's super important is that with the application, what some of our customers said to us was, "Well, if this process is repeatable, wouldn't it be great to take the structure of an existing site and just replicate that?" We can also do that, right? When she's actually going through this wizard, what she will also see oftentimes, 'cause the application knows who she is and what department she works, it'll say to her, "Would you like to create this digital workspace similar to the one you're using for this other project?" If she says yes, the application actually knows to bring along all of those compliance capabilities during the creation. This, by the way, really only takes Adele no more than probably a minute, right? Without our solution, how would you do this? You would probably send an IT ticket.
You'd probably need to get approval. You would probably need to, you know, fill out a response, understand how you're gonna classify it. Once it's created, you'd probably have to go in, you'd probably have to pick who you're gonna share with. It's very time-consuming. Could you imagine you doing that? That's not the purpose of your role. The purpose of your role is to actually work on the due diligence for an M&A transaction. Perhaps you're part of the marketing team, and your job is to actually create a campaign. Why should you, the end user, be bothered with the creation of these workspaces? AvePoint's Cloud Governance solution is actually solving that problem for many of our clients. That's why, as I mentioned before, the Asian bank is actually really excited about rolling this out. It's gonna remove the burden from IT.
It's gonna help them reduce cost. Very timely, especially now with the macro environment. Okay. I'm gonna move along and kind of get to this place here, which I think is really important. Another thing that often happens is when we actually are creating these digital workspaces, we don't know when it's gonna be done, right? We kinda sit there and say, "Yeah, I actually sent the request. I'm waiting for it to be ready," so I actually can't do my work. I can't actually start working, and I can't be productive. One of the things we offer is the ability that any time we're automated, any time of creation for purchases, we're able to offer the end user a status check.
This is super important because right from the application, if they're actually growing impatient, they could actually, you know, initiate a request and trigger almost a poke to the IT, you know, organization. IT organization receives notification and realizes something must be going on. Let's actually get to it. We are in a way still involving IT, but we're helping IT be more efficient with our solution. We're not getting in the way of work is, you know, the purpose here. The end result here is what you see as after Adele filled her wizard, you know, Project Beta V2 Crisis Management was created.
The reality is that if you were Adele, you came into Teams, you had a conversation in the morning with your colleagues, and you said, "Oh, I gotta go create this team." Go hit Create, answer a few questions, run off, have another chat, come back. It's all created. Now, Adele probably thinks, "Oh, this is easy. This is all part of Microsoft Teams," right? We designed it this way by design. We don't want to actually have Adele jump out of Teams, go to a new portal, log into our system, and that's what many vendors are doing. We don't think of it that way. We wanna bring our technology into the experience that the user is having in the tool of choice. When we say we actually integrate our products and applications with third-party cloud providers, that's why we do it. Okay?
It is adding unique differentiation, and it is also capability that is not part of the first-party tool. Microsoft is not actually in the business of solving the automation of, and governance of digital workspaces. We are. Okay. Completing my analogy, you can see here that we have a beautiful picture of a strike. The point is that every time we see success when digital workspaces get created, organizations feel, you know, not only can I trust in AvePoint, but I can now, you know, rely on AvePoint to become part of the core operations of our program to bring digital workspace to success. We're bringing this solution not only to products like Microsoft Teams, but we're also working across other tools that are part of, you know, different departments in the organization.
Most of the companies today that are actually offering you the tools to communicate and collaborate, actually will have challenges with governance. There's tremendous opportunity for us to actually continue doing this. All right. Next, I wanna talk to you real quick about the success that this organization, DLA Piper, excuse me, is having. As I mentioned, they started working with us, and they started deploying the governance product, along the way, they also started, using some of the other products in the Control Suite.
Tom will actually talk a little bit about this use case, but what I wanted to kind of remind you is that our Cloud Governance product, our MyHub product, which you saw, and also, another product that we have in the Control Suite called Entrust, is not only helping this organization with the automation and creation of digital workspaces, but it's also helping them manage entitlements. Entitlements are also important because remember, all these solutions where end users are engaging also require licenses. Entitlement management is really important. We help sunset. We help manage the entire life cycle of that digital workspace. There's a whole life cycle. Let's say seven months later after the M&A project was done, what do you do with that information?
I'm probably never gonna go to that team again and work there, or I'm probably not gonna be there as frequently. The organization wants to make sure it's actually archiving that information, applying retention policies. Especially if the information is sensitive. It might be part of a records policy. Our application allows the product to actually package it, so we manage the full life cycle of that application. That's very powerful. That's why DLA Piper is super excited about this. They were saying to us, "Well, the creation's great, but we really wanna manage the full life cycle because that matters more to our business. Over time, we could also determine where to optimize our storage if the environment's growing to a, you know, degree where it's unmanageable." Okay. Next, I wanna talk about modernization.
Before I do this, you know, as I said earlier, we are transitioning the Fidelity Suite to become a Modernization Suite. The reason for that is because, you know, over the 20 years, we've built an incredible connector framework, and we started helping companies move legacy data from on-premise systems. Then we started moving data from cloud to cloud. Then we realized that as we were doing this data transformation, we could actually put on top of it a business application, and we can then interpret, manual business processes, with that data. That's really valuable for customers because what they tend to do when they're building their own products is they tend to connect the products they wanna build or the applications for the line of business with their datasets.
Our Modernization Suite is really an opportunity for us to bring industry solutions and bring industry solutions that are going to integrate not just with all of the data that is different and living in different data repositories for the customer, but also, you know, provide an experience that interoperates with other tools that they use. I wanna just give you a quick glimpse at one of the products, and I'm going to show you a very different use case so that I could really illustrate the point of what an industry solution is. Remember, behind this is the Confidence Platform. Let's start by, you know, talking about this one.
The idea here is that we have an organization that's really looking to train an entire workforce. This workforce is, you know, spread across different regions. We work with a lot of multinationals. The challenges today are onboarding employees, as I mentioned before. Also continuous skill development, right? They can continue investing in the workforce, as well as, you know, talent retention. Well, how do you do this? How do you do this with a modern application? In my case, what I'm gonna talk to you about is about learning and development leaders, how they think about this. When we started really building this application, we thought about the opportunity to offer them not only a way to create courses and learning paths. We also wanted to do it with the same concept of building these digital workspaces.
Here, what I'm showing you is our Curricula interface, our Curricula app, which is part of our Modernization Suite. Our Curricula app actually allows the end user here to create, you know, three different course constructs for each of the regions, right? We see the three different cards here, APAC, EMEA, and North America. What happens is, not only is he defining the course and the lesson plan, but also he's identifying who's gonna be the owner in the region. This is important because he's actually delegating control, administration, and it's all secured so that the leadership team in EMEA can localize the content and can actually tailor it to the end user experience. All of that is done by the product, Curricula.
What you see here represented with the Teams icon, the Microsoft Teams icon, is that in this organization, you know, their tool of choice where they see that users are gonna spend most of the time is Microsoft Teams. We said, "No problem. We'll create the course and the learning materials in our Curricula application, and we will publish and push all of the learning content right in the Teams interface." That if I'm having a conversation, let's say, with this learning development leader, says, "Hey, Mario, welcome to the team. Can you do us a favor and actually take this course?" He sends me a link right in my chat message, and right from there, I can start experiencing the application. Before I show you what that looks like, I did wanna highlight here that the delegation model of the application is really important.
More and more, we see a lot of data owners wanna really take control of how exactly it is that their end users are gonna engage with the product. In this case, the product being the course material that they're creating because they wanna be able to review and do assessments at the end. When you see here that the courses are developed in our Curricula, what often happens is that now, in this case, we have the new hire, as I mentioned before. Once again, the new hire is here having a conversation, probably working on different projects, having conversations with different colleagues. She gets a ping from Ray. Ray says, you know, "Hi. Welcome to the team.
Can you please take this course?" Well, once she starts engaging, what you see here at the top is that we also have learning activities. That learning activities menu option is being powered by Curricula, and that's allowing us to actually say, you know, "Click on learning activities, and we're gonna show you a bunch of other sections where you can go in," That's how we pull the user into the course, into the learning path. That's how we pull them in, and that's all being powered by the Curricula product. You may say, "Well, why not have the user just go to Curricula?" They could. Some organizations actually prefer it that way. We wanna make it easy. Access the application from two different places, right?
As I mentioned before, activating the learning activities is showing, and then ultimately, I get to see here, a video as well as start taking my exam. Maybe it's a course. I have to go out, you know, watch a couple of videos. Finally, I'm gonna take an online course. Maybe this is all part of my onboarding process, which is the case in this use case. Onboarding is about advancing the digital workplace environment, making it successful, right? Last but not least, my third persona in my demo here, is the manager that's gonna do the review and the assessment. She can log into the Curricula program, she can actually track all of this, and she can also distribute this to the HR department, right?
It's probably really important for them to track this information for career development and track all the different users that are coming through this application. Why we're excited about this type of product is because we already have an organization of over 300,000 users that is using this. It is all of the polytechnics in Singapore. You know, this is an organization that came to us and said, "We really wanna train the workforce. We wanna do it with modern applications, and we wanna do it in a way in which our IT program is not disrupted." For that reason, we're not only excited to do a lot of this type of learning development work for higher ed, but we're also doing a lot now with corporate organizations for corporate learning.
Corporate learning is really critical. It's at a stage now where a lot of, you know, talent acquisition is happening through career development. If my organization is not giving me a pathway for me to grow, why should I stay here? In that regard, we're super excited about this one, and that's just one of the many industry solutions we have. Before I talk about the Confidence Platform, I wanted to just make one last note on the Modernization Suite. We also will be talking about solutions that are more vertical specific. We have a product that some of you heard us mention, I think it was early last year, called Confide, which is a product that really is designed to manage sensitive information when you need to share information with both internal and external resources.
Let me actually, with the last few minutes I have, I do wanna walk you really quickly through why is it that the Confidence Platform offers a unique value proposition. Remember, it's packaging a set of applications in three distinct suites that interoperate, the platform actually is quite special. The reason why it's quite special is because as it ingests data from all the different workspaces or data sources for various cloud providers, we actually have an orchestration engine that allows us to organize all of that information. We take all the information, we power it up with automation insights, delegation self-service, and we actually bring to life all of these business apps, as you see here organized into three categories.
The business applications are helping us address all of the challenges that happen at the end user for the digital workplace experience, as well as the challenges that IT and security teams have in deploying those applications. What's interesting about the platform is that when you log into the platform, the way we actually make it easy for customers to onboard their products is by actually using an auto discovery service. The auto discovery service says, if, let's say, DLA Piper bought from us Cloud Governance, we're actually creating a dataset inventory of all the information that they're actually collecting every time they use the product.
That information creates almost a structured template for the next product to use, so that when, you know, Tom's programmer or Tom's team goes and sells DLA Piper the next product, all the customer has to do is log into the Confidence Platform and actually select the next product, and the auto discovery engine brings all of that business context. That business context makes the next product more valuable. How we do that is with a container service. What you see here at the top of the screen is all of the different workspaces that this organization is using. You got Microsoft, you got Power Apps, you have, you know, OneDrive. All of those are feeding data into our platform. Once that happens, we can create containers, and the containers can have business context. They can have ownership as well.
That's what you see here. We created a logical grouping for the containers. Once we have that, now when you go and use the next product, let's say it's Cloud Governance or Insights, the application is reusing all that information, right? That's really powerful. It's quite unique. Most vendors, when they design, you know, design one product, and they design the next product, they actually start all over again. That makes it very difficult for organizations to actually interoperate and get value from the platform. When we talk about the Confidence Platform, we're really talking about the value proposition of the interconnected suites, you know, bringing more value, you know, in a short period of time. You know, the last thing that I show you here is that we also have the opportunity to create these really unique profiles.
This, you know, IT leaders love because once they create the profile, they actually can write, you know, to our application. We have an API to the product, and they actually integrate, and then they actually, you know, can go and build other, you know, workflows if they desire to. Okay, last but not least, I also wanna talk really quick about Cloud Records because we're excited about the opportunities that Cloud Records provide customers. Now, Cloud Records is a solution that's part of our Resilience, and the reason for that is because a lot of organizations today that are using all this unstructured data worry about how do you secure information? How do you actually retain records? How do you retain a chat thread, right? Do I take the whole chat thread? Do I take only half of it?
Our software, Cloud Records, has been helping organizations look at these digital workplace environments, and actually take all of that and be able to apply file plans and digitize the experience, right? Most of the records management approach is quite legacy, actually. Still is for many companies. We're helping actually revamp that and modernize that. The reason for that is because, once again, in this case, if I'm actually using Cloud Records, this is our Cloud Records interface, when I'm going to create a logical grouping of different containers where I'm gonna apply a file plan to different data, it's actually all being done by the business context of the product because, in this case, the customer was already using Cloud Governance, which was another product. These are stats.
Just I wanted to also impress the fact that on a daily basis, our application is actually processing a lot of information. For example, we have over 38,000 governance events happening at any given moment on a daily basis. What that's telling us is that there's a lot of workspace creation happening, there are a lot of businesses that are actually, you know, relying on our platform to be mission-critical. Today, we already manage over 250 petabytes of data, and there are probably over 9 million workspaces that have been configured. In some cases, we don't really track this because organizations in the regulated side of our business oftentimes, you know, don't wanna share that information.
We do have encryption for a lot of this, but, you know, these are stats that really speak to the success, the dedication that our teams have in building a product, and the scalability that it has. This is why the market opportunity that we see is super interesting to us. You know, I often say to TJ, "I'm confident about this, TAM, because I know we have a strategy that'll take us from one place to the next in an interconnected way." We believe that the digital workplace revolution that's occurring is only bringing more and more complexity into the environment. We're well-positioned for that, and that's why we also have a multi-cloud, you know, platform strategy. Okay.
Last but not least, I just wanna talk to you a little bit about the roadmap for our product before I actually, you know, get us into a break. What we're doing here is that we're actually expanding our products this year. Number one, we will be further enhancing our backup and recovery capabilities, the work that I showed earlier, to offer more support for services within the data center. We launched the Azure Backup. Many organizations said, "We wanna be able to protect the identities," and for those that are using Azure AD, it's super important that they actually can recover identities, 'cause identities really are at the center, at the core of the digital workplace. We're super excited about that.
We also are launching in our 2nd half of this year, calendar year, a new information management product that combines the capabilities of Cloud Records that I showed before with archiving. The reason why this is important is because we're also reducing the cost for a lot of organizations that are carrying tons and tons of data. Guess what? Some of the 1st-party providers are raising their prices. We are an option that helps them move data into a cheaper storage repository. Very powerful. You know, the other part that we're excited about is in the Cloud Governance product that I talked to you about earlier, we are also going to be supporting more and more the Power Platform.
For some of you that may not know, Power Platform is actually at the center of organizations that are looking to empower, you know, citizens or the workers, the knowledge workers, to actually be more what they call citizen developers, right? With low-code, no-code type products. Our work here is to offer the guardrails, right, the concept I showed before around Power Platform. I'm working actually on a project with my account team where we're actually in the process of migrating, I think it's over 5,000 Power App workflows. The organization is kinda saying, "Well, how do we do this? How do we organize this?" We're gonna use our product to get them there. We're really excited about that. The other aspect that we're excited about is in our Control, you know, Suite.
We're also gonna be launching more capabilities for Entrust, which is a product that I mentioned before. Entrust is really working with entitlement management. It also works with policy management. A lot of our customers have asked us for more capabilities that really work across other data sources, so we're increasing that. Lastly, I am super excited about the opportunity that we have in the modernization. As I mentioned before, you know, we have, you know, Confide, we have the, you know, Curricula product, but we're also gonna be launching role-based applications for tyGraph. Now, some of you that have been following our story remember that we actually did an acquisition of tyGraph, which is a great product, helps us manage the engagement of the digital workplace environment.
We're now gonna package all of that rich knowledge that tyGraph has into role-based applications so that we can actually go beyond IT, security teams, and really spend more and more time with communications teams, HR departments. They really wanna understand how the workforce is engaging and using the digital technologies to advance the business. Then the last thing I'll mention is, I know TJ talked about our inorganic growth. Our inorganic growth is super important to us. The reason for it is because when you build a platform like this that has the design of interconnectedness and has an API framework, tuck-in acquisitions make a lot of sense. So what we wanna do is, you know, there's always this time to market, right?
We obviously have our teams very busy building a roadmap, but we also see an opportunity to tuck in some IP. We are gonna be measured, but we're also gonna be very active. My M&A team is actually, you know, cultivating a very rich pipeline right now, and the goal is for us to really invest more in the control area of our platform. We believe that SaaS management, optimization of the environment will continue to be an increasing category for us. One thing I wanna mention is all of this great technology is surfaced through another product that I didn't have time to show you today, but I promise we will do a webcast, Jamie, and we'll talk to you about the Elements portal or product platform, which brings all of this capability to partners.
You'll hear in the next session, Tom will talk a lot about our investment into the channel program. The reason we're excited about that is because when you're a partner, here's the use case. Let's say Jamie, for example, is a managed service provider, and his job is to take over the IT program for a mid-size organization of about 2,000 employees. He doesn't have tools, he doesn't have IP. If I offer Jamie the opportunity to take all of this technology, white label it, Jamie can then deliver value back to his end customer, and he can start to provide all of these capabilities as an IT service. We are gonna continue investing on technologies that are also driving value for the MSPs, right? Already, the product offers a package set of capabilities, super light, right?
We wanna make sure they're actually easy to deploy and implement. At the same time, we see that as an opportunity to continue syndicating the technology that we've created across our partner ecosystem. Again, I know I've thrown a lot at you, but being that this is our first Investor Day, I really wanted to hopefully get across some of the excitement at AvePoint, some of the reasons why we're so confident. We do believe that our sort of story needs to be better understood, so hopefully today it's the beginning of that. We're also gonna be sharing all of this information, and as I said, we will continue promoting our message. We've been in relationships with customers for over five, seven years, some of the toughest organizations to operate in.
They see the value, they see us being part of that change that's happening. Hopefully you can also start to see it as well. Okay. With that, I wanna thank you for your time and for allowing me to explain some of the work that our teams are doing. I know in our next session, we'll hear from Tom Lin talk about the go-to-market and how we bring all of this great technology into the hands of our customers. I do believe we have a short, I think it's 10-minute break. Did I go over time, Julie? I did? What time do you want it for the people on the webcast? What time are we coming back? 10:20 A.M. Okay. 10:20 A.M. Well, thank you so much for listening, and we'll be back at 10:20 A.M.
Everyone, I think we're gonna get started again in another minute or two if you wanna grab your seats. Thanks.
All right, we'll get started. Welcome back from the break, everyone. We're gonna keep things rolling here. You've heard from TJ on the opportunity and Mario on our platform and technology. I wanna spend the next 30 minutes or so discussing our go-to-market strategies with you. First, a bit about me, as this is the first opportunity that I've had to speak with many of you. I'm Tom Lin, AvePoint's Chief Revenue Officer. I've been at AvePoint since 2006, and I'm proud to have been a part of company's key milestones, many of them until today.
Today, my time is primarily spent with our customers, with our partners, and with AvePoint's global sales team, and I'm excited to discuss all of the things that we're doing in sales and in go-to-market, as we are the provider of the most advanced platform for SaaS operation and secure collaboration. With that, let me first walk you through what our current go-to-market approach is today. We offer a wide range of solutions, products, and routes to market, which allows us to serve companies of all sizes in all corners of the world.
Specifically, I'm gonna walk you through how we segment our customers and how our sales team cater to those customer segments, who the buyer profiles are in each and every one of those segments, how we leverage the channel to engage those customers, and lastly, I'll walk you through an example of a customer's buying journey with us. After providing an understanding of our current go-to-market approach, I'll then dive into a little bit more details on those strategic priorities that TJ mentioned earlier as we look to capture the market ahead of us in the short to midterm. Of course, also taking into account that those macro uncertainties that TJ had brought up earlier.
Specifically, I'm gonna be covering our increased customer success coverage to be able to cover all of our customers to drive our technology adoption and usage to combat the downsell and churn that's upcoming. We're also gonna be talking about how we upsell and cross-sell our entire Confidence Platform and its diverse product portfolio into our customer base. Next, I'll talk about how we double down on our strategy to really grow and expand our channel network. Lastly, we'll take a look at how we're thinking about geographical expansion. Our execution of these strategies is really what's going to be driving our top-line ARR growth over the next couple of years, as well as delivering greater efficiencies. That's the big picture. Let's turn to the details.
To serve our customers better, we really spread our sales teams out with geographical coverage that are better able to serve those customers. We first segment by geography, t e segment by company size. First, let's take a look at geography. As you guys already know, we report our earnings, we report our revenue based on three major geographical regions: North America, EMEA, and APAC. Our sales teams are structured in the same way. In North America, the sales force is actually further segmented by a commercial versus a public sector sales team. Our commercial sales team is spread across all of our major U.S. offices, our public sector sales team is actually mainly based in Virginia, serving our public sector customers not only in the federal space, but also state and local customers throughout the country.
In EMEA, our sales force is actually spread across four major geographies. Our London-based team serves UK and Ireland, our Paris-based team serves France as well as Southern Europe, which we include Spain, Italy, and Portugal. Our Netherlands-based team serves Netherlands and the Nordics. Lastly, our Munich-based team serves Germany, Switzerland, and Austria. In APAC, our sales force is spread across three major geographies. Our Tokyo-based team covers all of Japan with localized pre-sales and post-sales support, all localized in Japanese. Our Singapore-based team covers Singapore, South Korea, Southeast Asia, as well as the Greater China region. Lastly, our Sydney-based team covers Australia and New Zealand. As you can see, we strive to be as local as we can wherever possible to better serve our customers in their local culture, region, language, and within their country.
I wanna talk about how we then stack our customers by company size, and again, their respective sales teams are broken out in the same way. At the top of our customer pyramid are what we call our enterprise customers. These are large organizations that have more than 5,000 employees. We have about 1,150 enterprise customers today, and they represent just over 50% of our ARR. Below that is our mid-market customers. When we talk about mid-market, we define that as organizations greater than 500 employees, but fewer than 5,000 employees. Today, we have around 2,000 mid-market customers, and they represent just over 30% of our ARR. Lastly, we have our SMB segment. Our SMB customers are organizations with 500 employees or fewer.
Today, we have over 14,000 SMB customers, and they represent just under 20% of our ARR. To better understand our routes to market and how we leverage either our direct sales team or our channel to engage each one of these customer segments, first, let me walk you through the buying cycle and the buying motion and the buying profiles for each and every one of these segments. In our enterprise customers, the typical buyer is IT leadership. As you can imagine, as Mario mentioned before, we're talking to CTOs, CIOs, and CISO. The needs for governing their digital workspace, a lot of times it's 365 , Google Workspace, Salesforce, et cetera, typically fall under their purview. They usually have a team, a budget, as well as the capacity to go out and research tools and solutions that solve the issues that they're facing.
The buying motion is typically a direct engagement with the vendor, often proceeding with product trials, live demos, installing in their testing environment, and proof of concepts. After the solutions are deemed a technical fit for the buyer, they often then proceed with legal negotiations, contract negotiations with their legal departments and procurement, respectively. In most cases, customer engagement here is directly with AvePoint's enterprise sales team, which primarily is an outside sales team that, again, is spread regionally to cover our customers where they are, and it's a high-touch direct sales experience. It's also a multistage experience, a multistage sales cycle, where we're actually walking them through not only the technical validation, but all the way to contract negotiations and closure. Sorry. In our mid-market customers, however, the typical buyer is still IT leadership, so we're still talking to CTOs, CIOs, and CISO.
Historically, this is covered by our inside sales team that is engaging these customers directly. However, what we're finding is, unlike their enterprise counterparts, these IT leaders in the mid-market space have much smaller budgets and smaller teams, and often don't have the time, the capacity to be able to go out and research as many tools, as many vendors as they like to solve their collaboration challenges. Because of these constraints, we're finding more and more mid-market customers leaning on IT consultants, systems integrators, and software resellers to give them the trusted guidance and referrals that they need to best address the challenges in the collaboration space. This is why the mid-market segment is the key segment to our channel transformation strategy.
By building out relationships with these value-added partners, our goal is to gain the mind share of all the customers they assist, especially those that aren't engaging with vendors directly. This will broaden our reach and expand our market penetration, while of course, driving greater efficiencies as we improve the selling motion over the channel. Lastly, in SMB, the technology buyer profile and buying motion here is very different compared to mid-market and enterprise. As you can see in our pyramid earlier, we have a vast number more of SMB customers. That's because in small businesses, there often isn't a single person, let alone a department, who's dedicated to IT functions. Instead, small business outsource their technology to managed service providers, you know, to do all of their IT upkeep and all of their IT maintenance.
Those managed service providers then in turn source the technology from multiple vendors, us included, and resell it as a service. Our SMB team here primarily engages this customer segment through our distribution channels, our distribution partners, and of course, their network of resellers and managed service providers. By leveraging distributors as a route to market here in this segment, we allow managed service providers to procure AvePoint solutions quickly, easily with automated invoicing, automated license delivery. This harkens back to what Mario mentioned earlier in our Elements platform, where a lot of this procurement, a lot of the licensing can be done automatically. This reinforces our no-touch or low-touch strategy to really cater to our SMB segment with a high-volume transactional business. As you can see, the channel is a part of each of these three segments of our business.
I wanna make it clear that channel here is not just referring to our SMB business or with the distribution ARR we have previously mentioned. Actually, you can see within each and every one of those segments, we have different types of channel, different types of partners that we're engaging with. Again, leading on some of our systems integrators and our IT consultant partners to really make that trusted referral into our enterprise and mid-market customers, while our distributors really help us reach the vast expanse of managed service providers in the SMB space. Let me wrap up this section of our go-to-market discussion by walking you guys through an enterprise customer's buying journey with us, or more specifically, an enterprise customer's digital journey, their transformation cycle as they go through their own digital transformation.
As a customer embarks on their digital journey to build their perfect digital workspace, they're faced with many different challenges. In different stages that they enter the cycle, there's a different challenge that they face. A lot of times it's very easy to assume that every customer, their first challenge is migrating legacy data. That's simply not the case. Customers can enter the digital journey, as you see here, in any part of the cycle, and within different part of the cycle, there is actually a very unique challenge.
The great thing that we do here at AvePoint is that regardless of the part of the sales life cycle that you enter, we actually have a solution that allows you to solve the challenges that you're facing, whether it be, again, migrating legacy data or the protection of the data that you now put into that platform, or even enabling users onboarding adoption, as well as satisfying our legal concerns or any regulatory concerns. This really highlights our ability to deliver a comprehensive suite of solutions to address our clients' needs, again, at every space of the digital journey that the customer is on. This is really giving us that competitive advantage to a lot of the single-purpose tool vendors that are out there.
Armed with an entire platform that we can offer to our customers, not only our sales teams, but our partners can actually go out very aggressively in that initial engagement, knowing that we will be able to land further upsell and cross-sell opportunities. After the initial problem is solved, we will find new problems and new solutions to be able to deliver to those clients. As they face new parts of the journey, they will face new challenges, and we're already in there. This is case in point with our DLA Piper customer that Mario actually brought up earlier. In Mario's scenario, he talked about DLA Piper coming to us with their governance needs and ultimately buying our Cloud Governance solution. Let me walk you through a little bit more deeper dive into DLA Piper and walk you guys through that entire buying journey.
For those of you that don't know, DLA Piper is a global law firm with 4,500 attorneys operating in 40 different countries. On their digital journey, again, their first need was solving the day-to-day operational tasks inside of Microsoft Teams, right? As Mario showed you, they wanted to be able to create workspaces, end-of-life workspaces, and they want all of that automated. Of course, their first foray into buying AvePoint solutions was our Cloud Governance tool, which is inside the Control Suite, and they bought this back in 2019. They began that relationship with us at approximately $100,000 ARR. After onboarding, our team then quickly realized, again, the next challenge as they increased their usage.
We discovered that DLA Piper has needs for preventing data loss, ransomware. We cross-sold our Cloud Backup solution to them, which is inside the Resilience Suite in 2020. Over the course of the last 4 years, we have then partnered with them further as they proceeded on their journey and discovered new challenges that they're facing so that we're able to deliver them more solutions. Throughout those 4 years, they have invested in more tools, specifically File System and eRoom Migration, which is our Fly Migrator tool, to move legacy data that they have into their new environment, as well as Policies and Insights, our reporting tool for a lot of analytics and reporting. Today, throughout that journey, their AR with us has quintupled just in those 4 years. We see that same potential across our entire customer base, right?
Here's a look at the product attach rates for our customers with 500 employees or more. Specifically, remember what I mentioned before, 500 or more is our mid-market and our enterprise customers. The reason we look at product attach rates for our mid-market and enterprise customers is because this is the segment that we're really engaging in with a land and expand strategy. Specifically what you see here on the chart is percentage of our customers taking on 2 or more products, as well as percentage of our customers taking on 4 or more products. As you can see, in 2019, the percentage of customers taking on 2 or more products was 35%, and as of last year, 2022, that number had risen to nearly 50%.
On the other side of that, we see percentage of customers taking 4 more products, 4 or more products. As you can see in that same time span from 2019 to 2022, that number rose from 20% to 24%. This is regardless of what suite the products are sitting in, but we see a similar pattern and a similar trend when we go to our suite adoption as well. As we look at the metric of our customers adopting 2 or more suites, we see that that percentage is sorry, 13% in 2019 and rising to 23% in 2022. What the data is telling us is twofold. One is that we are, you know, validated in our platform play approach. When we get in, we're sticky, they buy more.
As you can see, we still see a lot of greenfield and a lot of opportunities and that we remain under-penetrated with our customers as far as product attach rates, and that is, you know, part of the opportunity we see ahead of us. I've covered how we currently go to market, let's take a look at some of our go-forward strategies, specifically those four points that TJ mentioned earlier that I'll dive a little bit deeper into. First and foremost, I'm gonna be starting with customer success coverage. This is where we're investing in our team internally, as well as technology, to be able to provide our customers better coverage. We believe these investments will help promote greater usage and adoption of our technology, which in turn will combat those downsells and churns.
Our customer success team's mission today is proactively aligning client and vendor goals and their expectations to ensure what the customers are expecting the value out of our software is realized, and thus creating a very strong mutual relationship with our clients. This function is critical to our overall growth strategy as we kinda usher the customers through their journey. To achieve this, we implement an engagement model that actually has 4 pieces and maximizing each and every one of those stages of their customer life cycle, starting with onboarding, then adoption, optimization, and growth. First, onboarding. We begin our relationship by ensuring customers are seeing a full value of their AvePoint investments early to establish confidence in our platform and showcase a meaningful ROI. This means a successful production deployment shortly after purchase. Second, adoption.
We help our customers identify more uses of our software as we understand how their needs are evolving over time. As Mario mentioned before, a lot of clients may come to us, again, buying one of our products because they have a problem they wanna fix. As we get in there, we realize that our solution can actually help them solve much more problems. Again, in the case of that DLA Piper customer, they may be coming to us for Teams creation, Teams governance inside of Microsoft 365. However, we also can then extend that to a full data life cycle, where we're talking about not only the creation of digital workspaces, but managing the sunsetting and the archiving of digital workspaces as well, maximizing the usage of the product they already bought.
Third, as we move into optimization, this is where we actually extend beyond the initial product they purchased. As we become, kind of a trusted advisor to them, Our knowledge of their business challenges strengthen. This is a part where we can actually recommend additional products to solve new problems that they're facing. This, of course, not only leads to a successful contract renewal, but overall expansion of the relationship. We become ultimately a trusted advisor that they turn to whenever new challenges surface. Lastly, growth. We move into an iterative mode so that we can continue to stay ahead of any changes that may occur. A lot of times, our clients go through organizational changes, project priorities change, new departments get spun up, departments get, sunsetted.
As those things change within the organization, we're able to actually go out and anticipate those changes and see how the technology can help facilitate those changes. As trusted advisors, this really puts us in a prime position to grow and renew our customers in the long run. That's the strategy. What we've seen is that it's even more powerful in practice, which I'll kind of give an example coming up, especially when we talk about our retention rates. Prior to today, in our disclosures, we primarily talked about our net retention rates, our ability to increase and expand within our existing customer base. While our continued investment in the CS strategy that I talked about here will surely drive improvements to our net retention rates, we're also going to start to be talking about our gross retention rates, which this will directly impact.
Jim, in his section coming up, will dive much deeper into our gross retention rates, which is a new disclosure that we're gonna have going forward. Ultimately, what we know is that when customers renew with us and stay with us, over the long run, their ARR grows. This is why that third and fourth stage, that optimization and growth stage of our customer success engagement model, is so critical and flows directly into our upsell and cross-sell motion of more of our Confidence Platform solutions into our clients. Let me give you a real-life example that I just went through beginning of this year. An example of our customer success model working hand in hand with our cross-sell and upsell motion can be seen in this recent engagement with a state government customer of ours here in the U.S. in the Midwest.
This state government customer today has approximately about $400,000 in account ARR with us, primarily with our Cloud Backup and our Cloud Governance solutions. Given the macroeconomic uncertainties that we're all seeing today, their management team came to them and mandated a reduction in their IT spend going forward. Of course, our contacts within the IT department reached out to us to try to negotiate, as they do with all of their vendors, a reduction in their upcoming renewal to comply to stay under this new mandate to spend less money on IT.
Of course, as trusted advisors, our CS team was able to dig deeper into the technology stack of the customer, gain a better understanding of what they're spending in IT, not only what they're spending with us, but what they're spending with IT in general overall, found out they were investing also into other competitive software tools that were in there, specifically for adoption and training, for secure file sharing, and other shadow IT management tools.
By demonstrating the value of our MaivenPoint, which is our edTech solution that Mario brought up earlier, to fill that need for adoption and training, and our Confide solution that unfortunately we didn't have time to show you today, that caters to their secure file sharing needs, and of course, our Entrust solution for that delegated administration, we were able to cross-sell more of our platform and these solutions into that client. We were also able to offer these additional solutions at a much more competitive rate versus what they were paying with those other vendors today. The end result is that we at AvePoint are actually able to increase the size of the ARR in that account and cross-sell more of our platform into that client, while at the same time helping that client meet the goals of lower overall IT spend.
This really demonstrates what TJ was talking about earlier. As we now face macroeconomic challenges, a lot of our vendors, a lot of our customers, are really looking to consolidate IT vendors, consolidate platforms, and of course, save money. Further to that's just cross-selling and upselling into IT. As Mario mentioned before, one of the reasons that we're changing our Fidelity Suite into now Modernization is our ability to now bring to market a lot of industry solutions, line of business solutions, and industry-specific line of business solutions. This is allowing us to now tap into budgets beyond IT. In fact, we're starting to see customers now come from HR and L&D, corporate communications, and even finance and accounting departments with the new tools and solutions that we're pushing out there.
An example of this would be a medical insurance company of ours based out of the West Coast that has been a customer with us since 2018. While we have worked closely with their IT departments and they, you know, cross-sold and upsold a lot of our different solutions into the IT department, it wasn't actually until last year that we were introduced to their corporate L&D team and the team that managed their internal LMS environment, right? Because of our ability to get introduced to that team and to show them again that edTech platform that we built for Microsoft Teams, they were able to see that we provide beyond just infrastructure tools, that we actually can now help them also with employee onboarding, employee sentiment engagement. We were able to sell that edTech platform into a different budget within their corporate communications team.
Today, with that sale, that actually pushed the account ARR here over the $300,000 mark with us. With that, in addition to upselling and cross-selling to our existing customer base, we know that there's still a lot of greenfield opportunities out there that we have to go out and attack. Next, I wanna spend a few moments to talk about our channel strategy, where we really see as a key driver to really help us expand the reach that we have today. We see this as a strategic opportunity, and it's an enormous opportunity that is also gonna help us drive profitable growth, because we don't have to scale our current sales teams the same way. Ultimately, it is our goal that the % of our ARR generated by the channel continue to grow every single year.
When we talk about channel, what do we mean? I mentioned this again, in a previous slide, but I thought it would be good to bring it up here again, is that channel is not just SMB for us or just any one of these segments for us, nor is it just a specific type of partners that we're engaging with. As you can see, because of the go-to-market motion and the buying motion that I mentioned earlier, we're actually engaging all different types of channel to be able to cater to where the customers are and how they wanna buy. Beyond just the word of channel, how we think about channel is really two major partner segmentations, depth and breadth. Depth partners are essentially invested and managed partners that are generating the highest level of ARR for AvePoint.
They're managed by a dedicated team of partner managers who are responsible for creating and executing a bespoke business plan that measures that partner's progress. These partners are mature, ramped up, and they're fully capable of driving both the pre-sales and the post-sales motion for selling our solutions. Oftentimes, they've already integrated our solution into their own business' go-to-market motions. By leveraging the expertise of these partners and their knowledge of our overall Confidence Platform, we can sell more of the entire platform to more organizations that they're working with day in and day out while achieving a lower customer acquisition cost. This is going to allow us to scale profitably for years to come, again, without us having to significantly increase the size of our mid-market and our enterprise teams. Beyond our depth partners, we also have our breadth partners.
In fact, we have thousands of breadth partners who are contractually authorized to resell AvePoint solutions. Now, I always talk about this pyramid here. It's definitely a much wider base as you think about the graphic of where our breadth partners exist compared to the top end of the pyramid. These partners are actually supported by us through automation. Now, that's through our partner program, through our partner portal, and again, leveraging what Mario mentioned before, our Elements platform, where a lot of this invoicing license delivery is automated. In addition, I mentioned before, we have major distributor relationships, people like TD SYNNEX, Ingram Micro. They also help us manage and support these partners with a low-touch model from us.
Breadth partners are a critical part of our channel strategy as it's primarily through these breadth partners that we're actually reaching and penetrating that vast SMB market and again, gaining those tens of thousands of SMB customers in a low-touch model. Overall, with channel, our long-term goal is to double the ARR generation of our top depth partners here, while also widening that base of doubling the number of our breadth partners in the mid to long term. We're confident in our ability to execute to hit these goals, working hand in hand with our partners. In fact, let's take the opportunity here to hear from a few of our European partners.
The reason is quite simple, but nevertheless important and awesome. It's the quality, availability, and competence of the German AvePoint partner management. I like working with AvePoint because it's super easy and you always get help quickly. In addition, I'm convinced of the product. I like working with AvePoint because we work together on an equal level in the interest of our customers. I would say uncomplicated and just perfect. We are in sales opportunities together, the cooperation is very good, and we always find the best solution, whether technical or commercially for our joint customers. AvePoint gives a lot of opportunities to develop products for our customers and solutions for our customers. This has been done without any distance between AvePoint as a deliverer and, also us as a partner.
A big thanks to our partners for their kind words. As you can see, we have partners all throughout the world in many different geographies, covering different languages as well. Hopefully the subtitles also help there. Before I turn things over to Jim, I wanna dive into our kind of fourth and final key priority that TJ mentioned, and that is really geographical expansion. Before we do that, I really wanna take a look at, from a high level, our current performance by geography. With that, I'd like to make a few points. First, we are truly a global organization with customers now in over 100 countries around the world. As you can see, last year in 2022, 45% of our ARR came from North America, 35% of our ARR came from EMEA, and about 20% came from APAC.
We're not really relying on any single region. Second, our historical growth rates in each and every one of these regions have actually been very strong and steady for all three regions, as I'll discuss in the next slide. Lastly, while our view of growth in 2023 is a more measured one, as TJ mentioned, given some of the macro uncertainties that we're seeing, our long-term view of the global opportunity is unchanged. Companies in any region of the world do and can benefit from our software. Let's spend a minute on each region, but you're gonna hear a lot of similarities as I go through each one of those regions, especially in regard to their historical performance and where we see them going forward. First, in North America, where our ARR has actually grown on average 27% per year since 2019.
Even considering AvePoint's strong presence here and founded here, we still see a lot of greenfield opportunities continuing to add new customers as well as, of course, those upsell, cross-sell motions I talked about earlier to sell more into the thousands of customers we already have here in the United States. We also know that the long-term demand is there. The US digital workspace market is expected to grow at a 21.5% CAGR all the way through to 2030. As we look at our mid-market and SMB segments here, that execution of the channel transformation strategy I talked about earlier is gonna be critical to ensuring that we can reach as many customers as possible, of course, at a profitable scale. EMEA is another strong story where our ARR has grown 40% per year since 2019.
This success has been driven mainly by our customers opting for our Modernization and Resilience suites, actually the ongoing demand for term licenses that you've heard Jim and TJ say earlier, in line with the greater data sovereignty needs overall, being in country that we previously discussed. While the scaling of the channel has been working really well for us in EMEA, we know that by adding even more partners into our ecosystem, we can sell the AvePoint platform to many more organizations in Europe. Lastly, APAC, which has been a strong performer as well, growing on average 30% per year since 2019. Our opportunity here is very unique because of our decision to build a presence and a competitive position in this region very early on in the company's history.
As far back as 2008, let's take an example. For Singapore, we decided to invest in Singapore as far back as 2008 because Singapore is well known for its digital infrastructure as well as the government's mandate for digital transformation. When we established presence there in 2008, we were able to grow the region hand in hand by building a close partnership with the Singaporean government as well as Microsoft APAC. Over time, we have built a strong customer base there, not only again in government institutions, but also in educational institutions as well as commercial enterprises in the region. Last year, this culminated in our opening of a new R&D center in Singapore, further strengthening the brand with our prospects and our customers, and also fostering development of the substantial engineering talent that we see there.
I know we covered a lot, in a short bit of time. Before I hand things over to Jim, I would like to recap a little bit about our four key priorities as we see going forward to capture that near-term opportunity in front of us. First is our increased customer success coverage. Again, investing in both tools and people and a model to help us drive greater adoption and usage of our technology to combat that downsell and churn.
Of course, dovetailing into that, leveraging that relationship that we built with our clients to increase cross-sell and upsell opportunities to bring a lot of not only our existing platform, but our new solutions that we're launching into that same client base. In terms of net new growth and attracting new customers and reaching our customers that we have, not yet reachable today, we are doubling down on the growth of our channel network and again, growing more partners, and at the same time growing deeper with the partners that we already have. Finally, expansion by geography, where you can see that we've done a lot of work leading up to this point, but further investments and growth, not only in regions where we're already established, but also in new regions where we're just in early stages.
I'll close by saying that we're mindful of the near-term economic uncertainty, but we are confident that the strategies discussed here today allow us to be much more resilient and able to really navigate any economic conditions that come our way. At the same time, we also know that the long-term demand and the long-term trends that TJ shared earlier is there. That demand will be there for us and for our solutions as we look towards, again, the digital workplaces growing to 2030. Our diversification of our go-to-market efforts really help us drive that strong top-line performance that we're looking for, as well as being able to deliver that at a much more efficient and profitable rate. With that, I'm gonna conclude my section and turn things over to Jim.
Okay. Good morning, everyone, and thanks, Tom. Great overview of our go-to-market approach and strategy for capturing the opportunity in front of us. I wanna spend my time today discussing these 4 topics. First, a review of our strong financial performance. Second, our financial priorities as we think about capital allocation. Third, our financial disclosures and some changes we'll be making in the KPIs we report, which we believe better align with how we evaluate the business and how we believe investors should judge our performance. Lastly, an updated view of our long-term financial targets. Plenty to cover. Before we look ahead, I wanna spend a few minutes highlighting our financial performance over the last few years. Let's start with ARR. In 2019, we were at $91.9 million, and we ended 2022 at $214.7 million.
That's a 33% growth rate per year. In the last bar on this chart, you can see our ARR guidance for 2023, it has us crossing the quarter billion dollar mark in ARR, something that we are all very proud of. I do wanna point out on this slide that these numbers now include our migration products. Historically, we've excluded this when reporting ARR, going forward, we plan to include it, we'll talk more about that shortly. ARR is definitely a key metric, investors should focus on it's also important to understand our revenue composition. I know this is a busy slide, I would like to make a few points here as you think about the various revenue streams, which has been a common theme that I've discussed with many of you.
Let's start off with SaaS, our fastest-growing segment. Our SaaS revenues grew 60% per year from 2019 to 2022, and today, 50% of our revenues are SaaS. As I mentioned at earnings a few weeks ago, we expect that SaaS will continue the same strong trajectory we saw in 2022 and continue to grow as a percentage of total revenues. I do wanna make a few comments here on our term license revenues. First, as you've heard me talk about, term license revenues can be lumpy given the revenue recognition associated with it, which is why we stress that investors focus on ARR as the best measure of our top-line performance. The second point is about demand. A number of our long-time customers still require term licenses to manage their legacy ECM environments.
We also see customers who choose term licensing due to regulatory requirements, like some of our pub sector customers. Lastly, some prefer to host the offerings themselves, which we frequently see from some of our European customers. Ultimately, the ability to offer our customers the flexibility of how they consume our platform only makes us more valuable. The last point I'd like to make regarding our term license revenue is that although we meet our customers where they are, we do expect that term license revenue will decline in 2023 as we anticipate increased demand for our SaaS offerings. Now a comment on services, which has been a meaningful component of our business for a number of years. We expect service dollars to be higher in 2023 than it was in 2022, but continue declining as a % of total revenues.
Lastly, a comment on our perpetual license and maintenance revenues. We no longer sell perpetual licenses, and you can see in this chart, and in our income statement, that perpetual license sales have been insignificant over the past several years. This, in turn, is contributing to a steady decline in maintenance revenues with no new perpetual license sales to fuel future maintenance revenues, and because many legacy maintenance customers are converting over to our subscription offerings, we expect this erosion to continue in 2023. Putting all of these pieces together, our strategy of focusing on SaaS, our fastest-growing recurring revenue stream, has led to a stronger financial profile for AvePoint. You can see on the top of this chart that SaaS was 24% of our revenues in 2019, and has more than doubled to 50% of our revenues in 2022.
As a result, more than 80% of our revenues today are recurring, including SaaS, term, and maintenance. We only expect this strengthening to continue. Looking at our operating margins. We've had strong track record of driving non-GAAP operating profitability with operating margins in 2020 of 12.1%. Margins dipped to 3.1% in 2021 as we meaningfully ramped investments in the business in the second half of the year following our going public in July. In 2002, our first full year as a public company, we still had several quarters of new public company expenses and higher levels of R&D investments, resulting in operating margins of a negative 1.2%. If we exclude the impact from the workforce reduction we announced in December, operating margins in 2022 were slightly positive.
Probably the most important thing on this slide is we are guiding for non-GAAP operating margins of 5.2% in 2023, an increase of about 650 basis points year-over-year. I'll talk more about our longer-term model shortly, but suffice to say, there is plenty of embedded leverage in our business, and we plan to show steady, meaningful margin improvement in the years to come. Turning back now to ARR, with a focus on the different customer segments. As Tom had mentioned, we segment our customers into 3 categories. Enterprise, these are customers, again, with over 5,000 customers. Mid-market, which are companies between 500 and 5,000 employees. SMB, which are companies with 500 employees or fewer. You look at the chart, we're happy with what we're seeing from all three segments. Let's start with enterprise.
As mentioned, it's about half of our ARR today and has been growing 26% per year since 2019. In our mid-market segment, which makes up about 30% of our ARR, growth has been about 33% per year since 2019. ARR from our SMB segment has been growing 48% per year since 2019. Underneath this bar chart, I also wanna flag these equally important metrics, which show the number of customers with greater than 100K of ARR. We disclose this metric each quarter, and you can see the continued growth of this metric, and we're very pleased with that growth. Below that are the AvePoint customers with more than 250K of ARR, and we are equally pleased with what we're seeing here.
We ended 2022 with 137 such customers or more than triple the 42 we had in 2019. The key takeaway here for me on this slide is we continue to add customers each quarter, and at the same time, we are seeing growth in the number of customers making larger commitments to the AvePoint Confidence Platform. As we look at our results, we're really pleased with the balance we've been able to deliver. These charts I'm about to show you reflect our ARR for 2022. You can look at our performance in a number of ways and see that our diversification is a clear strength of our business.
Whether you look at our performance by industry vertical, as you see on the chart here, where we are not reliant or exposed to the performance of any one industry, and where we have approximately half of our ARR coming from regulated industries. We can look at it by geography, where our balance has been steady and strong across all three regions. We can look at it by direct versus channel, where nearly half of our business today now comes through the channel. You heard from Tom how we expect the channel % to continue to increase. We can look at our new ARR coming from new logos versus existing customers, which has been consistently balanced between the two. By product suites. Similar to what I flagged before, we're not reliant on the contribution from any one suite of products.
Lastly, by customer size, which I discussed on a prior slide, you'll see we have healthy contributions from all customer segments, and no 1 customer today represents more than 1% of total ARR. Again, our diversification is a strength, and it speaks to the demand for the platform. We expect both this demand and balance to continue. Sticking with customers, TJ flagged a few highlights earlier about our unit economics with customers. including the fact that more than 80% of our revenues are recurring today. Sticking with this theme, I wanna spend a minute discussing our retention rates because obviously these are critical for investors in assessing our performance, and we plan to provide more color to help investors understand our strategy. With that in mind, here's a look at our historical dollar-based gross retention rates. You can see the improvements over the last few years.
In 2019, we were at 84%, and we ended 2022 at 87%. These improvements are the result of the investments we have made, primarily with the focus on implementing the customer success changes that Tom discussed, and through more and better sales coverage. We are pleased with this trajectory, and going forward, we plan to report gross retention rates each quarter. In the medium term, we are targeting 90% for this metric. At the same time, we are aware of the current environment and the fact that our solutions are primarily headcount-driven. It is certainly possible that our gross retention rates see some pressure if customers reduce the number of seats needed in the short term. Now let's look at our net retention rates, which we have been providing regularly since going public.
Tom spent some time walking you through the customer success team strategy for maximizing customer experience across each phase of the customer life cycle, from onboarding to growth, and how we're confident the investments in the team and technology to help them scale will promote greater adoption and usage of our technology. This should support steady upticks in our retention rates. Going forward, it is our expectation that NRR will continue to improve, and in the medium term, we are targeting a range of 110%-115%. That's a review of our financial performance. Now I'd like to turn to how we're thinking about capital allocation. First, we will continue investing for profitable growth.
As I hope today has made clear, AvePoint is a company built on innovation, and we have grown in large part over the last 20 years by continuously building on the platform. While we continue to be thoughtful in the rate and pace of such investments, we know that it will be critical in ensuring the continued strong growth and improving profitability of our company. Second will be M&A, which is one of our growth drivers. We made four acquisitions last year, and we are actively evaluating opportunities as we speak. We will certainly be measured in deciding where all acquisitions fit, and while our focus is primarily on tuck-in deals, we are open to larger opportunities if their pursuit can lead to more value for customers and for partners. Lastly, our share repurchases.
In 2022, we bought back approximately 4 million shares at a total cost of approximately $20 million. Our share repurchase program, which is still active, has about $130 million left. As I said on the last earnings call, we are taking a more measured approach to buybacks with a focus on managing our cash and prioritizing strategic investments in the business, including M&A opportunities that will further our growth. We are anticipating that in 2023, our share repurchase spend levels will be similar to that of 2022. Before I turn to some of the disclosures, I wanna quickly run through some modeling notes. First start with ARR guidance. As mentioned, we will be including migration in our ARR going forward.
As such, our updated 2023 guidance for ARR is a range of $254 million-$260 million. Our guidance of 20% growth for total ARR remains unchanged. Revenue recognition. As you know, under ASC 606, we recognize approximately 50% of an on-prem or hybrid opportunity upfront, and the remaining 50% ratably over the term of the contract. Our SaaS revenues continue to be recognized ratably over their contract term. This is important to keep in mind because depending on the type of bookings, our revenues could really be impacted meaningfully in any given quarter. It's for this reason that we remind investors to focus on ARR. Turning to contract duration, the vast majority of our contracts are between one and three years.
Thinking about foreign exchange, revenues are reported using current exchange rates, for comparative purposes, they are calculated on a constant currency basis, meaning we apply FX rates used last year to revenue generated in the current year. For ARR, the impact of FX is reflected as existing customers renew subscriptions or every time there's a contract change. When we think about services, I spoke earlier about our expectations for services in 2023. In the longer term, we are targeting that services represent approximately 10% of total revenues. Stock-based compensation. In 2022, stock-based compensation was 16% of revenues, a meaningful decrease, if you think about it, compared to 2021 and 2022, where we had 31% of revenues in 2021, and 22% of revenues in 2020.
In 2023, we expect that stock-based compensation will be at roughly the same % as 2022. In the long term, we are targeting that stock-based compensation represents less than 10% of revenues. Lastly, perpetual license revenue. Beginning with the reporting of our Q1 2023 results, we will no longer break out perpetual license revenues given their immateriality. The historical results for prior periods will be included in the maintenance revenue line. Next, I wanna spend a few minutes on our disclosures where we are making some changes to the metrics we plan to report going forward. We believe these new disclosures better align with our growth strategies and how we evaluate the business, and we are also being responsive to investor feedback on the KPIs that they would like to see.
Going forward, we will provide additional detail on our results. I'll spend a minute going through each of these. Let's start with ARR. First, we will continue to report ARR each quarter. Next, we will begin to provide each quarter the % of our total ARR coming from channel versus the % that is direct. Lastly, you've heard quite a bit today about our product suites and the updated way in which we are going to the market with them. Going forward, we will report annually the % of ARR coming from each suite. Given that we have seen these % fluctuate on a quarterly basis, and because we are now including the industry products in the new Modernization Suite, we feel that right now this disclosure makes sense on an annual basis. Moving to our customer metrics.
First, we will continue to provide each quarter our net retention rate and the number of customers with more than $100K of ARR. Second, we will begin to provide our gross retention rates each quarter. Third, we will provide a total customer count on an annual basis. Fourth, we will provide the percentages of customers with 500 employees or more taking 2 or more products and 4 or more products regardless of suite, as well as the percentage of these customers taking products from 2 or more suites. Given our motion to sell the platform and the belief that we remain under-penetrated with existing customers, this metric will help us track our progress. Lastly, I wanna remind you that total ARR we report going forward will now include ARR from our migration products.
While we have historically not included this when reporting total ARR, primarily due to its relatively lower renewal rates and its tendency to fluctuate in terms of customer demand from quarter to quarter, we will now be including it. We believe these changes will simplify our compelling equity story and provide a clearer picture into our underlying performance. We have included in our appendix a slide which provides historical ARR inclusive of migration, and the gross and net retention rates you saw earlier on the slides have been restated to include migration. Let's now turn to our updated financial outlook. While we provided our expectations for 2023 on the March 9th earnings call, I wanna now discuss how we're thinking about the next few years.
We understand the importance of consistent, steady execution on a quarterly basis. I also wanna stress that we don't manage the business for the next 90 days. We continue to make thoughtful investments in our strategic priorities across the company. With that in mind, here's a view of our operating margin performance over the last few years, our guidance for 2023, our longer-term expectations. As I mentioned in the opening, we have shown strong margin performance while continuing to invest in the business. Our top priority is profitable growth. How do we plan to get there? Let's go through each income statement line and highlight the primary drivers of the improvement. For gross margin, you can see that we're already close to our target. There are a few puts and takes to discuss regarding our expectations.
First, further improvements will be driven by a reduction in our services business as a % of total revenues. Second, a reduction in costs associated with our SaaS offerings, as we expect to see improvements through negotiations with our cloud storage providers using different tiered storage rates and other alternative costs. On the other hand, as discussed, we do expect that more business will be going through the channel, which is at a lower margin. Sales and marketing is where we have the biggest opportunity, ongoing leverage will be driven by improved efficiency and the maturing of our channel strategy as Tom has discussed. Let's spend a minute on R&D, where it is fair to say that historically, our investments as a % of revenues were relatively low for the industry, as we took advantage of lower-cost employees to optimize our spend.
However, in 2022, we made elevated levels of R&D investments, and we know that going forward, we will have to continue making those to ensure that our competitive re-moat remains firmly in place. While our prior long-term target was 10% of revenues, we are adjusting this to a range of 10%-15% as we plan to make continued investments in targeted geographies, in past and future acquisitions, and in ongoing support of the platform for our customers. Lastly is G&A, where we expect to realize the ongoing benefits of scale, and that incremental costs of being a public company will increase at a slower rate moving forward. When you put all of this together, we see a long-term operating margin target of 20%-25%.
Inclusive of stock-based compensation, this target is approximately 10%-15%, as we are targeting stock-based comp to be less than 10% of revenues in the long term. This margin target is by no means a ceiling. We see a clear path to get there, and we have several levers to pull to support us along the way. As Tom discussed in detail, there are levers to drive top line growth as well. I hope everything you heard today confirms that profitable growth is our top priority. Pulling this all together, there are 3 financial headlines that I want you to take away. First, we will be profitable on a non-GAAP basis for 2023, increasing 650 basis points year-over-year.
Two, as we look at our expected ARR growth and non-GAAP operating margins, our target is to be a Rule of 40 company by the end of 2025. Third, our target is to be profitable on a GAAP basis also by the end of 2025. With that, let me have TJ rejoin us to wrap up.
Thank you, Jim. Thank you again for coming to our event. I hope you have a lot of good takeaways. The 3 major things we want you to leave with is obviously we have a lot of work around advanced workloads. The market, we're still at the early inning of the market, we're gonna go capture a growing market. We're very, very excited about that. Of course, we wanna do this at a profitable way. Those are very, very important for us. As you heard the financial highlights, the headlines from Jim just now, we're very excited about being back to Rule of 40 and being GAAP profitable by 2025. Not very far away. I want to also thank our incredible employees, our partners, our shareholders for your support.
It's a privilege to be here presenting to you at our first investor day. Lastly, we have one more slide on the conferences. Do you have that? Okay. All right. I wanna call out, we have our industry conference. It's actually a very well-attended popular industry conference, COVID happened. We're resuming again in person in D.C. in October. The website is live. You can go register. We will bring key industry experts across all ecosystems to talk about what it means in this advanced workspace as well as digital collaboration across hybrid work environment. These are well-attended by industry research analysts from Gartner and Forrester as well, of course, from the larger hyperscalers.
Very super excited to see you there in person, and thank you once again for being here at our investor day. Thank you.
Yeah, again, thank you everyone for coming. We're just gonna take another break. There is gonna be, I believe, lunch outside, and we'll resume. You feel free to grab lunch, come back in here, and then we'll have the team up here for about 30 minutes of Q&A. We'll start that in about 20 minutes. Thanks. All right, we're gonna get started with about 30 minutes of Q&A. And for those in the room, just, you know, raise your hands, and we can bring a mic around. I guess we just ask that you introduce yourself for the question. We have gotten a couple questions from online. Maybe I'll just start with one while everyone's still getting seated.
from Bradley Arnold , the recently announced partnership regarding Microsoft Syntex, what impact has this had on your business? Do you see this changing moving forward? Mario, maybe that's one you could take.
Yeah, sure. Let me borrow this.
Oh, yeah.
Thank you. Thank you, Jamie. Microsoft Syntex. Syntex has been actually really interesting for our customers. For those of you that may not be familiar, it's really a way for Microsoft to look at, you know, content. We spoke a lot about content today, you know, think of contracts proposals. You know, with Syntex Microsoft, because they have all the services, they're able to actually really make sense of what's happening. The idea is to give the user more opportunity for them to actually, you know, see the value of all this information. What it does for us, frankly, is actually it increases our opportunity. You heard TJ talk about just the sort of the explosion of data growth. Syntex is going to amplify that and accelerate that.
The reason for that is if you think, you know, today many of you probably use Microsoft Word, right? Or let's say Excel. Using Excel for a purpose. It's very specific. I'm writing a proposal. What if you had, you know, a system that would say to you, "Oh, you're looking to write a proposal. Well, you know, why don't you actually let's do the work for you. Let me help you get started. Let me actually do some analysis and insights for you." You know, Syntex is gonna provide that for a lot of companies, end users. What we're actually looking at is how do we then, you know, bring a lot of that capability into our industry and our applications.
A lot of the work that I do personally and as well as our CTO and chief product officer spend time talking to Microsoft about the impact of this so that we could align our roadmap. Yeah, we're super excited. In terms of impact, it's been great. It's actually opened up a lot of conversations, and that puts us in and at the center of projects that are going to be happening around how does the organization consume in Microsoft Syntex, and what additional capabilities do you need to make that experience successful?
In fact, we're the launch partner for Syntex.
That's right. Thank you for reminding me of that. Thank you, TJ. If you didn't hear TJ, we are a launch partner. In fact, you know, Jeff Teper, who you saw in the video, when they launched Syntex, that he had, you know, AvePoint was one of the leading partners for this effort, and that speaks to, you know, the fact that we've been working with them for a number of years.
Jake.
Thanks for taking the question. Jake Teitelbaum from Goldman Sachs. As you guys think about the 20% ARR growth guide for 2023, could you sort of break down how you're thinking about new logos versus expanding with existing customers and maybe talk about pricing in that as well?
I'll take it first.
Yeah.
Cut at it.
Yeah.
One of Jim's slide you actually saw was that our incremental ARR, more than half is actually from new logos and slightly less than half is from existing logos. We actually see that composition to be consistent going forward. That actually means that we are doing a decent job to acquire new logos, and we see that accelerating through our channel. At the same time, as Tom mentioned around our CS motion, this whole optimization cycle that we introduced this year, we think that is a very, very relevant theme this year, in this year of optimization and efficiency. We see both the mix to be strong in that sense.
Yeah, I would agree. I think even longer term, as our customer base continues to grow, we'll start to see that pie shift a little bit more to the existing customer base just naturally, particularly as we get to those NRR targets we wanna see. TJ is right. It's nicely balanced today, and I think we'll see it shift from more new customers. It'll start to shift, and we'll see existing customers take over more of the pie. Did that answer all your questions? Okay.
The last one was just pricing, but that's super helpful so far.
On the pricing side, yeah, I was having a conversation about pricing just now as well. We do have a SKU level pricing as well as suite level and then platform level pricing. In that regard, we do have quite a bit of flexibility, in actually deploying our capabilities and do this, compete in a climate of consolidation and ROI seeking. I think on the pricing side, we'll continue to be moving aggressively and also regional. In fact, you know, I know a lot of the analysts here do customer calls. We're actually known in the market as one of the more expensive vendors just because our focus around enterprise and quality and regulatory, you know, standards.
The platform play afforded us a lot more flexibility in pricing so that we can compete aggressively and then remain sticky and then upsell.
Yep. Over here, Nihal Choksi from Northland Capital Markets. Good content here, all you guys. Jim, on your long-term financial targets, at what type of ARR growth rates is that underpinned by?
Yeah. You saw that for our 23 guidance. You had a second partner, Nihal?
I'll have follow-ups.
That's good. You saw in our 2023 guidance, we're showing 20% ARR growth. We haven't provided guidance after that, but I would tell you that we think 2023 is a different year and not the new normal for us. Without giving you guidance for beyond 2023, I would say that we're looking at 2023 as a little bit of a unique year, and we would expect that beyond that, we would see improvements.
Can you elaborate on why is 2023 a unique year relative to future years?
I think we touched on it a bunch at our last earnings call, that we're definitely seeing some elongated cycles in terms of just this macroeconomic environment we're in. We don't see that continuing forever. People have to, as we've been talking about all day today, they're digitally transforming, right? They have to continue on that journey. We are seeing some of that additional kind of review process in the budget cycles. We don't think that continues long term. Our 2023 guidance was really focused about trying to be prudent, trying to be responsible, and really taking care of that for 2023. We do not see that as something that continues for the next 10 years.
Okay. Then also on the long-term financial target model, 20-25+% operating margin, can you translate that to free cash flow margin for us?
Yeah. When we look at free cash flow, we don't have a ton of, you know, kind of when you look at our operating income and then translating that into kind of free cash flow, we're pretty close. We don't have a huge, you know, we've got some depreciation and some other things, but not a ton of add back items there. I think if you look at our operating income, 20%-25%, you can take a couple percentage points off of that and be pretty close to free cash flow.
Great. Then my final question here is that one of the big levers in that financial model, G&A, that's obvious, sales and marketing. Two drivers from that that you cited was improved sales efficiency and then channel strategy maturation.
Yeah.
Which of these are the bigger drivers here and why?
Tom touched on, actually kind of both of those, right? In terms of both some of the sales efficiency and some of the channel. You know, if I look at our modeling, I think longer term, we do think the channel probably has the biggest impact, just in terms of where we are in that journey. Tom, I'd love your thoughts too. In our modeling, that's what we see.
Yeah. I would say definitely one kind of dovetails into the other, right? The way that we are improving the sales efficiency is that each one of those sales reps today are now going to be working with multiple partners. As those partners mature and bring more revenue, we're effectively generating more per rep.
Great. Thank you.
Hi. You talked earlier about... Thank you. Sorry about that. You talked earlier about, you know, you know, buybacks and capital allocation and looking at cash flow. Could you go into a little more detail in terms of what we think about with the growth rate, you know, where inorganic growth fits into that? Also if you were to make an acquisition that's more than just a tuck-in, you know, what the consideration would be for taking on debt?
Sure. Maybe the first piece of that. I think right now our focus is more on tuck-in acquisitions. If we look at the four that we did in 2022, as we think about it and what we're evaluating currently for 2023, they're similar in nature. When I think about what should you be expecting from us in 2023, my thoughts are that they're gonna be similar in terms of size, in terms of contribution, much more technology driven than necessarily revenue or ARR driven. I would think about it that way. I do think as we've collectively have said, there is an appetite to do something greater than that, but there has to be a lot of things aligning. Again, I don't think that's our focus.
You know, if there something presents itself, I think we would consider it. In terms of cash flow, I think we're looking at the next year really in terms of our guidance being a kind of a shift for us in terms of we've heard from a lot of folks in terms of when are you gonna be profitable. We've kinda set that guidance out there. We are focused on profitable growth. 2023 will be kind of like a, you know, our first foray in terms of really showing that and demonstrating that. I think that produces additional cash flow, which I think then gives us more options in terms of looking at other opportunities, whether it's M&A, whether it's the buyback you referred to, maybe we would accelerate.
I think having more flexibility, will give us more options.
Thank you.
Hi. Good afternoon. Joel Omino here from Citi, sitting in on behalf of Fatima Boolani. Thanks for taking our questions. Just a question on adoption in non-Microsoft environments, right? Certainly an area AvePoint is looking to expand into. Could you help us understand perhaps what the barriers are in this case, right? Is it more a product and tech and R&D issue where, you know, you have over 30 SKUs and, you know, these need to be integrated into these other clouds, or might it be more of a GTM issue? Just anything to help us understand the barriers and then perhaps what you're doing to address them going forward. Thank you.
I'll go first. We see that most of our customers have multi-cloud, they don't only sit on one hyperscaler stack. The expansion into multi-cloud we have done already is with backup as a service. We also see that as platforms become centerpiece of a data strategy for companies, like Salesforce, for example, is increasingly becoming, the same type of headache that people experience with the Office cloud or when it comes to governance, when it comes to compliance and data retirement, are faced by the folks that select Salesforce as their centerpiece of data strategy. We actually have a lot of conversation with now, technical leadership there in that space, as well as partners, and we identify same pains. It's actually a natural extension for our product to cover that.
That also allow us to be a lot better of a strategic partner for our customers because they know that we're out there to provide a consistent and holistic approach to govern and optimize their cloud operations across multi-clouds. Whereas if they only deal with the hyperscaler themselves, it's very much a walled garden and, you know, all they are carried and nurtured towards or ushered towards is just one stack. That's where we can come in and say, "Hey, we're the third party, and we can actually help you, Mr. Customer, to maximize your investment across multiple clouds." Yeah. Mitch, maybe thanks for the question.
I think also just to add on to what TJ mentioned, what we see with customers is that there is a desire and an appetite to actually bring on more third-party providers, content repositories, or applications they're quite frankly using for other sides of the digital workplace environment. From a product perspective, we feel that the API framework that we've developed will make it super easy for us to lift and shift. We're just prioritizing based on where we're seeing demand. It is a constant understanding of is our message resonating with the market, and are we able to bring these customers on board? As TJ mentioned, the success we're seeing is that it's a great place for organizations to reduce cost as well.
I think, and you covered it in one example, where, you know, vendor consolidation is a real thing. For us, there's an opportunity to say, "Well, you know, if you actually consolidate these vendors, we could actually bring in a product that will actually, you know, bring value from those sources. We can also, you know, move data as well." Remember, we have that as part of the Modernization Suite now. I think it's really a, you know, pacing ourselves as customers move into that space.
Thanks.
Junaid Siddiqui, Truist Securities. You've expanded your product portfolio considerably. I was just curious if you could give us an idea of the competitive landscape, who your main competitors are?
Yeah, it's always been a very competitive space. We as always mention, we have many point competitors, every new space we go into, we run into new point competitors. For example, the product that Mario showcased around commercial learning development, that's actually part of our EdTech platform that's born out of the Singapore engagements and now is doing really, really well. We obviously in EdTech space, you run into some of the usual suspects. Where we see our advantages, we compete against legacy players that historically are in those verticals. They're very slow-moving to the cloud. We all see the power of cloud, right? The power of Microsoft Copilot when applied to Office 365 is just amazing.
That's what we've been saying all along is, again, manage data where you work, but also tight integration with hyperscalers that the cloud platform itself, it's revving very quickly. We're revving quickly with DevOps. The collective speed allow us to leapfrog many of the legacy players that have been siloed and on premises. Just to specific example, in our backup as a service space, in the enterprise space, we run into some of the legacy player like Veritas, right. And even NetApp. And some of them players decide to OEM our solutions because they can't compete with us. Some others just did start to dip their toes into a cloud. In SMB space for that same segment, we run into different set of players altogether, people like Acronis, people like Veeam.
In fact, 80% of Veeam's revenue come from companies with less than 100 employees. That's new green space for us. That's just in one silo, right? You saw Mario's presentation, how we tie that together with ransomware detection, warranty, restore. Of course, it's also tied into with data record management compliance. In that space, we don't see these backup guys at all. We will see the traditional ECM guys like OpenText, right? Historically, it could be a HP TRIM or Documentum. Now they roll up under OpenText. OpenText is also not cloud. They're not SaaS. For them to move to SaaS, it requires significant work, right? Significant cannibalization of their existing stack. In that tech space, we also see even Blackboard. Again, Blackboard's not SaaS, right?
There's different players with compete against. In the enterprise segment, it tend to be with legacy players. In the SMB segment, it tend to be SaaS players, but they're so new, they're establishing credibility only in SMB, whereas we take the enterprise-grade capabilities, the FedRAMP certification, ISO certification, and we make enterprise-grade accessible to SMB via SaaS delivery model. That's where we will continue to see competition, but we don't see any singular holistic competition. In governance side, where Mario show you the guardrails, right? Where I'm bowling out analogy. That's actually in a square space of Varonis. And Varonis does this really well for on-prem legacy stuff, and their cloud stuff just follow the revenue, right? You just ask all these guys how much cloud revenue do they do, specifically also in Microsoft Cloud. Just follow the revenue.
We're the biggest. Therefore, we don't have a singular competitor. I mean, we have many singular competitors. We don't have a holistic competitor.
Great. Thank you. Just 1 follow-up. In terms of your sales, your go-to-market motion, now that you do have a lot of different silos and products, is there some specialization within the sales force in terms of what they're selling? Does the sales ramp time also now get longer for them to get up to speed on all these products?
That's a great question. I think in the past, we've talked about specialization, specifically into hunting as well as farming. That's now been complete. Starting this year, based on what you just said, we do actually now not necessarily having specialization, but we do have different KPIs and metrics, different, essentially compensation metrics pertaining to different product lines, specifically comping more on these additional product lines that we're pushing out. The goal is to incentivize selling beyond our initial kind of 1 or 2 product attach rate to really drive up, some of the charts that I showed earlier, to really drive growth to beyond 2 products or beyond 4 product attach rates.
Two questions here. I guess first, maybe one for Jim. If we could just scroll down into gross retention. Can you talk about the difference in rates between enterprise, mid-market, and SMBs? I guess is gross retention higher or lower depending on a specific product suite that's deployed?
Yeah, a great question. You know, without... We haven't really guided to any of those, but just to give you a sense, maybe as you would expect, enterprise probably has our best retention, mid-market is pretty close, and then SMB is probably third in terms of kind of stack ranking. That's the way maybe to think about that. In terms of particular products, you know, I think maybe one thing to call out, and I think I called it out in my discussion, is that we're now including migration, and that by far, has the least renewal rate of all of our products. Actually, surprisingly, much better than we may have thought three or four years ago, just because people are not migrating once.
It is not a one and done like we may have thought about, or even if you think about, hey, you're gonna move and you're done with the move. Now it's people are moving from on-prem to the cloud, but then they're going cloud to cloud and various different moves beyond the initial. We're actually seeing a better retention rate than originally anticipated, but it's still far less than the remaining of our products.
I guess just on the migration point. How are you guys pricing that in terms of like, you know, why you're including that in ARR now? Is that more transactional pricing in nature, or is that more subscription, readily recognized pricing on the migration front?
It's always been subscription pricing.
Yeah.
We do price it in two different ways, again, just to be serving the customers where they are. One is by volume, one is by users. As we now see again, as Jim mentioned, customers are using it more than once, right? Before it was migrating from on-premises to cloud. Now we actually see them use migration for cloud-to-cloud movements, whether it's more M&A throughout the years, divestitures, departments being split, data being moved around across different departments. It's now increasingly becoming an annual subscription SKU, where they're just keeping the lights on and using it daily.
MSPs use it.
Right.
MSPs actually, because.
Yeah
...be in the end user.
Right.
They're handling hundreds of clients. We actually have MSPs continually subscribe and renew. Our SaaS migration platform is one of our most popular solutions in the SMB space because it's used by MSPs to optimize a cloud journey for many, many customers.
Yeah.
Maybe just one last question. Microsoft's made it clear that they wanna be the dominant player in AI, in generative AI, and you guys have been in this ecosystem for more than two decades. I guess, how should we think about the investments and the push they're making there, and what impact, or tailwind that could potentially have for your business, given the data that's gonna be generated, and other maybe ancillary products that could be created?
We actually think it's fantastic. We've been an early adopter of Turing, a platform, Microsoft Research, for a few years now on our ed tech side, because there is this intelligent chatbot to interface with students. We're actually incredibly excited because what that does is, it allow us to essentially consume their services, to make our engagement with end users and MSP partners more intelligent. There's that piece of it. The other piece, which I mentioned in my segment, was this amount of data now gonna be generated. Business data, unstructured data, where Satya Nadella said 10% of all data generated by 2025 will be done by generative AI. That means if you think customers are swimming in data now, you know, the floodgate has opened.
Thereby we have the opportunity to save cost, do this ROT, redundant, out of date, trivial data, classification, tagging, proper recycle, proper management, lifecycle management. Yeah, it's, the data problem will become even bigger.
Okay, thanks.
Yeah. Go ahead.
Hi. My name is Hakan Cingir. I'm not an IT profession or the other things, but I'm your investor, individual investor. I would like to know when your company last time make the price increase. Last year especially, before this, there were some price increases also. Microsoft Corporation, last year, I believe, just 1 day, 40% increase they did, and you're supporting their products, and you're supposed to be affiliated with that. There's no price increase, and you're just trying to achieve your goals with the regular conditions. I don't know, perhaps the market is too tough with your competitors or not.
You're good company, you have good products, and you're confident, and you know what you're doing, and why you don't increase your prices, and why until as of now, after you being public, your company couldn't be profitable?
That's a great question. I'll take that first, and you can think-
Sure
about it.
Sure
...later. On the pricing side, pricing exercise in the software world is very complex. I did a doctorate in data mining, and my colleague was actually studying pricing. I mentioned this at many investor events before, where different segmentation have different pricing characteristics. I mentioned that in the enterprise space, for example, you know, somebody like Nestlé with 300,000 seats, we're selling a 300,000 subscription, the pricing negotiation power is quite different. The customer has a lot more negotiation leverage. Whereas in the SMB side, when a customer is buying through a digital marketplace, which we're available in 100 digital marketplaces, and they're just doing monthly subscription, there's no conversation whatsoever. It's fully automated.
The difference, to take it to a consumer perspective is, if you go to Costco to buy soda versus you go to 7-Eleven, the unit price for per can soda is very, very different. We do have that, right? Also, if you look at our pricing against our point competitors, as I mentioned earlier, many of the research analysts from big banks here do their research and call customers. We are known as one of the higher priced vendors because our focus are on quality, right? We can be competitive because we have a platform play. Pricing itself is not as simple as, okay, I'm gonna raise price on everybody across all SKU. It's actually quite nuanced.
Because there is fundamentally in this day and age that we live in, where technology is being disrupted constantly, pricing pressure from legacy versus new is very different. It's actually quite complex of a story. There are spaces where we're more expensive in the market, and there are spaces where we sell the platform. There are segments where we are naturally much more cost effective for us from a profitability perspective than, you know, the other segments. It's actually quite nuanced of a story. We can spend, you know, a long time on that as well. Profitability?
Yeah. I mean, I think.
You know, good question on profitability, and we definitely had a ramp up of expenses, you know, when we think about becoming a public company. We definitely had additional expenses. Beginning in Q3 of 2022, I think we made it very clear that we were focused on profitable growth and controlling what we can control. I think what you're seeing now, what you saw in Q4, and what you'll see moving forward is that focus for us to be as efficient as possible, focused on growth but profitable growth, and that's what we're focused on now. I love your question. We also want to get back to that profitability, and I think you're going to see that in 2023 as our goal state.
I have one more question. In your last presentation for the things, you diminished for 2023 projections, total revenues a little bit. This is making us scared as an investor for the company without any profit and our goals are we need to update, and we need to lower it up. It is only negative things happening or some positive effects on your goals are supposed to be. For example, a really nice question for AI. AI moment, OpenAI, perhaps with the Microsoft things, you're gonna be involved their project. I don't know how much SaaS and their related products they gonna need it, but these things... As a small investor, one word of yours is changing the price drastically.
All the investors, without knowing that, there's no profit really soon. All of a sudden, your damage is going bad, and you're losing money for nothing. One day, 20% for. It's a good company. You trust them. They're confident. They're in good way, but they need to be profitable to convince the markets.
Yeah.
I'll take the first cut of it.
You wanna take it? Okay, sure.
Through our 20-plus year history, we have never taken on debt. We have always strived to be cash flow positive, which we maintain. What we learn as a public company when it comes to SBC is real cost, stock-based comp. When we went public, we had many employees, Tom's been with us for 18 years, Julie over there, 12 years. Many employees that's been with us now exercise their equity. We have many international employees, which then bring up the stock-based compensation to a bigger number, but that's a one-time event. Jim has already guided that the way view SBC will be less than 10% as a medium-term goal, and we're also executing on that. We are cash flow positive, and this year we'll be non-GAAP profitable.
We are very keenly aware about profitability. This company has always been run that way. As I also another stat I throw now is when we became public, we became public with only $60 million primary capital. All the additional $300+ million secondary were raised to benefit investors, series A, series B, series C. We have great track record to bring shareholder value. Yes, we went public and of course, the market being the market, the macro conditions, we control what we can control. This is why this year we control the costs. We wanna make sure that we have EBIT, very drastic change of EBIT to be positive. Of course, we still focus on ARR, which is the really good guidance on growth, which is 20% plus the 5% EBIT. We're looking at 25% delta.
We already laid down the stake on the ground of getting to Rule of 40 by 2025, right? All these things are. You can see that we're executing. What we need to do better, as we articulated during the break, is to do better, you know, education, tell the equity story, better investor education about our story. On the tech side, on the company side, on the financial side, you see that we are executing.
Yeah, maybe just one other thing for clarity. The only thing we changed today, just so everybody's aware is the ARR guidance. Our guidance as it relates to revenue and our operating income has not changed. What we announced several weeks ago in our Q4 earnings call, setting the guidance for 2023, we haven't changed that. We just increased the ARR guidance to now reflect the inclusion of migration. Again, just to be clear on that.
Thank you. I think during the presentation you guys disclosed that about 25% of your customers are currently using 4+ solutions. You guys have a product portfolio of over 40 solutions. What is the ideal customer profile look like? How many modules can they get to? What can ARR get to for an individual customer? If you can comment on that'd be great.
It's a, it is a great question, thank you. We are because we and Tom covered this, we work in 3 segments: enterprise, mid-market, and SMB. In the enterprise segment, oftentimes we do offer bundled SKUs. Bundled SKUs is a way to get products into the organization, and then upon renewal, it's part of our price strategy. We start increasing price. There are some products that actually customers may receive. I was having a great conversation during the break about MyHub. You take MyHub, it was an application that was really complementary to Cloud Governance, and as we saw the adoption of MyHub, we saw an opportunity to actually monetize it better. The strategy is you actually start increasing the price.
In some cases, we might count that internally as one product, but two years down the road, that same client might eventually have two products in the portfolio. I think when we are thinking about the platform strategy, the idea is to help customers onboard more technology, more solutions, and then as we change the pricing strategy and the product strategy, our internal metrics as to how many, you know, products a customer may have will change. I also think that, you know, the portfolio that we have today, we've been working hard to position it for the opportunity that we spoke of, this TAM. What you'll see from us is a greater focus and concentration on monetizing each individual SKU, as well as bringing a go-to-market motion that helps our sellers be better at upsell and cross-sell. Right?
To add on that, based on what I presented today, I think, you know, to what Mario said, in the SMB segment, we're really not gonna be tracking that stat, and that's why the stats I presented today is really for our mid-market and enterprise customers. I think the two-plus products that will continue to grow, it's been growing at a good rate, and we continue to see that grow. The four-plus products that definitely today it's a little bit under-penetrated, and I think we could do a lot better there. I would definitely expect to see improvement in the four-plus rate.
That's great. Just on the edTech presentation that you guys gave before, I don't think many investors think of AvePoint as an edTech vendor. Just curious why you decided to highlight that and maybe the potential that you see in that piece of the business going forward.
One of the growth drivers we mentioned as part of our IPO thesis was vertical solutions. We have this data orchestration and management engine that's called the Confidence Platform. There we sell to IT, we sell to technical folks. Because we're already in accounts, it's a very natural extension to expand department coverage. In this case, HR, communications. The tyGraph acquisition is really their primary user at Coca-Cola, Accenture, are communication people to measure engagements in this day of hybrid work, right? The edtech piece is something that we've been showcasing and announcing wins, is again, they're sitting on top of this data orchestration platform, also highly integrated with LinkedIn, with Office 365 to provide that experience. Initially, we're starting higher learning because public sector education are verticals we already cover naturally.
Now we expanded quite significantly into the commercial learning development, which is a massive space. Fundamentally, the purpose here is to expand our footprint in existing accounts to touch more and more use cases and more and more users. At the same time we also see in the vertical solution space, a lot of the legacy guys are getting disrupted. This is why you see a plethora, almost explosion of vertical SaaS solutions out there. Just go to SaaStr conference, right? You see a lot of those guys. What we see is that a lot of the newborn SaaS players, they're not enterprise-grade at all, while enterprise-grade customers, which is predominantly majority of our customer, are in need for enterprise-grade solutions that does the same thing, where their legacy vendors are falling flat on literally, right?
They're just very, very slow in cloud adoption. There lies the opportunity. We have not only edtech. At the latest earning, we actually announced a fantastic project if, and we caught that, around the Monetary Authority of Singapore. That's fintech. It's the first instance in the world where a regulatory body and big, big banks are sharing data with each other. This is 3 global banks, which is Citi, HSBC and Standard Chartered. This is all public information, by the way. You can go Google. It's called COSMIC Project, it's officially legislated at the national level. 3 local banks, DBS, OCBC and UOB. The banks are sharing data with a regulator, they've been working on this for the last 2 years, we were the vendor of choice to implement this.
We're actually subcontracting IBM's anti-money laundering division, which is Promontory. It's a great firm that got acquired by IBM. They provide services. We provide product. We're productizing it, and this will be our fintech play. It's actually, that project is gonna go live second half this year. It's being watched by European regulator, by Asian banking regulators. If that works, everybody wanna do it. The trigger for that is actually 1MDB event where essentially by collecting and sharing data, you can track and monitor money laundering activities and terrorism financing activities. It's an incredibly exciting project. Why do we do it? Vertical expansion. Because again, this sits on top of our data orchestration layer already.
Okay. I think we're just to stay on time, I think we pretty much have to wrap it up there. Thank you all so much. Thank you to the team for fielding questions. Please don't hesitate to reach out with other questions. Again, thank you all for coming today and for those on the webcast, thank you for participating.