美國
證券交易委員會
華盛頓特區20549
格式
| | 根據1934年證券交易法第13或15(d)節的季度報告 |
截至季度結束日期的財務報告
or
| | 根據1934年證券交易法第13或15(d)節的轉型報告書 |
從__________到__________的過渡期。
委員會文件編號：001-38851
AvePoint, Inc.
(根據其章程規定的註冊人準確名稱)
| | |
| （設立或組織的其他管轄區域） | （納稅人識別號碼） |
（總部地址）（郵政編碼）
(
(註冊人電話號碼，包括區號)
（原名、原地址和原財年，如自上次報告以來有變動）。
在法案第12(b)條的規定下注冊的證券：
| 每一類的名稱 | 交易標的 | 在其上註冊的交易所的名稱 | ||
| | | The | ||
| | | The |
請勾選以下選項以表明註冊人：（1）已在過去的12個月內根據《證券交易所法》第13或15（d）條規定提交了所有要求提交的報表（或者在所需提交此類報表的更短期限內），並且（2）在過去的90天內一直遵守了這些申報要求。
請在以下勾選方框表示註冊人是否已在Regulation S-T Rule 405規定的前12個月(或在註冊人需要提交此類文件的較短期間內)提交了每個互動數據文件。
請在勾選標記中表明發行人是大型加速申報人、加速申報人、非加速申報人、較小報告公司還是新興增長型公司。請參見證券交易所法案規則12b-2中「大型加速申報人」、「加速申報人」、「較小報告公司」和「新興增長型公司」的定義。
| | 加速量申報人 ☐ |
| 非加速報告人 ☐ | 小型報告公司 |
| 新興成長性公司 |
如果是新興成長型公司，在選中複選標記的同時，如果公司已選擇不使用根據證券交易法第13(a)條提供的任何新的或修訂後的財務會計準則的延長過渡期來符合新的或修訂後的財務會計準則，則表明該公司已選擇不使用根據證券交易法第13(a)條提供的任何新的或修訂後的財務會計準則的延長過渡期來符合新的或修訂後的財務會計準則。☐
請勾選以下選項以指示註冊人是否爲外殼公司(根據交易所法規則12b-2定義)。是
截至2024年11月6日，已發行和流通的
10-Q表格
截至財政季度結束 2024年9月30日
目錄
| 前瞻性聲明 | 3 |
| 項目2。未註冊的股權銷售，所得使用和發行人購買股權 | 51 |
| 第3項。 對優先證券的違約 | 51 |
| 事項4。 礦山安全披露 | 51 |
| 項目5。 其他信息 | 52 |
| 簽名 | 54 |
這份關於表格10-Q的季度報告（以下簡稱“季度報告”）的AvePoint, Inc.（以下簡稱“公司,” “艾芙坡,” “我們," “我們”和“我們的）包括可能構成《1995年證券訴訟改革法》第27A條修訂後（「《證券法》」）意義下的「前瞻性聲明」的估計、預測、與我們業務計劃、目標和預期經營結果相關的表述。證券法”及《1934年證券交易法》第21E條修訂後（「《證券交易法》」）”。使擁有公司註冊證券類別10%以上股權的官員、董事或實際股東代表簽署人遞交表格3、4和5（包括修正版及有關聯合遞交協議）,符合證券交易法案第16(a)條及其下屬規則規定的要求；”。前瞻性聲明及有關可能導致實際結果和事件出現重大差異的風險和不確定因素的描述，可能會貫穿於本季度報告各部分，包括「管理層對財務狀況和經營業績的討論與分析」（本季度報告的第I部分第2項）、「關於市場風險的定量與定性披露」（本季度報告的第I部分第3項）以及「風險因素」（本季度報告的第II部分第1A項）。這些風險和不確定性還包括，但不限於，有時出現在公司向證券交易委員會提交的報告中的那些描述中。SEC”).
這些展望性聲明通常通過"相信"、"項目"、"期待"、"預期"、"估計"、"打算"、"策略"、"未來"、"機會"、"計劃"、"可能"、"應當"、"將"、"將會"、"將持續"、"可能會導致"等詞語來識別。然而，若沒有出現上述詞語或類似表達，並不意味着該聲明不具備前瞻性。凡是涉及我們預期或預計將來發生的經營表現、事件或發展，包括與成交量增長、銷售額、收益有關的聲明，以及表達對未來經營結果一般看法的聲明，均屬於前瞻性聲明。這些展望性聲明本質上存在重大風險和不確定性，並基於我們管理層的信念以及目前可獲得的假設和信息。我們管理層認爲，這些展望性聲明在作出時是合理的。然而，讀者在評估這些展望性聲明時應謹慎，不應過分依賴任何此類展望性聲明，因爲此類聲明僅代表作出時的日期。讀者應在風險和不確定性背景下評估所有作出的展望性聲明。上述引用的重要因素可能不包含所有對投資者重要的因素。
此外，我們不能保證我們將實現期望的結果或發展，即使實現了，也不能保證其產生的後果或對我們或我們的運營產生的影響與我們預期的一樣。我們不承擔公開更新或修訂任何前瞻性聲明的義務，除非法律要求。所有歸屬於我們或代表我們行事的人的口頭或書面前瞻性聲明，均受到這些警示性聲明以及我們在其他時間在SEC備案和公共通信中不時發表的其他警示性聲明的明確限制。
項目1
第一部分。財務信息。
項目1.基本報表。
彙編的綜合資產負債表
（以千爲單位，除每股面值外）
(未經審計)
| 九月三十日 | 十二月 31, | |||||||
| 2024 | 2023 | |||||||
| 資產 | ||||||||
| 流動資產： | ||||||||
| 現金和現金等價物 | $ | $ | ||||||
| 短期投資 | ||||||||
| 應收賬款，淨額 | ||||||||
| 預付費用和其他流動資產 | ||||||||
| 流動資產總額 | ||||||||
| 財產和設備，淨額 | ||||||||
| 善意 | ||||||||
| 無形資產，淨額 | ||||||||
| 經營租賃使用權資產 | ||||||||
| 遞延合同費用 | ||||||||
| 其他資產 | ||||||||
| 總資產 | $ | $ | ||||||
| 負債、夾層權益和股東權益 | ||||||||
| 流動負債： | ||||||||
| 應付賬款 | $ | $ | ||||||
| 應計費用和其他流動負債 | ||||||||
| 遞延收入的本期部分 | ||||||||
| 流動負債總額 | ||||||||
| 長期經營租賃負債 | ||||||||
| 遞延收入的長期部分 | ||||||||
| 盈利股票負債 | ||||||||
| 其他負債 | ||||||||
| 負債總額 | ||||||||
| 承付款和或有開支（注9） | ||||||||
| 夾層股權 | ||||||||
| 可贖回的非控制性權益 | ||||||||
| 夾層資產總額 | ||||||||
| 股東權益 | ||||||||
| 普通股，$ 面值； 已授權的股份， 和 分別截至2024年9月30日和2023年12月31日的已發行和流通股份 | ||||||||
| 額外的實收資本 | ||||||||
| 累計其他綜合收益 | ||||||||
| 累計赤字 | ( | ) | ( | ) | ||||
| 非控股權益 | ||||||||
| 股東權益總額 | ||||||||
| 負債總額、夾層權益和股東權益 | $ | $ | ||||||
詳見附註。
收入簡明合併表格
2024年4月27日
(未經審計)
| 三個月已結束 |
九個月已結束 |
|||||||||||||||
| 九月三十日 |
九月三十日 |
|||||||||||||||
| 2024 |
2023 |
2024 |
2023 |
|||||||||||||
| 收入： |
||||||||||||||||
| SaaS的 |
$ | $ | $ | $ | ||||||||||||
| 定期許可和支持 |
||||||||||||||||
| 服務 |
||||||||||||||||
| 保養 |
||||||||||||||||
| 總收入 |
||||||||||||||||
| 收入成本： |
||||||||||||||||
| SaaS的 |
||||||||||||||||
| 定期許可和支持 |
||||||||||||||||
| 服務 |
||||||||||||||||
| 保養 |
||||||||||||||||
| 總收入成本 |
||||||||||||||||
| 毛利潤 |
||||||||||||||||
| 運營費用： |
||||||||||||||||
| 銷售和營銷 |
||||||||||||||||
| 一般和行政 |
||||||||||||||||
| 研究和開發 |
||||||||||||||||
| 運營費用總額 |
||||||||||||||||
| 運營收入（虧損） |
( |
) | ( |
) | ||||||||||||
| 其他費用，淨額 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| 所得稅前收入（虧損） |
( |
) | ( |
) | ( |
) | ||||||||||
| 所得稅支出 |
||||||||||||||||
| 淨收益（虧損） |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
| 歸因於非控股權益的淨收益（虧損） |
( |
) | ( |
) | ||||||||||||
| 普通股股東可獲得的淨收益（虧損） |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
| 每股淨收益（虧損）： |
||||||||||||||||
| 基本 |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
| 稀釋 |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
| 已發行股票的加權平均值： |
||||||||||||||||
| 基本 |
||||||||||||||||
| 稀釋 |
||||||||||||||||
請參閱附註。
綜合收益（損失）的簡明合併報表
（以千計）
(未經審計)
| 三個月結束 |
九個月結束 |
|||||||||||||||
| 9月30日， |
9月30日， |
|||||||||||||||
| 2024 |
2023 |
2024 |
2023 |
|||||||||||||
|
|
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
| 其他綜合收益（損失）淨稅後 |
||||||||||||||||
| 可供出售金融資產未實現收益（損失） |
( |
) | ||||||||||||||
| 外幣翻譯調整 |
||||||||||||||||
| 其他綜合收益總額 |
||||||||||||||||
| 總綜合收益（損失） |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
| 應歸屬於少數股東的綜合收益（損失） |
( |
) | ( |
) | ( |
) | ||||||||||
| 普通股股東可獲得的綜合收益（虧損） |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
請參閱附註。
減記合併資產負債表的樓中樓權益和股東權益
（單位：千元，股份數量除外）
(未經審計)
| 2024年9月30日止三個月 |
||||||||||||||||||||||||||||
| 累積的 |
||||||||||||||||||||||||||||
| 額外的 |
其他 |
總計 |
||||||||||||||||||||||||||
| 普通股 |
實繳 |
累積的 |
綜合 |
非控制權益 |
股東的 |
|||||||||||||||||||||||
| 股份 |
數量 |
資本 |
$ |
收入 |
利息 |
股權 |
||||||||||||||||||||||
| 2024年6月30日結餘 |
$ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||
| 期權行使所得 |
||||||||||||||||||||||||||||
| 普通股發行，以換取限制股單位 |
||||||||||||||||||||||||||||
| 股票補償費用 |
— | |||||||||||||||||||||||||||
| 盈利補償限制股單位重新分類爲盈利補償股票 |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| 購買公開認股權證 |
— | ( |
) | ( |
) | |||||||||||||||||||||||
| 普通股的回購和養老 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||
| 綜合收入： |
||||||||||||||||||||||||||||
| 淨利潤 |
— | |||||||||||||||||||||||||||
| 可供出售證券未實現收益 |
— | |||||||||||||||||||||||||||
| 外幣翻譯調整 |
— | |||||||||||||||||||||||||||
| 2024年9月30日餘額 |
$ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||
| 2023年9月30日止三個月 | ||||||||||||||||||||||||||||||||
| 可贖回 | 總計 | 累積的 | ||||||||||||||||||||||||||||||
| 非控制 | 中層融資 | 額外的 | 其他 | 總計 | ||||||||||||||||||||||||||||
| 利息 | 股東權益 | 普通股 | 實繳 | 累積的 | 綜合 | 股東的 | ||||||||||||||||||||||||||
| 數量 | 數量 | 股份 | 數量 | 資本 | $ | 收入 | 股權 | |||||||||||||||||||||||||
| 2023年6月30日，餘額 | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||
| 期權行使所得 | — | — | ||||||||||||||||||||||||||||||
| 限制性股票單位歸屬後發行的普通股 | — | — | ||||||||||||||||||||||||||||||
| 股票補償費用 | — | — | — | — | ||||||||||||||||||||||||||||
| 重分類盈餘限制性股票單位爲盈餘股票 | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||||||
| 普通股的回購和養老 | — | — | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| 綜合收益（損失）： | ||||||||||||||||||||||||||||||||
| 淨損失 | — | — | — | (4,230 | ) | — | ( | ) | ||||||||||||||||||||||||
| 歸屬於淨損失和可贖回非控制權益的遞增 | ( | ) | ( | ) | — | 18 | ||||||||||||||||||||||||||
| 外幣翻譯調整 | — | — | ||||||||||||||||||||||||||||||
| 2023年9月30日餘額 | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||
請參閱附註。
AvePoint, Inc.
減記合併資產負債表的樓中樓權益和股東權益
（單位：千元，股份數量除外）
(未經審計)
| 2024年9月30日止九個月 |
||||||||||||||||||||||||||||||||||||
| 可贖回 |
總計 |
累積的 |
||||||||||||||||||||||||||||||||||
| 非控制 |
中層融資 |
額外的 |
其他 |
總計 |
||||||||||||||||||||||||||||||||
| 利息 |
股東權益 |
普通股 |
實繳 |
累積的 |
綜合 |
非控制權益 |
股東的 |
|||||||||||||||||||||||||||||
| 數量 |
數量 |
股份 |
數量 |
資本 |
$ |
收入 |
利息 |
股權 |
||||||||||||||||||||||||||||
| 2023年12月31日的餘額 |
$ | $ | $ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||||||
| 期權行使所得 |
— | — | ||||||||||||||||||||||||||||||||||
| 限制性股票單位歸屬後發行的普通股 |
— | — | ( |
) | ||||||||||||||||||||||||||||||||
| 股票補償費用 |
— | — | — | |||||||||||||||||||||||||||||||||
| 可贖回非控制權益的遞增 |
( |
) | ( |
) | — | — | — | — | — | |||||||||||||||||||||||||||
| 非控制權益的贖回 |
( |
) | ( |
) | — | ( |
) | |||||||||||||||||||||||||||||
| 重分類盈餘限制性股票單位爲盈餘股票 |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||||||
| 購買公開認股權證 |
— | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||
| 普通股的回購和養老 |
— | — | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
| 綜合（損失）收益： |
||||||||||||||||||||||||||||||||||||
| 淨（虧損）利潤 |
(5 | ) | (5 | ) | — | ( |
) | ( |
) | |||||||||||||||||||||||||||
| 可供出售證券的未實現損失 |
— | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||
| 外幣翻譯調整 |
( |
) | ( |
) | — | — | ||||||||||||||||||||||||||||||
| 2024年9月30日餘額 |
$ | $ | $ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||||||
| 2023年9月30日止九個月 |
||||||||||||||||||||||||||||||||||||||||
| 可贖回 |
總計 |
累積的 |
||||||||||||||||||||||||||||||||||||||
| 非控制 |
中層融資 |
額外的 |
其他 |
總計 |
||||||||||||||||||||||||||||||||||||
| 利息 |
股東權益 |
普通股 |
實繳 |
庫存股 |
累積的 |
綜合 |
股東的 |
|||||||||||||||||||||||||||||||||
| 數量 |
數量 |
股份 |
數量 |
資本 |
股份 |
數量 |
$ |
收入 |
股權 |
|||||||||||||||||||||||||||||||
| 2022年12月31日的餘額 |
$ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||||||||
| 期權行使所得 |
— | — | ||||||||||||||||||||||||||||||||||||||
| 限制性股票單位歸屬後發行的普通股 |
— | — | ||||||||||||||||||||||||||||||||||||||
| 股票補償費用 |
— | — | — | — | ||||||||||||||||||||||||||||||||||||
| 重分類盈餘限制性股票單位爲盈餘股票 |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||||||||||
| 普通股的回購和養老 |
— | — | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
| 綜合收益（損失）： |
||||||||||||||||||||||||||||||||||||||||
| 淨損失 |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||
| 歸屬於淨利潤和可贖回非控制權益的增加 |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
| 外幣翻譯調整 |
( |
) | ( |
) | — | — | ||||||||||||||||||||||||||||||||||
| 2023年9月30日餘額 |
$ | $ | $ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||||||||||||
請參閱附註。
簡明的綜合現金流量表
（以千計）
(未經審計)
| 九個月已結束 |
||||||||
| 九月三十日 |
||||||||
| 2024 |
2023 |
|||||||
| 運營活動 |
||||||||
| 淨虧損 |
$ | ( |
) | $ | ( |
) | ||
| 爲使淨虧損與經營活動提供的淨現金保持一致而進行的調整： |
||||||||
| 折舊和攤銷 |
||||||||
| 經營租賃使用權資產支出 |
||||||||
| 外幣重新計量損失 |
||||||||
| 基於股票的薪酬 |
||||||||
| 遞延所得稅 |
( |
) | ( |
) | ||||
| 其他 |
( |
) | ||||||
| 盈利和認股權證負債價值的變化 |
||||||||
| 運營資產和負債的變化： |
||||||||
| 應收賬款 |
( |
) | ||||||
| 預付費用和其他流動資產 |
||||||||
| 遞延合同成本和其他資產 |
( |
) | ( |
) | ||||
| 應付賬款、應計費用、經營租賃負債和其他負債 |
( |
) | ( |
) | ||||
| 遞延收入 |
||||||||
| 經營活動提供的淨現金 |
||||||||
| 投資活動 |
||||||||
| 投資的到期日 |
||||||||
| 購買投資 |
( |
) | ( |
) | ||||
| 內部使用軟件的資本化 |
( |
) | ( |
) | ||||
| 購買財產和設備 |
( |
) | ( |
) | ||||
| 應收票據的發行 |
( |
) | ( |
) | ||||
| 其他投資活動 |
( |
) | ||||||
| 用於投資活動的淨現金 |
( |
) | ( |
) | ||||
| 融資活動 |
||||||||
| 回購普通股 |
( |
) | ( |
) | ||||
| 股票期權行使的收益 |
||||||||
| 贖回可贖回的非控股權益 |
( |
) | ||||||
| 購買公開認股權證 |
( |
) | ||||||
| 償還融資租賃 |
( |
) | ( |
) | ||||
| 用於融資活動的淨現金 |
( |
) | ( |
) | ||||
| 匯率對現金的影響 |
( |
) | ||||||
| 現金和現金等價物的淨增加（減少） |
( |
) | ||||||
| 期初的現金和現金等價物 |
||||||||
| 期末的現金和現金等價物 |
$ | $ | ||||||
| 現金流信息的補充披露 |
||||||||
| 繳納的所得稅 |
$ | $ | ||||||
詳見附註。
1. 業務和組織性質
AvePoint公司（以下統稱爲「公司及其子公司」艾芙坡”公司“公司,” “我們,” “我們本公司我們的”）在2001年7月24日正式註冊成爲新澤西州的一家公司 並於之後遷入特拉華州，成爲特拉華州的一家公司 紅omiciled爲特拉華州公司 2006.
AvePoint 提供一種雲原生軟件平台，組織依賴其來優化運營、管理關鍵數據並確保數字工作環境的安全。隨着全球企業 embracing 混合工作的新常態，它們必須構建並提供一個全新、無縫的工作體驗，以滿足知識工作者的需求，重點放在旨在改善整個組織協作的廣泛 saas概念和提高生產力的應用程序組合上。
我們的主要企業總部位於新澤西州澤西城，我們的主要運營總部位於弗吉尼亞州里士滿，並在北美、歐洲、亞洲、澳洲和中東設有額外辦公室。
2. 重大會計政策摘要
報告前提
隨附的截至未經審計的簡明合併資產負債表 2023年12月31日， 源自經審計的財務報表，未經審計的中期簡明合併財務報表是根據美國證券交易委員會的規章制度（”秒”）以獲取中期財務信息，包括公司和在可變利息和投票模式下合併的實體的賬目。所有公司間往來交易和餘額均已清除。某些信息和披露通常包含在根據美國普遍接受的會計原則編制的合併財務報表中（”GAAP”) 已被壓縮或省略。
管理層認爲，這些基本報表包含所有重大調整，包括正常發生的計提，以公正地呈現所示期間的財務狀況、經營成果和現金流量。中期結果爲 沒有 並不一定代表全年或任何未來時期可預期的結果。 爲了管理信用風險，管理層對客戶的財務狀況進行持續的信用評估，監測付款績效，並評估當前經濟情況，以及合理和支持未來經濟情況的預測，以及可能出現的其他情況。對於任何其他中期期間或截至年末應另有期望 2014年12月31日
這些簡明綜合基本報表應與我們的審計綜合基本報表以及我們最近的《年度報告》中包含的相關附註一起閱讀 10-k的年度報告中包含的與此期間未經審計的簡明合併財務報表及其附註有關的注意事項。 2023年12月31日年月日提交給SEC。 二月份 29, 2024 (“年度報告”).
公司的重要會計政策詳見附註 2 年度報告中包含的合併財務報表附註。這些政策發生了 no 重大變化。 九之額外聯邦稅項負債。 9月30日是3,321萬美元，因爲公司的普通股的公允價值低於這些期權的行權價。30, 2024.
比較數據
爲符合當前期間的表達方式，已將以前期間的某些金額重新分類，其中包括：
| • | 將earn-out和認股權責任變動重新分類至損益表中的其他費用淨額 三 和 九月份結束時 2023年9月30日 | |
| • | 將利息收入淨額重新分類至損益表中的其他費用淨額 三 和 九月份結束時 2023年9月30日。 |
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. We base our estimates and assumptions on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The amounts of assets and liabilities reported and the amounts of revenue and expenses reported for each of the periods presented are affected by estimates and assumptions, which are used for, but not limited to, the accounting for the determination of standalone selling price for revenue recognition, deferred contract costs, valuation of goodwill and other intangible assets, income taxes and related reserves, purchase price in a business combination, and earn-out liabilities. Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties.
Foreign Currency
Transaction gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in other expense, net in the Company’s condensed consolidated statements of income.
Cash and Cash Equivalents
The Company maintains cash with several high credit-quality financial institutions. The Company considers its investments with original maturities of three months or less to be cash equivalents. These investments are not subject to significant market risk. The Company maintains its cash and cash equivalents in bank accounts which, at times, exceed the federally insured limits. The Company has not experienced any losses in such accounts. The Company maintains cash balances used in operations at entities based in countries that impose regulations that limit the ability to transfer cash out of the country. As of September 30, 2024 and December 31, 2023, the Company’s cash balances at these entities were $
Goodwill
No events or circumstances changed since the acquisitions that would indicate that the fair value of our reporting unit is below its carrying amount.
Deferred Contract Costs
We defer sales commissions that are considered to be incremental and recoverable costs of obtaining or renewing SaaS, term license and support, services, and maintenance contracts. Changes in the anticipated period of asset benefit or the average renewal term are recognized on a prospective basis upon occurrence.
Amortization of deferred contract costs of $
Revenue Recognition
The Company derives revenue from four primary sources: SaaS, term license and support, services, and maintenance. Services include installation services, training and other consulting services.
Term license revenue recognized at a point in time was $
Accounts receivable, net is inclusive of accounts receivable, and current unbilled receivables, net of allowance for credit losses. We record an unbilled receivable when revenue is recognized prior to invoicing. We have a well-established collection history from our direct and indirect sales. We periodically evaluate the collectability of our accounts receivable and provide an allowance for credit losses as necessary, based on the age of the receivable, expected payment ability, and collection experience. As of September 30, 2024 and December 31, 2023, the allowance for credit losses was not material.
We record deferred revenue in the condensed consolidated balance sheets when cash is collected or invoiced before revenue is earned. Deferred revenue as of September 30, 2024 and December 31, 2023 was $
The opening and closing balances of the Company’s accounts receivable, net, deferred revenue and deferred contract costs are as follows:
| Accounts | Deferred | |||||||||||
| receivable, | Deferred | contract | ||||||||||
| net (1) | revenue | costs | ||||||||||
| (in thousands) | ||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | |||||||||
| Balance, September 30, 2024 | ||||||||||||
(1) Includes long-term unbilled receivables.
There were no significant changes to the Company’s contract assets or liabilities during the nine months ended September 30, 2024 and the year ended December 31, 2023 outside of its sales activities.
As of September 30, 2024, transaction price allocated to remaining performance obligations, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods, was $
Stock-Based Compensation
Stock-based compensation represents the cost related to stock-based awards granted to employees. To date, we have issued both stock options and restricted stock units. The Company measures stock-based compensation cost at the grant date based on the estimated fair value of the award and recognizes the cost ratably over the requisite service period, net of actual forfeitures in the period.
We estimate the fair value of stock options using the Black-Scholes valuation model. The Black-Scholes model requires highly subjective assumptions in order to derive the inputs necessary to calculate the fair value of stock options. To estimate the expected term of stock options, the Company considers contractual terms of the options, including the vesting and expiration periods, as well as historical option exercise data and current market conditions to determine an estimated expected term. The Company’s historical experience is too limited to be able to reasonably estimate an expected term. Expected volatility is based on the historical volatility of a group of peer entities. Dividend yields are based upon historical dividend yields. Risk-free interest rates are based on the implied yields currently available on U.S. Treasury zero coupon issues with a remaining term equal to the expected term.
Recent Accounting Pronouncements not yet effective
In November 2023, the FASB issued ASU 2023-07, “Improvements to Reportable Segment Disclosures (Topic 280)” (“ASU 2023-07”). ASU 2023-07 is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendment in this ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. We are currently evaluating the impact ASU 2023-07 will have on our consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU No. 2023-09, “Improvements to Income Tax Disclosures (Topic 740)” (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The amendment in this ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted. We are currently evaluating the impact ASU 2023-09 will have on our consolidated financial statements and related disclosures.
3. Goodwill
The changes in the carrying amounts of goodwill were as follows:
| Goodwill | ||||
| (in thousands) | ||||
| Balance as of December 31, 2023 | $ | |||
| Effect of foreign currency translation | ( | ) | ||
| Balance as of September 30, 2024 | $ | |||
4. Intangible assets, net
Intangible assets consist of acquired intangible assets and self-developed software.
A summary of the balances of the Company’s intangible assets as of September 30, 2024 and December 31, 2023 is presented below:
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||
| September 30, 2024 | December 31, 2023 | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Technology and software | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Customer related assets | ( | ) | ( | ) | ||||||||||||||||||||
| Content | ( | ) | ( | ) | ||||||||||||||||||||
| Total | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
Amortization expense for intangible assets was $
As of September 30, 2024, estimated future amortization expense for intangible assets, net is as follows:
| Year Ending December 31: | ||||
| (in thousands) | ||||
| 2024 (three months) | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| Total intangible assets subject to amortization | $ | |||
5. Accounts Receivable, Net
Accounts receivable, net, consists of the following components:
| September 30, |
December 31, |
|||||||
| 2024 |
2023 |
|||||||
| (in thousands) |
||||||||
| Trade receivables |
$ | $ | ||||||
| Current unbilled receivables |
||||||||
| Allowance for credit losses |
( |
) | ( |
) | ||||
| $ | $ | |||||||
6. Line of Credit
The Company maintains a loan and security agreement (the “Loan Agreement”) with HSBC Bank USA, National Association, (“HSBC”) as lender, for a revolving line of credit of up to $
7. Income Taxes
The Company had an effective tax rate of
The change in effective tax rates for the three-month period ended September 30, 2024 as compared to the three-month period ended September 30, 2023 was primarily due to the mix of pre-tax income (loss) results by jurisdictions taxed at different rates, the impact of foreign inclusions, stock-based compensation and changes in valuation allowance in certain jurisdictions.
The change in effective tax rates for the nine-month period ended September 30, 2024 as compared to the nine-month period ended September 30, 2023 was primarily due to the mix of pre-tax income (loss) results by jurisdictions taxed at different rates, the impact of foreign inclusions, stock-based compensation and changes in valuation allowance in certain jurisdictions.
The Company continues to evaluate the realizability of its deferred tax assets on a quarterly basis and will adjust such amounts in light of changing facts and circumstances. In making such an assessment, management would consider all available supporting data, including the level of historical taxable income, future reversals of existing temporary differences, tax planning strategies, and projected future taxable income.
8. Leases
The Company is obligated under various non-cancelable operating leases primarily for office space. The initial terms of the leases expire on various dates through 2030. We determine if an arrangement is a lease at inception.
The components of the Company’s operating lease expenses are reflected in the condensed consolidated statements of income as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Lease liability cost | $ | $ | $ | $ | ||||||||||||
| Short-term lease expenses (1) | ||||||||||||||||
| Variable lease cost not included in the lease liability (2) | ||||||||||||||||
| Total lease cost | $ | $ | $ | $ | ||||||||||||
(1) Short-term lease expenses include rent expenses from leases of 12 months or less on the transition date or lease commencement.
(2) Variable lease cost includes common area maintenance, property taxes, and fluctuations in rent due to a change in an index or rate.
Our lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. We elected to combine fixed payments for non-lease components, for all classes of underlying assets, with our lease payments and account for them together as a single lease component which increases the amount of our lease assets and liabilities.
During the nine months ended September 30, 2024 and 2023, right-of-use assets obtained in exchange for new operating lease liabilities amounted to $
Other information related to operating leases is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Cash paid for amounts included in the measurement of the lease liability: | ||||||||||||||||
| Operating cash flows from operating leases | $ | $ | $ | $ | ||||||||||||
As of September 30, 2024, our operating leases had a weighted average remaining lease term of
| Year Ending December 31: | ||||
| (in thousands) | ||||
| 2024 (three months) | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| Total future lease payments | $ | |||
| Less: Present value adjustment | ( | ) | ||
| Present value of future lease payments (1) | $ | |||
(1) Includes the current portion of operating lease liabilities of $
As of September 30, 2024, letters of credit have been issued in the amount of $
9. Commitments and Contingencies
Legal Proceedings
In the normal course of its business, the Company may be involved in various claims, negotiations and legal actions. Except for such claims that arise in the normal course of business, as of September 30, 2024, the Company was not a party to any other litigation for which a material claim is reasonably possible, probable or estimable.
Indemnification
The Company has entered into indemnification agreements with its executive officers and directors. These agreements, among other things, require AvePoint to indemnify its directors and executive officers to the fullest extent permitted by Delaware law, specifically the Delaware General Corporation Law (as the same exists or may hereafter be amended) for certain expenses, including attorneys’ fees, judgments, fines, and settlement amounts incurred by a director or officer in any action or proceeding arising out of their services as one of the Company’s directors or officers or any other company or enterprise to which the person provides services at the Company’s request.
As part of the business combination with Apex Technology Acquisition Corporation, Inc. (“Apex”), we assumed certain indemnification obligations for Apex Technology Sponsor LLC and Jeff Epstein, Brad Koenig, David Chao, Peter Bell, Donna Wells, and Alex Vieux (the “Indemnitees” or “Defendants”). On February 2, 2024, Drulias and Farzad (as purported Apex stockholders, the “Plaintiffs”) filed a class action complaint against the Indemnities in Delaware Court of Chancery, captioned Dean William Drulias, et.al. v. Apex Technology Sponsor LLC, et.al., C.A. No. 2024-0094-LWW. Plaintiffs asserted breach of fiduciary duty and unjust enrichment claims against the Defendants. The complaint alleged that Defendants made false and misleading disclosures in the June 2, 2021 proxy statement of Apex impacting its stockholders’ vote to approve a merger between Apex and us and also affecting stockholders’ redemption rights prior to the merger. Plaintiffs sought unspecified damages, rescission or rescissory damages, and disgorgement of unjust enrichment. We were not a named defendant in the complaint but had indemnification obligations to the Defendants under indemnification agreements executed during the merger. Also, in accordance with the business combination agreement, the Defendants obtained insurance policies to cover post-closing liability, with Apex securing a policy with a limit of $
Guarantees
In the normal course of business, customers in certain geographies or in highly regulated sectors occasionally require contingency agreements for the completion of service projects, the completion of which are secured by certificates of deposit and a line of credit. The certificates of deposit are included in short-term investments within the condensed consolidated balance sheets. As of September 30, 2024, letters of credit have been issued in the amount of $
10. Earn-Out and Warrant Liabilities
Company Earn-Out
Certain holders of common stock and certain holders of options shall be issued additional shares of AvePoint’s common stock, as follows:
| • | |
|
| • | |
|
| • | |
The rights described above are hereafter referred to as the “Company Earn-Out Shares”. To the extent that any portion of the Company Earn-Out Shares that would otherwise be issued to a holder of options that remain unvested at the date of the milestones described above, then in lieu of issuing the applicable Company Earn-Out Shares, the Company shall instead issue an award of restricted stock units of the Company for a number of shares of AvePoint’s common stock equal to such portion of the Company Earn-Out Shares issuable with respect to the unvested options (the “Company Earn-Out RSUs”). In evaluation of the Company Earn-Out Shares and Company Earn-Out RSUs, management determined that the Company Earn-Out Shares represent derivatives to be marked to market at each reporting period, while the Company Earn-Out RSUs represent equity under ASC 718, Compensation-Stock Compensation (“ASC 718”). Refer to “Note 13 — Stock-Based Compensation” for more information regarding the Company Earn-Out RSUs.
In order to capture the market conditions associated with the Company Earn-Out Shares, the Company applied an approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future price paths over the Sponsor Earn-Out Shares’ (as defined below) contractual life based on the appropriate probability distributions. The fair value was determined by taking the average of the fair values under each Monte Carlo simulation trial. The Monte Carlo model requires highly subjective assumptions including the expected volatility of the price of our common stock, and the expected term of the earn-out shares. Significant increases or decreases to these inputs in isolation could result in a significantly higher or lower liability. Under this approach, the fair value of the Company Earn-Out Shares on July 1, 2021 was determined to be $
| September 30, |
December 31, | |||||
| 2024 | 2023 | |||||
| Term (in years) |
||||||
| Volatility |
% |
% | ||||
Private Warrants to Acquire Common Stock
On July 1, 2021, the Company granted
The private placement warrants are non-transferable and any transfer to an unrelated party would cause the warrants to be converted into public warrants. Consequently, the fair value of the private placement warrants is equivalent to the quoted price of the publicly traded warrants. Under this approach, the fair value of the private placement warrants on July 1, 2021, was determined to be $
As of September 30, 2024,
11. Mezzanine Equity and Stockholders’ Equity
The Company has one class of capital stock: common stock. The following summarizes the terms of the Company’s capital stock.
Common Stock
Pursuant to the Company’s restated Articles of Incorporation, the Company was authorized to issue up to
Share Repurchase Program
On March 17, 2022, the Company announced that its Board of Directors authorized a new share repurchase program (the “Share Repurchase Program”) for the Company to buy back shares of its common stock. Under the Share Repurchase Program, the Company has the authority to buy up to $
Sponsor Earn-Out Shares
On July 1, 2021, the Company modified the terms of
| • | 100% of the Sponsor Earn-Out Shares shall vest and be released if at any time through July 1, 2028, AvePoint’s stock price is greater than or equal to $15.00 (as adjusted for share splits, share capitalization, reorganizations, recapitalizations and the like) over any 20 trading days within any 30 trading day period; and | |
| • | 100% of the remaining Sponsor Earn-Out Shares that have not previously vested shall vest and be released if at any time through July 1, 2028, the Company consummates a subsequent transaction. |
The Sponsor Earn-Out Shares are currently outstanding and receive all benefits of regular shares with the exception of the fact that the shares are held in escrow and restricted from transfer until the vesting conditions described above are met. Consequently, the shares are classified as equity.
Public Warrants to Acquire Common Stock
On July 1, 2021, the Company issued
On August 27, 2024, the Company announced the commencement of an offer to purchase all of its outstanding public warrants at a price of $
Redeemable Noncontrolling Interest
During the nine months ended September 30, 2024, the redeemable noncontrolling interest shareholders of MaivenPoint Pte. Ltd. (“MaivenPoint”), a consolidated subsidiary of the Company, submitted notices of exercise of their put option to cause MaivenPoint to repurchase their shares at a price of $
There are
12. Growth Equity Fund
On February 28, 2024, the Company and Lumens Capital Partners Ltd. (“LCP”) established A3V JV Co. (the “Venture”), with each owning an equal share of the Venture. In addition, the Company entered into a separate agreement with LCP to form A3 Ventures Fund 1, L.P. (the “Fund”). The Fund is a Cayman Islands-exempted limited partnership, aimed at investing in companies in the growth equity phase and mature cashflow generating businesses with strong growth potential. The Fund looks to invest in companies situated in enterprise software markets aligning with the professional expertise and geographical presence of both the Company and LCP.
The Venture wholly owns A3V GP Co., which serves as the general partner of the Fund. As a limited partner, the Company committed to contribute $
As of September 30, 2024, portion of the Company’s $
As of September 30, 2024, $
13. Stock-Based Compensation
The Company maintains the 2021 Equity Incentive Plan (the “2021 Plan”). As of September 30, 2024,
For the three months ended September 30, 2024 and 2023, total stock-based compensation expense was $
Stock Options
The compensation costs for stock option awards are accounted for in accordance with ASC 718. Stock options vest over a -year service period and expire on the anniversary of the date of award.
On March 5, 2024, the Company granted
| March 5, | ||||
| 2024 | ||||
| Expected life (in years) | ||||
| Expected volatility | % | |||
| Risk-free rate | % | |||
| Dividend yield | ||||
To estimate the expected life of stock options, the Company considered the vesting term, contractual expiration period, and market conditions. Expected volatility is based on historical volatility of a group of peer entities. Dividend yields are based upon historical dividend yields. Risk-free interest rates are based on the implied yields currently available on U.S. Treasury zero coupon issues with a remaining term equal to the expected life. Based on these inputs, the grant-date fair value was determined to be $
As of September 30, 2024, there was $
As of September 30, 2024, the Company had
Restricted Stock Units
Under the terms of the 2021 Plan, we have issued restricted stock unit awards with a continuous employment condition only (“Time-Based RSUs”), and restricted stock unit awards with a continuous employment condition that are also contingent on the Company meeting certain performance goals (“PSUs”, and together “RSUs”). Both types of RSU awards vest over a -year period from the grant date.
Company Earn-Out RSUs
The compensation costs for Company Earn-Out RSUs are accounted for in accordance with ASC 718. In order to capture the market conditions associated with the Company Earn-Out RSUs, the Company applied an approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future price paths over the Sponsor Earn-Out RSUs’ contractual life based on the appropriate probability distributions. The fair value was determined by taking the average of the fair values under each Monte Carlo simulation trial. Under this approach, the grant-date fair value of the Company Earn-Out RSUs on July 1, 2021, was determined to be $
14. Financial Instruments
Fair value is defined by ASC 820, Fair Value Measurement (“ASC 820”) as the price that would be received upon selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| • | Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. |
| • | Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. |
| • | Level 3 — Unobservable inputs for the asset or liability. |
| September 30, 2024 | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets | ||||||||||||||||
| Cash Equivalents: | ||||||||||||||||
| Certificates of deposit | $ | $ | $ | $ | ||||||||||||
| Money market funds | ||||||||||||||||
| U.S. treasury bills | ||||||||||||||||
| Short term investments: | ||||||||||||||||
| Certificates of deposit | ||||||||||||||||
| Other assets: | ||||||||||||||||
| Certificates of deposit | ||||||||||||||||
| Notes receivables (1) | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Earn-out shares liabilities: | ||||||||||||||||
| Earn-out shares (2) | $ | $ | $ | $ | ||||||||||||
| Other non-current liabilities: | ||||||||||||||||
| Warrant liabilities (2) | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| December 31, 2023 | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets | ||||||||||||||||
| Cash Equivalents: | ||||||||||||||||
| Certificates of deposit (3) | $ | $ | $ | $ | ||||||||||||
| Money market funds | ||||||||||||||||
| U.S. treasury bills | ||||||||||||||||
| Short term investments: | ||||||||||||||||
| Certificates of deposit (3) | ||||||||||||||||
| Other assets: | ||||||||||||||||
| Notes receivables (1) | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Earn-out shares liabilities: | ||||||||||||||||
| Earn-out shares (2) | $ | $ | $ | $ | ||||||||||||
| Other non-current liabilities: | ||||||||||||||||
| Warrant liabilities (2) | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
(1) During 2023, the Company extended a credit facility to LCP with a total commitment of up to $
(2) Refer to “Note 10 — Earn-Out and Warrant Liabilities” for further details.
(3) The majority of certificates of deposit are foreign deposits.
The following tables summarize the Company’s available-for-sale securities measured at fair value as of September 30, 2024 and December 31, 2023.
| September 30, 2024 | ||||||||||||
| (in thousands) | ||||||||||||
| Amortized Cost | Fair Value | Gross unrealized losses | ||||||||||
| U.S. treasury bills | $ | $ | $ | ( | ) | |||||||
| Total | $ | $ | $ | ( | ) | |||||||
| December 31, 2023 | ||||||||||||
| (in thousands) | ||||||||||||
| Amortized Cost | Fair Value | Gross unrealized gains | ||||||||||
| U.S. treasury bills | $ | $ | $ | |||||||||
| Total | $ | $ | $ | |||||||||
The contractual maturity of the available-for-sale securities held as of September 30, 2024 and December 31, 2023 was within one year.
The following table presents the reconciliation in Level 3 instruments which consisted of earn-out shares liabilities which were measured on a recurring basis.
| Nine Months Ended September 30, | ||||
| 2024 | ||||
| (in thousands) | ||||
| Opening balance | $ | |||
| Total gains or losses from the period | ||||
| Included in other expense, net | ||||
| Reclass from Earnout-RSU | ||||
| Closing balance | $ | |||
15. Segment Information
The Company operates in segment. Its products and services are sold throughout the world, through direct and indirect sales channels. The Company’s chief operating decision maker (the “CODM”) is the Chief Executive Officer. The CODM makes operating performance assessment and resource allocation decisions on a global basis. The CODM does not receive discrete financial information about asset allocation or profitability by product or geography.
Revenue by geography is based upon the billing address of the customer. All transfers between geographic regions have been eliminated from consolidated revenue. The following table sets forth revenue by geographic area:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Revenue: | ||||||||||||||||
| North America | $ | $ | $ | $ | ||||||||||||
| EMEA | ||||||||||||||||
| APAC | ||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
The following table sets forth revenue generated by countries which represent more than 10% of total consolidated revenue:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Revenue: | ||||||||||||||||
| United States | $ | $ | $ | $ | ||||||||||||
| Singapore | ||||||||||||||||
| Germany | ||||||||||||||||
16. Other expense, net
Other expense, net is disaggregated as follows:
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2024 |
2023 |
2024 |
2023 |
|||||||||||||
| (in thousands) |
||||||||||||||||
| Change in value of earn-out and warrant liabilities |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Interest income, net |
||||||||||||||||
| Profits on securities (1) |
||||||||||||||||
| Foreign currency exchange gain (loss), net |
( |
) | ( |
) | ( |
) | ||||||||||
| Other, net |
( |
) | ( |
) | ( |
) | ||||||||||
| Other expense, net |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
(1) Profits on securities consist of interest income from amortization of the discount arising at acquisition of U.S. treasury bills.
17. Net Income (Loss) Per Share
Basic net income (loss) per share is computed by dividing total net income (loss) by the weighted average common shares outstanding for the period. In computing diluted net income (loss) per share, the Company adjusts the denominator, subject to anti-dilution requirements, to include the dilution from potential shares of common stock resulting from outstanding share-based payment awards, warrants and Company Earn-Outs. The Company’s Sponsor Earn-Out Shares described in “Note 11 — Mezzanine Equity and Stockholders’ Equity” are considered participating securities and have no contractual obligation to shares in the loss of the Company. As such, the weighted-average impact of these shares is excluded from the calculation of loss per share below.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||
| Net income (loss) per share available to common shareholders, excluding sponsor earn-out shareholders | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Net income attributable to Sponsor Earn-out Shares | ( | ) | ||||||||||||||
| Net (income) loss attributable to noncontrolling interest | ( | ) | ( | ) | ||||||||||||
| Total net income (loss) available to common shareholders | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Denominator: | ||||||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Effect of dilutive securities | ||||||||||||||||
| Stock options | ||||||||||||||||
| RSUs | ||||||||||||||||
| Weighted average diluted shares | ||||||||||||||||
| Basic net income (loss) per share available to common shareholders, excluding sponsor earn-out shareholders | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Diluted net income (loss) per share available to common shareholders, excluding sponsor earn-out shareholders | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
To arrive at net income (loss) available to common stockholders, the Company deducted net income attributable to Sponsor Earn-out Shares and net (income) loss attributable to noncontrolling interest.
The below table includes the total potentially dilutive securities for the three and nine months ending September 30, 2024 and the three and nine months ending September 30, 2023 which have been excluded from the computation of diluted net income (loss) per share as their effect is anti-dilutive:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Stock options | 12 | 27,982 | 25,195 | 27,982 | ||||||||||||
| RSUs | 1 | 11,533 | 10,534 | 11,533 | ||||||||||||
| Warrants | 16,308 | 17,905 | 16,308 | 17,905 | ||||||||||||
| Company Earn-Outs | 3,000 | 3,000 | 3,000 | 3,000 | ||||||||||||
| Total potentially dilutive securities | 19,321 | 60,420 | 55,037 | 60,420 | ||||||||||||
18. Subsequent Events
No material subsequent events occurred since the date of the most recent balance sheet period reported.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (Part I, Item 2 of this Quarterly Report) (“MD&A”) summarizes (and is intended to help the reader understand) the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of our Company as of and for the periods presented below. The MD&A should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023 (our “Annual Report”) and our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report.
Third Quarter 2024 Business Highlights
| ▪ |
Total annual recurring revenue (“ARR”) increased 23% year-over-year to $308.9 million as of September 30, 2024; |
|
| ▪ |
Total revenue increased 22% year-over-year to $88.8 million for the three months ended September 30, 2024; | |
| ▪ | SaaS revenue increased 45% year-over-year to $60.9 million for the three months ended September 30, 2024; and | |
| ▪ | Announced the general availability of AvePoint Cloud Backup Express, designed to use Microsoft 365 Backup Storage for rapid and more efficient data protection. |
Overview
AvePoint provides a cloud-native data management software platform that organizations rely on to manage and protect critical data, optimize IT operations, achieve meaningful cost savings, and efficiently secure the digital workplace. Companies around the world have adopted a hybrid work model, and they are now tasked with delivering a seamless and secure workplace experience for knowledge workers, centered around an extensive portfolio of Software-as-a-Service (“SaaS”) solutions and productivity applications.
The adoption of a portfolio of solutions is a substantial and ongoing challenge for most organizations, which for decades had used only a small number of multi-purpose on-premises applications to drive business outcomes. However, to deliver an efficient digital workplace today, companies must manage this range of applications – and the associated explosive growth and sprawl of critical data – with a platform offering that is well governed, fit for purpose, easy to use and built on automation.
In addition, many organizations are beginning to realize the potential of generative artificial intelligence (“AI”) to drive competitive advantage and value creation, including (1) extracting greater value from complex datasets, (2) making more informed business decisions, (3) reducing employee workloads, and (4) improving the overall customer experience. While these data-driven improvements are expected to lead to stronger revenue growth and operational efficiency, successfully leveraging this new technology is in turn dependent on first addressing data management challenges that all organizations face. Specifically, for AI-driven projects to succeed, companies must apply robust strategies across the data estate to manage the information lifecycle, properly govern and secure their data, and ensure its compliance. These are the core business problems that AvePoint has been solving for more than two decades, and why we believe AvePoint is well positioned to be a key enabler of generative AI adoption within enterprises in the coming years.
AvePoint’s Confidence Platform empowers organizations – of all sizes, in all regions, and across all industries – to optimize and secure the solutions that most commonly establish and underpin the digital workplace. As our customers seek to rapidly reduce costs, improve productivity and make more informed business decisions, they depend on our platform for data-driven insights, critical business intelligence and ongoing operational value through automation.
Key Business Metric
| September 30, |
||||||||
| 2024 |
2023 |
|||||||
| Total ARR ($ in mil) |
$ | 308.9 | $ | 250.6 | ||||
| Annual Recurring Revenue |
We believe ARR further enables measurement of our business performance, is an important metric for financial forecasting and better enables us to make strategic decisions on the business. We calculate ARR as the annualized sum of contractually obligated Annual Contract Value (“ACV”) from SaaS, term license and support, and maintenance revenue sources from all active customers at the end of a reporting period.
As of September 30, 2024 and September 30, 2023, total ARR was $308.9 million and $250.6 million, respectively, representing growth of 23%.
Growth in ARR is driven by both new business and the expansion of existing business. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or replace these items. ARR is not a forecast of future revenue, and the active contracts used in calculating ARR may or may not be extended or renewed by our customers. |
Components of Results of Operations
| Revenue |
We generate revenue from four primary sources: SaaS, term license and support, services, and maintenance.
SaaS revenues are generated from our cloud-based solutions. Term license and support revenues are generated from the sales of on-premise or hybrid licenses, which include a distinct support component. Both SaaS and term license and support revenues are primarily billed annually. SaaS and term license and support are generally sold per user license or based upon the amount of data protected. SaaS revenue is recognized ratably over the term of the contract. For term license and support revenues, the license component is generally recognized upfront at the point in time when the software is made available to the customer to download and use, and the support component is recognized ratably over the term of the contract.
Services revenue includes revenue generated from implementation, training, consulting, license customization and managed services. These revenues are recognized by applying a measure of progress, such as labor hours, to determine the percentage of completion of each contract. These offerings are not inherently recurring in nature and as such are subject to more period-to-period volatility than other elements of our business. Services revenue from managed services are recognized ratably or on a straight-line basis over the contract term.
Maintenance revenue is a result of selling on-going support for legacy perpetual licenses. It also includes recurring professional services such as technical account management. Maintenance revenue is recognized ratably over the term of the maintenance agreement, which is typically one year. |
|
| Cost of Revenue |
Cost of SaaS and cost of term license and support consists of all direct costs to deliver and support our SaaS and term license and support products, including salaries, benefits, stock-based compensation and related expenses, overhead, third-party hosting fees related to our cloud services, depreciation and amortization. We recognize these expenses as they are incurred. We expect that these costs will increase in absolute dollars but may fluctuate as a percentage of SaaS and term license and support revenue from period to period.
Cost of maintenance consists of all direct costs to support our legacy perpetual license products, including salaries, benefits, stock-based compensation and related expenses, overhead, depreciation and amortization. We recognize these expenses as they are incurred. We expect that cost of maintenance revenue will decrease in absolute dollars as maintenance revenue declines but may fluctuate as a percentage of maintenance revenue.
Cost of services consists of salaries, benefits, stock-based compensation and related expenses for our services organization, overhead, IT necessary to provide services for our customers, depreciation and amortization. We recognize these expenses as they are incurred. |
|
| Gross Profit and Gross Margin |
Gross profit is revenue less cost of revenue, and gross margin is gross profit as a percentage of revenue.
Gross profit has been and will continue to be affected by various factors, including the mix of our revenue, the costs associated with third-party cloud-based hosting services for our cloud-based subscriptions, and the extent to which we expand our customer support and services organizations. We expect that our gross margin will fluctuate from period to period depending on the interplay of these various factors but should increase in the long term as SaaS revenue continues to increase as a percentage of total revenue. |
|
| Sales and Marketing |
Sales and marketing expenses consist primarily of personnel-related expenses for sales, marketing and customer success personnel, stock-based compensation expense, sales commissions, marketing programs, travel-related expenses, overhead costs, depreciation and amortization. We focus our sales and marketing efforts on creating sales leads and establishing and promoting our brand. Incremental sales commissions for new customer contracts are deferred and amortized ratably over the estimated period of our relationship with such customers. We plan to continue our investment in sales and marketing by hiring additional sales and marketing personnel, executing our go-to-market strategy globally, and building our brand awareness. |
| General and Administrative |
General and administrative expenses consist primarily of personnel-related expenses for finance, legal and compliance, human resources, and IT personnel, as well as stock-based compensation expense, external professional services, overhead costs, other administrative functions, depreciation and amortization. Our general and administrative expenses have increased as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, and increased expenses for insurance, investor relations, and professional services. |
|
| Research and Development |
Research and development expenses consist primarily of personnel-related expenses incurred for our engineering and product and design teams, as well as stock-based compensation expense, overhead costs, depreciation and amortization. We have a geographically dispersed research and development presence in the United States, China, Singapore and Vietnam. We believe this provides a strategic advantage, allowing us to invest efficiently in both new product development and increasing our existing product capabilities. We believe delivering expanding product functionality is critical to enhancing the success of existing customers while new product development further reinforces our breadth of software solutions. |
|
| Other Expense, net |
Other Expense, net consists primarily of fair value adjustments on earn-out and warrant liabilities, realized gain/loss for securities, and of foreign currency remeasurement gains/losses. |
|
| Income Taxes |
We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions. Tax laws, regulations, administrative practices, principles, and interpretations in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions. The foreign jurisdictions in which we operate have different statutory tax rates than those of the United States. Accordingly, our effective tax rate could be affected by the relative proportion of foreign to domestic income, use of foreign tax credits, changes in the valuation of our deferred tax assets and liabilities, applicability of any valuation allowances, and changes in tax laws in jurisdictions in which we operate. |
Results of Operations
The below period-to-period comparisons of operating results are not necessarily indicative of results for future periods.
Comparison of Three Months Ended September 30, 2024 and September 30, 2023
Revenue
The components of AvePoint’s revenue during the three months ended September 30, 2024 and 2023 were as follows:
| Three Months Ended |
||||||||||||||||
| September 30, |
Change |
|||||||||||||||
| 2024 |
2023 |
Amount |
% |
|||||||||||||
| (in thousands, except percentages) |
||||||||||||||||
| Revenue: |
||||||||||||||||
| SaaS |
$ | 60,866 | $ | 41,910 | $ | 18,956 | 45.2 | % | ||||||||
| Term license and support |
14,140 | 16,293 | (2,153 | ) | (13.2 | )% | ||||||||||
| Services |
10,810 | 11,194 | (384 | ) | (3.4 | )% | ||||||||||
| Maintenance |
2,988 | 3,363 | (375 | ) | (11.2 | )% | ||||||||||
| Total revenue |
$ | 88,804 | $ | 72,760 | $ | 16,044 | 22.1 | % | ||||||||
Total revenue increased 22.1% to $88.8 million for the three months ended September 30, 2024, due to an increase in SaaS revenue, which increased 45.2% to $60.9 million, and represented 69% of total revenue, up from 58% of total revenue in the prior year. The increase in SaaS revenue, which was driven by strong customer demand for our SaaS solutions, was partially offset by an expected decrease in both term license and support and maintenance revenue.
Services revenue is expected to fluctuate as the services generally are not recurring in nature. Additionally, maintenance revenue is expected to continue declining as we have shifted away from the sale of perpetual licenses and towards SaaS and term licenses. Without perpetual license sales, there will be limited opportunities to sell maintenance contracts to new customers. Existing customers have and will continue to transition to SaaS and term licenses, which will continue the decline in maintenance revenue.
Revenue by geographic region for the three months ended September 30, 2024 and 2023 was as follows:
| Three Months Ended |
||||||||||||||||
| September 30, |
Change |
|||||||||||||||
| 2024 |
2023 |
Amount |
% |
|||||||||||||
| (in thousands, except percentages) |
||||||||||||||||
| North America |
$ | 37,648 | $ | 31,751 | $ | 5,897 | 18.6 | % | ||||||||
| EMEA |
26,298 | 21,739 | 4,559 | 21.0 | % | |||||||||||
| APAC |
24,858 | 19,270 | 5,588 | 29.0 | % | |||||||||||
| Total |
$ | 88,804 | $ | 72,760 | $ | 16,044 | 22.1 | % | ||||||||
For the three months ended September 30, 2024, North America revenue increased 18.6% to $37.6 million, driven by a 46.2%, or $8.3 million, increase in SaaS revenue, partially offset by a combined $2.4 million decrease in term license and support, services, and maintenance revenues. EMEA revenues increased 21.0% to $26.3 million, driven by a 41.5%, or $6.5 million, increase in SaaS revenue, partially offset by a combined $1.9 million decrease in term license and support, services and maintenance revenues. APAC revenues increased 29.0% to $24.9 million, driven by a 50.4%, or $4.1 million, increase in SaaS revenue, a 10.3%, or $0.8 million, increase in services revenue, a 22.7%, or $0.4 million, increase in term license and support revenue, and a 16.0%, or $0.2 million, increase in maintenance revenue.
Cost of Revenue, Gross Profit, and Gross Margin
Cost of revenue, gross profit, and gross margin during the three months ended September 30, 2024 and 2023 were as follows:
| Three Months Ended |
||||||||||||||||
| September 30, |
Change |
|||||||||||||||
| 2024 |
2023 |
Amount |
% |
|||||||||||||
| (in thousands, except percentages) |
||||||||||||||||
| Cost of revenue: |
||||||||||||||||
| SaaS |
$ | 10,624 | $ | 9,561 | $ | 1,063 | 11.1 | % | ||||||||
| Term license and support |
373 | 484 | (111 | ) | (22.9 | )% | ||||||||||
| Services |
10,057 | 9,922 | 135 | 1.4 | % | |||||||||||
| Maintenance |
167 | 189 | (22 | ) | (11.6 | )% | ||||||||||
| Total cost of revenue |
$ | 21,221 | $ | 20,156 | $ | 1,065 | 5.3 | % | ||||||||
| Gross profit |
67,583 | 52,604 | 14,979 | 28.5 | % | |||||||||||
| Gross margin |
76.1 | % | 72.3 | % | — | — | ||||||||||
| GAAP cost of revenue |
$ | 21,221 | $ | 20,156 | $ | 1,065 | 5.3 | % | ||||||||
| Stock-based compensation expense |
(530 | ) | (806 | ) | 276 | (34.2 | )% | |||||||||
| Amortization of acquired intangible assets |
(242 | ) | (241 | ) | (1 | ) | 0.4 | % | ||||||||
| Non-GAAP cost of revenue |
$ | 20,449 | $ | 19,109 | $ | 1,340 | 7.0 | % | ||||||||
| Non-GAAP gross profit |
68,355 | 53,651 | 14,704 | 27.4 | % | |||||||||||
| Non-GAAP gross margin |
77.0 | % | 73.7 | % | — | — | ||||||||||
Cost of revenue increased 5.3% to $21.2 million for the three months ended September 30, 2024, primarily driven by a $0.6 million increase in personnel costs and a $0.4 million increase from higher aggregate hosting costs resulting from increased SaaS revenue.
Operating Expenses
Sales and Marketing
Sales and marketing expenses during the three months ended September 30, 2024 and 2023 were as follows:
| Three Months Ended |
||||||||||||||||
| September 30, |
Change |
|||||||||||||||
| 2024 |
2023 |
Amount |
% |
|||||||||||||
| (in thousands, except percentages) |
||||||||||||||||
| Sales and marketing |
$ | 30,050 | $ | 28,436 | $ | 1,614 | 5.7 | % | ||||||||
| Percentage of revenue |
33.8 | % | 39.1 | % | — | — | ||||||||||
| GAAP sales and marketing |
$ | 30,050 | $ | 28,436 | $ | 1,614 | 5.7 | % | ||||||||
| Stock-based compensation expense |
(2,186 | ) | (2,358 | ) | 172 | (7.3 | )% | |||||||||
| Amortization of acquired intangible assets |
(120 | ) | (112 | ) | (8 | ) | 7.1 | % | ||||||||
| Non-GAAP sales and marketing |
$ | 27,744 | $ | 25,966 | $ | 1,778 | 6.8 | % | ||||||||
| Non-GAAP percentage of revenue |
31.2 | % | 35.7 | % | — | — | ||||||||||
Sales and marketing expenses increased 5.7% to $30.1 million for the three months ended September 30, 2024, primarily driven by a $1.2 million increase in personnel costs, which included additional headcount and other investments in the business to respond to strong customer demand for our solutions and provide support for future growth.
General and Administrative
General and administrative expenses during the three months ended September 30, 2024 and 2023 were as follows:
| Three Months Ended |
||||||||||||||||
| September 30, |
Change |
|||||||||||||||
| 2024 |
2023 |
Amount |
% |
|||||||||||||
| (in thousands, except percentages) |
||||||||||||||||
| General and administrative |
$ | 17,043 | $ | 15,838 | $ | 1,205 | 7.6 | % | ||||||||
| Percentage of revenue |
19.2 | % | 21.8 | % | — | — | ||||||||||
| GAAP general and administrative |
$ | 17,043 | $ | 15,838 | $ | 1,205 | 7.6 | % | ||||||||
| Stock-based compensation expense |
(4,925 | ) | (5,264 | ) | 339 | (6.4 | )% | |||||||||
| Non-GAAP general and administrative |
$ | 12,118 | $ | 10,574 | $ | 1,544 | 14.6 | % | ||||||||
| Non-GAAP percentage of revenue |
13.6 | % | 14.5 | % | — | — | ||||||||||
General and administrative expenses increased 7.6% to $17.0 million for the three months ended September 30, 2024. The increase was primarily driven by $0.5 million in new fees related to the Company’s investment in a growth equity fund, a $0.5 million increase in salary and benefits, and a $0.2 million increase in software license expense due to increased headcount, partially offset by a $0.3 million decrease in stock-based compensation.
Research and Development
Research and development expenses during the three months ended September 30, 2024 and 2023 were as follows:
| Three Months Ended |
||||||||||||||||
| September 30, |
Change |
|||||||||||||||
| 2024 |
2023 |
Amount |
% |
|||||||||||||
| (in thousands, except percentages) |
||||||||||||||||
| Research and development |
$ | 12,838 | $ | 8,643 | $ | 4,195 | 48.5 | % | ||||||||
| Percentage of revenue |
14.5 | % | 11.9 | % | — | — | ||||||||||
| GAAP research and development |
$ | 12,838 | $ | 8,643 | $ | 4,195 | 48.5 | % | ||||||||
| Stock-based compensation expense |
(2,170 | ) | (857 | ) | (1,313 | ) | 153.2 | % | ||||||||
| Non-GAAP research and development |
$ | 10,668 | $ | 7,786 | $ | 2,882 | 37.0 | % | ||||||||
| Non-GAAP percentage of revenue |
12.0 | % | 10.7 | % | — | — | ||||||||||
Income Tax Provision
Income tax expense during the three months ended September 30, 2024 and 2023 was as follows:
| Three Months Ended |
||||||||||||||||
| September 30, |
Change |
|||||||||||||||
| 2024 |
2023 |
Amount |
% |
|||||||||||||
| (in thousands, except percentages) |
||||||||||||||||
| Income tax expense |
$ | 183 | $ | 2,841 | $ | (2,658 | ) | (93.6 | )% | |||||||
AvePoint’s income tax expense for the three months ended September 30, 2024 was $0.2 million, as compared to a tax expense of $2.8 million for the three months ended September 30, 2023. The effective tax rate was 5.9% for the three months ended September 30, 2024, compared to (204.5)% for the three months ended September 30, 2023. The change in effective tax rates was primarily due to the mix of pre-tax income (loss) results by jurisdictions taxed at different rates, certain jurisdictions with separate tax expense calculated, impact of foreign inclusions, stock-based compensation, and changes in valuation allowance.
In assessing the need for a valuation allowance, the Company has considered all available positive and negative evidence including its historical levels of income, expectations of future taxable income, future reversals of existing taxable temporary differences and ongoing tax planning strategies. If in the future, the Company determines it is more likely than not that deferred tax assets will not be realized, the Company may set up a valuation allowance, which may result in income tax expense in the Company’s condensed consolidated statements of income and condensed consolidated statements of comprehensive income (loss).
Comparison of Nine Months Ended September 30, 2024 and September 30, 2023
Revenue
The components of AvePoint’s revenue during the nine months ended September 30, 2024 and 2023 were as follows:
| Nine Months Ended |
||||||||||||||||
| September 30, |
Change |
|||||||||||||||
| 2024 |
2023 |
Amount |
% |
|||||||||||||
| (in thousands, except percentages) |
||||||||||||||||
| Revenue: |
||||||||||||||||
| SaaS |
$ | 165,820 | $ | 115,701 | $ | 50,119 | 43.3 | % | ||||||||
| Term license and support |
35,128 | 40,474 | (5,346 | ) | (13.2 | )% | ||||||||||
| Services |
31,808 | 31,007 | 801 | 2.6 | % | |||||||||||
| Maintenance |
8,543 | 10,019 | (1,476 | ) | (14.7 | )% | ||||||||||
| Total revenue |
$ | 241,299 | $ | 197,201 | $ | 44,098 | 22.4 | % | ||||||||
Total revenue increased 22.4% to $241.3 million for the nine months ended September 30, 2024, primarily as a result of an increase in SaaS revenue, which increased 43.3% to $165.8 million, and represented 69% of total revenue, up from 59% of total revenue in the prior year. The increase in revenue, which was driven by strong customer demand for our SaaS products, was partially offset by an expected decrease in both term license and support and maintenance revenue.
Services revenue is expected to fluctuate as the services generally are not recurring in nature. Additionally, maintenance revenue is expected to continue declining as we have shifted away from the sale of perpetual licenses and towards SaaS and term licenses. Without perpetual license sales, there will be limited opportunities to sell maintenance contracts to new customers. Existing customers have and will continue to transition to SaaS and term licenses, which will continue the decline in maintenance revenue.
Revenue by geographic region for the nine months ended September 30, 2024 and 2023 was as follows:
| Nine Months Ended |
||||||||||||||||
| September 30, |
Change |
|||||||||||||||
| 2024 |
2023 |
Amount |
% |
|||||||||||||
| (in thousands, except percentages) |
||||||||||||||||
| North America |
$ | 99,240 | $ | 84,484 | $ | 14,756 | 17.5 | % | ||||||||
| EMEA |
72,193 | 60,800 | 11,393 | 18.7 | % | |||||||||||
| APAC |
69,866 | 51,917 | 17,949 | 34.6 | % | |||||||||||
| Total |
$ | 241,299 | $ | 197,201 | $ | 44,098 | 22.4 | % | ||||||||
For the nine months ended September 30, 2024, North America revenue increased 17.5% to $99.2 million, driven by a 42.7%, or $21.8 million, increase in SaaS revenue, partially offset by a combined $7.1 million decrease in term license and support, services, and maintenance revenues. EMEA revenues increased 18.7% to $72.2 million, driven by a 41.0%, or $17.5 million, increase in SaaS revenue, partially offset by a combined $6.1 million decrease in term license and support, services and maintenance revenues. APAC revenues increased 34.6% to $69.9 million, primarily driven by a 49.1%, or $10.9 million, increase in SaaS revenue, a 25.7%, or $5.2 million, increase in services revenue, and a 34.6%, or $1.8 million, increase in term license and support revenue.
Cost of Revenue, Gross Profit, and Gross Margin
Cost of revenue, gross profit, and gross margin during the nine months ended September 30, 2024 and 2023 were as follows:
| Nine Months Ended |
||||||||||||||||
| September 30, |
Change |
|||||||||||||||
| 2024 |
2023 |
Amount |
% |
|||||||||||||
| (in thousands, except percentages) |
||||||||||||||||
| Cost of revenue: |
||||||||||||||||
| SaaS |
$ | 30,139 | $ | 26,586 | $ | 3,553 | 13.4 | % | ||||||||
| Term license and support |
1,202 | 1,441 | (239 | ) | (16.6 | )% | ||||||||||
| Services |
28,777 | 29,231 | (454 | ) | (1.6 | )% | ||||||||||
| Maintenance |
487 | 584 | (97 | ) | (16.6 | )% | ||||||||||
| Total cost of revenue |
$ | 60,605 | $ | 57,842 | $ | 2,763 | 4.8 | % | ||||||||
| Gross profit |
180,694 | 139,359 | 41,335 | 29.7 | % | |||||||||||
| Gross margin |
74.9 | % | 70.7 | % | — | — | ||||||||||
| GAAP cost of revenue |
$ | 60,605 | $ | 57,842 | $ | 2,763 | 4.8 | % | ||||||||
| Stock-based compensation expense |
(1,516 | ) | (2,292 | ) | 776 | (33.9 | )% | |||||||||
| Amortization of acquired intangible assets |
(722 | ) | (725 | ) | 3 | (0.4 | )% | |||||||||
| Non-GAAP cost of revenue |
$ | 58,367 | $ | 54,825 | $ | 3,542 | 6.5 | % | ||||||||
| Non-GAAP gross profit |
182,932 | 142,376 | 40,556 | 28.5 | % | |||||||||||
| Non-GAAP gross margin |
75.8 | % | 72.2 | % | — | — | ||||||||||
Cost of revenue increased 4.8% to $60.6 million for the nine months ended September 30, 2024, primarily driven by a $1.7 million increase in personnel costs and a $1.4 million increase from higher aggregate hosting costs resulting from increased SaaS revenue.
Operating Expenses
Sales and Marketing
Sales and marketing expenses during the nine months ended September 30, 2024 and 2023 were as follows:
| Nine Months Ended |
||||||||||||||||
| September 30, |
Change |
|||||||||||||||
| 2024 |
2023 |
Amount |
% |
|||||||||||||
| (in thousands, except percentages) |
||||||||||||||||
| Sales and marketing |
$ | 90,459 | $ | 82,978 | $ | 7,481 | 9.0 | % | ||||||||
| Percentage of revenue |
37.5 | % | 42.1 | % | — | — | ||||||||||
| GAAP sales and marketing |
$ | 90,459 | $ | 82,978 | $ | 7,481 | 9.0 | % | ||||||||
| Stock-based compensation expense |
(6,684 | ) | (7,267 | ) | 583 | (8.0 | )% | |||||||||
| Amortization of acquired intangible assets |
(342 | ) | (381 | ) | 39 | (10.2 | )% | |||||||||
| Non-GAAP sales and marketing |
$ | 83,433 | $ | 75,330 | $ | 8,103 | 10.8 | % | ||||||||
| Non-GAAP percentage of revenue |
34.6 | % | 38.2 | % | — | — | ||||||||||
Sales and marketing expenses increased 9.0% to $90.5 million for the nine months ended September 30, 2024, primarily driven by a $6.6 million increase in personnel costs, which included additional headcount and other investments in the business to respond to strong customer demand for our solutions and provide support for future growth.
General and Administrative
General and administrative expenses during the nine months ended September 30, 2024 and 2023 were as follows:
| Nine Months Ended |
||||||||||||||||
| September 30, |
Change |
|||||||||||||||
| 2024 |
2023 |
Amount |
% |
|||||||||||||
| (in thousands, except percentages) |
||||||||||||||||
| General and administrative |
$ | 52,095 | $ | 45,679 | $ | 6,416 | 14.0 | % | ||||||||
| Percentage of revenue |
21.6 | % | 23.2 | % | — | — | ||||||||||
| GAAP general and administrative |
$ | 52,095 | $ | 45,679 | $ | 6,416 | 14.0 | % | ||||||||
| Stock-based compensation expense |
(15,451 | ) | (14,551 | ) | (900 | ) | 6.2 | % | ||||||||
| Non-GAAP general and administrative |
$ | 36,644 | $ | 31,128 | $ | 5,516 | 17.7 | % | ||||||||
| Non-GAAP percentage of revenue |
15.2 | % | 15.8 | % | — | — | ||||||||||
General and administrative expenses increased 14.0% to $52.1 million for the nine months ended September 30, 2024. The increase was primarily driven by a $2.9 million increase in personnel costs, $1.9 million in new fees related to the Company’s investment in a growth equity fund, a $0.8 million increase in software license expense due to increased headcount, and a $0.6 million increase in professional services expense.
Research and Development
Research and development expenses during the nine months ended September 30, 2024 and 2023 were as follows:
| Nine Months Ended |
||||||||||||||||
| September 30, |
Change |
|||||||||||||||
| 2024 |
2023 |
Amount |
% |
|||||||||||||
| (in thousands, except percentages) |
||||||||||||||||
| Research and development |
$ | 35,827 | $ | 26,931 | $ | 8,896 | 33.0 | % | ||||||||
| Percentage of revenue |
14.8 | % | 13.7 | % | — | — | ||||||||||
| GAAP research and development |
$ | 35,827 | $ | 26,931 | $ | 8,896 | 33.0 | % | ||||||||
| Stock-based compensation expense |
(6,156 | ) | (2,865 | ) | (3,291 | ) | 114.9 | % | ||||||||
| Non-GAAP research and development |
$ | 29,671 | $ | 24,066 | $ | 5,605 | 23.3 | % | ||||||||
| Non-GAAP percentage of revenue |
12.3 | % | 12.2 | % | — | — | ||||||||||
Income Tax Provision
Income tax expense during the nine months ended September 30, 2024 and 2023 was as follows:
| Nine Months Ended |
||||||||||||||||
| September 30, |
Change |
|||||||||||||||
| 2024 |
2023 |
Amount |
% |
|||||||||||||
| (in thousands, except percentages) |
||||||||||||||||
| Income tax expense |
$ | 6,170 | $ | 8,132 | $ | (1,962 | ) | (24.1 | )% | |||||||
AvePoint’s income tax expense for the nine months ended September 30, 2024 was $6.2 million, as compared to a tax expense of $8.1 million for the nine months ended September 30, 2023. The effective tax rate was (106.5)% for the nine months ended September 30, 2024, compared to (45.7)% for the nine months ended September 30, 2023. The change in effective tax rates was primarily due to the mix of pre-tax income (loss) results by jurisdictions taxed at different rates, certain jurisdictions with separate tax expense calculated, impact of foreign inclusions, stock-based compensation, and changes in valuation allowance.
In assessing the need for a valuation allowance, the Company has considered all available positive and negative evidence including its historical levels of income, expectations of future taxable income, future reversals of existing taxable temporary differences and ongoing tax planning strategies. If in the future, the Company determines it is more likely than not that deferred tax assets will not be realized, the Company may set up a valuation allowance, which may result in income tax expense in the Company’s condensed consolidated statements of income and condensed consolidated statements of comprehensive income (loss).
Certain Non-GAAP Financial Measures
We believe that, in addition to our financial results determined in accordance with GAAP, non-GAAP operating income (loss) and non-GAAP operating margin are useful in evaluating our business, results of operations, and financial condition.
Non-GAAP Operating Income and Non-GAAP Operating Margin
Non-GAAP operating income and non-GAAP operating margin are non-GAAP financial measures that our management uses to assess our overall performance. We define non-GAAP operating income as GAAP operating income (loss) plus stock-based compensation and the amortization of acquired intangible assets. We define non-GAAP operating margin as non-GAAP operating income divided by revenue. We believe non-GAAP operating income and non-GAAP operating margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these metrics eliminate the effects of stock-based compensation which has had historical volatility from period to period due to marked-to-market securities, and of acquired intangible assets, which are unrelated to current operations and are neither comparable to the prior period nor predictive of future results. We believe the elimination of the effect of variability caused by stock-based compensation expense and the amortization of acquired assets, both of which are non-cash expenses, provides a better representation as to the overall operating performance of the Company. We use non-GAAP financial measures (a) to evaluate our historical and prospective financial performance and trends as well as our performance relative to our peers, (b) to set and approve spending budgets, (c) to allocate resources, (d) to measure operational profitability and the accuracy of forecasting, and (e) to assess financial discipline over operational expenditures.
Non-GAAP operating income and non-GAAP operating margin should not be considered as an alternative to operating income, operating margin or any other performance measures derived in accordance with GAAP as measures of performance. Non-GAAP operating income and non-GAAP operating margin should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.
The following table presents a reconciliation of (i) non-GAAP operating income from the most comparable GAAP measure, operating income, and (ii) non-GAAP operating margin from the most comparable GAAP measure, operating margin, for the periods presented:
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| September 30, |
September 30, |
|||||||||||||||
| 2024 |
2023 |
2024 |
2023 |
|||||||||||||
| (in thousands, except percentages) |
||||||||||||||||
| GAAP operating income (loss) |
$ | 7,652 | $ | (313 | ) | $ | 2,313 | $ | (16,229 | ) | ||||||
| GAAP operating margin |
8.6 | % | (0.4 | )% | 1.0 | % | (8.2 | )% | ||||||||
| Add: |
||||||||||||||||
| Stock-based compensation |
9,811 | 9,285 | 29,807 | 26,975 | ||||||||||||
| Amortization of acquired intangible assets |
362 | 353 | 1,064 | 1,106 | ||||||||||||
| Non-GAAP operating income |
$ | 17,825 | $ | 9,325 | $ | 33,184 | $ | 11,852 | ||||||||
| Non-GAAP operating margin |
20.1 | % | 12.8 | % | 13.8 | % | 6.0 | % | ||||||||
Liquidity and Capital Resources
As of September 30, 2024, we had $249.8 million in cash and cash equivalents and $0.2 million in short-term investments.
Our short-term liquidity needs primarily include working capital for sales and marketing, research and development, and continued innovation. In addition, we extended a credit facility with a remaining commitment of $2.5 million, and committed $50.0 million to a growth equity fund. We also have letters of credit issued in the amount of $0.8 million as security for operating leases, and $3.7 million as security for customer contingency agreements. Our long-term capital requirements will depend on many factors, including our growth rate, levels of revenue, the expansion of sales and marketing activities, market acceptance of our platform, the results of business initiatives, and the timing of new product introductions.
We currently maintain a loan and security agreement (the “Loan Agreement”), dated as of November 3, 2023, with HSBC Bank USA, National Association, (“HSBC”) as lender, for a revolving line of credit of up to $30.0 million with an accordion feature that provides up to $20.0 million of additional borrowing capacity we may to draw upon at our request. The line currently bears interest at a rate equal to term SOFR plus 3.0% to 3.3% depending on the Consolidated Total Leverage Ratio (as defined in the Loan Agreement). The line carries an unused fee at a rate equal to 0.5%. The line will mature on November 3, 2026. We are required to maintain a minimum Consolidated Fixed Charge Coverage Ratio (as defined in the Loan Agreement) as well as a maximum Consolidated Total Leverage Ratio, tested by HSBC each quarter. We pledged, assigned, and granted HSBC a security interest in all shares of our subsidiaries, future proceeds and assets (except for excluded assets, including material intellectual property) as a security for the performance of the loan and security agreement obligations.
We believe that our existing cash, cash equivalents and short-term investments, our cash flows from operating activities, and our borrowing capacity under our credit facility with HSBC are sufficient to meet our working capital and capital expenditure needs for at least the next twelve months. In the future, we may attempt to raise additional capital through the sale of additional equity or debt financing. The sale of additional equity would be dilutive to our stockholders. Additional debt financing could result in increased debt service obligations and more restrictive financial and operational covenants.
Cash Flows
The following table sets forth a summary of AvePoint’s cash flows for the periods indicated.
| Nine Months Ended |
||||||||
| September 30, |
||||||||
| 2024 |
2023 |
|||||||
| (in thousands) | ||||||||
| Net cash provided by operating activities |
$ | 56,134 | $ | 13,284 | ||||
| Net cash used in investing activities |
(1,369 | ) | (4,224 | ) | ||||
| Net cash used in financing activities |
(28,218 | ) | (29,809 | ) | ||||
Operating Activities
Net cash provided by operating activities for the nine months ended September 30, 2024 was $56.1 million, reflecting AvePoint’s net loss of $12.0 million, adjusted for non-cash items of $51.5 million and net cash inflows of $16.6 million from changes in its operating assets and liabilities. The primary drivers of non-cash items were stock-based compensation which reflects ongoing compensation and an increase in the mark to market value of earn-out and warranty liabilities. The drivers of changes in operating assets and liabilities are seasonal in nature. These drivers are related to a decrease in accounts receivable due primarily to the timing of customer invoices and an increase in prepaid expenses and other current assets primarily related to prepaid software maintenance and subscription, an increase in deferred revenue and an increase in accrued expenses primarily due to income tax payable.
Net cash provided by operating activities for the nine months ended September 30, 2023 was $13.3 million, reflecting AvePoint’s net loss of $25.9 million, adjusted for non-cash items of $43.9 million and net cash outflows of $4.7 million from changes in its operating assets and liabilities. The primary drivers of non-cash items were stock-based compensation which reflects ongoing compensation and an increase in the mark to market value of earn-out and warranty liabilities. The drivers of changes in operating assets and liabilities are seasonal in nature. These drivers are related to a decrease in accounts receivable due primarily to timing of customer invoices and decrease in prepaid expenses and other current assets primarily related to prepaid insurance, an increase in deferred revenue and a decrease in accrued expenses primarily due to accrued bonuses, commissions and VAT/sales tax payable.
Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2024 was $1.4 million. It primarily consisted of $2.3 million of purchases of property and equipment, $1.9 million of purchases of short-term investments, $1.5 million investment in notes, and $0.9 million from the capitalization of internal use software, offset by $5.4 million from the maturity of short-term investments.
Net cash used in investing activities for the nine months ended September 30, 2023 was $4.2 million. It primarily consisted of $2.1 million of purchases of short-term investments, $1.5 million of purchases of property and equipment, and $1.0 million from the capitalization of internal use software, partially offset by $1.3 million from the maturity of short-term investments.
Financing Activities
Net cash used in financing activities for the nine months ended September 30, 2024 was $28.2 million, primarily consisting of $21.7 million in repurchases of common stock under the previously announced Share Repurchase Program that authorizes us to repurchase up to $150 million of our common shares (the “Share Repurchase Program”), $6.1 million in the redemption of the redeemable noncontrolling interest of MaivenPoint, and $4.0 million in the purchase of our public warrants, partially offset by $3.6 million of proceeds from the exercise of stock options.
Net cash used in financing activities for the nine months ended September 30, 2023 was $29.8 million, primarily consisting of $33.6 million in repurchases of common stock under the Share Repurchase Program, partially offset by $3.9 million of proceeds from the exercise of stock options.
Indebtedness
Credit Facility
We maintain a line of credit under Loan Agreement with HSBC, as the lender. See “Note 6 - Line of Credit” in Part I, Item 1 “Financial Statements” of this Quarterly Report on Form 10-Q.
The Loan Agreement provides for a revolving line of credit of up to $30.0 million and an additional $20.0 million accordion feature for additional capital we may draw upon at our request. Borrowings under the line currently bear interest at a rate equal to term SOFR plus 3.0% to 3.3% depending on the Consolidated Total Leverage Ratio (as defined in the Loan Agreement). The line carries an unused fee at a rate equal to 0.5%. Any proceeds of borrowings under the Loan Agreement will be used for general corporate purposes.
On a consolidated basis with our subsidiaries, we are required to maintain a minimum Consolidated Fixed Charge Coverage Ratio as well as a maximum Consolidated Total Leverage Ratio, tested by HSBC each quarter. Pursuant to the Loan Agreement, we pledged, assigned, and granted HSBC a security interest in all shares of our subsidiaries, future proceeds, and certain assets as security for our obligations under the Loan Agreement. Our line of credit under the Loan Agreement will mature on November 3, 2026.
To date, we are in compliance with all covenants under the Loan Agreement. We have not at any time borrowed under the Loan Agreement. The description of the Loan Agreement is qualified in its entirety by the full text of the form of such agreement, a copy of which is referenced as an exhibit to our Annual Report.
Leasing Activities
We are obligated under various non-cancelable operating leases for office space. The initial terms of the leases expire on various dates through 2030. As of September 30, 2024, the commitments related to these operating leases is $16.3 million, of which $6.3 million is due in the next twelve months.
Operating Segment Information
We operate in one segment. Our products and services are sold throughout the world, through direct and indirect sales channels. Our chief operating decision maker (the “CODM”) is our Chief Executive Officer. The CODM makes operating performance assessment and resource allocation decisions on a global basis. The CODM does not receive discrete financial information about asset allocation or profitability by product or geography. See the section titled “Notes to Condensed Consolidated Financial Statements” (Part I, Item 1 of this Quarterly Report) under the sub-heading “Note 15 – Segment Information” for more information.
Critical Accounting Policies and Estimates
Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. We also make estimates and assumptions on the reported revenue generated and reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that our management believes are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
While our significant accounting policies are described in more detail in the section titled “Notes to Condensed Consolidated Financial Statements” (Part I, Item 1 of this Quarterly Report), we believe the following critical accounting policies and estimates are most important to understanding and evaluating our reported financial results.
Revenue Recognition
We derive revenue from four primary sources: SaaS, term license and support, services, and maintenance. Many of our contracts with customers include multiple performance obligations. Judgement is required in determining whether each performance obligation is distinct. Our products and services generally do not require a significant amount of integration or interdependency; therefore, our products and services are generally not combined. We allocate the transaction price for each contract to each performance obligation based on the relative standalone selling price (“SSP”) for each performance obligation within each contract.
We use judgment in determining the SSP for products and services. For substantially all performance obligations except term licenses, we are able to establish the SSP based on the observable prices of products or services sold separately in comparable circumstances to similar customers. We typically establish an SSP range for our products and services which is reassessed on a periodic basis or when facts and circumstances change. Term licenses are sold only as a bundled arrangement that includes the rights to a term license and support. In determining the SSP of license and support in a term license arrangement, we utilize observable inputs and consider the value relationship between support and term license when compared to the value relationship between support and perpetual licenses, the average economic life of our products, and software renewals rates. Using a combination of the relative fair value method, or the residual value method the SSP of the performance obligations in an arrangement is allocated to each performance obligation within a sales arrangement.
Economic Conditions, Challenges, and Risks
The markets for software and cloud-based services are dynamic and highly competitive. Our competitors are developing new software while also deploying competing cloud-based services for consumers and businesses. Customer preferences evolve rapidly, and choices in hardware, products, and devices can and do influence how users access services in the cloud, and in some cases, the user’s choice of which suite of cloud-based services to use. We must continue to evolve and adapt to keep pace with this changing environment. The investments we are making in infrastructure, research and development, marketing, and geographic expansion will continue to increase our operating costs and may decrease our operating margins.
Our success is highly dependent on our ability to attract and retain qualified employees. We hire a mix of university and industry talent worldwide. We compete for talented individuals globally by offering an exceptional working environment, broad customer reach, scale in resources, the ability to grow one’s career across many different products and businesses, and competitive compensation and benefits.
Additionally, demand for our software and service is correlated to global macroeconomic and geopolitical factors, which remain dynamic and currently include multiple ongoing conflicts where the outcomes and consequences are not possible to predict, but could include regional instability and geopolitical shifts, and could materially adversely affect global trade, currency exchange rates, regional economies and the global economy. These in turn could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition, and results of operations.
Our international operations provide a significant portion of our total revenues and expenses. Many of these revenues and expenses are denominated in currencies other than the U.S. dollar. As a result, changes in foreign exchange rates may significantly affect revenue and expenses. Refer to the section titled “Risk Factors” (Part I, Item 1A of our Annual Report) for a discussion of these factors and other risks.
Seasonality
Our quarterly revenue fluctuates and does not necessarily grow sequentially when measuring any one fiscal quarter’s revenue with another (e.g. comparing the fourth fiscal quarter of fiscal year 2023 with the first fiscal quarter of fiscal year 2024). Historically, our third and fourth quarters have been our highest revenue quarters, however those results are not necessarily indicative of future quarterly revenue or full year results. Higher third and fourth quarter revenue is driven primarily by increased sales resulting from our customers’ fiscal year ends. Additionally, new product and service introductions (including the timing of those introductions) can significantly impact revenue. Revenue can also be affected when customers anticipate a product introduction. Our operating expenses have generally increased sequentially due to increases in personnel in connection with the expansion of our business.
Recently Issued and Adopted Accounting Pronouncements
For information about recent accounting pronouncements, see “Note 2 - Summary of Significant Accounting Policies” in Part I, Item 1 “Financial Statements” of this Quarterly Report on Form 10-Q.
Part I
Item 3
Item 3. Quantitative and Qualitative Disclosures About Market Risks
We are exposed to potential economic risk from interest rates, foreign exchange rates, and our concentration of credit. We continued to evaluate our exposure to market risks during the nine months ended September 30, 2024, and have determined that there have been no material changes to our exposure to market risks from those described in our Annual Report. However, we have provided the following information to supplement or update our disclosures in our Annual Report.
Interest Rate Risk
As of September 30, 2024, we had cash and cash equivalents, marketable securities, and short-term deposits of $250.0 million, which we hold for working capital purposes. Our cash and cash equivalents are held in cash deposits and money market funds. Due to the short-term nature of these instruments, we believe that it does not have any material exposure to changes in the fair value of our investment portfolio due to changes in interest rates. Declines in interest rates, however, would reduce our future interest income. The effect of a hypothetical 10% change in interest rates would not have a material negative impact on our condensed consolidated financial statements. To the extent we enter into other long-term debt arrangements in the future, we would be subject to fluctuations in interest rates which could have a material impact on our future financial condition and results of operation.
Foreign Currency Exchange Risk
Fluctuations in foreign currencies impact the amount of total assets and liabilities that we report for our foreign subsidiaries upon the translation of these amounts into U.S. Dollars. In particular, the amount of cash, cash equivalents and marketable securities that we report in U.S. Dollars for a significant portion of the cash held by these subsidiaries is subject to translation variance caused by changes in foreign currency exchange rates as of the end of each respective reporting period, the offset to which is substantially recorded to accumulated other comprehensive income on our condensed consolidated balance sheets and is also presented as a line item in its condensed consolidated statements of comprehensive income (loss). We believe we are in large part naturally hedged against foreign currency exchange risk from our ongoing business operations, as most of our regional revenues are generated in the same currency as that region’s expenses are paid.
Concentration of Credit Risk
We deposit our cash with financial institutions, and, at times, such balances may exceed federally insured limits.
Part I
Item 4
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer (in his capacity as “Principal Executive Officer”) and our Chief Financial Officer (in his capacity as “Principal Financial and Accounting Officer”), we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e)) under the Exchange Act, as of the end of the period covered by this report. Based upon that evaluation, our Principal Executive Officer and Principal Financial and Accounting Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2024, due to the material weakness described below.
Notwithstanding such material weakness in internal control over financial reporting, our Principal Executive Officer and Principal Financial and Accounting Officer have concluded that our condensed consolidated financial statements included in this report present fairly, in all material respects, our financial position, results of operations, and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles (“GAAP”).
Previously Disclosed Material Weakness
Our management is responsible for establishing and maintaining effective internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. As reported in our Annual Report, we did not maintain effective internal control as of December 31, 2023, as a result of a material weakness in our internal control over financial reporting for accuracy and completeness of information used. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Refer to our Annual Report for a description of our material weakness.
2024 Remediation Plan
Our material weakness was not remediated as of September 30, 2024. Our management has been and continues to be committed to remediating this material weakness and has identified and implemented several steps to enhance our internal controls over financial reporting. We have implemented a remediation plan (the “2024 Remediation Plan”), which includes actions not limited to:
| ■ |
enhance the design of controls that address the accuracy and completeness of reports being utilized in the execution of internal controls; and |
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establishing additional training to address the accuracy and completeness of data used controls and the level of documentation required to evidence control activities. |
We have implemented documented policies and procedures for, and are in the process of testing the implementation and operating effectiveness of, the newly designed controls. The material weakness in our internal control over financial reporting will not be considered remediated until the newly designed controls operate for a sufficient period of time, and management has concluded, through testing, that these controls are designed and operating effectively. In addition, we may discover additional material weaknesses that require additional time and resources to remediate, and we may decide to take additional measures to address the material weaknesses or modify the remediation steps described above.
Changes in Internal Control Over Financial Reporting
Other than described above, there have been no changes in our internal control over financial reporting during the quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II
Items 1 and 1A
As part of the business combination with Apex Technology Acquisition Corporation, Inc. (“Apex”), we assumed certain indemnification obligations for Apex Technology Sponsor LLC and Jeff Epstein, Brad Koenig, David Chao, Peter Bell, Donna Wells, and Alex Vieux (the “Indemnitees” or “Defendants”). On February 2, 2024, Drulias and Farzad (as purported Apex stockholders, the “Plaintiffs”) filed a class action complaint against the Indemnities in Delaware Court of Chancery, captioned Dean William Drulias, et.al. v. Apex Technology Sponsor LLC, et.al., C.A. No. 2024-0094-LWW. Plaintiffs asserted breach of fiduciary duty and unjust enrichment claims against the Defendants. The complaint alleged that Defendants made false and misleading disclosures in the June 2, 2021 proxy statement of Apex impacting its stockholders’ vote to approve a merger between Apex and us and also affecting stockholders’ redemption rights prior to the merger. Plaintiffs sought unspecified damages, rescission or rescissory damages, and disgorgement of unjust enrichment. We were not a named defendant in the complaint but had indemnification obligations to the Defendants under indemnification agreements executed during the merger. Also, in accordance with the business combination agreement, the Defendants obtained insurance policies to cover post-closing liability, with Apex securing a policy with a limit of $10 million and the sponsors obtaining a policy with a $3 million limit. The parties participated in a mediation in October and agreed to settlement terms. Pursuant to a signed letter of intent and a forthcoming settlement agreement, releasing us and the Defendants and settling the class action, we will contribute $1.4 million toward the full settlement amount of $14.4 million. The remaining $13 million will be paid pursuant to the two aforementioned insurance policies covering the Defendants and sponsor. As of September 30, 2024, an estimated accrual of $1.4 million was included in the accrued expenses and other current liabilities within the condensed consolidated balance sheets.
In the normal course of our business, we may be involved in various claims, negotiations, and legal actions. Except for such claims that arise in the normal course of business, as of and for the fiscal quarter ended September 30, 2024, we are not a party to any material asserted, ongoing, threatened, or pending claims, suits, assessments, proceedings, or other litigation for which a material claim is reasonably possible, probable, or estimable.
Refer to the information under the section titled “Risk Factors” of our Annual Report (Part I, Item 1A of our Annual Report) for information regarding the potential legal and regulatory risks (including potential legal proceedings and litigation) in which we may become involved.
Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in our Annual Report, which risks and uncertainties could affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock. There have been no material changes to the risk factors previously disclosed in our Annual Report. We urge you to read the risk factors in our Annual Report.
Part II
Items 2, 3 and 4
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
During the quarter ended September 30, 2024, we did not issue any shares of our common stock or any other equity securities without registration under the Securities Act of 1933, as amended.
Issuer Purchases of Equity Securities.
On March 17, 2022, we announced that our Board of Directors authorized the Share Repurchase Program for us to buy back shares of our common stock. Under the Share Repurchase Program, we have the authority to buy up to $150 million of our common stock shares via acquisitions in the open market or privately negotiated transactions. The Share Repurchase Program will remain open for a period of three years from the date of authorization. Purchases made pursuant to the Share Repurchase Program may be conducted in compliance with Exchange Act Rule 10b-18 and/or Exchange Act Rule 10b5-1. Purchases made pursuant to the Share Repurchase Program will be conducted in compliance with all applicable legal, regulatory, and internal policy requirements, including our Insider Trading Policy. We are not obligated to make purchases of, nor are we obligated to acquire any particular amount of, our common stock under the Share Repurchase Program. The Share Repurchase Program may be suspended or discontinued at any time.
The following table presents information with respect to common stock shares repurchased under the Share Repurchase Program during the three months ended September 30, 2024:
| Period |
Total number of shares purchased(1) |
Average price paid per share(2) |
Total number of shares purchased as part of the Share Repurchase Program |
Approximate dollar value of shares that may yet be purchased under the Share Repurchase Program(3) |
| July 1, 2024 - July 31, 2024 |
2,696 |
$10.2964 |
2,696 |
$71,857,416 |
| August 1, 2024 - August 31, 2024 |
13,064 |
$10.4160 |
13,064 |
$71,721,341 |
| September 1, 2024 - September 30, 2024 |
202,786 |
$11.7813 |
202,786 |
$69,332,259 |
(1) All shares reported herein were purchased pursuant to the publicly announced Share Repurchase Program.
(2) Average price paid per share includes costs associated with the repurchases and excludes the 1% excise tax on stock repurchases enacted by the Inflation Reduction Act of 2022.
(3) The maximum remaining dollar value of shares that may yet be purchased under the Share Repurchase Program is reduced by the aggregate price paid for share purchases in addition to any fees, commissions, or other costs that may arise as a result of the purchase.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
Part II
Item 5
During the quarter ended September 30, 2024, director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-k.
Part II
Item 6
The following exhibits are filed as part of, furnished with, or incorporated by reference into, this Quarterly Report on Form 10-Q, in each case as indicated therein.
Exhibit Index
| Incorporated by Reference |
||||||||||||
| Exhibit |
Description |
Schedule/ Form |
File No. |
Exhibit |
Filing Date |
Filed Herewith | ||||||
| 31.1 |
X | |||||||||||
| 31.2 |
X | |||||||||||
| 32.1** |
X | |||||||||||
| 32.2** |
X | |||||||||||
| 101.INS |
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
X | ||||||||||
| 101.SCH |
Inline XBRL Taxonomy Extension Schema Document. |
X | ||||||||||
| 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
X | ||||||||||
| 101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document. |
X | ||||||||||
| 101.LAB |
Inline XBRL Taxonomy Extension Labels Linkbase Document. |
X | ||||||||||
| 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
X | ||||||||||
| 104.1 |
Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101). |
X | ||||||||||
| ** |
Furnished herewith. Any exhibit furnished herewith (including the certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto) are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AVEPOINT, INC. | ||
| Date: November 7, 2024 |
/s/ Tianyi Jiang |
|
| Name: |
Tianyi Jiang |
|
| Title: |
Chief Executive Officer (Principal Executive Officer) |
|
| Date: November 7, 2024 | /s/ James Caci |
|
| Name: |
James Caci |
|
| Title: |
Chief Financial Officer (Principal Financial and Accounting Officer) |
|