Hi, everyone. Thanks for joining us today at the Jefferies Software Conference. Today, we're delighted to have CEO and co-founder of AvePoint, Tianyi Jiang, who's been at the helm of the company for over 20 years now. You know, AvePoint secures collaboration data, sustains the connections between employees, and ensures business continuity for over 17,000 customers. We also have AvePoint CFO, Jim Caci, who's with AvePoint just under two years now, and you were previously the CFO at Brand Value Accelerator. Thanks, guys, for joining us today. Maybe just to get started, TJ, maybe tell a little about AvePoint, what the problems you solve, and how you help your customers. Great. Thank you for having us here. By the way, Jim was our CFO a few years ago. Boom, ramp, come back. Jim actually knows the company quite well. Yeah, AvePoint, we've been around for 22 years, as you mentioned. We had quite the evolution. I would say that now is the most exciting juncture of our company's evolution, as especially now a public company. We started in the enterprise content management space and really handling large enterprise customers when it comes to information lifecycle management. You would, you know, think about document management, record management, that type of thing. Then when Microsoft came out with cloud, we invested very aggressively into cloud. As luck would have it, you know, the space that we're very, very strong, which is Microsoft SharePoint, became the foundation and substrate for entirety of Office 365, which today is mission-critical platforms and application for enterprises large and small. Because of that, we were able to really expand the surface area coverage to include the entirety of what Microsoft now collectively call M365, which is Teams, email, OneDrive, Yammer, SharePoint projects, entirety of Microsoft's modern workplace workloads. We do end-to-end data management, so data integration, data analytics, migration. Once in cloud, talk about data backup as a service, data archiving, and of course, license management, operations management, and then entitlement management. That's how we started in the enterprise space. Since we've gone to SaaS, again, going to enterprise-grade SaaS is not a short process. To do it right, it requires at least a five to six year investment, and we've been doing this for now 11 years. We now discover that we're actually a lot more accessible to the small to medium businesses as well. Where we define as smaller than 500 employee companies. There, we grew very rapidly from pretty much 0% of our business to now, within three years, 20% of our recurring into the SMB segment. Another unique aspect of this business is that we are quite global. While we're not that big yet as a B2B SaaS company, just under a quarter billion recurring, we are 45% of our business is North America, and rest of it is evenly split between Western Europe and Tier One B2B software markets in Asia, so Japan, Australia, New Zealand, Singapore, South Korea, etc. Quite global, quite well represented. Now segmentation-wise, enterprise is 50% of our business, which is we define as 5,000 employee and up. Mid-market is 500 - 5,000, that's 30% of recurring, and 20% is SMB. 60% of our business is regulated industry. Out of that, half is government, and that's U.S. government, Japanese government, Singapore government, Australia government, etc. Highly resilient vertical segment. That's our overall business, and, as Microsoft now going strength to strength with generative AI, with cloud, more data means more management, opportunity for us, more SaaS optimization opportunity for us. We feel actually very, very good in the current climate. That's a great overview. Maybe just to go a little deeper, you know, you guys have built out an impressive product, you know, platform. Maybe just talk about the aspects of that. I think there's three components and a little bit more about what each does. Yeah. We design our product really from the, as I mentioned, we started from the enterprise content management perspective. That's our heritage. We really design our product to follow the enterprise through their life journey into cloud, this whole digital transformation momentum. Start with data integration migration. Now we call it Modernization Suite. We used to call it Fidelity. I'll discuss more about that. Once customers are in cloud, then we talk about business continuity, business resiliency. That's backup as service, archiving as service, compliance as service. Of course, as then you start to worry about data sovereignty, data regulations, data privacy. Then we talk about the control aspect of it. Who has access to what from where? That's the control part of our business. Those are the three major suites. The resiliency is over 50% of our business today, and that's really business continuity. Then the control side is actually growing really, really well because there we get into now, not only lifecycle access control, but also entitlement management and license management. That's especially relevant in today's optimization cycles. Everyone want to save costs. They want to say, "Hey, I want to maximize my already investment in cloud. I want to consolidate vendors and platforms." The third is the migration and integration piece. Historically, we talk about that and fidelity, but now, because we built a great set of vertical solution on top of our what we call Confidence Data Management Platform, we repackaged that and named it Modernization Suite. What that is we are very strong in government, a third of our global business is government, so we have this actual GovTech focus. That's document management, record management, born out of Singapore and Australia. We then expand into higher ed, so education, all of that, it's worth noting, sits on top of our collaboration Confidence Platform. There, in education, we then recently pivot into corporate learning development. Again, it's based on our sophistication and maturity in Microsoft Cloud. Natively out of Teams, natively out of Microsoft Office, you can interact with our applications and be able to do business applications. In education space, that's learning, that's digital assessment, that's student alumni management. That's how we also touch CRM, so Dynamics 365, Salesforce, and then we also then expand it to Google Docs, Google Workspace. You see that how we go from SaaS, data management and governance into then vertical solutions. You're definitely focused on Microsoft's top growth areas, 'cause we had Jared Spataro yesterday. I think he was gonna dance every time he talked about Microsoft Teams. That's good. Jim, you guys reported Q1 results a couple of weeks ago. Maybe just give a brief overlay of what happened and then kind of your growth expectations for the rest of the year. Sure. Yeah, we did. We reported good results. We were really pleased with the results for Q1. We reported revenue exceeding guidance, we reported operating income exceeding guidance. Again, we were really pleased with the performance. I think this year coming in, we knew it was gonna be a challenging year. I think everyone's talked about the macro environment being a headwind, and we were really conscious of that in setting the expectations, and really trying to focus on profitable growth this year, and that being a key real driver in terms of how we set our expectations and what we were trying to accomplish. Again, Q1, we're really pleased with the results. I think it sets us up well for the rest of the year. No real surprises in Q1 in terms of expectations, in terms of what we saw in the macro environment. We were expecting to see some, you know, some slowness in certain areas. We did see that, but we didn't see anything worsening, which was really positive for us, and some of the things that TJ talked about are really good for us in terms of some of the positive trends. Again, I think as we think about the rest of the year, we're actually encouraged. You know, we're cautiously optimistic that, you know, again, this will continue. Again, Q1 was really positive, sets us up nicely for the rest of the year. Our pipeline looks good, so we're positive and we're thinking good things for the rest of the year. Cautious in terms of the macro environment, that we don't wanna get ahead of ourselves, but we're, you know, we're looking forward to the rest of the year. That's interesting. I definitely had some prints last night that were incremental macro, so broad-based, kind of the same thing you saw in 4Q. Did you benefit at all from companies having a set budget in 2023? Like maybe a little bit more, "Okay, this is our budget, now we can go forward with procurement," or did you see that at all in 1Q? I do think that's a, you know, interesting observation. I think we did see that. One of the things that we were benefiting from in Q1 was also people looking at consolidating vendors, looking to really focus on cost optimization. We do help some of our customers with that. Some of our products help them get the maximum value out of Microsoft's products and other products. We did see some of that. We even see some of that continuing in the beginning of Q2. I do think that we fit nicely into our customer strategy in terms of optimization, and in terms of consolidation. We do have a platform play, which I think plays nicely as people think about consolidating vendors and looking to save costs. I think we're a great option for them. I think one debate for every company on Earth, but every software company especially, is Microsoft, friend or foe? You know, how do you view them? How do you view that opportunity? And I guess more broadly, how do you view the competitive environment? Yeah, we're technologists at heart. This company is a very technical company. We have been a partner in the Microsoft ecosystem for 22 years. We see ourselves as a strong competitor in the trillion-dollar Microsoft ecosystem. As Microsoft continue to gain, and grow from strength to strength, the ecosystem gets larger. We're very happy to be part of that drag and grow with that. The nature of enterprise tech, with all the disruption happening all the time, is that you have to be agile, you have to be willing to cannibalize your own solutions to grow, and we did that with our SaaS, conversion as well, and cloud investment over 10 years ago, and now going to vertical solutions. We actually see that, it's. Yes, the hyperscalers will continue to improve their horizontal offering, that actually keeps us on our toes and provide that value to our customers. Honestly, with the SaaS subscription conversion and also now going to consumption-based modeling, it keeps us, the vendor, honest, in that we have to truly provide value-added strategic differentiation to our customers to enable that mutual beneficial relationship. It's the only good thing from a technologist perspective. Of course, you know, the overall competitive market specifically, it's always been competitive. You know, that's the nature of software. Ever since my grad school days, studying data mining and machine learning, I always appreciate software, right? The marginal cost of software is 0, there's no inventory, there's no supply chain. That's the benefit of it, but the challenge side of it is that it's constantly moving, so you have to keep up with that. This is where, you know, we historically have a pretty really good, robust R&D capability, even though the cost is rather low. We'll always be able to innovate and stay ahead of it. We are very, we're top global partner with Microsoft. We're top five in term of Azure consumption, IP co-sell, and then we're five only, you know, Viva Learning integrated partner. Just our education play, for example, even though it's only officially been around for two and a half years, we're now their top global education partner. Because Microsoft also looking for a great partner like us that has the end-to-end enterprise capability, that has a global presence, to then go to market with, go after markets opportunities together. In that regard, we have a very good relationship. In fact, the president of Collab, Jeff Teper, has been a board member since 2014. We're able to learn from them how, you know, for example, generative AI Copilots are improving their internal efficiency, and we're adopting the same. We've been a consumer of Cognitive Services, which is a wrapper around OpenAI, for a number of years already. That technical partnership has always been very, very strong. I was gonna try to avoid AI. Since you brought it up, you know, how does it impact your model? Is it really just the governance and control, and you can, you know, assure CISOs and CIOs that they know where their data's going? You know, what is the path to potential upside monetization for you guys, if any? We see multiple prospective benefits. We're in the business of data management governance, the more data, the better. Satya Nadella recently said that by 2025, 10% of all data generated will be done by generative AI. That just means further explosion, acceleration of data growth. Data is already growing so fast, every two years, we more than double all the data accumulated since the beginning of mankind. Even as the hardware cost of storing data is reducing, the speed of data explosion outpaces that. The overall cost of data management and retention, and analytics still rises. Obviously, customer want to get benefit from that. Internally, we actually utilize this quite a bit. We, from a support, from development, we actually leverage AI to make things more efficient. Support, for example, we can automate with chatbots so that ingests our massive user guides and support cases, and even error log code, so that customer coming in don't even have to deal with a human person initially, to be able to solve problems. Also, Dev, our senior developers, are now start to experiment with Copilot to achieve that 30% efficiency gain that Microsoft internally is seeing. Those are all good things, not to even mention elevation of content marketing and capabilities there. With generative AI, companies are more and more careful when it comes to data privacy and also, the accuracy of that output. A lot of banks, including yours, probably, this won't allow you to directly interface with ChatGPT, because if you are inputting your financial data into an open model, you never know when that model starts to hallucinate and starts to give out your results to others. There lies the opportunity. Again, governance, control, and what's being shared, what could be shared. Yeah, more data, better for us. That makes a ton of sense. That's awesome. Maybe going back to, you know, go-to-market, competitive landscape. Are you landing in greenfield opportunities? I guess, like, what are customers doing if they're not using AvePoint? Is it more of a rip and replace? Does it change by product? Yeah. For us, You know, we share this. Our incremental ARRs, half of that come from new customers. We're actually doing really well with new logo acquisition. In fact, 60% of the new acquisitions now are coming directly from our channel and partner investments. We are doing that aggressively to scale the business. Now we're a public company, we're looking at this magic number of sales and marketing efficiency, so we want to make sure that we live up to that, and the best way to do it is to scale through channel. That's where the new logo pickup happens. At the same time, we continue to improve our customer success, as we have now shared our gross retention rate. Over the last few years, we have consistently improved that. We still want to improve more to get from the high 80s to the low 90s from gross retention, thereby bringing the net retention from the high, you know, 100s- 110+. We see that 110 as the benchmark for NRR, for infrastructure SaaS companies. The 120, 130 are really for the application. We have segmentation that get there. It's like modernization, vertical solution that I talk about, and also in the government regulated industry. That's the blended rate we're working on. New cut logo acquisitions, we're doing that better and cheaper now through channel and distribution. Awesome. Maybe swinging back to Jim. I think at your March Investor Day, you talked about GAAP profitability by the end of 2025. You talked about Rule of 40. Maybe just give us an update on where you're tracking and kind of the framework and steps needed to get there. Sure. When we talk about Rule of 40, it's really made up of two components for us. One is ARR growth, the second is non-GAAP operating income profitability as a percentage of revenue. Those two components. If we look at those for 2023, we're gonna show, or we've guided to 20% ARR growth and about 6% non-GAAP operating income growth, we'd be at about 26%. What we're expecting over the next two years, really into 2025, would be that we would see both of those numbers improving. We do not expect that 20% ARR growth for 2023 is the new normal. We've been ahead of that in the past. We expect after 2023 to return to growth rates in excess of 20% on the ARR level. We continue to expect to see growth on that 6% non-GAAP operating income. We would expect that to continue to improve as we see continued improvements in efficiencies from sales and marketing and from G&A that we're starting to see already in Q1 of this year, and we would expect those to continue. I think both of those parameters increase, over the next two years. Where are you? Like, you have that trillion-dollar ecosystem, right, to go after, right? You also have macro, incremental, or maybe staying the same, but still there. I guess, where are your top one, two, or three investment areas? You mentioned R&D earlier. Is there a particular part of the product portfolio? Is it go-to-market? I guess, what do you need to do to sustain that ARR growth? Yeah. For us, we have, obviously, investing channel, that's, we've been signaling that for some time, and that's really paying dividends, as evident from our SMB segmentation growth. That's net new greenfield for us. Channel investment to enable more segmentation growth globally, and low touch sales efficiency, that's important. Organic investment into R&D, like we mentioned, this year, we're increasing some more on R&D. Historically, we're actually being well below industry average in terms of overall R&D spend. That's important. Then thirdly is, we continue to look at inorganic, so acquisitions. We've done four small tuck-in acquisitions during last year. Most of it is really IP acquisitions to broaden the portfolio, to increase ability to upsell and cross-sell into existing accounts. We'll continue to do that. We have active pipeline, as I mentioned, previously in other conferences, acquisition is something that we only started last year. We built this business with just $60 million primary capital, with no debt and no acquisitions. The hardest part of M&A is actually the post-acquisition integration. We're building the muscle to do that, and you should expect to see the ticket size of the acquisitions to get bigger over time. We do understand that we have a very healthy balance sheet, and that's not our money, it's shareholder money. We do need to deploy it, in a very, very strategic way to continue to grow shareholder value. I guess on that M&A front, is it more technology tuck-ins? Are you looking for revenue? Is it to broaden the product portfolio, strengthen one area that you think? So far, it's all technology tuck-in. We're not in the business of acquiring revenues to grow. We feel that we have a infrastructure globally, especially with our channel and physical presence, and indirect presence through channel, that we can scale very quickly once we get new product through and just pump through the same channel. IP acquisition, interesting way to extend our story, interesting way to optimize the cloud usage patterns for our customers, and strengthen the consolidation platform play, the better for us. We want to acquire things. Our investment thesis that whatever we acquire, we should be able to accelerate that revenue stream for that product line by a multifold to make it, you know, worthwhile for us, because we're also getting back to the high growth trajectory. Yeah, so it's more on the IP expansion, not on the revenue acquisition. Gross retention rates are one of my favorite metrics. I think you're high 80s with the goal of getting to 90. I think you've also talked about a baseline for NRR. I guess, what are the steps needed to get there, particularly in a tough macro where people want the option to be able to churn if they have to? Yeah. No, great question. It's something we've been focused on for several years. If you look at the history, and we presented some of this data at our Investor Day, you can see that we've been improving our GRR over time. It was actually in the low 80s. We invested in CS technology, both, and people. We've seen continuous improvement, now up into the higher 80s. We are continuing to invest in CS, to make the products even more sticky and make sure that the customers are fully engaged and getting full value out of the products. It's one of the things that we really see, is that when customers are not getting full value, frankly, it goes for us, too. When we're not getting full value out of a product, we're more likely to change that product. Again, it's one of our keys actually for 23 as well, is ensuring that our customers are getting full value of the product. Not only does that help our gross retention, it also adds to NRR as well, because they're now invested in the product, they have faith in the product and trust in us to then experiment and potentially look at another product. Both of those things are really important for us. That makes a ton of sense. Maybe just as a final closing out question, one for both of you, but if you could move one constraint from the business to kind of turbocharge growth or get to the next level that you want to, and I think you've laid out some of those things, other than removing macro, you know, what would it be? I think we live in the real world, and we just have to deal with the real-world constraints. I honestly think First and foremost, is execution. Just focus on execution. We have a great market positioning because we're first to market, and we have a platform play, and we're a global presence. We built this for usually this size company, you don't see that, right? You don't see usually, it's high concentration in one geography and also high concentration in one segment. We don't have any singular customer that's more than 1% of our total revenue. We have a highly resilient segmentation base with regular industry. That's 60% of our business. Overall, the setup is beautiful. We just need to execute on our strategy and vision and don't mess up on that. Don't sit on our laurels and continue to innovate. Yeah, it's focused on our own capabilities. Yeah, I would just echo that. I think we have best-in-class product, and now it's just about execution. It's not about eliminating anything else, it's about us focusing. I think we've demonstrated that in Q1, and really, that's the bar that we're trying to set now moving forward the rest of this year, as well as we move into the next couple of years. That's exciting. I'll just end there with one remark, is that historically, my only regret is that we haven't gone public 10 years ago. Historically, we've been so fiscally conservative, we never borrow money, we always run a very tight ship, and our cash balance wasn't that great, right? That's why we say we built this business with just $60 million primary capital. We raised a lot of secondary that went back to great return for our investors. Now we're sitting on a very nice balance sheet, and we have no debt, and we're generating cash this year already, and very cash generating going forward. You will see that we will take advantage of that capital structure and go aggressive and lean forward more. Being public makes us so much more disciplined from top to down. That sense of ownership at the employee level, you don't get that being a private company. I think that's what's gonna really help us execute. Awesome. Well, that's all the time we have today but, guys, really, really appreciate you joining us. Thank you. Thank you.