Q4 2025 AvePoint Inc Earnings Call

February 26, 2026

Speaker #1: Good day, and welcome to the AvePoint, Inc. fourth quarter and full year 2025 earnings call. All participants will be in listen-only mode.

Operator: Good day, welcome to the AvePoint, Inc. Q4 and full year 2025 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing Star then 0 on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star then 1 on your telephone keypad. To withdraw your question, please press Star then 2. Please note this event is being recorded. I would now like to turn the conference over to Jamie Arestia, Vice President, Investor Relations. Please go ahead.

Speaker #1: Should you need assistance , please signal a conference specialist by pressing Star then zero on your telephone keypad . After today's presentation , there will be an opportunity to ask questions to a question .

Speaker #1: You may press star , then one on your telephone keypad . To withdraw your question , please press star . Then two . Please note this event is being recorded .

Speaker #1: I would now like to turn the conference over to Jamie Oresteia , vice President , Investor Relations . Please go ahead .

Speaker #2: Thank you . Operator . Good afternoon and welcome to AvePoint, Inc. fourth quarter and full year 2025 Earnings call . With me on the call this afternoon is doctor TJ Zhang , Chief Executive Officer And Jim Casey Chief Financial Officer After preliminary remarks , we will open the call for a question and answer session .

Jamie Arestia: Thank you, operator. Good afternoon, welcome to AvePoint's Q4 and full year 2025 Earnings Call. With me on the call this afternoon is Dr. Tianyi Jiang, Chief Executive Officer, and Jim Caci, Chief Financial Officer. After preliminary remarks, we will open the call for a question-and-answer session. Please note that this call will include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations. We encourage you to review the safe harbor statements contained in our press release for a more complete description. All material in the webcast is the sole property and copyright of AvePoint, with all rights reserved. Please note this presentation describes certain non-GAAP measures, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, and non-GAAP operating margin, which are not measures prepared in accordance with US GAAP.

Speaker #2: Please note that this call will include forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations .

Speaker #2: We encourage you to review the Safe harbor statements contained in our press release for a more complete description . All material in the webcast is the sole property and copyright of AvePoint, Inc. .

Speaker #2: All rights reserved . Please note this presentation describes certain non-GAAP measures , including non-GAAP gross profit , non-GAAP gross margin , non-GAAP operating income , and non-GAAP operating margin , which are not measures prepared in accordance with US GAAP .

Speaker #2: To non-GAAP measures are presented in this presentation as we believe they provide investors with a means of understanding how management evaluates the company's operating performance These non-GAAP measures should not be considered in isolation from as substitutes for or superior to financial measures prepared in accordance with US GAAP A reconciliation of these measures to the most directly comparable GAAP financial measures is available in our fourth quarter and full year 2025 earnings press release , as well as our updated investor presentation and financial tables .

Jamie Arestia: The non-GAAP measures are presented in this presentation as we believe they provide investors with a means of understanding how management evaluates the company's operating performance. These non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with US GAAP. A reconciliation of these measures to the most directly comparable GAAP financial measures is available in our Q4 and full year 2025 earnings press release, as well as our updated investor presentation, and financial tables, all of which are available on our investor relations website. With that, let me turn the call over to TJ.

Speaker #2: All of which are available on our Investor Relations website . With that , let me turn the call over to TJ

Speaker #3: Thank you , Jamie , and thank you to everyone joining us on the call today . Our fourth quarter results were a strong conclusion to a outstanding year .

Tianyi Jiang: Thank you, Jamie, and thank you to everyone joining us on the call today. Our Q4 results were a strong conclusion to an outstanding year. Our leading position in mission-critical data management, coupled with market demand for data protection in the AI era, enabled us to accelerate revenue growth, deliver our 11th straight quarter of double-digit growth in net new ARR, and achieve double-digit GAAP operating margins. Very few software companies can point to comparable levels of organic growth, GAAP profitability, and strong cash flow generation, and even fewer sit at a critical intersection of data protection and security. Importantly, we see healthy demand from companies spanning every size, vertical, and region of the world, validating our conviction in a large and growing market for secure, automated, and AI-ready data governance and resilience solutions.

Speaker #3: Our leading position in mission critical data management , coupled with market demand for data protection in the AI era , enabled us to accelerate revenue growth , deliver our 11th straight quarter of double digit growth in net new IRR , and achieved double digit GAAP operating margins Very few software companies can point to comparable levels of organic growth , GAAP , profitability , and strong cash flow generation , and even fewer sit at a critical intersection of data protection and security Importantly , we see healthy demand from companies spanning every size , vertical and region of the world validating our conviction in a large and growing market for secure , automated and AI ready data governance and resilience solutions .

Speaker #3: This broad based customer demand isn't surprising , as it's clear that AI has transformed the speed , scale and stakes of data security and governance for companies everywhere Organizations no longer view data governance as simple back office hygiene .

Tianyi Jiang: This broad-based customer demand isn't surprising, as it's clear that AI has transformed the speed, scale, and stakes of data security and governance for companies everywhere. Organizations no longer view data governance as simple back-office hygiene. It has become the prerequisite for AI and agentic AI adoption. Our customers and partners continue to tell us the same thing. Before they can deploy AI at scale, they need one company that can secure, govern, and operationalize their data with confidence. In fact, I just met with one of our financial services customers who in Q4 replaced patchwork tools and a vendor they had for over 20 years with AvePoint. Our platform now secures, governs, and guarantees data recovery for nearly 100,000 employees who drive $25 billion in annual revenue. That's not a workflow that gets agented away.

Speaker #3: It has become the prerequisite AI and AI adoption , and our customers and partners continue to tell us the same thing before they can deploy AI at scale , they need one company that can secure governance and operationalize their data with confidence In fact , I just met with one of our financial services customers who , in Q4 replaced patchwork tools and a vendor they had for over 20 years without point .

Speaker #3: Our platform now secures, governs, and guarantees data recovery for nearly 100,000 employees who drive $25 billion in annual revenue. That's not a workflow that gets agented away.

Speaker #3: It's the trust layer that makes enterprise AI possible . In the first place . With stories like these . Our focus today on the durability of our value and share why , despite speculation about the future of enterprise software in the context of a AI appoint will capitalize on the AI data protection opportunity in 2026 and the years ahead But first , I want to remind you of three long standing trends that you have heard us discuss for years the relentless growth of data , the complexity of systems , and the severe consequences of poor data management .

Tianyi Jiang: It's the trust layer that makes enterprise AI possible in the first place. With stories like these, I'll focus today on the durability of our value and share why, despite speculation about the future of enterprise software in the context of agentic AI, AvePoint will capitalize on the AI data protection opportunity in 2026 and the years ahead. First, I want to remind you of 3 long-standing trends that you have heard us discuss for years: the relentless growth of data, the complexity of systems, and the severe consequences of poor data management. These challenges existed long before AI but have only accelerated in recent years as data now spans cloud platforms, on-premise systems, third-party tools, and AI-driven workflows. AvePoint brings order to this chaos. We ensure that data is reliable, governed, and secure, and we have done this for more than 2 decades for thousands of customers.

Speaker #3: These challenges existed long before AI , but have only accelerated in recent years as data now spans cloud platforms on premise systems , third party tools , and AI driven workflows that point brings order to this chaos .

Speaker #3: We ensure that data is reliable , governed and secure , and we have done this for more than two decades . For thousands of customers .

Speaker #3: While AI is a powerful tool , enterprise grade software remains essential for managing complex environments and ensuring regulatory compliance . And if your AI relies on inconsistent or poorly governed data , it becomes a liability rather than an asset .

Tianyi Jiang: While AI is a powerful tool, enterprise-grade software remains essential for managing complex environments and ensuring regulatory compliance. If your AI relies on inconsistent or poorly governed data, it becomes a liability rather than an asset. The AvePoint Confidence Platform is the solution to this challenge. Specifically, it's our platform architecture which determines how effectively organizations can discover, govern, protect, and recover data across distributed multi-cloud environments that not only makes us unique today but provides a durable competitive moat. To start, our platform serves as a foundational layer within any data protection framework, acting as the control plane for policy management and real-time remediation, and the connectivity tissue for enterprise security operations. By maintaining a robust API framework and interoperability across hybrid cloud environments, we enforce strict identity verification and least privileged access at the data layer and immediately remediate any potential breach or policy violation.

Speaker #3: The appoint Confidence platform is the solution to this challenge . Specifically , it's our platform architecture , which determines how effectively organizations can discover governance , protect and recover data across distributed multi-cloud environments .

Speaker #3: That not only makes us unique today , but provides a durable , competitive moat to start our serves as a foundational layer within any data protection framework , acting as the control plane for policy management and real time remediation .

Speaker #3: And the connectivity tissue for enterprise security operations. By maintaining a robust API framework and interoperability across hybrid cloud environments, we enforce strict identity verification and least-privileged access at the data layer and immediately remediate any potential breach or policy violation.

Speaker #3: This approach was crucial for one of our largest consumer packaged goods customer , who faced significant challenges around ransomware threats , intellectual property protection and data access compliance .

Tianyi Jiang: This approach was crucial for one of our largest consumer packaged goods customer, who faced significant challenges around ransomware threats, intellectual property protection, and data access compliance before launching Copilot. Using our platform as the core of their data protection strategy, we cleaned up their ROT data, deployed data resiliency across their 13,000 global employees, and implemented granular access controls. By starting at the data layer and utilizing our policy management and real-time remediation capabilities, they now have safe, secure, and compliant data they can trust to power their businesses. Our solutions also ensured that proper provable access controls are in place for Copilot and other agents. We can solve challenges like this for thousands of companies because of our platform's ability to define all of their unstructured data and then visualize how its attributes, including sensitivity, intent, and lineage, evolve in real time.

Speaker #3: Before launching Copilot using our platform as the core of their data protection strategy . We cleaned up their rot data , deployed data resiliency across their 13,000 global employees and implemented granular access controls by starting at the data layer and utilizing our policy management and real time remediation capabilities .

Speaker #3: They now have safe , secure and compliant data they can trust to power their businesses . Our solutions also ensured that proper , provable access controls are in place for Copilot and other agents .

Speaker #3: We can solve challenges like this for thousands of companies because of our platform's ability to define all of their unstructured data , and then visualize how its attributes , including sensitivity , intent and lineage , evolve in real time This contextual data , which is housed with us and which you heard anthropic discuss on Tuesday as a critical input to their goal of transforming knowledge work provides appoint an enormous competitive advantage because our customers rely on us to govern the data in real time .

Tianyi Jiang: This contextual data, which is housed with us and which you heard Anthropic discuss on Tuesday as a critical input to their goal of transforming knowledge work, provides AvePoint an enormous competitive advantage because our customers rely on us to govern the data in real time. Customers today know that proper data governance requires more than logs or snapshots. It requires a live context that our platform provides, that AI cannot deliver on its own, and that traditional static databases miss. It was this technological differentiation that led a large construction company to become a new AvePoint customer in Q4. They were recovering from a major cyber incident and preparing for broader AI adoption. Their core issue wasn't simply storage or cleanup. It was a lack of real-time context into how their sensitive data was evolving and being accessed across their environment.

Speaker #3: Customers today know that proper data governance requires more than logs or snapshots . It requires a live context that our platform provides that AI cannot deliver on its own , and that traditional static databases miss .

Speaker #3: And it was this technological differentiation that led a large construction company to become a new AvePoint customer in Q4. They were recovering from a major cyber incident and preparing for broader AI adoption.

Speaker #3: But their core issue wasn't simply storage or clean up; it was a lack of real-time context into how their sensitive data was evolving and being accessed across their environment.

Speaker #3: By deploying our unified platform with live visibility and control across unstructured data , they were able to reduce access , sprawl and saved up to $1.3 million .

Tianyi Jiang: By deploying our unified platform with live visibility and control across unstructured data, they were able to reduce access sprawl and saved up to $1.3 million, improve data quality, and most importantly, govern risk as it emerged. With AvePoint as their strategic partner and restored confidence in their data foundation, they are now positioned to safely expand protection across their cloud and Azure workloads. Our platform is the result of decades of innovation and refinement. Today features a layered, interoperable architecture built for scale. It also functions as a governance and control layer for agentic AI, providing the trusted data foundation that agents need to act safely and effectively in the AI era. This includes a business logic layer, which defines the security and operational rules required by the customer.

Speaker #3: Improved data quality and most importantly , governance risk as they emerged with that point as their strategic partner and restored confidence in their data foundation , they are now positioned to safely expand protection across their cloud and Azure workloads Our platform is the result of decades of innovation and refinement , and today features a layered , interoperable architecture built for scale .

Speaker #3: It also functions as a governance and control layer for Agentic AI , providing the trusted data foundation that agents need to act safely and effectively in the AI era .

Speaker #3: This includes a business logic layer , which defines the security and operational rules required by the customer . A elastic scaling data abstraction layer , which allows the platform to meet massive data surges without performance degradation and A.I.

Tianyi Jiang: A elastic scaling data abstraction layer, which allows the platform to meet massive data surges without performance degradation. AI-specific remediation, which leverages proprietary algorithms to identify threats designed to bypass AI guardrails. We have always aimed for our innovation to keep up with the larger technological changes taking place. Today, as agents proliferate, the missing layer isn't more AI, it's governance and operational oversight for AI. That's exactly why we built our sixth command center, Agent Pulse, which provides unified visibility, governance, and operational oversight for agentic AI. AvePoint customers can now inventory agents across their digital estate, surface usage, risk, and cost signals, monitor performance drift, and ultimately take action when needed. As companies scale their agentic AI deployments, Agent Pulse becomes the operational cockpit that ensures safety, compliance, and measurable value.

Speaker #3: Specific remediation, which leverages proprietary algorithms to identify threats designed to bypass AI guardrails. We have always aimed for our innovation to keep up with the larger technological changes taking place today.

Speaker #3: As agents proliferate the missing layer isn't more AI , it's governance and operational oversight for AI . That's exactly why we built our sixth command center agent Pause , which provides unified visibility , governance and operational oversight for AI affluent customers can now inventory agents across their digital estate .

Speaker #3: Surface usage , risk and cost signals monitor performance , drift , and ultimately take action when needed . As companies scale their AI deployments , Agent Pulse becomes the operational cockpit that ensures safety , compliance and measurable value .

Speaker #3: And lastly , building on Agent Pulse are a new Agentic AI governance and data protection features that we announced earlier this month , which provide customers with better insights about agent security , posture and ability to correct security problems directly in the confidence platform , helping them use a generic AI tools safely and efficiently .

Tianyi Jiang: Lastly, building on AgentPulse are a new agentic AI governance and data protection features that we announced earlier this month, which provide customers with better insights about agent security posture and the ability to correct security problems directly in the Confidence Platform, helping them use agentic AI tools safely and efficiently. In short, no other platforms combines modularity with tailored functionality to manage critical data in real time across cloud vendors. This was also validated by Gartner, which referenced AvePoint in their latest research on how to build a strategy for M365 Copilot and agentic AI in 2026.

Speaker #3: In short, no other platform combines modularity with tailored functionality to manage critical data in real time across cloud vendors. This was also validated by Gartner, which referenced AvePoint in their latest research on how to build a strategy for M365 Copilot and AI in 2026.

Speaker #3: And as we continue to introduce extensions to existing cloud services and to new applications , the confidence platform will further consolidate point solutions to drive a faster ROI , which in turn only deepens our competitive advantage .

Tianyi Jiang: As we continue to introduce extensions to existing cloud services and to new applications, the Confidence Platform will further consolidate point solutions to drive a faster ROI, which in turn only deepens our competitive advantage. Our conviction in our platform differentiation is not to suggest that every enterprise software company is immune to disruption from AI. In fact, it's quite the opposite. We believe every company, regardless of industry, will be impacted by AI. Those that use AI to drive innovation as their core competency will be successful in delivering durable growth in the years ahead.

Speaker #3: Our conviction in our platform differentiation is not to suggest that every enterprise software company is immune to disruption from AI . In fact , it's quite the opposite .

Speaker #3: We believe every company , regardless of industry , will be impacted by AI , but those that use AI to drive innovation as their core competency will be successful in delivering durable growth in the years ahead .

Speaker #3: And specific to software , we believe the winners will offer the market two things a true platform offering that provides pricing flexibility and ultimately leans on consumption based and cost saving focused licenses and end to end vertical organic integration ranging from development to go to market to best in class cloud and security , to continuous enhancements and improvements .

Tianyi Jiang: Specific to software, we believe the winners will offer the market 2 things: a true platform offering that provides pricing flexibility and ultimately leans on consumption-based and cost-saving focused licenses, and end-to-end vertical organic integration, ranging from development to go to market, to best-in-class cloud ops and security, to continuous enhancements and improvements. We're mindful of this with every strategic decisions we make. We'll further differentiate ourselves by leveraging our domain expertise, our extensive partnerships, and our global scale and distribution to solidify our leadership position in the responsible and effective deployment of AI across all enterprises. As technology evolves, we're enhancing our go-to-market strategy to prioritize bundle offerings, building on last year's successful launch of our control and resilience packages. These bundles deliver comprehensive outcome-based solutions addressing data cleanup, lifecycle management, governance, storage optimization, and protection, which customers and partners prefer over fragmented tools.

Speaker #3: We are mindful of this with every strategic decision we make, and will further differentiate ourselves by leveraging our domain expertise, our extensive partnerships, and our global scale and distribution to solidify our leadership position in the responsible and effective deployment of AI across all enterprises.

Speaker #3: As technology evolves , we are enhancing our go to market strategy to prioritize bundle offerings , building on last year's successful launch of our control and Resilience packages These bundles deliver comprehensive , outcome based solutions addressing data cleanup , lifecycle management .

Speaker #3: Governance , storage , optimization , and protection , which customers and partners prefer over fragmented tools . And while we have historically licensed by count , we anticipate moving towards a hybrid model that incorporates capacity based and data volume pricing , especially as AI enhances productivity by retains user driven workflows .

Tianyi Jiang: While we have historically licensed by seat count, we anticipate moving towards a hybrid model that incorporates capacity-based and data volume pricing, especially as AI enhances productivity but retains user-driven workflows. In Q4, and throughout 2025, we proved that AvePoint is built for this moment, and our belief in the long-term market opportunity has only strengthened. As organizations modernize their processes and workflows, the need for a secure, governed, and resilient data foundation that transforms enterprise data into a secure, high-quality signal for AI only becomes structurally more important. That's what our platform delivers, making us the trusted long-term partner for our customers. We have said before that our ambition is big, reaching $1 billion ARR by 2029, but it's grounded in operational discipline, durable market demand, and a platform strategy that is only becoming more relevant as AI adoption grows.

Speaker #3: In Q4 and throughout 2025 , we proved that our is built for this moment and our belief in the long term market opportunity has only strengthened as organizations modernize their processes and workflows .

Speaker #3: The need for a secure , governed and resilient data foundation that transforms enterprise data into a secure , high quality signal for AI only becomes structurally more important That's what our platform delivers , making us the trusted , long term partner for our customers .

Speaker #3: We have said before that our ambition is big , reaching $1 billion in AR by 2029 , but it's grounded in operational discipline , durable market demand and a platform strategy that is only becoming more relevant as AI adoption grows .

Speaker #3: And while questions about market cycles or technological disruption will come and go , our conviction in the durability of the market opportunity and our ability to capture it has never been stronger I want to thank the entire team for their tireless efforts in making 2025 a exceptional year of execution and continued growth , and we're excited for even stronger 2026 .

Tianyi Jiang: While questions about market cycles or technological disruption will come and go, our conviction in the durability of the market opportunity and our ability to capture it has never been stronger. I want to thank the entire AvePoint team for their tireless efforts in making 2025 a exceptional year of execution and continued growth, and we're excited for an even stronger 2026. Thank you again for joining us today. I will now turn it over to Jim.

Speaker #3: Thank you again for joining us today . I will now turn it over to Jim

Speaker #2: Thanks , TJ , and good afternoon , everyone . Thanks for joining us today Coming into 2025 , our outlook reflected two central themes .

Jim Caci: Thanks, TJ, and good afternoon, everyone. Thanks for joining us today. Coming into 2025, our outlook reflected two central themes. First, the growing customer demand to prepare, secure, and optimize their critical data. Second, the ongoing improvement in our ability to efficiently deliver on that demand. These themes gave us the confidence to continue investing in support of our strategic priorities and our 2029 goal of $1 billion in ARR, while remaining committed to delivering ongoing top-line growth and margin expansion. As we recap our Q4 and full year results today, we are proud that they validate our strategies and demonstrate our ability to execute on our commitments to shareholders.

Speaker #2: First , the growing customer demand to prepare , secure and optimize their critical data . And second , the ongoing improvement in our ability to efficiently deliver on that demand These themes gave us the confidence to continue investing in support of our strategic priorities and our 2029 goal of $1 billion in IRR .

Speaker #2: While remaining committed to delivering ongoing top line growth and margin expansion . As we recap , our fourth quarter and full year today , we are proud that they validate our strategies and demonstrate our ability to execute on our commitments to shareholders Q4 had a number of highlights , including acceleration of our revenue growth , our 11th straight quarter of double digit growth in net new IRR , substantial expansion of both GAAP and non-GAAP operating margins , and our continued success selling the AvePoint, Inc. platform to large enterprises Reflected in the record number of 100 K and 250 K , AR customers , added .

Jim Caci: Q4 had a number of highlights, including acceleration of our revenue growth, our 11th straight quarter of double-digit growth in net new ARR, substantial expansion of both GAAP and non-GAAP operating margins, and our continued success selling the AvePoint Confidence Platform to large enterprises, reflected in the record number of $100K and $250K ARR customers added. We are particularly proud of these accomplishments in light of the two goals we set at our first Investor Day 3 years ago. Namely, that by the end of 2025, we would deliver GAAP operating profitability, and we would be a Rule of 40 company.

Speaker #2: We are particularly proud of these accomplishments in light of the two goals we set at our first Investor Day three years ago, namely that by the end of 2025, we would deliver GAAP operating profitability and we would be a rule of 40 company.

Speaker #2: And while we delivered GAAP profitability in 2024 , a year ahead of schedule , we delivered on both of these commitments in 2025 with a rule of 46 and a GAAP operating margin of 7.9% for the year These accomplishments have only strengthened our conviction in the market opportunity and our ability to execute , and we have even better visibility into the growth factors that will propel us toward our $1 billion IRR target for 2029 .

Jim Caci: While we delivered GAAP profitability in 2024, a year ahead of schedule, we delivered on both of these commitments in 2025, with a Rule of 46 and a GAAP operating margin of 7.9% for the year. These accomplishments have only strengthened our conviction in the market opportunity and our ability to execute, we have even better visibility into the growth vectors that will propel us toward our $1 billion ARR target for 2029.

Speaker #2: As TJ mentioned, there are very few software companies that have our organic growth profile, scaling, operating margins, and GAAP profitability.

Jim Caci: As TJ mentioned, there are very few software companies that have our organic growth profile, scaling operating margins and GAAP profitability, material cash flow generation, and healthy SaaS KPIs. This exceptional financial position, coupled with the competitive differentiation that TJ discussed, are why we will continue to balance strategic growth investments in our go-to-market capacity and innovation pipeline with a continued commitment to driving operating leverage across the business. Let's turn to our results. Total revenues for Q4 were $114.7 million, up 29% year-over-year and comfortably above the high end of our guidance. On a constant currency basis, total revenues grew 25% year-over-year, a meaningful acceleration from Q3. SaaS continues to drive our business, with Q4 revenue of $88.9 million, growing 37% year-over-year.

Speaker #2: Material cash flow generation and healthy SaaS KPIs . And this exceptional financial position , coupled with the competitive differentiation that TJ discussed , are why we will continue to balance strategic growth investments in our go to market capacity and innovation pipeline with a continued commitment to driving operating leverage across the business .

Speaker #2: So let's turn to our results. Total revenues for the fourth quarter were $114.7 million, up 29% year over year and comfortably above the high end of our guidance.

Speaker #2: On a constant currency basis . Total revenues grew 25% year over year . A meaningful acceleration from Q3 . SaaS continues to drive our business with Q4 revenue of $88.9 million , growing 37% year over year .

Speaker #2: The strong customer demand for SaaS is also reflected in our revenue mix , as it represents 78% of total Q4 revenues , surpassing last quarter's record .

Jim Caci: The strong customer demand for SaaS is also reflected in our revenue mix as it represents 78% of total Q4 revenues, surpassing last quarter's record. On a constant currency basis, Q4 SaaS revenues grew 33% year-over-year. Services revenue of $14.6 million represented 13% of total revenues and grew 20% year-over-year. While term license and support revenues grew 7% year-over-year and represented 9% of Q4 revenues compared to 11% a year ago. Lastly, maintenance revenue of approximately $981,000 represented 1% of total revenues and continued its expected decline. As a result, 87% of our Q4 revenues were recurring. Looking at our geographical performance, we were pleased that each region delivered a strong close to the year.

Speaker #2: And on a constant currency basis , Q4 SaaS revenues grew 33% year over year Services revenue of $14.6 million represented 13% of total revenues and grew 20% year over year , while term license and support revenues grew 7% year over year and represented 9% of Q4 revenues compared to 11% a year ago .

Speaker #2: And lastly , maintenance revenue of approximately $981,000 represented 1% of total revenues and continued its expected decline . As a result , 87% of our Q4 revenues were recurring Looking at our geographical performance , we were pleased that each region delivered a strong close to the year in North America .

Jim Caci: In North America, total revenue growth accelerated to 25% year-over-year, driven by SaaS revenue growth of 34%. In EMEA, total revenue growth accelerated to 39% year-over-year, driven by SaaS revenue growth of 44%. In APAC, total revenues grew 23% year-over-year, driven by SaaS revenue growth of 32% and service revenue growth of 25%. On a constant currency basis, EMEA SaaS revenues increased 33%, while total revenues increased 28%. For APAC, SaaS revenues increased 31% on a constant currency basis, while total revenues increased 22%. We were pleased to see the same strength and balance when looking at ARR. In Q4, North America ARR grew 20%, EMEA ARR grew 32%, and APAC ARR grew 34%.

Speaker #2: Total revenue growth accelerated to 25% year over year , driven by SaaS revenue growth of 34% in EMEA . Total revenue growth accelerated to 39% year over year , driven by SaaS revenue growth of 44% , and in APAC , total revenues grew 23% year over year , driven by SaaS revenue growth of 32% and service revenue growth of 25% .

Speaker #2: On a constant currency basis , EMEA SaaS revenues increased 33% , while total revenues increased 28% . And for APAC , SaaS revenues increased 31% .

Speaker #2: On a constant currency basis , while total revenues increased 22% . We were pleased to see the same strength and balance when looking at RR in Q4 .

Speaker #2: North America grew 20% . EMEA IRR grew 32% and APAC IRR grew 34% . Taken together , we ended the year with total IRR of $416.8 million , representing year over year growth of 27% or 26% , after adjusting for FX .

Jim Caci: Taken together, we ended the year with total ARR of $416.8 million, representing year-over-year growth of 27% or 26% after adjusting for FX. Net new ARR in Q4 was $26.8 million, once again surpassing last quarter's record and representing growth of 48% year-over-year. As of the end of Q4, 57% of our total ARR came through the channel compared to 55% a year ago. Our success at the enterprise level has been consistent for many years, but it was especially notable across our large customer cohorts in Q4. We ended the year with 826 customers with ARR of over $100,000, a year-over-year increase of 24%.

Speaker #2: As a result , net new IRR in Q4 was $26.8 million . Once again surpassing last quarter's record and representing growth of 48% year over year Lastly , as of the end of Q4 , 57% of our total IRR came through the channel , compared to 55% a year ago Our success at the enterprise level has been consistent for many years , but it was especially notable across our large customer cohorts in Q4 , we ended the year with 826 customers with IRR of over $100,000 a year over year increase of 24% .

Speaker #2: This record growth also represented the addition of 64 such customers in Q4 , easily surpassing last quarter's record of 41 . In addition , we ended the quarter with 298 customers with IRR of over $250,000 .

Jim Caci: This record growth also represented the addition of 64 such customers in Q4, easily surpassing last quarter's record of 41. In addition, we ended the quarter with 298 customers with ARR of over $250,000, as we added 28 such customers in Q4 and 73 for the year, both of which were records. Lastly, we now have more than 100 customers with ARR of over $500,000, as well as 31 customers with ARR of more than $1 million. Taken together, these results demonstrate that we are meeting the demands of organizations looking for single platform vendors that can address multiple strategic use cases. Turning now to our customer retention rates.

Speaker #2: As we added 28 such customers in Q4 and 73 for the year . Both of which were records Lastly , we now have more than 100 customers with IRR of over $500,000 , as well as 31 customers with IRR of more than $1 million .

Speaker #2: Taken together , these results demonstrate that we are meeting the demands of organizations looking for single platform vendors that can address multiple strategic use cases Turning now to our customer retention rates , adjusted for the impact of FX , our Q4 gross retention rate was 88% and our Q4 net retention rate was 110% , both of which were in line with Q3 .

Jim Caci: Adjusted for the impact of FX, our Q4 gross retention rate was 88%, and our Q4 net retention rate was 110%, both of which were in line with Q3. I want to remind you that GRR factors in account-level churn, customer down-sell, and our migration products, which have naturally lower renewal rates. This quarter, migration served as a 2-point headwind to GRR. Excluding it, GRR would have been 90%. I also want to point out that in Q3 and Q4, we did see a higher migration contribution than in prior years due to increased customer modernization efforts around AI deployment.

Speaker #2: I want to remind you that growth factors in account level churn , customer down , sell , and our migration products , which have naturally lower renewal rates this quarter , migration served as a two point headwind to Grr .

Speaker #2: So excluding it , Grr would have been 90% . I also want to point out that in Q3 and Q4 , we did see a higher migration contribution than in prior years due to increased customer modernization efforts around deployment .

Speaker #2: While we believe this positions us to potentially cater to additional use cases outside of migration for these customers , this dynamic could put modest pressure on Grr .

Jim Caci: While we believe this positions us to potentially cater to additional use cases outside of migration for these customers, this dynamic could put modest pressure on GRR in 2026. On a reported basis, Q4 GRR was 88% and Q4 NRR was 111%, with GRR in line with the prior year and NRR representing a 1-point improvement. Turning back to the income statement, gross profit for Q4 was $85.1 million, representing a gross margin of 74.2% compared to 75.5% a year ago. The year-over-year gross margin decline is primarily the result of a higher mix of services revenue this year and the lower relative gross margins on those revenues.

Speaker #2: In 2026 . On a reported basis , Q4 Grr was 88% and Q4 Nr was 111% with Grr in line with the prior year and Gnrh-r representing a one point improvement Turning back to the income statement , gross profit for Q4 was $85.1 million , representing a gross margin of 74.2% , compared 75.5% a year ago .

Speaker #2: The year over year gross margin decline is primarily the result of a higher mix of services revenue . This year , and the lower relative gross margins on those revenues Moving down the income statement , Q4 operating expenses totaled $62.2 million , or 54% of revenues , compared to $52.8 million , or 59% of revenues a year ago .

Jim Caci: Moving down the income statement, Q4 operating expenses totaled $62.2 million or 54% of revenues, compared to $52.8 million or 59% of revenues a year ago. As a result, Q4 non-GAAP operating income was $22.9 million, with our 20% operating margin representing year-over-year expansion of more than 370 basis points. Sales productivity was a key driver of the increase as this metric improved every quarter over the course of 2025 and was our highest ever in Q4. These improvements, along with our growing channel contribution, continue to drive down our sales and marketing expense as a percentage of revenues, which was 31% for Q4 and 32% for the year. To remind you, our long-term target for this is 30%.

Speaker #2: As a result , Q4 non-GAAP operating income was $22.9 million . With our 20% operating margin representing year over year expansion of more than 370 basis points Sales productivity was a key driver of the increase , as this metric improved every quarter over the course of 2025 , and was our highest ever in Q4 These improvements , along with our growing channel contribution , continue to drive down our sales and marketing expense as a percentage of revenues , which was 31% for Q4 and 32% for the year .

Speaker #2: To remind you , our long term target for this is 30% . Turning to the balance sheet and cash flow statement , we ended the year with $481 million in cash .

Jim Caci: Turning to the balance sheet and cash flow statement, we ended the year with $481 million in cash equivalents, and short-term investments. For the year, cash generated from operations was $85.3 million, or a 20% margin, while free cash flow was $81.6 million or a 19% margin. I also wanna call out our remaining performance obligation, which crossed the half billion-dollar mark in Q4, growing 36% year-over-year to $508.1 million. The ongoing strength of this metric reflects the longer-term commitments that customers are making, and they're investing in our platform as a foundational layer for governing, protecting, and operationalizing data as they scale AI across the business. Lastly, we repurchased 1.7 million shares in Q4 for approximately $22.4 million.

Speaker #2: Cash equivalents and short term investments . And for the year , cash generated from operations was $85.3 million , or a 20% margin , while free cash flow was $81.6 million , or a 19% margin .

Speaker #2: I also want to call out our remaining performance obligation , which crossed the half billion dollar mark in Q4 . Growing 36% year over year to $508.1 million .

Speaker #2: The ongoing strength of this metric reflects the longer term commitments that customers are making , and their investing in our platform as a foundational layer for governing , protecting and operationalizing data as they scale AI across the business Lastly , we repurchased 1.7 million shares in the fourth quarter for approximately $22.4 million .

Speaker #2: Before I turn to our guidance , I'll briefly recap our full year 2025 results . Total revenues of $419.5 million represented 27% reported growth and 25% constant currency growth , both of which were in acceleration from 2020 .

Jim Caci: Before I turn to our guidance, I'll briefly recap our full-year 2025 results. Total revenues of $419.5 million represented 27% reported growth and 25% constant currency growth, both of which were an acceleration from 2024. SaaS revenues grew 38% year-over-year to $319.2 million and represented 76% of total revenues, compared to 70% in 2024 and 59% in 2023. As mentioned, total ARR as of 31 December was $416.8 million, representing growth of 27% or 26% when adjusted for FX. As a result, net new ARR for the full year was a record $89.8 million, representing record growth of 44%.

Speaker #2: For SaaS , revenues grew 38% year over year to $319.2 million , and represented 76% of total revenues compared to 70% in 2020 .

Speaker #2: Four and 59% in 2023 . As mentioned , total IRR as of December 31st was $416.8 million , representing growth of 27% , or 26% , when adjusted for FX .

Speaker #2: As a result , net new IRR for the full year was a record $89.8 million , representing record growth of 44% . This compares to net new IRR in 2024 of $62.5 million , which grew 25% over 2023 .

Jim Caci: This compares to net new ARR in 2024 of $62.5 million, which grew 25% over 2023. Full year non-GAAP operating income was $79.2 million, or an operating margin of 18.9%, compared to $47.6 million in 2024, or a margin of 14.4%. GAAP operating income for the year was $33 million, with GAAP operating margins expanding 570 basis points year-over-year to 7.9%. This expansion was driven by the improvements I discussed earlier, as well as our management of stock-based compensation expense, which is now less than 10% of our revenues and which we expect will further decrease as a percentage of revenue in 2026.

Speaker #2: Full year non-GAAP operating income was $79.2 million , or an operating margin of 18.9% , compared to $47.6 million in 2020 . For or a margin of 14.4% , GAAP operating income for the year was $33 million , with GAAP operating margins expanding 570 basis points year over year to 7.9% .

Speaker #2: This expansion was driven by the improvements I discussed earlier , as well as our management of stock based compensation expense , which is now less than 10% of our revenues and which we expect will further decrease as a percentage of revenue in 2026 .

Speaker #2: During 2025 , we repurchased 3.4 million shares for approximately $50 million . And through the close of trading last week , we have repurchased another 2.8 million shares .

Jim Caci: During 2025, we repurchased 3.4 million shares for approximately $50 million. Through the close of trading last week, we have repurchased another 2.8 million shares year-to-date, or more than 80% of the total shares repurchased last year for another $33.5 million. Share buybacks remain a key pillar of our capital allocation philosophy. We intend to remain active and opportunistic in the open market, reflecting our belief in the underlying strength of our business and commitment to driving shareholder value. Lastly, on a Rule of 40 basis, which for AvePoint is the sum of ARR growth and non-GAAP operating margin, we finished 2025 at the Rule of 40-6, as I mentioned earlier.

Speaker #2: Year to date , or more than 80% of the total shares repurchased last year for another $33.5 million . Share buybacks remain a key pillar of our capital allocation philosophy , and we intend to remain active and opportunistic in the open market , reflecting our belief in the underlying strength of our business and commitment to driving shareholder value .

Speaker #2: And lastly , on a rule of 40 basis , which for Avepoint is the sum of IRR growth and non-GAAP operating margin , we finished 2025 at the rule of 46 .

Speaker #2: As I mentioned earlier , this compares to the rule of 38 for 2024 and the rule of 31 for 2023 . Turning now to our guidance for the first quarter .

Jim Caci: This compares to the Rule of 38 for 2024 and the Rule of 31 for 2023. Turning now to our guidance. For Q1, we expect total revenues of $115 million to $117 million, or growth of 25% at the midpoint. On a constant currency basis, we expect revenue growth of 20% at the midpoint. We expect non-GAAP operating income of $19.5 million to $20.5 million. For the full year, we expect total ARR of $525.1 million to $531.1 million, or growth of 27% at the midpoint. On an FX-adjusted basis, we expect total ARR growth of 26% at the midpoint.

Speaker #2: We expect total revenues of 115 million to $117 million , or growth of 25% at the midpoint . And on a constant currency basis , we expect revenue growth of 20% at the midpoint .

Speaker #2: We expect non-GAAP operating income of $19.5 million to $20.5 million , and for the full year , we expect total IRR of 525.1 million to $531.1 million , or growth of 27% at the midpoint .

Speaker #2: On an FX adjusted basis . We expect total IRR growth of 26% at the midpoint . We expect total revenues of $509.4 million to $517.4 million , or growth of 22% at the midpoint .

Jim Caci: We expect total revenues of $509.4 million to $517.4 million, or growth of 22% at the midpoint. On a constant currency basis, we expect revenue growth of 20% at the midpoint. Lastly, we expect full-year non-GAAP operating income of $92.6 million to $96.6 million. Finally, on a Rule of 40 basis, the midpoint of our initial full-year guidance is a 45. Before we open it up for Q&A, I want to provide some additional color into our guidance and how we are thinking about Q1 and the year. First, our guidance philosophy remains unchanged. We want to responsibly set expectations that are consistent with the demand trends we are currently seeing.

Speaker #2: And on a constant currency basis , we expect revenue growth of 20% at the midpoint . And lastly , we expect full year non-GAAP operating income of $92.6 million to $96.6 million .

Speaker #2: Finally , on a rule of 40 basis , the midpoint of our initial year guidance is a 45 . Before we open it up for Q&A .

Speaker #2: I want to provide some additional color into our guidance and how we are thinking about Q1 and the year First , our guidance philosophy remains unchanged .

Speaker #2: We want to responsibly set expectations that are consistent with the demand trends we are currently seeing. Second, our FX-adjusted RR for the year is 26% growth, in line with 2025.

Jim Caci: Second, our FX-adjusted ARR guidance for the year is 26% growth, in line with 2025. I also want to remind you that our 2025 ARR included $2.8 million in Q1 from our acquisition of Ydentic. Adjusting for this, our guidance for FX-adjusted ARR growth represents an acceleration over 2025. Third, the delta between our guidance for ARR and revenue growth is driven by two factors: our services business, which is excluded from ARR and which we expect to grow at a slower rate than in 2025, and our term license revenue, where we expect growth to be roughly flat versus 2025, and thus will realize less upfront revenue in 2026.

Speaker #2: I also want to remind you that our 2025 RR included $2.8 million in Q1 from our acquisition of Identic Adjusting for this , our guidance for FX adjusted RR growth represents an acceleration over 2025 .

Speaker #2: Third , the delta between our guidance for RR and revenue growth is driven by two factors . Our services business , which is excluded from RR and which we expect to grow at a slower rate than in 25 .

Speaker #2: And our term license revenue , where we expect growth to be roughly flat versus 2025 . And thus will realize less upfront revenue in 2026 .

Speaker #2: Lastly , with regard to margins , we expect that 2026 will be an investment year specifically focused on strengthening our go to market strategy through meaningful increases in marketing spend .

Jim Caci: Lastly, with regard to margins, we expect that 2026 will be an investment year, specifically focused on strengthening our go-to-market strategy through meaningful increases in marketing spend. I want to reiterate that there is no change to our long-term target of 25% to 30% non-GAAP operating margins, while reminding you of our prior commentary that the margin trajectory between now and 2029 won't be perfectly linear. Importantly, as I mentioned, we expect that stock-based compensation will further decline as a percentage of revenues in 2026, and thus GAAP operating margins will in fact expand this year. In summary, we are proud of our Q4 and full year 2025 results, which are a testament to the execution of our teams and the growing demand for our platform offering.

Speaker #2: I want to reiterate that there is no change to our long-term target of 25% to 30% non-GAAP operating margins, while reminding you of our prior commentary that the margin trajectory between now and 2029 won't be perfectly linear.

Speaker #2: And importantly , as I mentioned , we expect the stock based compensation will further decline as a of revenues in 2026 and thus gap operating margins will in fact , expand this year .

Speaker #2: In summary , we are proud of our fourth quarter and full year 2020 results , which are a testament to the execution of our teams and the growing demand for our platform offering .

Speaker #2: As we look ahead , our conviction in the market opportunity and our ability to capitalize on it has only grown and we are excited for another strong year Thanks for joining us today .

Jim Caci: As we look ahead, our conviction in the market opportunity and our ability to capitalize on it has only grown, and we are excited for another strong year. Thanks for joining us today. With that, we would be happy to take your questions. Operator?

Speaker #2: And with that , we would be happy to take your questions . Operator

Speaker #1: We will now begin the question and answer session To ask a question , you may press star , then one on your telephone keypad .

Operator: We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Joseph Gallo with Jefferies. Please go ahead.

Speaker #1: If you are using a speakerphone , please pick up your handset before pressing the keys If at any time your question has been addressed and you would like to withdraw your question , please press star then two .

Speaker #1: At this time , we will pause momentarily to assemble roster The first question comes from Joseph Gallo with Jefferies Please go ahead .

Speaker #4: Hey guys , thanks for the question . Jim , I want to follow up with something you kind of said at the very end .

Joseph Gallo: Hey, guys. Thanks for the question. Jim, I wanna follow up with something you kind of said at the very end. It was a really impressive, you know, constant currency ARR guide, and constant currency always makes my head spin a little bit, but, you know, I believe it's an acceleration of new constant currency dollar growth versus what you saw this year. Just if you could unpack a little bit more of the visibility, confidence, and, you know, any specific product drivers into that guide?

Speaker #4: It was a really , really impressive , constant currency . IRR guide and constant currency always makes my head spin a little bit .

Speaker #4: But I believe it's an acceleration of new constant currency dollar growth versus what you saw this year . So just if you could unpack a little bit more the visibility confidence and any specific product drivers into that guide

Speaker #2: Yeah . Thanks , Joe . And you're spot on . I mean , it sometimes it does get a little confusing with FX So definitely appreciate you know , that complexity when we talk about that .

Jim Caci: Yeah. Thanks, Joe. I mean, you're spot on. Sometimes it does get a little confusing with FX, definitely appreciate, you know, that complexity when we talk about that. You're right. We're looking at an acceleration in terms of our guidance compared to last year, we're excited about that. We're seeing that really across the board. I think one of the things you've probably noticed is that we have this consistent kind of growth across all three regions, that's been very helpful in terms of really that balanced ARR approach, whether it's our regions or even our customer segments and even our verticals. We see that same demand moving forward. We see nice pipeline building across all of those metrics.

Speaker #2: But but you're right . We're looking at an acceleration in terms of our our guidance compared to last year . And so we're excited about that .

Speaker #2: We're seeing that really across the board . I think one of the things you've you've probably noticed is that we have this consistent kind of growth across all three regions .

Speaker #2: And that's been very helpful in terms of really that balanced IRR approach, whether it's our regions or even our customer segments and even our verticals. And so we see that same demand moving forward. We see a nice pipeline building across all of those metrics.

Speaker #2: And so that kind of gives us that confidence to see into the future . And look at that IRR guidance and feel good that , you know , we're going to be able to deliver on that acceleration .

Jim Caci: That kind of gives us that confidence to see into the future and look at that ARR guidance and feel good that, you know, we're gonna be able to deliver on that acceleration.

Speaker #4: Awesome . No , that's really clear and helpful . And then maybe as a follow up TJ , you spent a lot of time talking about AI on the call .

Joseph Gallo: Awesome. No, that's really clear and helpful. Then maybe, you know, as a follow-up, you know, TJ, you spent a lot of time talking about AI on the call, and it's certainly been a buzz for the past few years, but you haven't necessarily seen, you know, that excitement materialize into revenue for cybersecurity vendors. Are you seeing that now, or is that still more of a longer-term gradual driver?

Speaker #4: And it's certainly been a buzz for the past few years . But you haven't necessarily seen , you know , that excitement materialize into revenue for cybersecurity vendors .

Speaker #4: Are you seeing that now or is that still more of a longer term , gradual driver Yeah .

Tianyi Jiang: We are seeing enterprises actually all have AI projects and deliver realizations around efficiency, especially easier workloads like coding, customer support, and marketing content generation. On the Microsoft side, a lot of folks are conflating the Copilot adoption as synonymous with AI adoption. That's not the case. We actually see companies actually deploying AI in various forms, whereas the broader Copilot usage tend to lag behind even for firms that are fully licensed. We see that this is due to more the lack of enterprise data readiness, which tend to yield suboptimal experience for rolling out Copilot. This is part of change management.

Speaker #3: We are seeing enterprises actually all have AI projects and deliver Realizations around efficiency , especially easier workloads like coding , customer support , market marketing , content generation on the Microsoft side , a lot of folks are conflating the copilot adoption as synonymous with AI adoption .

Speaker #3: That's not the case. We actually see companies deploying AI in various forms, whereas the broader Copilot usage tends to lag behind, even for firms that are fully licensed.

Speaker #3: We see that this is due to more the lack of enterprise data readiness , which tend to yield suboptimal experience for rolling out Copilot and also , this is part of change management .

Speaker #3: It's tough for business user to , you know , try several times and have some suboptimal output due to lack of high quality data and some of the inaccuracies .

Tianyi Jiang: It's tough for a business user to, you know, try several times and have some suboptimal output due to lack of high quality data and some of the inaccuracies. This led to some trust issues. These are the exact kind of problems we address for our customers and partners. We do see tremendous demand in that regard.

Speaker #3: So this led to some trust issues. But these are the exact kind of problems we address for our customers and partners. So we do see tremendous demand in that regard.

Speaker #4: Awesome . Nice job guys . Thank you Thanks , Joe . Thanks , Joe .

David Brown: Awesome. Nice job, guys. Thank you.

Joseph Gallo: Awesome. Nice job, guys. Thank you.

Tianyi Jiang: Thanks, Joe.

Chirag Ved: Thanks, Joe.

Jim Caci: Thanks, Joe.

Speaker #1: The next question comes from Kirk Materne with Evercore ISI . Please go ahead

Operator: The next question comes from Kirk Materne with Evercore ISI. Please go ahead.

Speaker #5: Hey , this is Chirag . On for Kirk . Congrats on the quarter . And thanks for taking my question TJ . In your prepared remarks , you touched on developing a hybrid pricing strategy over time that balances seats and usage .

Chirag Ved: Hey, this is Chirag on for Kirk. Congrats on the quarter, and thanks for taking my question. TJ, in your prepared remarks, you touched on developing a hybrid pricing strategy over time that balances seats and usage. Can you speak to where in the platform you might see the opportunity for this over time and any early feedback from partners or customers? Thank you.

Speaker #5: Can you speak to where in the platform you might see the opportunity for this over time and any early feedback from partners or customers Thank you

Speaker #3: Yeah , thank you for that question . So today we already have capacity based licensing across products like migration . And also IaaS and PaaS data protection and governance .

Tianyi Jiang: Yeah. Thank you for that question. Today we already have capacity-based licensing across products like Fly, and also IaaS and PaaS data protection and governance. We have extended very much in the compute infrastructure, not only just productivity workloads, that's Microsoft 365 and Google Workspace, but the compute side, which is Azure, GCP, and AWS. There it's actually natural for customers to think about consumption-based licensing. This is also how hyperscalers think about it as well. There's a blend of seat versus consumption-based. We also see in the age of agentic AI, where there are more sophisticated agent being deployed. These agents are actually fully licensed from a software perspective, from a licensing perspective, looks like a virtual employee.

Speaker #3: So we have extended very much in the compute infrastructure , not only just productivity workloads . That's office Cloud and Google Workspace , but the compute side , which is Azure , GCP and AWS .

Speaker #3: So there it's actually natural for customers to think about consumption based licensing . And this is also how hyperscalers think about it as well .

Speaker #3: It's a blend of sweet versus consumption based . We also see in the age of AI where they're more sophisticated agent being deployed , these agents are actually fully licensed to from a software perspective , from a licensing perspective .

Speaker #3: Looks like a virtual employee . So you have agents that have an email account that has a CRM login that also have access to cloud storage access and accounts .

Tianyi Jiang: You have agents that have an email account, that has a CRM login, that also have access to cloud storage, access and accounts. From that perspective, there's also that seat count conversation. Overall, we are very much focused on working with customers regardless of the structure, to ensure that they are able to maximize their investment to drive customer value. So far we haven't seen overall seat count reduction in a major way, because there's a combination of consumption. There's also this virtual AI licensing, agent licensing. We'll continue to evaluate and looking at work to be done, not just the people doing it.

Speaker #3: So from that perspective , there's also that seat count conversation . But overall , we're very much focused on working with customers regardless of the structure to ensure that they are able to maximize their investment to drive customer value .

Speaker #3: So so far , we haven't Seen overall seat count reduction in a major way because that's there's a combination of consumption . There's also this virtual AI licensing agent licensing .

Speaker #3: So we'll continue to evaluate and looking at work to be done , not just the people doing it . So this is where the IaaS and PaaS expansion with that consumption leaning will be a bigger piece of our business going forward

Tianyi Jiang: This is where the IaaS and PaaS expansion, with the consumption leaning, will be a bigger piece of our business going forward.

Speaker #5: Sounds good. And if I could just squeeze in one more on that line of thought—AI governance clearly remains a strategic focus.

Chirag Ved: Sounds good. If I could just squeeze in one more on that line of thought. AI governance clearly remains a strategic focus. As we look into 2026, how early are we in terms of customers meaningfully monetizing agent governance? What are some of the leading indicators that you're seeing that signal that AI-driven use cases are becoming a more material ARR driver rather than AI readiness spending?

Speaker #5: So as we look into 2026 , how early are we in terms of customers meaningfully monetizing agent governance ? And what are some of the leading indicators that you're seeing that signal that AI driven use cases are becoming a more material ?

Speaker #5: RR driver rather than AI readiness spending ?

Speaker #3: That's a great question . I think the buzzword of the year is AI , a generic governance . So we have you see Microsoft released their agent governance capabilities .

Tianyi Jiang: That's a great question. I think the buzzword of the year is AI agentic governance. We have seen, you see Microsoft released their agent governance capabilities. We actually announced our capabilities at the same time, AgentPulse, which covers multi-cloud. Particularly we're looking at agentic not only governance from a risk exposure perspective, access control, but also the cost. We hear a lot of customers talking about, hey, we got an agent running 24 by 7, and all of a sudden it's racking up, you know, a $100,000 bill. That cost thing is real, and we are actively working with our partners and customers to monitor and ring in that agent aspect of it.

Speaker #3: We actually announced our capabilities at the same time , agent Pulse , which covers multi-cloud and particularly we're looking at agentic not only governance from a risk exposure perspective , access control , but also the cost We hear a lot of customers talking about , hey , we got an agent running 24 by seven , and all of a sudden it's racking up $100,000 bill .

Speaker #3: So that cost thing is real . And we are actively working with our partners and customers to monitor and ring in that agent aspect of it .

Speaker #3: So we already seeing the beginning of revenue generation from that type of need . But that's definitely something that's very much in demand .

Tianyi Jiang: We already seeing, the beginning of revenue generation from that type of need, but that's definitely something that's very much in demand. There's a ton of experimentation with agentic AI, as you would expect. The risk and control and cost, it's very much top of mind for our customers.

Speaker #3: There's a ton of experimentation with AI , as you would expect . So the risk and control and cost , it's a very much top of mind for our customers .

Speaker #5: Perfect . Thanks so much

Chirag Ved: Perfect. Thanks so much.

Speaker #1: The next question comes from Rudy Kessinger with D.A. Davidson . Please go ahead

Operator: The next question comes from Rudy Kessinger with D.A. Davidson. Please go ahead.

Speaker #6: Hey , thanks for taking my questions . Congrats on the quarter and the strong guide here , Jim . I appreciate the call out of the inorganic contribution to net new AR and Q1 last year .

Rudy Kessinger: Hey, thanks for taking my questions. Congrats on the quarter, and the strong guide here. Jim, I appreciate the call-out of the inorganic contribution to net new ARR in Q1 last year. I guess, are there any further parameters you could give us to help kind of, you know, think about the sequential pacing of net new ARR throughout the year and specifically in Q1?

Speaker #6: I guess . Are there any further parameters you could give us to help ? Kind of , you know , think about the sequential pacing of net new RR throughout the year and specifically in Q1

Speaker #2: Yeah , yeah . Thanks , Rudy . Good question . So , you know , I would say we're probably going to be fairly consistent with what we said in the past on this topic .

Jim Caci: Yeah. Yeah. Thanks, Rudy. Good question. You know, I would say we're probably gonna be fairly consistent with what we said in the past on this topic. As you know, we don't guide today to quarterly ARR, but what we've historically seen is that Q1 is generally a step down sequentially from Q4, and it's usually our lowest quarter in terms of ARR. We'd see a pickup in Q2, and the second half of the year is generally stronger than that first half of the year. I think we're gonna see that same kind of, you know, that play out exactly similar to what we've seen in the past. I wouldn't expect any change there. You're right, that we do have that little bit of a call-out from last year.

Speaker #2: So as you know , we don't guide today to quarterly IRR , but what we've historically seen is that Q1 is generally a step down sequentially from Q4 .

Speaker #2: And it's usually our our lowest quarter in terms of IRR . And then we'd see a pickup in Q2 . And then the second half of the year is generally stronger than that first half of the year .

Speaker #2: And so I think we're going to see that same kind of , you know , that play out exactly similar to what we've seen in the past .

Speaker #2: So I wouldn't expect any change there . And then you're right . We do little bit of a call out from last year .

Speaker #2: We added that $2.8 million in Q1 last year . So as we think about this year , obviously we're not going to have that incremental .

Jim Caci: We added that $2.8 million in Q1 last year. As we think about this year, obviously we're not gonna have that incremental. Again, we feel really good, you know, about where we're gonna land for Q1 and really the year, and feel good about that overall guidance.

Speaker #2: But again, we feel really good, you know, about where we're going to land for Q1 and really the year, and feel good about that overall guidance.

Speaker #6: Got it . And then I know you called out you saw higher migration contribution . You know , in the second half of 25 .

Rudy Kessinger: Got it. I know you called out, you saw higher migration contribution in the second half of 25, and we can see the modernization ARR growth really accelerated. It was close to 40% year-over-year. Your 2026 ARR guide, does that assume that you continue to see growth in that modernization ARR, or does it moderate a bit, or what does it assume? That re-acceleration growth in that modernization suite is quite the acceleration from the past 2 years. I'm curious just what your guide assumes on that front.

Speaker #6: And we can see the modernization AR growth really accelerated as close to 40% year over year . Your 2026 AR guide does that assume that , you continue to see growth in that modernization ?

Speaker #6: Or does it moderate a bit ? Or what does it assume because that that acceleration of growth in that modernization suite is is , you know , quite deceleration from the past two years ?

Speaker #6: So I'm curious just what your guide assumes on that front .

Speaker #2: Yeah . Good question . I mean , we oh , sure . Go ahead .

Jim Caci: Yeah, good question.

David Brown: Go ahead, Jim. I'll go first.

Tianyi Jiang: Go ahead, Jim. I'll go first [crosstalk].

Jim Caci: I mean. Oh, sure.

David Brown: Go ahead.

Jim Caci: Go ahead.

Speaker #3: Yeah . On the mike . Yeah . And then you can go and modernization . Yeah . So yeah we do see higher demand for for migration .

Jim Caci: On the mic. You can go. On modernization.

Tianyi Jiang: On the mic. You can go. On modernization.

David Brown: Yeah.

Tianyi Jiang: Yeah.

Jim Caci: Yeah, we do see high demand for migration. There's. We wanna articulate that migration is effectively data movement. Data would never stop moving between different cloud providers, between on-prem legacy to modern workloads in the cloud. You have divestitures, you have acquisitions, that will continue to happen. That's a very important aspect of our tip of the spear approach to engage partners and customers early. You have seen since we've gone public, we have actually given much of the service revenue opportunities on monetization, data integration, and migration to our partners. That also leaves tremendous value for us to engage our partners and customers to buy our product.

Tianyi Jiang: Yeah, we do see high demand for migration. There's. We wanna articulate that migration is effectively data movement. Data would never stop moving between different cloud providers, between on-prem legacy to modern workloads in the cloud. You have divestitures, you have acquisitions, that will continue to happen. That's a very important aspect of our tip of the spear approach to engage partners and customers early. You have seen since we've gone public, we have actually given much of the service revenue opportunities on monetization, data integration, and migration to our partners. That also leaves tremendous value for us to engage our partners and customers to buy our product.

Speaker #3: There's so we want to articulate that migration is effectively data movement data will never stop moving between different cloud providers between on prem legacy to modern workloads in the cloud .

Speaker #3: You have divestitures . You have acquisitions . So that will continue to happen . That's a very important aspect of our tip of the spear approach to engage partners and customers .

Speaker #3: Early . And you have seen since we've gone public , we have actually given much of the service revenue opportunities on monetization , data integration , migration to our partners .

Speaker #3: But that also leaves tremendous value for us to engage our partners and customers via our product . And then after that , we have the day two solutions around governance , around data protection , ransomware detection and recovery .

Jim Caci: After that, we have the day two solutions around governance, around data protection, ransomware detection, and recovery, and of course now with license control, cost control. We will continue to see this modernization to be a core part of our platform as a way to engage and expand our footprint. Jim will talk a bit about the GRR headwind. There's two factors. When the migration projects is over, what we have in day two solutions, if the ARR is less than a migration project on license piece, it will lead to a perceived GRR decline, and that's vast majority of the cases. Very few cases where after migration project's over, we don't have a day two solution running in the customer environment. Yeah.

Tianyi Jiang: After that, we have the day two solutions around governance, around data protection, ransomware detection, and recovery, and of course now with license control, cost control. We will continue to see this modernization to be a core part of our platform as a way to engage and expand our footprint. Jim will talk a bit about the GRR headwind. There's two factors. When the migration projects is over, what we have in day two solutions, if the ARR is less than a migration project on license piece, it will lead to a perceived GRR decline, and that's vast majority of the cases. Very few cases where after migration project's over, we don't have a day two solution running in the customer environment. Yeah.

Speaker #3: And of course , now with license control , cost control . So we will continue to see this modernization to be a core part of our platform as a way to engage and expand our footprint .

Speaker #3: It does Jim will talk a bit about the GR headwind . There's a two factors . When the migration projects is over . What we have in day two , solutions .

Speaker #3: If the AR is less than migration projects on license piece , it will lead to a perceived Grr decline . And that's vast majority of the cases .

Speaker #3: Very few cases where after migration projects over , we don't have a day to solution running in the customer environment

Speaker #2: Yeah . The only the only thing I would add to that , because I think you did a good job , TJ , of summarizing that would be maybe to come back to your question , Rudy , about our expectations for next year .

Jim Caci: The only thing I would add to that, 'cause I think you did a good job, TJ, of summarizing that, would be maybe to come back to your question, Rudy, about our expectations for next year. I think, you know, we would expect to see, you know, the similar kind of growth next year, where again, we would expect this to be a, as TJ kind of alluded to, continue to be top of mind for our customers and be part of their strategy. Again, we would expect this to continue to grow. I think as a percentage of our overall ARR, it steps up a little bit.

Speaker #2: I think , you know , we would expect to see , you know , the similar kind of growth next year , where , again , we would expect this to be a as TJ kind of alluded to , continued to be top of mind for our customers and be part of their strategy .

Speaker #2: So again , we we would expect this to continue to grow , I think as a percentage of our overall IRR , it steps up a little bit .

Jim Caci: We're mindful of that when we think about our GRR, which is why you've probably heard us talking about all the GRR initiatives we've had over the past year or so, and we're continuing to work on those. We believe that with some of those initiatives that we're naturally seeing some pickup in terms of GRR, which will offset any really headwind coming from migration in GRR. We did wanna point it out as just that is what we're seeing and obviously those are the dynamics.

Speaker #2: And so we're mindful of that when we think about our Grr , which is why you've probably heard us talking about all the Grr initiatives we've had over the past year or so .

Speaker #2: And we're continuing to work on those . So we believe that with some of those initiatives that we're naturally seeing some pickup in terms of Grr , which will offset any really headwind coming from migration and grr .

Speaker #2: But we did want to point it out as just to that is what we're seeing . And obviously those are the dynamics .

Speaker #6: Great . Thank you guys .

Rudy Kessinger: Great. Thank you, guys.

Speaker #4: Thanks .

Jim Caci: Thanks, Rudy.

Speaker #1: The next question, the next question comes from Jason Ader with William Blair. Please go ahead.

David Brown: Thank you.

Tianyi Jiang: Thank you.

Operator: The next question comes from Jason Ader with William Blair. Please go ahead.

Speaker #7: Hi . Good afternoon guys . For for Jim . Just wanted to talk briefly about free cash flow . It looks like it was down a little bit on a dollar basis this year .

Jason Ader: Good afternoon, guys. For Jim, just wanted to talk briefly about free cash flow. Looks like it was down a little bit on a dollars basis this year. I think you had initially expected it to be up a bit. Maybe just talk about what is happening there, and then maybe just give us some guidelines for 2026 on free cash flow.

Speaker #7: I think you had initially expected it to be up a bit. Maybe just talk about what is happening there, and then maybe just give us some guidelines for 2026 on free cash flow.

Speaker #2: Sure . Yeah . I'm glad you brought it up , Jason . So , you know , I think maybe two things to to call out .

Jim Caci: Sure. Yeah, I'm glad you brought it up, Jason. You know, I think maybe two things to call out. One is that in 2025 we did have, at the beginning of the year, some, what I would call one-time tax payments that needed to be made. That definitely brought down some of the free cash flow that we would've otherwise anticipated, and that was to the tune of about $7 million. I think we talked about that in Q1. That's one factor. The second factor is we did have a very strong Q4, and we did have a number of opportunities that were actually invoiced in Q4 of this year, and last year they were actually invoiced in Q3 and collected in Q4.

Speaker #2: One is that in 25 we did have at the beginning of the year , some what I would call one time tax payments that needed to be made .

Speaker #2: And so that definitely brought down some of the free cash flow that we would have otherwise anticipated . And that was to the tune of about $7 million .

Speaker #2: I think we talked about that in Q1 . So that's one factor . The second factor is we did have a very strong Q4 , and we did have a number of of opportunities that were actually invoiced in Q4 of this year .

Speaker #2: And last year they were actually invoiced in Q3 . And collected in Q4 . And so those opportunities remained outstanding . At the end of this year .

Jim Caci: Those opportunities remained outstanding at the end of this year, and a couple of those had to do with our public sector customers. We understand the challenges there. That also had an impact on our free cash flow because in 2024 those would have been collected, and in 2025 they were still receivables at the end of the year. That had a little bit of a timing issue. Again, I don't think there's a challenge or a problem or a concern. Again, when we think about 2026, I think our free cash flow is still gonna be above what we would consider our non-GAAP operating income. I think that trend would continue, and we would expect to see that in 2026.

Speaker #2: And a couple of those had to do with our public sector customers . And so we understand the challenges there . So that also had an impact on our free cash flow , because in 24 , those would have been collected .

Speaker #2: And in 25 they were still receivables at the end of the year . So that had a little bit of a timing issue .

Speaker #2: And so again , I don't think there's a challenge or a problem or a concern . And again , when we think about 26 , I think our free cash flow is still going to be above what we would consider our non-GAAP operating income .

Speaker #2: So I think that trend would continue . And we would expect to see that in 26 .

Speaker #7: Okay . But also fair to say that the term is being being a little bit lighter in , in 26 , in the mix impacts your free cash flow because you don't get the cash up front .

Jason Ader: Okay. Also fair to say that the term biz being a little bit lighter in 26 in the mix impacts your free cash flow because you don't get the cash up front. I mean, I'm sorry, because you get the cash up front on the term license, and if that's gonna be a little bit smaller in the mix, then that'll have a headwind to free cash flow, correct?

Speaker #7: I mean , I'm sorry because you get the cash up front on a term license . And if that's going to be a little bit smaller in the mix , then that that'll that'll have a headwind to to free cash flow .

Speaker #7: Correct .

Speaker #2: Well let me , let me , let me just dive into that a little bit because it's worthwhile . So when we think about that term license , remember that's only the revenue recognition that customer is the same as a SaaS customer where we're building up front .

Jim Caci: Well, let me just dive into that a little bit 'cause it's worthwhile. When we think about that term license, remember that's only the revenue recognition. That customer is the same as a SaaS customer, where we're billing up front. It's the same dynamic, it's the same ARR, it's the same billing structure. It's just the revenue recognition on the term is more upfront as opposed to ratably over the course of the contract. Cash flow is unchanged, but the revenue is different. As we see that our term license becomes less and less a percentage of the total, that does impact the revenue recognized in that year, and it becomes more ratable like SaaS.

Speaker #2: So it's the same dynamic , it's the same RR , it's the same billing structure . It's just the revenue recognition on the term is more up front as opposed to radically over the course of the contract .

Speaker #2: So cash flow is unchanged . But the revenue is different . And so as we see that our term license becomes less and less a percentage of the total , then that does impact the revenue recognized in that year .

Speaker #2: And it becomes more radical, like SaaS.

Speaker #7: Okay, I guess what I was referring to is, if you do a three-year term deal, you do not collect all the cash up front.

Jason Ader: Okay. I guess what I was referring to is if you do a three-year term deal, you do not collect all the cash up front, you just kind of collect it annually. Is that the right way to think about it?

Speaker #7: You just collect it annually . Is that is that the right way to think . about it ? Okay .

Jim Caci: That's right.

Jason Ader: Okay. Okay.

Speaker #2: That's that's the right way to think about it . Is our multi-year contracts are still paid annually . Okay . And then the revenue would be different obviously for SaaS versus term .

Jim Caci: That's the right way to think about it, is our multi-year contracts are still paid annually.

Jason Ader: Okay.

Jim Caci: The revenue would be different, obviously for SaaS versus term.

Speaker #7: Okay . Helpful . And then and then one for TJ , TJ , can you elaborate on the investments you're making in 2026 .

Jason Ader: Okay. Helpful. Then one for TJ. TJ, can you elaborate on the investments you're making in 2026? You talked about it as an investment year, and particularly around your hiring plans. I know there's, you know, there's just a ton of fear out there about jobs and, you know, how many jobs, you know, are gonna be around in five years for knowledge workers and engineers, et cetera. Maybe just talk to that in addition to just the specific investments you're making in 2026.

Speaker #7: You talked about it as an investment year . And particularly around your hiring plans I know there's you know , there's just a ton of fear out there about about jobs .

Speaker #7: And you know , how how how many jobs , you know , are going to be around in in five years for , for knowledge workers and engineers , etc.

Speaker #7: maybe just talk to that in addition to just the specific investments you're making in 2026 .

Speaker #3: Thank you Jason . That's a great question . So we're not slowing down on the tech side . We have seen productivity improvements with like other tech companies leveraging AI driven Ides to get high productivity improvements .

Tianyi Jiang: Thank you, Jason. That's a great question. We're not slowing down on the tech side. We have seen productivity improvements with like other tech companies leveraging AI-driven IDEs to get high productivity improvement. In our case, we use GitHub Copilot. There we also continue to invest into tech, but at the same time, you've seen in Jim's prepared remarks, we have actually controlled the cost of that very well. We continue to have the efficiency. Not only do we have tech productivity improvements, but we still monitor the efficiency very carefully because profitable growth is the mantra. On the tech side, we are not slowing down in term of or reducing headcount.

Speaker #3: In our case , we use GitHub Copilot . So they're we are also continue to invest into tech . But at the same time , you're seeing in gyms prepared remarks .

Speaker #3: We have actually controlled the cost of that very well . So we continue to have the efficiency . So not only do we have tech productivity improvements , but we still monitor the efficiency very carefully because profitable growth is the mantra .

Speaker #3: So on the tech side , we are not slowing down in terms of or reducing headcount on the non-tech side , we are very actively looking at productivity , continue productivity improvement , leveraging AI .

Tianyi Jiang: On the non-tech side, we are very actively looking at productivity, continued productivity improvement, leveraging AI. There's a number of initiatives internally leveraging AI so that we can really continue to accelerate our strong business presence and global go-to-market flywheel, that we have going, both for the enterprise segment as well as the channel and partner investment in the mid-market SMB segment. Lastly, it's not related to headcount, but from a product perspective, you hear we talk about the scaling of data fabric layer. That's something we're super excited about.

Speaker #3: There is a number of initiatives internally leveraging AI so that we can really continue to accelerate our strong business presence and global go to market .

Speaker #3: Flywheel that we have , going both for the enterprise segment as well as the channel and partner investment in the mid-market SMB segment .

Speaker #3: And lastly , it's not related to headcount , but from a product perspective , you Here we talk about the scaling of data fabric layer .

Speaker #3: So that's something we're super excited about . You'll hear more in the coming months that that's we because we actually have close to a zettabyte of unstructured data that we're now surfacing out to our customers to what we call a new data intelligence service offering that will allow combine with AI and UX enhancements that will allow more real time unstructured data governance and intelligence , at scale .

Tianyi Jiang: You'll hear more in the coming months because we actually have close to a zettabyte of unstructured data that we're now surfacing out to our customers through what we call a new data intelligence and service offering that would allow in combined with AI and UX enhancements that will allow more real-time unstructured data governance intelligence at scale to better service more user persona. This will massively broaden our data protection and management platforms consumption base and lead to, we believe, much further stickiness and realization of value of our offerings, which is the core of infrastructure, base level infrastructure for all AI projects and deployments across companies. All these things you hear me talking is really focused on growth.

Speaker #3: To better service , more user persona . So this will massively broaden our data protection and management platforms . Consumption base and lead to , we believe , much further stickiness and realization of value of our offerings , which is the core of infrastructure base level infrastructure for all AI projects and deployments across companies .

Speaker #3: So all these things , you hear me talking is really focused on growth . We think the pie is getting bigger .

Tianyi Jiang: We think the pie is getting bigger.

Speaker #7: Thanks guys . Good luck

Jason Ader: Thanks, guys. Good luck.

Speaker #4: Thank you .

Tianyi Jiang: Thank you.

Speaker #2: Thanks , Jason .

Jim Caci: Thanks, Jason.

Speaker #1: The next question comes from Erik Suppiger with B Riley Securities . Please go

Operator: The next question comes from Erik Suppiger with B. Riley Securities. Please go ahead.

Speaker #4: Yeah . Thanks for taking the question . First off , on the operating margin guidance , looks like it's going to be relatively flat in fiscal 26 .

Erik Suppiger: Yeah, thanks for taking the question. First off, on the operating margin guidance, looks like it's gonna be relatively flat in fiscal 26. What will you change as you get past fiscal 26 so that you can start to expand those margins to get to your target for fiscal 29? What gives you confidence that you're not gonna have a slowdown in ARR as you invest less?

Speaker #4: What will you change as you get past fiscal '26 so that you can start to expand those margins to get to your target for fiscal '29?

Speaker #4: And what gives you confidence that you're not going to be you're not going to have slowdown in AR as you as you , as you , as you invest less

Speaker #2: Yeah . Great question , Erik . And so I think one of the things that gives us confidence is , you know , our our history now over the past three years of this profitable growth strategy and driving significant IRR growth and , okay , there's a bunch of sirens outside the .

Jim Caci: Yeah. Great question, Erik. I think one of the things that gives us confidence is, you know, our history now over the past three years of this profitable growth strategy and driving significant ARR growth. Okay, there's a bunch of sirens outside the... So hopefully you guys aren't hearing that, but all kinds of police activity outside. Okay, great. I think that gives us confidence, right? That we've executed now over the past three years on this growth strategy and delivering both profitability and ARR growth.

Speaker #2: So hopefully you guys aren't hearing that . But all kinds of police activity outside okay great . So I think that gives us confidence , right .

Speaker #2: That we've we've executed now over the past three years on this growth strategy . And delivering both profitability and AR growth . And what we decided to do for really for , for 26 is continue to do that .

Jim Caci: What we've decided to do for really, for 2026, is continue to do that but look at making some outsized investments, particularly as I called out in the prepared mark in marketing in particular, to really take advantage of this dynamic in this environment we're in right now and look to really spend more than we have in the past on marketing and really kind of lean into our go-to-market positioning. That's different. Some of the investments that TJ alluded to, both technically for our development teams, but even operationally, we are making investments both in 2025 that just passed, but also in 2026. Those investments won't really pay significant dividends in 2026, but we're talking about operational efficiency from a technology point of view, AI adoption, and those will have benefits going forward.

Speaker #2: But look at making some outsized investments , particularly as I called out in the prepared remarks in marketing in particular , to really take advantage of this , this dynamic in this environment we're in right now .

Speaker #2: And look to really spend more than we have in the past on marketing and really kind of lean into our go market positioning .

Speaker #2: So , so that's different . Some of the investments that TJ alluded to , both technically for our development teams , but even operationally we are making investments both in 25 that just passed , but also in 26 .

Speaker #2: And those investments will really pay significant dividends in 26 . But we're talking about operational efficiency from a technology point of view , AI adoption .

Speaker #2: And those will have benefits going forward . So some of our scalability moving forward should be much more efficient . So so that gives me the confidence that , you know , that .

Jim Caci: Some of our scalability moving forward should be much more efficient. That gives me the confidence that, you know, that 2026, although the operating margins are relatively flat, that we will be set up to deliver expanded margins moving forward.

Speaker #2: 26 although the operating margins are relatively flat , that we will be set up to deliver expanded margins moving forward .

Speaker #4: Okay . Very good . Then your growth in in your larger customers was very good . Can you comment as to whether or not that's coming more from seed expansion at those customers , is that layering on new services , or is it the combination of the two ?

Erik Suppiger: Okay, very good. Your growth in your larger customers was very good. Can you comment as to whether or not that's coming more from seat expansion at those customers, or is that layering on new services, or is it the combination of the two?

Speaker #2: Yeah . So , you know , historically , if you look at our gnrhr , it is mostly coming from cross-selling activities of customers consuming additional products more so than seats .

Jim Caci: Yeah. You know, historically, if you look at our NRR, it is mostly coming from cross-selling activities of customers consuming additional products, more so than seats. The only exception to that is our MSP channel. Generally our MSPs, our more successful MSPs, obviously they're expanding, they're adding seats that they're managing for their customers, we see seat expansion there. Generally, the driver has always been and continues to be adoption of additional components in our platform, that's been the key driver, we expect that to continue.

Speaker #2: Now, the only exception to that is our MSP channel. So generally, our MSPs are more successful MSPs. Obviously, they're expanding.

Speaker #2: They're adding seats that they're managing for their customers . And so we see seed expansion there . But generally the the driver has always been and continues to be adoption of additional components in our platform .

Speaker #2: And that's been the key driver . And we expect that to continue .

Speaker #4: Very good. Thank you.

Erik Suppiger: Very good. Thank you.

Speaker #2: Thanks , Eric .

Jim Caci: Thanks, Erik.

Speaker #1: The next question comes from Derrick Wood with TD Cowan . Please go ahead

Operator: The next question comes from Derrick Wood with TD Cowen. Please go ahead.

Derrick Wood: Thank you, guys. Congrats on a strong quarter. First one for TJ. Obviously a lot of concern of software disruption from the LLM vendors as they move up stack and into more of the workflow orchestration layer. Obviously, you don't seem to be seeing it at all, but how do you think about the potential risks of these vendors encroaching on your part of the market? How should we think about your defensibility in these core areas?

Speaker #8: Thank you guys . Congrats on a strong quarter . First one for TJ . Obviously a lot of concern of software disruption from the LLM vendors as they move up stack and into more of the workflow layer .

Speaker #8: Obviously you don't seem to be seeing it at all . But how do you think about the potential risks of these vendors encroaching on your part of the market ?

Speaker #8: And how should we think about your defensibility in these in these core areas ?

Speaker #3: Yeah , that's a great question . So we always say that we continue to see robust growth . We have multiple vector of growth .

Tianyi Jiang: Yeah, that's a great question. We always say that we continue to see robust growth. We have multiple vector growth. We have continued to accelerate our new logo acquisition. There's still tons of greenfield opportunities, both in existing regions and newer ones. From our existing customers, we have a massive upsell opportunity, as clarity demonstrated through the new customer acquisitions, and the cohort increase in ARR. Of course, our channel, focused on MSPs, still our fastest-growing segment, unlocking SMB and mid-market. We have not seen slowdown in SMB as some other vendors have seen. Also from a geography perspective.

Speaker #3: So we have continued to accelerate our new logo acquisition . There's still tons of greenfield opportunities both existing regions and newer ones from our existing customers .

Speaker #3: We have a massive upsell opportunity as clarity demonstrated through the new customer acquisitions and the cohort increase in AR . And of course , our channel focussed on MSPs still our fastest growing segment , unlocking SMB and mid-market .

Speaker #3: We have not seen slowdown in SMB as some other vendors have seen , and also from a geography perspective , we attribute this much to our platform expansion of our enhanced products and our capability around the fundamental under belly of the data curation , data governance and the context of data for which AI grounds on we even called out anthropic identification of that specific critical mode in there .

Tianyi Jiang: We attribute this much to our platform expansion of our enhanced products and our capability around the fundamental under belly, right, of the data curation, data governance, and the context of data for which AI grounds on. We even called out Anthropic's identification of that specific critical moat in their you know Tuesday conversations. That, we believe, is something that's very, very strong in our perspective as a defensible moat. Of course, you know, software, we think isn't dead. It's really, you know, there's gonna be far more software to be written. The ability to write software and costs have come down and become easier. There are a lot more niche areas that can now serve by software.

Speaker #3: You know , Tuesday conversations and that , we believe , is something that's very , very strong in our perspective as a defensible mode .

Speaker #3: And of course , you know , software , we think is isn't dead . It's really you know , there's going to be far more software to be written .

Speaker #3: The ability to write software and costs have gone down and become easier . So there are a lot more niche areas that can now serve by software .

Speaker #3: We think there's an infinite amount of software to be written . So AI can definitely lower the barrier to entry . But for critical enterprise scale data management , you actually need more rigorous approach to this infrastructure for AI .

Tianyi Jiang: We think there's an infinite amount of software to be written. AI can definitely lower the barrier to entry. For critical enterprise scale data management, you actually need more rigorous approach to this infrastructure for AI, and that's the layer we play in. We enable high quality data to give you better AI-driven outcome. This isn't gonna change. We are seeing tremendous demand and no sign of slowing.

Speaker #3: And that's the layer we play in . So we enable high quality data to give you better AI driven outcome . And this isn't going to change .

Speaker #3: So we are seeing tremendous demand . And no sign of slowing

Speaker #8: Okay . Great . Yeah . Probabilistic technology probably not that great in enterprise security needs . And compliance needs . But good to hear Jim .

Derrick Wood: Okay, great. Yeah, probabilistic technology probably not that great in enterprise security needs and compliance needs, but good to hear. Jim, real quick for you, could you just comment on how the US Fed business performed relative to expectations and what you're seeing in terms of pipeline and demand?

Speaker #8: Real quick for you . Could you just comment on how the US fed business performed relative to expectations and what you're seeing in terms of pipeline and demand

Speaker #2: Yeah , so great question . So you know , what we saw in Q4 was , you know , I would say similar to what we had seen in Q3 in that , you know , the the public sector and particularly fed space growth rate was was lower than North America in general .

Jim Caci: Yeah. Great question. You know, what we saw in Q4 was, you know, I would say similar to what we had seen in Q3 in that, you know, the public sector and particularly Fed space, growth rate was lower than North America in general. You know, that's why, you know, I think I said in the remarks, we're really pleased that, you know, North America still grew 20% despite that. Now, having said that, you know, we still are very keen on the public sector. It's a big part of our global strategy, still part of our North America strategy. For us, there's really multiple components within public sector.

Speaker #2: So , that's why , you know , I think I said in the remarks we're really pleased that , you know , North America still grew 20% despite that .

Speaker #2: Now , having said that , you know , we still are very , very keen on the public sector . It's a big part of our global strategy .

Speaker #2: Still part of our North America strategy . And for us , there's really multiple components within public sector . We've all been talking about the federal and that's really the federal civilian piece of the pub sector .

Jim Caci: We've all been talking about the federal, and that's really the federal civilian piece of the pub sector, but there's obviously state and local, and there's also Department of Defense. Those areas of the business, the weakness that we saw this year and kind of anticipated was in that civilian piece, but the other parts of the business are very strong, and obviously globally, it's still a very key component to our growth strategy in the future. We, you know, we're not backing down on public sector. We know it was a tough year, but we're really proud of the team that even in this difficult time, executed as well as they did.

Speaker #2: But there's obviously state and local and there's also Department of Defense . So , so those areas of the business , the weakness that we saw this year and kind of anticipated was in that civilian piece .

Speaker #2: But the other parts of the business are very strong and obviously globally , it's still a very key component to our growth strategy in the future .

Speaker #2: So we you know , we're not backing down on public sector . We know it was a tough year , but we're really proud of the team that even in this difficult time , executed as well as they did

Speaker #8: Thank you

Derrick Wood: Thank you.

Speaker #2: Thanks , Derek .

Jim Caci: Thanks, Derrick.

Speaker #1: And the final question will come from Joe Vandrey with Scotiabank . Please go ahead .

Operator: The final question will come from Joe Vandrick with Scotiabank. Please go ahead.

Speaker #9: Thanks . I'll keep it to one question . So if I look at the breakdown of of IRR , it looks like the control suite came down from 28% of the total last year in Q4 to now , 26% of total IRR .

David Brown: Thanks. I'll keep it to 1 question. If I look at the breakdown of ARR, it looks like the Control Suite came down from 28% of the total last year in Q4 to now 26% of total ARR. Can you talk about why the Control Suite net new ARR was maybe a bit weaker than we would have expected given the AI tailwinds I think we were expecting to accrue in this segment, and why modernization and resilience came in a bit stronger?

Joe Vandrick: Thanks. I'll keep it to 1 question. If I look at the breakdown of ARR, it looks like the Control Suite came down from 28% of the total last year in Q4 to now 26% of total ARR. Can you talk about why the Control Suite net new ARR was maybe a bit weaker than we would have expected given the AI tailwinds I think we were expecting to accrue in this segment, and why modernization and resilience came in a bit stronger?

Speaker #9: So, can you talk about why the Control Suite net new IRR was maybe a bit weaker than we would have expected, given the AI tailwinds?

Speaker #9: I think we were expecting to accrue in this segment . And why modernization and resilience came in a bit a bit stronger

Speaker #2: So so I can start that one . And TJ maybe can jump on , but you know , I think I think it's it's twofold right .

Jim Caci: I can start that one and TJ maybe can jump on.

David Brown: Yeah.

Tianyi Jiang: Yeah.

Jim Caci: You know, I think, I think it's twofold, right? First is that TJ touched on, you know, the improvement in migration and kind of the step-up of customers in their journey of trying to take advantage of AI, really making sure that their data is in one place or as few places as possible. This idea of, you know, migrating your data to be able to accomplish that seems to have resonated, and we saw really a step-up of that in Q4 in particular, but really in the second half of the year. I think that in general had an impact on the overall control kind of step down as a percentage. We don't see that as a real long-term challenge.

Speaker #2: First is that TJ touched on , you know the improvement in migration and kind of the step up of customers in their journey of trying to take advantage of AI , really making sure that their data is in one , one place or as few places as possible .

Speaker #2: And so this idea of , you migrating your data to be able to accomplish that seems to have resonated . And we saw really a step up of that in , in Q4 .

Speaker #2: And particular . But really in the second half of the year . So I think that in general had an impact on the overall control kind of step down as a percentage , but we don't see that as a as a real long term challenge .

Speaker #2: We think that still governance is is key , and we would expect to see , you continued improvement in in that in that area .

Jim Caci: We think that still governance is key, and we would expect to see, you know, continued improvement in that, in that area and, you know, going forward. Again, we don't look at this as any kind of indication of what the future holds.

Speaker #2: And , you know , going forward . So again we don't we don't look at this as any kind of indication of of what the future holds .

Speaker #3: Yeah . From my side is so we continue to see clarity , very robust demand on the control side for AI governance . As Jim mentioned , because there were more data movement data migration projects ongoing .

Tianyi Jiang: Yeah. From my side is we continue to see clearly very robust demand on the Control Suite side for AI governance, as Jim mentioned, because there were more data movement, data migration, projects ongoing. Secondly is the average deal size of a Control Suite license sale is actually lower than the other modules, but it is our highest margin product due to the amount, the type of compute and the type of proprietary algorithm that we have to do that, to essentially making sure agentic AI data access monitoring that is all taken care of and remediation.

Speaker #3: And secondly , is the average deal size of a control license sale is actually lower than the other modules , but it is our highest margin product due to the amount , the type of compute and the type of proprietary algorithm that we have to do that to essentially making sure a generic AI data access monitoring , that is all taken care of .

Speaker #3: I'm remediation . So from that perspective , it may look a bit from a quarter to quarter vary , but overall it is very much what makes our platform very robust and strong to replace the point solution providers .

Tianyi Jiang: From that perspective, it may look a bit from a quarter to quarter vary, but overall, it is very much what makes our platform very robust and strong to replace the point solution providers. It is that combination of data analytics, integration migration, data resiliency, recoverability, and as well as governance and control. I won't read too much into this the percentages. It is part of our platform, and we also have seen tremendous success in the way we actually start to bundle the platform as a service for our customers and partners.

Speaker #3: It is that combination of data analytics , integration , migration , data resiliency , recoverability , and as well as governance and control .

Speaker #3: So I won't read too much into the percentages . It part of our platform . And we also have seen tremendous success in the way we actually start to bundle the platform as a service for our customers and partners .

Speaker #2: And then the only thing I would add , Joe , is that , overall , year over year , it's still growing at roughly 20% .

Jim Caci: The only thing I would add, Joe, is that, you know, overall year-over-year, it's still growing at roughly 20%. You know, we're still very, you know, very proud of that growth rate as well.

Speaker #2: So , you know , we're still very , you know , very proud of that growth rate as well .

Speaker #9: Definitely . All right . Thank you .

David Brown: Definitely. All right. Thank you.

Joe Vandrick: Definitely. All right. Thank you.

Speaker #2: Thanks , Joe .

Jim Caci: Thanks, Joe.

Speaker #1: This concludes our question and answer session . I would like to turn the conference back over to TJ Jiang CEO for any closing remarks

Operator: This concludes our question and answer session. I would like to turn the conference back over to Tianyi Jiang, CEO, for any closing remarks.

Speaker #3: Thank you . Thank you for spending time with us today . Our results in 2024 is very , very successful . And we're very proud of our achievement as a team .

Tianyi Jiang: Thank you. Thank you for spending time with us today. Our results in 2024 is very, very successful, and we're very proud of our achievement as a team. Also you have here our growth in 2026. Our strong outlook demonstrates our confidence in our ability to continue to deliver profitable growth at even greater scale. As we lean into today's highly disruptive macro environment and meet the existing and emerging needs of our customers and partners, we see no signs of our momentum slowing down. The value of our platform and enabling of AI-driven transformation for companies around the world ensures a durable competitive moat and a vast market opportunity that is ours to capture. I know I speak for the entire AvePoint team when I say how energized I am for 2026 and the many years ahead of us.

Speaker #3: And also you have here our growth in 2026 , our strong outlook demonstrates our confidence in our ability to continue to deliver profitable growth at even greater scale as we lean into today's highly disruptive macro environment and meet the emerging needs of our customers and partners , we see no signs of our momentum slowing down the value of our platform and enablement of AI driven transformation for companies around the world ensures a durable , competitive moat and a vast market opportunity that is ours to capture .

Speaker #3: I know I speak for the entire team when I say how energized I am for 2026 and the many years ahead of us .

Speaker #3: So thank you for joining us today and we look forward to speaking with you more this quarter .

Tianyi Jiang: Thank you for joining us today, and we look forward to speaking with you more this quarter.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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