10q10k10q10k.net

What changed in AvePoint, Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of AvePoint, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+279 added−309 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-31)

Top changes in AvePoint, Inc.'s 2023 10-K

279 paragraphs added · 309 removed · 212 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

69 edited+28 added−29 removed37 unchanged
Biggest changeAvePoint is committed to managing our affairs consistent with the highest principles of business ethics and the corporate governance requirements of both federal law and Nasdaq, including the following: ■ A majority of our board members are independent of AvePoint and its management; ■ All members of our three board committees—the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee—are independent; ■ We have a clear code of business conduct to which all employees, officers and directors must adhere; and ■ The charters of our board committees clearly establish their respective roles and responsibilities. 10 Table of Contents PART I Item 1 In 2022, in support of these priorities, AvePoint: ■ Adopted formal Independence Standards for its Board and the Board’s Audit Committee; ■ Completed a full review of its Corporate Governance policies; ■ Updated its Code of Conduct to include additional key policies and methods of reporting violations; and ■ Introduced a more robust and user-friendly platform for whistleblowers and other reporting.
Biggest changeIn keeping with these principles: ■ A majority of our Board members are independent of AvePoint and its management; ■ All members of our three Board committees—the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee—are independent of AvePoint and its management; ■ We have a transparent and publicly available Code of Ethics and Business Conduct that outlines our corporate policies to which all employees, officers and directors must adhere; ■ We have a corporate compliance training program which requires and monitors trainings given on an annual basis; and ■ The charters of our Board committees clearly establish their respective roles and responsibilities. 14 Table of Contents PART I Item 1 Management of Corporate Governance Resources In 2023, we took significant steps to reinforce our commitment to corporate governance and ethical practices, aligning with our strategic priorities.
To do so, we have made significant investments in our customer success program and in technology which provides additional telemetry to enhance our understanding of how our customers use our solutions, which we believe will deepen our relationships with existing customers. ■ Grow and Cultivate our Partner and Channel Network .
To do so, we have made significant investments in our customer success program and in technology which provides additional telemetry to enhance our understanding of how customers use our solutions, which we believe will deepen our relationships with existing customers. ■ Grow and Cultivate our Partner and Channel Network .
We believe delivering and expanding product functionality is critical to enhancing the success of existing customers while new product development further reinforces our breadth of solutions. Intellectual Property We rely on a combination of trade secrets, copyrights, and trademarks to establish and protect our intellectual property rights.
We believe delivering and expanding product functionality is critical to enhancing the success of new and existing customers while new product development further reinforces our breadth of solutions. Intellectual Property We rely on a combination of trade secrets, copyrights, and trademarks to establish and protect our intellectual property rights.
Our portfolio of learning and development programs equips our leaders and managers with the skills and confidence to lead high-performing teams, and supports our individual contributors with the tools and resources to contribute impactfully in their roles from the moment they join AvePoint. 3.
Our portfolio of learning and development programs equips our leaders and managers with the skills and confidence to lead high-performing teams, and supports our individual contributors with the tools and resources to contribute impactfully in their roles from the moment they join AvePoint.
We strive to exemplify our core values of agility, passion and teamwork every day to ensure the success of our customers, partners, and stakeholders as well as make a positive impact in the communities where we live and work.
We strive to exemplify our core values of agility, passion and teamwork every day to ensure the success of our colleagues, customers, partners, and stakeholders as well as make a positive impact in the communities where we live and work.
Not only does cloud computing help meet the business needs of our customers, but it also has tremendous benefits to the environment, including greater energy efficiency, lower carbon emissions, and reduced carbon footprints.
Not only does cloud computing help meet the needs of our customers, but it also has tremendous benefits to the environment, including greater energy efficiency, lower carbon emissions, and reduced carbon footprints.
Our goal is to maintain the Investor Relations website as a portal through which investors can easily find or navigate to pertinent information about us, including, but not limited to: ■ Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the SEC at www.sec.gov. ■ Announcements of investor conferences, speeches, presentations, and events at which our executives talk about our products, services, and competitive strategies. ■ Press releases on quarterly earnings, product and service announcements, legal developments, and national and international news. ■ Corporate governance information including our articles of incorporation, bylaws, governance guidelines, committee charters, code of ethics and business conduct, whistleblower “open door” policy for reporting accounting and legal allegations, global corporate social responsibility initiatives, and other governance-related policies. ■ Other news and announcements that we may post from time to time that investors might find useful or interesting, including with respect to our business strategies, financial results, and metrics for investors.
Our goal is to maintain the Investor Relations website as a portal through which investors can easily find or navigate to pertinent information about us, including, but not limited to: ■ Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the SEC at www.sec.gov. ■ Announcements of investor conferences, speeches, presentations, and events at which our executives discuss our products, services, competitive strategies, and other aspects of our business. ■ Press releases on quarterly results, product and service announcements, legal developments, and national and international news. ■ Corporate governance information including our articles of incorporation, bylaws, governance guidelines, committee charters, code of ethics and business conduct, whistleblower “open door” policy for reporting accounting and legal allegations, global corporate social responsibility initiatives, and other governance-related policies. ■ Other news and announcements that we may post from time to time that investors might find useful or interesting, including news with respect to our business strategies, financial results, and metrics for investors.
In addition, AvePoint has built a corporate culture in which privacy and security are enablers of productivity, collaboration and trust; we balance the free flow of information with the risk of inappropriate access and/or disclosure; and we implement a risk-based approach to privacy and security that will allow us to maintain not only legal and regulatory compliance in the jurisdictions in which we operate, but also to facilitate business and innovation at AvePoint. 11 Table of Contents PART I Item 1 Compliance with Material Government Regulations We are subject to many U.S. federal and state and foreign laws and regulations that involve matters central to our business, including laws and regulations that involve data privacy and data protection, intellectual property, advertising, marketing, health and safety, competition, consumer protection, taxation, anti-bribery, anti-money laundering and corruption, economic or other trade prohibitions or sanctions, environmental protection regulations, and securities law compliance.
In addition, we have built a corporate culture in which privacy and security are enablers of productivity, collaboration and trust; we balance the free flow of information with the risk of inappropriate access and/or disclosure; and we implement a risk-based approach to privacy and security that will allow us to maintain not only legal and regulatory compliance in the jurisdictions in which we operate, but also to facilitate business and innovation at AvePoint. 16 Table of Contents PART I Item 1 Compliance with Material Government Regulations We are subject to many U.S. federal and state and foreign laws and regulations that involve matters central to our business, including laws and regulations that involve data privacy and data protection, intellectual property, advertising, marketing, health and safety, competition, consumer protection, taxation, anti-bribery, anti-money laundering and corruption, economic or other trade prohibitions or sanctions, environmental protection regulations, and securities law compliance.
Classification is based on the customer’s billing address and is divided into (1) North America; (2) Europe, the Middle East, and Africa (“ EMEA ”); and (3) Asia-Pacific (“ APAC ”). 6 Table of Contents PART I Item 1 Research And Development We constantly seek to develop new offerings, drive improvements to our existing offerings, and enhance support of our existing customer deployments.
Classification is based on the customer’s billing address and is divided into (1) North America; (2) Europe, the Middle East, and Africa (“ EMEA ”); and (3) Asia-Pacific (“ APAC ”). 8 Table of Contents PART I Item 1 Research And Development We constantly seek to develop new offerings, drive improvements to our existing offerings, and enhance support of our existing customer deployments.
However, to build and deliver an efficient digital workplace today, companies must manage this range of applications – and the associated explosive growth and sprawl of data – with a platform offering that is well governed, fit for purpose, easy to use and built on automation.
However, to deliver an efficient digital workplace today, companies must manage this range of applications – and the associated explosive growth and sprawl of critical data – with a platform offering that is well governed, fit for purpose, easy to use and built on automation.
In 2022, we continued our partnership with Girls Who Code, an organization that is committed to building the largest pipeline of future female engineers and has engaged over 500,000 girls, women, and nonbinary individuals through in-person programming.
In 2023, we continued our partnership with Girls Who Code, an organization that is committed to building the largest pipeline of future female engineers and has engaged over 500,000 girls, women, and nonbinary individuals through in-person programming.
This may include acquiring complementary products, technologies, and/or businesses that reduce the time or costs required to develop new technologies, incorporate enhanced functionality into and complement our existing product offerings, augment our engineering workforce, improve our internal business and operating systems, and enhance our technological capabilities. 5 Table of Contents PART I Item 1 Sales, Marketing and Customers Sales Our global go-to-market strategy allows us to efficiently sell to and serve the needs of organizations across market segments and geographies.
This may include acquiring or investing in complementary products, technologies, and/or businesses that incorporate enhanced functionality into and complement our existing product offerings, reduce the time or costs required to develop new technologies, augment our engineering workforce, improve our internal business and operating systems, and enhance our technological capabilities. 7 Table of Contents PART I Item 1 Sales, Marketing and Customers Sales Our global go-to-market strategy allows us to efficiently sell to and serve the needs of organizations across market segments and geographies.
It empowers modernization and change management teams to drive digital transformation across the organization, and to measure and accelerate the impact of this transformation on employee experience and engagement. Built with security and scale in mind, AvePoint’s cloud-native platform is available across 14 global data centers.
It empowers modernization and change management teams to drive digital transformation with AI ready solutions across the organization, and to measure and accelerate the impact of this transformation on employee experience and engagement. Built with security and scale in mind, AvePoint’s cloud-native platform is available across 14 global data centers.
We seek to earn trust not just with robust security and privacy practices, but with the way we operate and organize our business. Aligning to clear privacy principles AvePoint has a policy of transparency regarding our data collection, use, retention and sharing practices.
We seek to earn trust not just with robust security and privacy practices, but with the way we operate and organize our business. Aligning to clear privacy principles We have a policy of transparency regarding our data collection, use, retention and sharing practices.
Customers We sell to organizations of all sizes, in all regions of the world, and across a broad array of industries. Our customers are located in more than 100 countries and, as of December 31, 2022, numbered more than 17,000. We classify our customer base by size and geography: ■ Small Business ( “ SMB ” ) segment .
Customers We sell to organizations of all sizes, in all regions of the world, and across a broad array of industries. Our customers are located in more than 100 countries and, as of December 31, 2023, numbered more than 21,000. We classify our customer base by size and geography: ■ Small Business ( “ SMB ” ) segment .
These collective efforts are supported by our customer success team, which employs a proactive relationship-focused approach designed to ensure that our valued customers get the care they need to rapidly deploy, and receive value from, their technology investment in us.
These collective efforts are supported by our customer success team, which employs a proactive relationship-focused approach designed to ensure that our valued customers get the care they need to rapidly deploy, and receive value from, their technology investment in the AvePoint Confidence Platform.
On July 1, 2021 (the “ Closing Date ”), Legacy AvePoint and certain members of Apex Technology Acquisition Corporation (“ Apex ”) the parties to the Business Combination Agreement consummated the transactions contemplated thereby (the “ Apex Business Combination ”) and a number of qualified institutional buyers and accredited investors consummated their respective purchases of shares as contemplated by the Subscription Agreements, with Apex being renamed “AvePoint, Inc.” On July 2, 2021, shares of common stock were officially listed under the ticker “AVPT” on the Nasdaq Global Select Market.
On July 1, 2021, Legacy AvePoint and certain members of Apex Technology Acquisition Corporation (“ Apex ”) consummated the transactions contemplated by a business combination agreement (the “ Apex Business Combination ”) and a number of qualified institutional buyers and accredited investors consummated their respective purchases of shares as contemplated by related subscription agreements, with Apex being renamed “AvePoint, Inc.” On July 2, 2021, shares of common stock were officially listed under the ticker “AVPT” on the Nasdaq Global Select Market.
To do this, we are committed to creating and empowering access to a variety of opportunities: Philanthropy As a global organization, AvePoint strives to create pathways to success for individuals and communities through education.
To do this, we are committed to creating and empowering access to a variety of opportunities: Philanthropy As a global organization, we strive to create pathways to success for individuals and communities through education.
Commitment to powering proactive data security programs AvePoint understands the importance of security and operational risk management and is committed to providing organizations with relevant metrics which help them make decisions that are proactive rather than reactive. When done in conjunction with policies, education and measurement, organizations can balance collaboration and transparency with data protection and privacy.
Commitment to powering proactive data security programs We understand the importance of security and operational risk management and are committed to providing organizations with relevant metrics which help them make decisions that are proactive rather than reactive. When done in conjunction with policies, education and measurement, organizations can balance collaboration and transparency with data protection and privacy.
This allows infrastructure and operations teams to protect business-critical information across collaborative workspaces. ■ The Resilience Suite enables organizations to efficiently and effectively comply with data protection regulations, preserve critical records, and ensure business continuity.
This allows infrastructure and operations teams to protect business-critical information across collaborative workspaces. ■ The Resilience Suite. Focused on security and enhanced data protection, the Resilience Suite enables organizations to efficiently and effectively comply with data protection regulations, preserve critical records, and ensure business continuity.
This provides regulatory, audit, and risk management teams with the assurance that the organization is meeting its compliance obligations. ■ The Modernization Suite transforms legacy data to allow it use by modern SaaS platforms and transforms legacy business processes into modern end-user business applications.
This provides regulatory, audit, and risk management teams with the assurance that the organization is meeting its compliance obligations. ■ The Modernization Suite. Focused on employee productivity and experience, the Modernization Suite transforms legacy data to allow it use by modern SaaS platforms and transforms legacy business processes into modern end-user business applications.
We believe this combination fosters a strong sense of ownership, aligns the interests of employees with our stockholders, and increases stockholder value and our overall success. 8 Table of Contents PART I Item 1 Environmental, Social and Governance Matters We recognize the importance of environmental, social and governance (“ ESG ”) matters and how they impact our stakeholders.
We believe this combination fosters a strong sense of ownership, aligns the interests of employees with our stockholders, and increases stockholder value and our overall success. 11 Table of Contents PART I Item 1 Environmental, Social and Governance Matters We recognize the importance of environmental, social and governance (“ ESG ”) matters and how they impact our customers, employees, community partners, and stockholders.
We leverage the resources of our partner and channel community across customers of all segments. We expect that partner sourced revenue will account for a growing portion of our revenue for the foreseeable future. ■ Partner Marketplaces . AvePoint is transactable in more than 100 marketplaces around the world through our distribution and marketplace partners.
We leverage the resources of our partner and channel community across customers of all segments. We expect that partner sourced revenue will account for a growing portion of our revenue for the foreseeable future. ■ Partner Marketplaces . Our solutions are available in more than 100 marketplaces around the world through our distribution and marketplace partners.
Tianyi Jiang was appointed as our Chief Executive Officer and a director in July of 2021. Prior to that, Dr. Jiang served as Legacy AvePoint’s Co-Chief Executive Officer alongside Mr. Gong from 2008 to 2021 and as a director since 2005. Dr.
Tianyi Jiang was appointed as our Chief Executive Officer and a director in July of 2021. Prior to that, Dr. Jiang served as our predecessor company’s Co-Chief Executive Officer alongside Mr. Gong from 2008 to 2021 and director from 2005 to 2021. Dr.
Lastly, because our platform is built upon a common data engine and common data layer, the purchase of products from multiple suites provides an incremental benefit to customers in the form of more intelligent and relevant data insights and automation. ■ The Control Suite contains products which offer the following capabilities: o Operationalize collaborative workspaces : centralize the management of SaaS solutions and productivity applications, with the flexibility to configure and delegate control for different end-users; o Regulatory compliance automation : Implement, enforce, and prove that access and configuration policies across collaborative workspaces comply with internal or regulatory requirements; o Access and risk management : gain insight into who has access to critical data and where the company is at risk; and o Cost optimization : maximize the return on SaaS subscription investments through real-time management and allocation of entitlements; ■ The Resilience Suite contains products which offer the following capabilities: o Backup-as-a-Service : support workloads in cloud infrastructure-as-a-Service and PaaS, including protection against ransomware, accidental deletions and user error in a variety of SaaS applications, as well as support for a range of on-premises workloads; o Data classification : automate data tagging, classification and protection to prevent loss; o Storage optimization : archive stale content from active systems to reduce costs and improve workspace quality and user experience; and o Records management : ensure content compliance and proper records retention with process automation. ■ The Modernization Suite contains products which offer the following capabilities: o Data modernization and restructuring: seamlessly move and transform legacy data to allow its use by modern SaaS platforms, and ensure that unstructured data can be easily restructured to reflect ongoing changes in the business; o Process modernization: transform manual processes with built-in data insights and process automation for Line of Business and role-based applications; and o Workforce transformation measurement: enable employees to thrive in the digital workplace by ensuring organizational leaders understand employee engagement and sentiment.
Lastly, because our platform is built upon a common data engine and common data layer, the purchase of products from multiple suites provides an incremental benefit to customers in the form of more intelligent and relevant data insights and automation. ■ The Control Suite contains products which offer the following capabilities: o Operationalize collaborative workspaces : centralize the management of SaaS solutions and productivity applications, with the flexibility to configure and delegate control for different end-users; o Regulatory compliance automation : Implement, enforce, and prove that access and configuration policies across collaborative workspaces comply with internal or regulatory requirements; o Access and risk management : gain insight into who has access to critical data and where the company is at risk; and o Cost optimization : maximize the return on SaaS subscription investments through real-time management and allocation of entitlements; ■ The Resilience Suite contains products which offer the following capabilities: o Backup-as-a-Service : support workloads in cloud Infrastructure-as-a-Service and PaaS, including protection against ransomware, accidental deletions and user error in a variety of SaaS applications, as well as support for a range of on-premises workloads; o Data classification : automate data tagging, classification and protection to prevent loss; o Storage optimization : archive stale content from active systems to reduce costs and improve workspace quality and user experience; and o Information lifecycle management : manage information and ensure compliance, optimize cloud storage, streamline processes, and unlock data driven insights. ■ The Modernization Suite contains products which offer the following capabilities: o Data modernization and restructuring: seamlessly move and transform legacy data to allow its use by modern SaaS platforms, and ensure that unstructured data can be easily restructured to reflect ongoing changes in the business; o Process modernization: transform manual processes with built-in data insights and process automation for Line of Business and role-based applications; and o Workforce transformation measurement: enable employees to thrive in the digital workplace by ensuring organizational leaders understand employee engagement and sentiment. 6 Table of Contents PART I Item 1 Our Growth Strategy Our aggressive pursuit of the large market opportunity we see includes the following growth strategies: ■ Expand the AvePoint Confidence Platform Offerings.
We received accolades from multiple publications around the world designating us as a “best place to work” in 2022. Our key human capital objectives in managing our business includes attracting and developing top talent, engaging our team in an environment where they thrive, and integrating diversity, equity, and inclusion principles into our core operating practices.
We received accolades designating us as a “best place to work” in 2023. Our key human capital objectives in managing our business includes attracting and developing top talent, engaging our team in an environment where they thrive, and integrating diversity, equity, and inclusion principles into our core operating practices.
Jiang holds doctorate and master’s degrees in Data Mining from New York University in addition to a bachelor’s degree and master’s degree in Electrical and Computer Engineering from Cornell University. Brian Michael Brown was appointed as our Chief Legal and Compliance Officer, Secretary of the Board of Directors (the " Board "), and a director in July of 2021.
Jiang holds a doctorate and a master’s degree in Data Mining from New York University, in addition to a bachelor’s degree and a master’s degree in Electrical and Computer Engineering from Cornell University. 18 Table of Contents PART I Item 1 Brian Michael Brown was appointed as our Chief Legal and Compliance Officer, Secretary of the Board and a director in July of 2021.
The information found on our main website or our Investor Relations website is not part of this or any other report we file with, or furnish to, the SEC, for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act except as shall be expressly set forth by specific reference in such filing, and you should not consider any information contained on, or that can be accessed through, our website as part of this Annual Report or in deciding whether to purchase our common stock. 2021 Consummation of the Apex Business Combination Apex and Legacy AvePoint Business Combination AvePoint, Inc.
The information found on our main website or our Investor Relations website is not part of this or any other report we file with, or furnish to, the SEC, for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act except as shall be expressly set forth by specific reference in such filing, and you should not consider any information contained on, or that can be accessed through, our website as part of this Annual Report or in deciding whether to purchase our common stock. 2021 Consummation of the Apex Business Combination AvePoint, Inc., incorporated as a New Jersey corporation on July 24, 2001 (“ Legacy AvePoint ”), was redomiciled as a Delaware corporation in 2006, and changed its name to “AvePoint Operations, Inc.” in June 2021.
ITEM 1. BUSINESS Company Overview AvePoint provides a cloud-native software platform that organizations rely on to optimize IT operations, manage critical data and secure the digital workplace.
ITEM 1. BUSINESS Company Overview AvePoint provides a cloud-native data management software platform that organizations rely on to manage and protect critical data, optimize IT operations, achieve meaningful cost savings, and efficiently secure the digital workplace.
The adoption of this portfolio of solutions – what has been generally described as the “digital transformation” – is a substantial and ongoing challenge for most organizations, which for decades had used only a small number of multi-purpose on-premises applications to drive business outcomes.
The adoption of this portfolio of solutions is a substantial and ongoing challenge for most organizations, which for decades had used only a small number of multi-purpose on-premises applications to drive business outcomes.
The AvePoint Confidence Platform, and the applications that it powers, is organized into three interconnected “suites” of functionality—each targeting a core set of business drivers and customer needs. Those suites are: ■ The Control Suite efficiently ensures the sustainability and operational capacity of the digital workplace by providing a ready-made framework for automated governance and policy enforcement.
The AvePoint Confidence Platform, and the applications that it powers, is organized into three interconnected suites of functionality—each targeting a core set of business drivers and customer needs. Those suites are: ■ The Control Suite. Focused on the governance and management of the digital workplace, the Control Suite provides a ready-made framework for automated governance and policy enforcement.
Our multi-tenant architecture is designed to immediately provide customers the latest enhancements and upgrades, and the platform is ISO 27001:2013 and ISO 27017:2015 certified and has received SOC 2 Type II accreditation and FedRAMP (Moderate) Authorization. 4 Table of Contents PART I Item 1 Within each suite are a number of products addressing critical customer needs.
Our multi-tenant architecture is designed to immediately provide customers the latest enhancements and upgrades, and the platform is ISO 27001:2013, ISO 27017:2015 and ISO 27701:2019 certified, has achieved compliance with HITRUST CSF v11.0.1, and has received systems and organization controls (“ SOC ”) 2 Type II accreditation and FedRAMP (Moderate) Authorization. 5 Table of Contents PART I Item 1 Within each suite are a number of products addressing critical customer needs.
It is our commitment to implement appropriate technical security measures to protect all AvePoint stakeholders and manage third party risk. AvePoint uses this foundation and discipline to develop market-leading privacy and security products and deliver world class customer service.
It is our commitment to implement appropriate technical security measures to protect all AvePoint stakeholders and manage third party risk. We use this foundation and discipline to develop market-leading privacy and security products and deliver world class customer service. Our software, processes and services have obtained industry-leading security and privacy certifications.
Subsequent to the consummation of the Apex Business Combination, on July 26, 2021, Legacy AvePoint’s successor by merger AvePoint US LLC merged with and into AvePoint, Inc. with AvePoint, Inc.
Subsequent to the consummation of the Apex Business Combination, on July 26, 2021, Legacy AvePoint’s successor by merger AvePoint US LLC merged with and into AvePoint, Inc. with AvePoint surviving. 20 Table of Contents PART I Item 1A
We do this by promoting global collaboration and taking pride in helping, sharing, mentoring, and coaching each other. Employees As of December 31, 2022, we had 2,187 employees globally. A large percentage of our employees have technical and professional backgrounds and undergraduate and/or advanced degrees.
We do this by promoting global collaboration and taking pride in helping, sharing, mentoring, and coaching each other. 10 Table of Contents PART I Item 1 Team As of December 31, 2023, we had 2,543 employees globally. A large percentage of our employees have technical and professional backgrounds and undergraduate and/or advanced degrees.
Caci brings more than 25 years of experience leading the strategic finance operations at both public and privately held SaaS and IT service companies. Mr. Caci holds a bachelor’s degree from Montclair State University and is a certified public accountant.
From March 2016 to April 2020, Mr. Caci served as the Chief Financial Officer of Nicopure Labs. Mr. Caci brings more than 25 years of experience leading the strategic finance operations at both public and privately held SaaS and IT service companies. Mr. Caci holds a bachelor’s degree from Montclair State University and is a certified public accountant.
At the heart of our work—volunteering, partnerships, donations, and advocacy—is the vision of a world where everyone, no matter where they live, which resources they have, or what challenging circumstances they face, has a path to self-reliance and resilience.
At the heart of our work—volunteering, partnerships, donations, and advocacy—is the vision of a world where everyone, no matter where they live, which resources they have, or what challenging circumstances they face, has a path to self-reliance and resilience. We empower our people to volunteer as individuals and as teams in support of community not-for-profit groups around the world.
Our operating expenses have generally increased sequentially due to increases in personnel in connection with the expansion of our business. 7 Table of Contents PART I Item 1 Human Capital Resources The success of our people is the success of our Company, making our talent strategy a core focus of our operations.
Our operating expenses have historically increased in connection with the expansion of our business, which we expect will continue. 9 Table of Contents PART I Item 1 Human Capital Resources The success of our people is the success of our Company, making our talent strategy a core focus of our operations.
We incentivize performance through a combination of competitive base pay, performance-based cash incentives and long-term incentives in the form of equity.
Rewards We strive to provide globally a competitive suite of pay, comprehensive benefits, and services. We incentivize performance through a combination of competitive base pay, performance-based cash incentives and long-term incentives in the form of equity.
We leverage marketplaces to create operational efficiencies with automation in procurement and provisioning, and to grow and scale our acquisition of the small business market, primarily through managed service providers (“ MSPs ”). ■ Microsoft Partnership . We are a Microsoft Gold Certified Partner, ranking in the global top 5 in Microsoft’s IP-Co-Sell program.
We leverage marketplaces to create operational efficiencies with automation in procurement and provisioning, and to grow and scale our acquisition of the small business market, primarily through managed service providers (“ MSPs ”). ■ Microsoft Partnership .
Our Growth Strategy Our aggressive pursuit of the large market opportunity we see includes the following growth strategies: ■ Expand our Platform Opportunity . We have built a differentiated platform that enables organizations to integrate modern applications, and our goal is to continually invest in technologies that improve the digital workplace experience.
We have built a differentiated platform that enables organizations to integrate modern applications, and our goal is to continually invest in technologies that improve the digital workplace experience.
We believe that strong ESG programs and practices are critical to attracting the best talent, executing on our strategies, maintaining a robust supplier and channel partner base, and innovating to meet our consumers’ evolving expectations.
We believe appropriately prioritizing ESG issues is an important component of corporate social responsibility and comprehensive fiscal management. In addition, we believe that strong ESG programs and practices are critical to attracting the best talent, executing on our corporate strategies, maintaining a robust supplier and channel partner base, and innovating to meet our consumers’ evolving expectations.
Earning the World ’ s Trust As a global company which is responsible to employees, stockholders and customers, our vision for AvePoint is to build an environment in which we earn trust and confidence every day through enabling collaboration and innovation through our commitment to privacy, security, and transparency.
By proactively reviewing, updating, and communicating its policies, the company demonstrated its dedication to transparency, accountability, and responsible stewardship in pursuit of its strategic objectives. 15 Table of Contents PART I Item 1 Earning the World ’ s Trust As a global company which is responsible to employees, stockholders and customers, our vision for AvePoint is to build an environment in which we earn trust and confidence every day through enabling collaboration and innovation through our commitment to privacy, security, and transparency.
Additional information regarding our Executive Officers is set forth in the Proxy Statement, which was filed with the SEC on March 24, 2023. 13 Table of Contents PART I Item 1 Corporate Information Our principal executive offices are located at 525 Washington Blvd, Suite 1400, Jersey City, NJ 07310, and our telephone number is (201) 793-1111.
Additional information regarding our Executive Officers is set forth in the Proxy Statement to be filed in connection with our 2024 Annual Meeting of Stockholders within 120 days after the end of the fiscal year ended December 31, 2023. 19 Table of Contents PART I Item 1 Corporate Information Our principal executive offices are located at 525 Washington Blvd, Suite 1400, Jersey City, NJ 07310, and our telephone number is (201) 793-1111.
Caci held the position of Chief Financial Officer at Brand Value Accelerator, LLC, an industry leading digital commerce services firm. From March 2016 to April 2020, Mr. Caci served as the Chief Financial Officer of Nicopure Labs. From 2010 to 2013, Mr. Caci served as Chief Financial Officer of Legacy AvePoint. Mr.
James Caci was appointed as our Chief Financial Officer in August of 2021 and previously served as our predecessor company’s Chief Financial Officer from 2010 to 2013. From April 2020 to August of 2021, Mr. Caci held the position of Chief Financial Officer at Brand Value Accelerator, LLC, an industry leading digital commerce services firm.
Prior to that, Mr. Gong had served as Legacy AvePoint’s Chairman and Co-Chief Executive Officer alongside Dr. Jiang since 2008. Before that, Mr. Gong had served as Legacy AvePoint’s Chief Executive Officer since Legacy AvePoint’s incorporation in 2001. Mr.
Prior to that, Mr. Gong had served as our predecessor company’s Chairman and Co-Chief Executive Officer alongside Dr. Jiang from 2008 to 2021, Chief Executive Officer from 2001 to 2008 and director from 2001 to 2021. Mr.
From 2004 until July of 2021, Mr. Brown served as Legacy AvePoint’s General Counsel, Chief Operating Officer, and a director. Mr. Brown holds a bachelor’s degree from the University of Michigan and a Juris Doctor from Michigan State University. James Caci was appointed as our Chief Financial Officer in August of 2021. From April 2020 to August of 2021, Mr.
Prior to that, Mr. Brown served as our predecessor company’s General Counsel and Chief Operating Officer from 2004 to 2021 and director from 2008 to 2021. Mr. Brown holds a bachelor’s degree from the University of Michigan and a Juris Doctor from Michigan State University.
We completed four acquisitions in 2022, and we expect to continue acquiring businesses and technologies or entering into joint ventures and strategic alliances as part of our long-term business strategy.
While the large majority of our current offerings were built organically, we expect that acquisitions and investments will be an important growth driver for our business. We completed four acquisitions in 2022, and we expect to continue acquiring and investing in businesses and technologies or entering into joint ventures and strategic alliances as part of our long-term business strategy.
In our evaluation and career development efforts, we also emphasize internal mobility opportunities for employees to drive professional development. Our goal is a long-term, upward-bound career for every employee, which we believe also drives our retention efforts.
In our evaluation and career development efforts, we emphasize internal mobility opportunities as a core strategy to drive professional development. Our goal is a long-term, upward-bound career for every colleague, which also drives our retention efforts. Our talent acquisition team directly recruits highly skilled and talented people, and we encourage and incentivize employee referrals for open positions.
Our partners range from organizations that advance education for underrepresented minorities across our industry, to those that champion public policies aimed at fostering innovation and growth. AvePoint is proud to support education as not only the great equalizer, but as the single most impactful catalyst to improving one’s trajectory.
Our partners range from organizations that advance education for underrepresented minorities across our industry, to those that champion public policies aimed at fostering innovation and growth.
Environmental Workplace Practices Across our twenty-five offices, we strive to reduce our environmental footprint, operate more efficiently, and engage our personnel in social initiatives that directly impact their lives.
The disclosure below describes the goals of our ESG program to allow our stakeholders to be informed about our progress and future direction. 1. Environmental Across our twenty-five offices, we strive to reduce our environmental footprint, operate more efficiently, and engage our personnel in social initiatives that directly impact their lives.
Our partner and channel network today touches all aspects of our business, but we believe there is a particular opportunity with our small and mid-sized customers and prospects. ■ Opportunistically Pursue Strategic Acquisitions . Acquisitions are an important growth driver for our business.
Our partner and channel network today touches all aspects of our business, but we believe there is a particular opportunity with our small and mid-sized customers and prospects. We expect that the continued scaling of this ecosystem will be a critical component of our ability to drive profitable growth going forward. ■ Opportunistically Pursue Strategic Acquisitions and Investments .
AvePoint Ransomware Detection, and its Ransomware Warranty for MSP, which primarily serves small business clients, gives assurance that companies will be protected. Strengthening our offerings by first strengthening ourselves AvePoint has built a resilient, scalable and secure IT environment by investing in complementary industry leading technology and security solutions, in addition to utilizing our own software platform.
Strengthening our offerings by first strengthening ourselves We have built a resilient, scalable and secure IT environment by investing in complementary industry leading technology and security solutions, in addition to utilizing our own software platform.
Unlike traditional vendors primarily focused on data management, data governance, or migration, we address a spectrum of SaaS solutions and productivity applications for the digital workplace.
Unlike traditional vendors primarily focused on data management, data governance, or migration, we provide a spectrum of SaaS solutions and productivity applications for the digital workplace. The competition we see is primarily standalone point solutions that aim to replicate the value provided by our suites or one of the products contained therein.
See the discussion contained in the “ Risk Factors ” section (Part I, Item 1A of this Annual Report) for information regarding how actions by regulatory authorities or changes in legislation and regulation in the jurisdictions in which we operate may have a material adverse effect on our business.
See the discussion contained in the “ Risk Factors ” section (Part I, Item 1A of this Annual Report) for information regarding how actions by regulatory authorities or changes in legislation and regulation in the jurisdictions in which we operate may have a material adverse effect on our business. 17 Table of Contents PART I Item 1 Information About Our Executive Officers Name Age Position Xunkai Gong 61 Executive Chairman and Director Tianyi Jiang 49 Chief Executive Officer and Director Brian Michael Brown 51 Chief Legal and Compliance Officer, Secretary, and Director James Caci 59 Chief Financial Officer Xunkai Gong was appointed as our Executive Chairman and a director in July of 2021.
Advancing cybersecurity Cybersecurity is a central challenge as companies around the world embark on the digital transformation. Ransomware attacks have become one of the top security threats for organizations, especially as increased collaboration can lead to more vulnerabilities. The cost to recover stolen data can be millions of dollars, in addition to substantial reputational damage.
Ransomware attacks have become one of the top security threats for organizations, especially as increased collaboration can lead to more vulnerabilities. The cost to recover stolen data can be millions of dollars, in addition to substantial reputational damage. AvePoint Ransomware Detection, and its Ransomware Warranty for MSPs, which primarily serves small business clients, gives assurance that companies will be protected.
As companies globally embrace the new normal of hybrid work, they must build and deliver a new, seamless workplace experience for knowledge workers, centered around an extensive portfolio of Software-as-a-Service ( “ SaaS ” ) solutions and productivity applications aimed at improving collaboration across the organization.
Companies around the world have now fully adopted a hybrid work model, and they are now tasked with delivering a seamless and secure workplace experience for knowledge workers, centered around an extensive portfolio of Software-as-a-Service (“ SaaS ”) solutions and productivity applications.
Marketing Our global marketing organization focuses on enhancing the AvePoint brand and building awareness and demand generation through multi-platform campaigns that leverage our expertise, content, technical resources and customer stories. We rely on multiple marketing and sales automation tools to efficiently identify and market to the correct individuals at target companies using product and industry specific criteria.
Marketing Our global marketing organization focuses on enhancing the AvePoint brand, establishing trust and capturing mindshare, and building awareness and demand generation through multi-platform campaigns that leverage our expertise, content, technical resources and customer stories.
AvePoint is committed to fostering an environment where people can bring their whole selves to work and feel a sense of belonging.
Diversity and inclusion drive our success and is at the core of how we hire, communicate and collaborate to deliver value and excellence. We are committed to fostering an environment where people can bring their whole selves to work and feel a sense of belonging.
We intend to drive new customer growth by leveraging our global partner ecosystem and through the expansion of our direct sales force. ■ Increase Customer Lifetime Value with Customer Success . We constantly seek to increase customer satisfaction, decrease time to value, reduce customer churn and set up successful land and expand opportunities.
We intend to drive new customer growth by leveraging our global partner ecosystem and through the expansion of our direct sales force both in regions where we have an established presence and in new markets where cloud adoption is growing. ■ Increase Customer Lifetime Value with Customer Success .
Historically, our third and fourth quarters have been our highest revenue quarters, however those results are not necessarily indicative of future quarterly revenue or full year results. Higher third and fourth quarter revenue is driven primarily by increased sales resulting from our customers’ fiscal year ends.
Historically, our third and fourth quarters have been our highest revenue quarters, however those results are not necessarily indicative of future quarterly revenue or full year results. Additionally, the timing of new product and service introductions can significantly impact revenue.
As our customers seek to rapidly reduce costs, improve productivity and make more informed business decisions, they depend on our platform for data-driven insights, critical business intelligence and ongoing operational value through automation.
As our customers seek to rapidly reduce costs, improve productivity and make more informed business decisions, they depend on our platform for data-driven insights, critical business intelligence and ongoing operational value through automation. 4 Table of Contents PART I Item 1 Platform Overview The AvePoint Confidence Platform delivers a comprehensive set of SaaS solutions, empowering users in a variety of technology roles – including IT operations, development operations and cybersecurity – to monitor and secure the digital workplace.
Recruitment and Internal Mobility We want to attract a pool of diverse and exceptional candidates and support their career growth once they join our team.
Recruitment and Internal Mobility We want to attract a pool of diverse and exceptional candidates and support their career growth once they join our team. We seek to hire based on talent, providing opportunities for capable workers from various backgrounds to learn valuable skills in critical operations such as business development, sales, customer support, and customer service.
Corporate Governance Social Responsibility Support from the Top At AvePoint, our corporate governance practices support our core values of agility, passion, and teamwork. These practices provide a framework for the proper operation of our company, consistent with our stockholders’ best interests and the requirements of law.
These practices provide a framework for the proper operation of our company, consistent with our stockholders’ best interests and the requirements of law. We are committed to managing our affairs consistent with the highest principles of business ethics and with the corporate governance requirements of both Nasdaq and applicable law.
To fulfill our aim of integrating environmental sustainability into everything we do, we have implemented numerous projects across our operations, including a company-wide paperless campaign and a computer recycling project, to reduce energy consumption and the use of non-renewable resources in our workplaces.
To fulfill our aim of integrating environmental sustainability into everything we do, we have implemented numerous projects across our operations to limit our environmental impact, such as implementing paperless campaigns, the encouragement of recycling and elimination of paper products, the sourcing of office resources from sustainable sources, and the recycling of physical IT assets.
The standalone point solutions we frequently encounter often fail to meet the needs of our customers, due to limitations in breadth of functionality, ease of use, scalability, rigor of security protocols, integration with third-party applications and data sources, time to value and total cost of ownership.
We believe our platform offering provides a meaningful competitive advantage, due to breadth of functionality, ease of use, scalability, rigor of security protocols, integration with third-party applications and data sources, time to value and total cost of ownership. Seasonality Our quarterly revenue can fluctuate and does not necessarily grow sequentially when measuring any one fiscal quarter’s revenue against another.
Looking forward, AvePoint is actively researching additional methods to reduce its carbon footprint and create a more sustainable future for the company and the communities we serve. 9 Table of Contents PART I Item 1 2. Social As a global company, we have a tremendous opportunity – and responsibility – to do good.
In furtherance of our goals to reduce unnecessary use, we review the data on the environmental impact of physical server providers and only use server providers who publish such data. 12 Table of Contents PART I Item 1 2. Social As a global company, we have a tremendous opportunity – and responsibility – to do good.
Through our IDEA (Inclusion, Diversity, Equity and Allyship) Committee, in 2022 we launched our newest employee resource group dedicated to driving greater awareness and connection with military veterans.
In 2023, through our IDEA (Inclusion, Diversity, Equity and Allyship) Committee, we continued to support the growth and impact our employee resource groups have in driving greater awareness and understanding within our company as well as make a positive impact in our local communities.
We will introduce new and adjacent products to extend our current operational and data management story and to improve the functionality of existing products and features. We also have invested and will continue to invest in opportunities beyond the Microsoft ecosystem. ■ Grow our Customer Base . The market we are targeting is rapidly growing and largely unpenetrated.
We plan to introduce new and adjacent products to extend our current operational and data management story and to improve the functionality of existing products and features, with a particular focus on AI ready solutions that transform and enrich data.
Removed
Platform Overview The AvePoint Confidence Platform delivers a comprehensive set of SaaS solutions, empowering users in a variety of technology roles – including IT operations, development operations and cybersecurity – to monitor and secure the digital workplace.
Added
In addition, many organizations are beginning to realize the potential of generative artificial intelligence (“ AI ”) to drive competitive advantage and value creation, including (1) extracting greater value from complex datasets, (2) making more informed business decisions, (3) reducing employee workloads, and (4) improving the overall customer experience.
Removed
Microsoft sellers are incentivized to develop a pipeline, share sales leads, and accelerate sales of AvePoint solutions, and we plan to continue adding to the number of co-sell ready solutions currently available.
Added
While these data-driven improvements are expected to lead to stronger revenue growth and operational efficiency, successfully leveraging this new technology is in turn dependent on first addressing data management challenges that all organizations face.
Removed
Seasonality Our quarterly revenue fluctuates and does not necessarily grow sequentially when measuring any one fiscal quarter’s revenue against another (e.g. comparing the fourth fiscal quarter of fiscal year 2021 against the first fiscal quarter of fiscal year 2022).
Added
Specifically, for AI-driven projects to succeed, companies must apply robust strategies across the data estate to manage the information lifecycle, properly govern and secure their data, and ensure its compliance.
Removed
Additionally, new product and service introductions (including the timing of those introductions) can significantly impact revenue. Revenue can also be affected when customers anticipate a product introduction.
Added
These are the core business problems that AvePoint has been solving for more than two decades, and why we believe AvePoint is well positioned to be a key enabler of generative AI adoption within enterprises in the coming years.
Removed
We seek to hire based on talent rather than solely on educational pedigree, and have provided many job openings, including in our local communities, for capable workers from various backgrounds to learn valuable skills in critical operations such as business development, sales, customer support, and customer service.
Added
We will also continue investing to support Microsoft, Salesforce, Google, AWS, Box, DropBox and other ecosystems for our customers, many of whom leverage multiple cloud vendors. ■ Expand o ur Market Presence. The market we are targeting is rapidly growing and largely unpenetrated.
Removed
Our talent acquisition team uses internal and external resources to recruit highly skilled and talented workers, and we encourage and incentivize employee referrals for open positions. Rewards We strive to provide globally a competitive suite of pay, comprehensive benefits, and services.

… 46 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

53 edited+13 added−19 removed159 unchanged
Biggest changeIf we are unable to assert that our internal control over financial reporting is effective, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common stock to decline, and we may be subject to investigation or sanctions by the SEC.
Biggest changeIf we are unable to assert that our internal control over financial reporting is effective and our independent registered public accounting firm is unable to attest to management’s assessment of the effectiveness of our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common stock to decline, and we may be subject to investigation or sanctions by the SEC. 34 Table of Contents P ART I Item 1A We are required, pursuant to Section 404 of SOX, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting as of December 31, 2023.
Additionally, the existence of any material weakness, including our existing material weaknesses identified by management previously, or significant deficiency requires management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiencies and management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner.
Additionally, the existence of any material weakness, including our existing material weaknesses identified by management previously, or any significant deficiency requires management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiencies and management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner.
Microsoft and other cloud providers may also choose to make it difficult for third party providers like us to continue making the necessary application programming interface (“ API ”) calls to provide their solutions, as illustrated by an increase in API “throttling” in recent years or API quotas provided by Salesforce. 15 Table of Contents P ART I Item 1A Although we typically receive significant advance notice of new product releases from Microsoft, Microsoft does not always preview our technology with us or other partners and, as a result, it is possible that we may not receive advance notice of changes in features and functionality of new technologies with which our products will need to interoperate.
Microsoft and other cloud providers may also choose to make it difficult for third party providers like us to continue making the necessary application programming interface (“ API ”) calls to provide their solutions, as illustrated by an increase in API “throttling” in recent years or API quotas provided by Salesforce. 21 Table of Contents P ART I Item 1A Although we typically receive significant advance notice of new product releases from Microsoft, Microsoft does not always preview their technology with us or other partners and, as a result, it is possible that we may not receive advance notice of changes in features and functionality of new technologies with which our products will need to interoperate.
All of the legal entities (and each of their respective employees) within our global corporate structure are contractually bound to the ISMS, but failure by any of our subsidiaries or affiliates (or employees thereof) to abide by the terms and conditions imposed by our ISMS could result in increased vulnerabilities, decreased integrity of our assets, and ultimately, liability, loss of business, and loss of customer confidence. 23 Table of Contents P ART I Item 1A The ISMS applies to the use of information, network resources, and electronic and computing devices to conduct business or interact with internal networks and business systems, whether owned or leased by us, our employees, or a third party.
All of the legal entities (and each of their respective employees) within our global corporate structure are contractually bound to the ISMS, but failure by any of our subsidiaries or affiliates (or employees thereof) to abide by the terms and conditions imposed by our ISMS could result in increased vulnerabilities, decreased integrity of our assets, and ultimately, liability, loss of business, and loss of customer confidence. 30 Table of Contents P ART I Item 1A The ISMS applies to the use of information, network resources, and electronic and computing devices to conduct business or interact with internal networks and business systems, whether owned or leased by us, our employees, or a third party.
In addition, failures to meet our customers’ expectations with respect to security and confidentiality of their data and information could damage our reputation and affect our ability to retain customers, attract new customers, and grow our business. 24 Table of Contents P ART I Item 1A Our potential failure to comply with legal or contractual requirements around the security of personal information could lead to significant fines and penalties, as well as claims by customers, affected data subjects, or other stakeholders.
In addition, failures to meet our customers’ expectations with respect to security and confidentiality of their data and information could damage our reputation and affect our ability to retain customers, attract new customers, and grow our business. 31 Table of Contents P ART I Item 1A Our potential failure to comply with legal or contractual requirements around the security of personal information could lead to significant fines and penalties, as well as claims by customers, affected data subjects, or other stakeholders.
Our international operations will involve a variety of risks, including: ■ Changes in a country’s or region’s political or economic conditions; ■ Economic uncertainty around the world and adverse effects arising from economic interdependencies across countries and regions; ■ The need to adapt and localize products and services for specific countries; ■ Greater difficulty in receiving payments from different geographies, including difficulties associated with currency fluctuations, transfer of funds, longer payment cycles and collecting accounts receivable, especially in emerging markets; ■ Potential changes in trade relations arising from policy initiatives implemented by the current administration or by a successor administration; ■ Compliance with foreign laws and regulations and the risks and costs of non-compliance with such laws and regulations; ■ Unexpected changes in laws, regulatory requirements, taxes, or trade laws; ■ More stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal information, particularly in Europe; ■ Differing labor regulations, especially in Europe, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; ■ Challenges inherent in efficiently managing an increased number of employees over large geographic distances (including in a work-from-home environment), including the need to implement appropriate systems, policies, benefits, and compliance programs; ■ Difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; ■ Increased travel, real estate, infrastructure, and legal compliance costs associated with international operations; ■ Currency exchange rate fluctuations and the resulting effect on revenue and expenses, and the cost and risk of entering into hedging transactions if we elect to do so in the future; ■ Limitations on the ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries; ■ Laws and business practices favoring local competitors or general preferences for local vendors; ■ limited or insufficient intellectual property protection or difficulties enforcing our intellectual property; ■ Political instability or terrorist activities; ■ Exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
Our international operations will involve a variety of risks, including: ■ Changes in a country’s or region’s political or economic conditions; ■ Economic uncertainty around the world and adverse effects arising from economic interdependencies across countries and regions; ■ The need to adapt and localize products and services for specific countries; ■ Greater difficulty in receiving payments from different geographies, including difficulties associated with currency fluctuations, transfer of funds, longer payment cycles and collecting accounts receivable, especially in emerging markets; 27 Table of Contents P ART I Item 1A ■ Potential changes in trade relations arising from policy initiatives implemented by the current administration or by a successor administration; ■ Compliance with foreign laws and regulations and the risks and costs of non-compliance with such laws and regulations; ■ Unexpected changes in laws, regulatory requirements, taxes, or trade laws; ■ More stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal information, particularly in Europe; ■ Differing labor regulations, especially in Europe, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; ■ Challenges inherent in efficiently managing an increased number of employees over large geographic distances (including in a work-from-home environment), including the need to implement appropriate systems, policies, benefits, and compliance programs; ■ Difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; ■ Increased travel, real estate, infrastructure, and legal compliance costs associated with international operations; ■ Currency exchange rate fluctuations and the resulting effect on revenue and expenses, and the cost and risk of entering into hedging transactions if we elect to do so in the future; ■ Limitations on the ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries; ■ Laws and business practices favoring local competitors or general preferences for local vendors; ■ limited or insufficient intellectual property protection or difficulties enforcing our intellectual property; ■ Political instability or terrorist activities; ■ Exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
Rigorous third-party audits verify that we adhere to strict security controls such as the ones contained in the ISO/IEC 27001 standard mandate. We are audited once a year for ISO/IEC 27001 compliance by a third-party accredited certification body, which provides independent validation that security controls are in place and operating effectively.
Rigorous third-party audits verify that we adhere to strict security controls such as the ones contained in the ISO/IEC 27001 standard mandate. We are audited once a year for ISO/IEC 27001, 27017 and 27701 compliance by a third-party accredited certification body, which provides independent validation that security controls are in place and operating effectively.
In addition to our remediation efforts described under the heading “ our management has identified material weaknesses in our internal control over financial reporting and we may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations, ” we may need to undertake various costly and time-consuming actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff, which may adversely affect our business, financial condition and results of operations.
In addition to our remediation efforts described in the previous risk factor under the heading “O ur management has identified material weaknesses in our internal control over financial reporting and we may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations, ” we may need to undertake various additional costly and time-consuming actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff, which may adversely affect our business, financial condition and results of operations.
T hese risks, as well as the number and frequency of cybersecurity events globally, may also be heightened during times of geopolitical tension or instability between countries, including, for example, the ongoing military conflict between Russia and Ukraine, from which a number of recent cybersecurity events have been alleged to have originated.
These risks, as well as the number and frequency of cybersecurity events globally, may also be heightened during times of geopolitical tension or instability between countries, including, for example, the ongoing military conflict between Russia and Ukraine, from which a number of recent cybersecurity events have been alleged to have originated.
As a public company, our management is required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. Prior to the consummation of the Business Combination, we were a private company with limited accounting and financial reporting personnel and other resources with which to address our internal controls and procedures.
We are a public company, and our management is required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. Prior to the consummation of the Apex Business Combination, we were a private company with limited accounting and financial reporting personnel and other resources with which to address our internal controls and procedures.
The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations and cause shareholders to lose confidence in our reported financial information, all of which could materially and adversely affect our business and stock price. 27 Table of Contents PART I Items 1B, 2, 3, and 4 ITEM 1B.
The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations and cause shareholders to lose confidence in our reported financial information, all of which could materially and adversely affect our business and stock price. 35 Table of Contents PART I Items 1B and 1C ITEM 1B.
Increases in cost, interruptions in service, latency, or poor service from our third-party data center providers could impair the delivery of our platform. This could result in customer dissatisfaction, damage to our reputation, loss of customers, limited growth, and reduction in revenue.
We depend on third-party data hosting and transmission services. Increases in cost, interruptions in service, latency, or poor service from our third-party data center providers could impair the delivery of our platform. This could result in customer dissatisfaction, damage to our reputation, loss of customers, limited growth, and reduction in revenue.
If the economic conditions of the general economy or markets in which we operate worsen from present levels, our business, results of operations and financial condition could be harmed. Failure to effectively develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our products and services.
If the economic conditions of the general economy or markets in which we operate worsen from present levels, our business, results of operations and financial condition could be harmed. 24 Table of Contents P ART I Item 1A Failure to effectively develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our products and services.
This development effort may require significant engineering, marketing and sales resources, all of which would affect our business and operating results. Any failure of our products and services to operate effectively with future technologies could reduce the demand for our products and services.
This development effort may require significant engineering, marketing and sales resources, all of which would affect our business and operating results. 23 Table of Contents P ART I Item 1A Any failure of our products and services to operate effectively with future technologies could reduce the demand for our products and services.
If we fail to anticipate market requirements or stay abreast of technological changes, we may be unable to successfully introduce new products, expand the functionality of our current products or convince our existing and potential customers of the value of our products in light of new technologies.
If we fail to anticipate market requirements or stay abreast of technological changes, we may be unable to successfully introduce new products, expand the functionality of our current products or convince our existing and potential customers of the value of our products in light of new technologies. Accordingly, our business, results of operations and financial condition could be harmed.
Our customers’ renewal rates may decline or fluctuate as a result of a number of factors, including their level of satisfaction with our pricing or our products and their ability to continue their operations and spending levels, mix of customer base, decreases in the number of users at our customers, competition, pricing increases or changes, and deteriorating general economic conditions, including as a result of the COVID-19 pandemic or the military conflict between Russia and Ukraine.
Our customers’ renewal rates may decline or fluctuate as a result of a number of factors, including their level of satisfaction with our pricing or our products and their ability to continue their operations and spending levels, mix of customer base, decreases in the number of users at our customers, competition, pricing increases or changes, and deteriorating general economic conditions, including as a result of the ongoing military conflicts where the outcome is not possible to predict.
Travel Act, the UK Bribery Act of 2010, the UK Proceeds of Crime Act 2002, and similar laws and regulations in other jurisdictions; ■ Compliance with laws and regulations for foreign operations, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on the ability to sell our software in certain foreign markets, and the risks and costs of non-compliance; ■ Heightened risks of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of financial statements and irregularities in financial statements; and ■ Adverse tax burdens and foreign exchange controls that could make it difficult to repatriate earnings and cash. 21 Table of Contents P ART I Item 1A In addition, certain of our customer or resellers may operate in, or have dealings with, countries subject to sanctions or embargos imposed by the U.S. government, foreign governments, or the United Nations or other international organizations.
Travel Act, the UK Bribery Act of 2010, the UK Proceeds of Crime Act 2002, and similar laws and regulations in other jurisdictions; ■ Compliance with laws and regulations for foreign operations, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on the ability to sell our software in certain foreign markets, and the risks and costs of non-compliance; ■ Heightened risks of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of financial statements and irregularities in financial statements; and ■ Adverse tax burdens and foreign exchange controls that could make it difficult to repatriate earnings and cash.
In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products, personnel, or operations of the acquired companies. Key personnel of the acquired companies may choose not to work for us, their software may not be easily adapted, or we may have difficulty retaining the customers of any acquired business due to changes in ownership, management, or otherwise.
Key personnel of the acquired companies may choose not to work for us, their software may not be easily adapted, or we may have difficulty retaining the customers of any acquired business due to changes in ownership, management, or otherwise. We may also experience difficulties integrating personnel of the acquired company into our business and culture.
Our success in adding new customers depends on numerous factors, including our ability to: (1) offer compelling products and services, (2) execute our sales and marketing strategy, (3) attract, effectively train and retain new sales, marketing, professional services, and support personnel in the markets we pursue, (4) develop or expand relationships with partners, IT consultants, systems integrators resellers and other third parties, strengthening our network, (5) expand into new geographies, including internationally, and market segments, (6) efficiently onboard new customers on to our product offerings, and (7) provide additional paid services that fulfill the needs and complement the capabilities of our customers and their partners. 16 Table of Contents P ART I Item 1A Our future success also depends, in part, on our ability to sell additional products, more functionality and/or adjacent services to our current customers, and the success rate of such endeavors is difficult to predict and, especially with regard to any new products or lines of business that we may introduce from time to time.
Our success in adding new customers depends on numerous factors, including our ability to: (1) offer compelling products and services, (2) execute our sales and marketing strategy, (3) attract, effectively train and retain new sales, marketing, professional services, and support personnel in the markets we pursue, (4) develop or expand relationships with partners, IT consultants, systems integrators resellers and other third parties, strengthening our network, (5) expand into new geographies, including internationally, and market segments, (6) efficiently onboard new customers on to our product offerings, and (7) provide additional paid services that fulfill the needs and complement the capabilities of our customers and their partners.
Our operations will be dependent upon our ability to prevent system interruption. The applications underlying our products and services are inherently complex and may contain material defects or errors, which may cause disruptions in availability or other performance problems.
The applications underlying our products and services are inherently complex and may contain material defects or errors, which may cause disruptions in availability or other performance problems.
If these policies delay or prevent us from advertising through these channels, it could result in reduced traffic to our website and subscriptions to our products and services. New search engines and other digital marketing platforms may develop, particularly in certain jurisdictions, that reduce traffic on existing search engines and digital marketing platforms.
Furthermore, search engines and digital marketing platforms may change their advertising policies from time to time. If these policies delay or prevent us from advertising through these channels, it could result in reduced traffic to our website and subscriptions to our products and services.
We have continued the implementation of this plan and believe the measures described above will remediate the material weaknesses identified and strengthen our internal control over financial reporting.
We have continued the implementation of this plan and believe the measures described above will remediate the material weaknesses identified and strengthen our internal control over financial reporting. We are committed to continuing to improve our internal control processes and will continue to diligently and vigorously review our financial reporting controls and procedures.
We may be unable to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions. We may evaluate and consider potential strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, products, and other assets in the future. An acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures.
We may evaluate and consider potential strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, products, and other assets in the future. An acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products, personnel, or operations of the acquired companies.
Any of these occurrences could result in loss of customers, lost or delayed market acceptance and sales of our products and services, delays in payment by customers, injury to our reputation and brand, legal claims, including warranty and service claims, diversion of resources, including through increased service and warranty expenses or financial concessions, and increased insurance costs.
Any of these occurrences could result in loss of customers, lost or delayed market acceptance and sales of our products and services, delays in payment by customers, injury to our reputation and brand, legal claims, including warranty and service claims, diversion of resources, including through increased service and warranty expenses or financial concessions, and increased insurance costs. 29 Table of Contents P ART I Item 1A We may discover defects in our products and services that could result in data unavailability, unauthorized access, loss, corruption, or other harm to our customers’ data.
To the extent that our products and services depend upon the successful operation of third-party software, any undetected errors or defects in such third-party software could impair the functionality of our products and services, delay new feature introductions, result in a failure of products and services, and injure our reputation. 25 Table of Contents P ART I Item 1A A significant portion of our products will incorporate open source software, and we expect to incorporate open source software into other offerings or products in the future.
To the extent that our products and services depend upon the successful operation of third-party software, any undetected errors or defects in such third-party software could impair the functionality of our products and services, delay new feature introductions, result in a failure of products and services, and injure our reputation.
As our customer base continues to grow, we will need to expand our services and other personnel and maintain and enhance our partnerships to provide a high level of customer service. Extended stay-at-home, business closure, and other restrictive orders may impact our ability to identify, hire, and train new personnel.
As our customer base continues to grow, we will need to expand our services and other personnel and maintain and enhance our partnerships to provide a high level of customer service.
If a distributor of open source software were to allege that we had not complied with our license, we could be required to incur significant legal expenses. In addition, if the license terms for the open source code change we may be forced to re-engineer our software or incur additional costs.
In addition, if the license terms for the open source code change we may be forced to re-engineer our software or incur additional costs.
If we invest substantial time and resources to expand our international operations and is unable to do so successfully, our business and operating results will suffer. We are exposed to fluctuations in currency exchange rates, which could negatively our revenue and earnings. We conduct a significant number of transactions and hold cash in currencies other than the U.S. Dollar.
If we invest substantial time and resources to expand our international operations and is unable to do so successfully, our business and operating results will suffer. 28 Table of Contents P ART I Item 1A We are exposed to fluctuations in currency exchange rates, which could negatively our revenue and earnings.
Any of the above circumstances or events may harm our reputation, cause customers to terminate their agreements with us, impair our ability to grow our customer base, subject us to financial liabilities, and otherwise harm our business, results of operations, and financial condition. 19 Table of Contents P ART I Item 1A Risks Related to Our Operations and Financial Condition Our operations will continue to increase in complexity as we grow, which will create management challenges.
Any of the above circumstances or events may harm our reputation, cause customers to terminate their agreements with us, impair our ability to grow our customer base, subject us to financial liabilities, and otherwise harm our business, results of operations, and financial condition.
Changes in the values of major foreign currencies relative to the U.S. Dollar may significantly affect our total assets, revenue, operating results and cash flows, which are reported in U.S. Dollars. We may acquire or invest in companies, which may divert management ’ s attention and result in additional dilution to stockholders.
We conduct a significant number of transactions and hold cash in currencies other than the U.S. Dollar. Changes in the values of major foreign currencies relative to the U.S. Dollar may significantly affect our total assets, revenue, operating results and cash flows, which are reported in U.S. Dollars.
Such breaches and attacks on our counterparts within the industry and within our market may cause, among other things, interruptions to the provision of service, degradation of the user experience, the loss of user confidence and trust in our products, or result in financial harm to us.
Such breaches and attacks on our counterparts within the industry and within our market may cause, among other things, interruptions to the provision of service, degradation of the user experience, the loss of user confidence and trust in our products, or result in financial harm to us. 32 Table of Contents P ART I Item 1A Risks Related to Intellectual Property We will rely on third-party proprietary and open source software for our products and services.
If we are not able to achieve prominence through advertising or otherwise, it may not achieve significant traffic to our website through these new platforms and our business and operating results could be harmed. We depend on third-party data hosting and transmission services.
New search engines and other digital marketing platforms may develop, particularly in certain jurisdictions, that reduce traffic on existing search engines and digital marketing platforms. If we are not able to achieve prominence through advertising or otherwise, it may not achieve significant traffic to our website through these new platforms and our business and operating results could be harmed.
We may not achieve anticipated revenue growth from expanding our sales force if we are unable to hire, develop, and retain talented sales personnel, if our new sales personnel are unable to achieve desired productivity levels in a reasonable period of time, or if our sales and marketing programs are not effective. 18 Table of Contents P ART I Item 1A If the cost of marketing our products and services over search engines or other digital marketing platforms increases, our business and operating results could be harmed.
We may not achieve anticipated revenue growth from expanding our sales force if we are unable to hire, develop, and retain talented sales personnel, if our new sales personnel are unable to achieve desired productivity levels in a reasonable period of time, or if our sales and marketing programs are not effective.
If we expend a significant amount of resources on research and development and our efforts do not lead to the successful introduction or improvement of products that are competitive in our current or future markets, it would harm our business and results of operations. 22 Table of Contents P ART I Item 1A If our products and services fail to perform properly, or if we fail to develop enhancements to resolve performance issues, we could lose customers, become subject to performance or warranty claims, or incur significant costs.
If we expend a significant amount of resources on research and development and our efforts do not lead to the successful introduction or improvement of products that are competitive in our current or future markets, it would harm our business and results of operations.
Competitors also may bid on the search terms that we use to drive traffic to our website. Such actions could increase our marketing costs and result in decreased traffic to our website. Furthermore, search engines and digital marketing platforms may change their advertising policies from time to time.
If the cost of marketing our products and services over search engines or other digital marketing platforms increases, our business and operating results could be harmed. Competitors also may bid on the search terms that we use to drive traffic to our website. Such actions could increase our marketing costs and result in decreased traffic to our website.
We are committed to continuing to improve our internal control processes and will continue to diligently and vigorously review our financial reporting controls and procedures. 26 Table of Contents While we continue to implement our plan to remediate the material weaknesses described above, we cannot predict the success of such plan or the outcome of our assessment of these plans at this time.
While we continue to implement our plan to remediate the material weaknesses described above, we cannot predict the success of such plan or the outcome of our assessment of these plans at this time.
Our systems and processes may not prevent or detect all errors, omissions, or fraud. We may have difficulty managing improvements to our systems, processes and controls or in connection with third-party software.
For example, we may not be able to effectively monitor certain extraordinary contract requirements or individually negotiated provisions as the number of customers continues to grow. Our systems and processes may not prevent or detect all errors, omissions, or fraud. We may have difficulty managing improvements to our systems, processes and controls or in connection with third-party software.
Any of these could result in the loss of information, litigation, indemnity obligations, damage to our reputation and other liability or harm our business, financial condition, and results of operations.
Such information may be the target of unauthorized access or subject to security breaches as a result of third-party action, exploitation of artificial intelligence, employee error, malfeasance or otherwise. Any of these could result in the loss of information, litigation, indemnity obligations, damage to our reputation and other liability or harm our business, financial condition, and results of operations.
If we do not help our customers quickly resolve issues and provide effective ongoing support, our ability to sell new products and services to existing and new customers could suffer and our reputation with existing or potential customers could be harmed. 20 Table of Contents P ART I Item 1A If our products and services do not effectively interoperate with our customers ’ existing or future IT infrastructures or do not operate as effectively when accessed through mobile devices, customers may not be satisfied, which could harm our business.
If our products and services do not effectively interoperate with our customers ’ existing or future IT infrastructures or do not operate as effectively when accessed through mobile devices, customers may not be satisfied, which could harm our business.
The anticipated benefits of any acquisition, investment, or business relationship may not be realized or we may be exposed to unknown risks or liabilities.
Acquisitions may also disrupt our business, divert our resources and require significant management attention that would otherwise be available for development of our existing business. The anticipated benefits of any acquisition, investment, or business relationship may not be realized or we may be exposed to unknown risks or liabilities.
We believe enhancing the AvePoint brand and maintaining our reputation in the information technology industry will be critical for the continued acceptance of our existing and future products and services, attracting new customers to our products and services, and retaining existing customers. The importance of brand recognition will increase as competition in our market increases.
If we fail to maintain or grow our brand recognition, our ability to expand our customer base will be impaired and our financial condition may suffer. 26 Table of Contents P ART I Item 1A We believe enhancing the AvePoint brand and maintaining our reputation in the information technology industry will be critical for the continued acceptance of our existing and future products and services, attracting new customers to our products and services, and retaining existing customers.
If we incur such losses or liabilities, we might be unable to recover significant amounts from our third-party providers (even if they were primarily or solely responsible) because of restrictive liability and indemnification terms.
If we incur such losses or liabilities, we might be unable to recover significant amounts from our third-party providers (even if they were primarily or solely responsible) because of restrictive liability and indemnification terms. 25 Table of Contents P ART I Item 1A If there are interruptions or performance problems associated with our technology or infrastructure, our existing customers may experience service outages, and our new customers may experience delays in using our products and services.
Our ability to achieve revenue growth and expand our SMB acquisition in the future will depend in part on our success in maintaining successful relationships with our partners. Our agreements with our partners are generally non-exclusive, meaning our partners may offer customers the products of several different companies.
We expect that sales to partners will account for a substantial portion of our revenue for the foreseeable future. Our ability to achieve revenue growth and expand our SMB acquisition in the future will depend in part on our success in maintaining successful relationships with our partners.
We may discover defects in our products and services that could result in data unavailability, unauthorized access, loss, corruption, or other harm to our customers’ data. Despite testing we may not be able to detect and correct defects or errors before release. Consequently, we or our customers may discover defects or errors after our products and services have been deployed.
Despite testing we may not be able to detect and correct defects or errors before release. Consequently, we or our customers may discover defects or errors after our products and services have been deployed. We expect to implement bug fixes and upgrades as part of our regularly scheduled system maintenance.
Our management has identified material weaknesses in our internal control over financial reporting and we may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.
Although we have generally taken measures to protect our proprietary rights, there can be no assurance that others will not offer products or concepts that are substantially similar to ours and compete with our business. 33 Table of Contents P ART I Item 1A Risks Related to Financial Reporting Our management has identified material weaknesses in our internal control over financial reporting and we may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.
Our business has experienced strong growth and is complex. This growth is expected to continue, and our operations will be increasingly complex. To manage this growth, we will make substantial investments to improve our operational, financial, and management controls as well as our reporting systems and procedures.
Risks Related to Our Operations and Financial Condition Our operations will continue to increase in complexity as we grow, which will create management challenges. Our business has experienced strong growth and is complex. This growth is expected to continue, and our operations will be increasingly complex.
Such open source software is generally licensed by its authors or other third parties under open source licenses. Little legal precedent governs the interpretation of these licenses; therefore, the potential impact of these terms on our business is unknown and may result in unanticipated obligations regarding our technologies.
Little legal precedent governs the interpretation of these licenses; therefore, the potential impact of these terms on our business is unknown and may result in unanticipated obligations regarding our technologies. If a distributor of open source software were to allege that we had not complied with our license, we could be required to incur significant legal expenses.
Our future revenue and operating results will be harmed if we are unable to acquire new customers, expand sales to our existing customers, or develop new functionality for our products and services that achieves market acceptance. To continue to grow our business, it is important that we continue to acquire new customers to purchase and use our products and services.
Moreover, if we do not effectively manage the growth of our business and operations, the quality of our software could suffer, which could negatively affect the AvePoint brand, results of operations and overall business. 22 Table of Contents P ART I Item 1A Our future revenue and operating results will be harmed if we are unable to acquire new customers, expand sales to our existing customers, or develop new functionality for our products and services that achieves market acceptance.
Accordingly, our business, results of operations and financial condition could be harmed. 17 Table of Contents P ART I Item 1A Our success with SMB customers depends in part on our resale and distribution partnerships. Our business would be harmed if we fail to maintain or expand partner relationships.
Our success with SMB customers depends in part on our resale and distribution partnerships. Our business would be harmed if we fail to maintain or expand partner relationships. We leverage the sales and referral resources of resale and referral partners through a variety of programs, and we also rely on distribution partners, especially for our SMB market acquisition.
We may not be able to implement and scale improvements to our systems and processes in a timely or efficient manner or in a manner that does not negatively affect our operating results. For example, we may not be able to effectively monitor certain extraordinary contract requirements or individually negotiated provisions as the number of customers continues to grow.
To manage this growth, we will make substantial investments to improve our operational, financial, and management controls as well as our reporting systems and procedures. We may not be able to implement and scale improvements to our systems and processes in a timely or efficient manner or in a manner that does not negatively affect our operating results.
We are in the very early stages of the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404 of the Sarbanes-Oxley Act (“SOX”).
We aim to comply with and perform the evaluations needed to comply with Section 404 of the Sarbanes-Oxley Act (“ SOX ”).
With the oversight of senior management and our audit committee, we implemented actions under a remediation plan which include (A) the hiring of personnel with technical accounting and financial reporting experience to further bolster our ability to assess judgmental areas of accounting and provide an appropriate level of oversight of activities related to internal control over financial reporting and (B) the engagement of external consultants in the assistance of the evaluation of complex accounting matters.
With the oversight of senior management and our audit committee, we implemented actions under a remediation plan which include (A) enhancement of the design of controls that address the completeness and accuracy of reports being utilized in the execution of internal controls and (B) continuous evaluation of the assignment of responsibilities associated with the performance of control activities and consider hiring additional resources, obtaining third party assistance, and providing additional training to existing resources.
We determined that we had material weaknesses in internal control because we did not maintain effective controls related to: (i) the completeness and accuracy of financial accounting, reporting and disclosures, (ii) the identification, review and accounting for nonroutine transactions and/or events and (iii) segregation of duties with respect to the processing of financial transactions.
We determined that we had material weaknesses in the design and implementation of control activities to address the completeness and accuracy of certain information relevant for control owners to perform their control activities over financial accounting, reporting and disclosures.
Removed
Moreover, if we do not effectively manage the growth of our business and operations, the quality of our software could suffer, which could negatively affect the AvePoint brand, results of operations and overall business.
Added
To continue to grow our business, it is important that we continue to acquire new customers to purchase and use our products and services.
Removed
We leverage the sales and referral resources of resale and referral partners through a variety of programs, and we rely on distribution partners especially for our SMB market acquisition. We expect that sales to partners will account for a substantial portion of our revenue for the foreseeable future.
Added
Our future success also depends, in part, on our ability to sell additional products, more functionality and/or adjacent services to our current customers, and the success rate of such endeavors is difficult to predict, especially with regard to any new products or lines of business that we may introduce from time to time.
Removed
If there are interruptions or performance problems associated with our technology or infrastructure, our existing customers may experience service outages, and our new customers may experience delays in using our products and services.
Added
Our agreements with our partners are generally non-exclusive, meaning our partners may offer customers the products of several different companies.
Removed
If we fail to maintain or grow our brand recognition, our ability to expand our customer base will be impaired and our financial condition may suffer.
Added
The importance of brand recognition will increase as competition in our market increases.
Removed
In particular, on February 24, 2022, Russian troops began a full-scale invasion of Ukraine and, as of the date hereof, the countries remain in active armed conflict.
Added
If we do not help our customers quickly resolve issues and provide effective ongoing support, our ability to sell new products and services to existing and new customers could suffer and our reputation with existing or potential customers could be harmed.
Removed
Around the same time, the U.S., the U.K., the E.U., and several other nations announced a broad array of new or expanded sanctions, export controls, and other measures against Russia, Russian-backed separatist regions in Ukraine, and certain banks, companies, government officials, and other individuals in Russia and Belarus, as well as a number of Russian Oligarchs.
Added
In addition, certain of our customer or resellers may operate in, or have dealings with, countries subject to sanctions or embargos imposed by the U.S. government, foreign governments, or the United Nations or other international organizations.
Removed
The U.S. or other countries could also institute broader sanctions on Russia and others supporting Russia’s economy or military efforts.
Added
These sanctions or embargos may result from the multiple ongoing conflicts where the outcomes and consequences are not possible to predict, but could include regional instability and geopolitical shifts, and could materially adversely affect global trade, currency exchange rates, regional economies and the global economy.
Removed
The ongoing conflict and the rapidly evolving measures in response could be expected to have a negative impact on the economy and business activity globally (including in the countries in which the Company invests), and therefore are expected to result in adverse consequences to the Russian economy and could have a material adverse effect on our business, financial condition, cash flows and results of operations.
Added
These conflicts and any actions taken in response could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition, and results of operations.
Removed
The severity and duration of the conflict and its impact on global economic and market conditions are impossible to predict, and as a result, present material uncertainty and risk with respect to our operations, and our ability to achieve our objectives.
Added
These conflicts and any actions taken in response could also result in the aforementioned impacts on the business of our customers, resellers or any other service providers on which we rely.
Removed
Similar risks will exist to the extent that any service providers, vendors or certain other parties have material operations or assets in Russia, Ukraine, Belarus, or the immediate surrounding areas.
Added
We may acquire or invest in companies, which may divert management ’ s attention and result in additional dilution to stockholders. We may be unable to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions.
Removed
Sanctions could also result in Russia taking counter measures or retaliatory actions which could adversely impact our business or the business of our partners, including, but not limited to, cyberattacks targeting private companies, individuals or other infrastructure upon which our business and the business of our partners may rely.
Added
If our products and services fail to perform properly, or if we fail to develop enhancements to resolve performance issues, we could lose customers, become subject to performance or warranty claims, or incur significant costs. Our operations will be dependent upon our ability to prevent system interruption.
Removed
We may also experience difficulties integrating personnel of the acquired company into our business and culture. Acquisitions may also disrupt our business, divert our resources and require significant management attention that would otherwise be available for development of our existing business.
Added
A significant portion of our products will incorporate open source software, and we expect to incorporate open source software into other offerings or products in the future. Such open source software is generally licensed by its authors or other third parties under open source licenses.
Removed
We expect to implement bug fixes and upgrades as part of our regularly scheduled system maintenance.
Added
In addition, our independent auditor is required to attest to management’s assessment of the effectiveness of our internal control over financial reporting.
Removed
Many companies that provide cloud-based services have reported a significant increase in cyberattack activity since the beginning of the COVID-19 pandemic.

… 5 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed4 unchanged
Biggest changeThe table below shows a summary of the square footage of our office and other facilities owned and leased domestically and internationally as of December 31, 2022: (Square feet in thousands) Location Owned Leased Total U.S. — 53.7 53.7 International 16.4 191.0 207.4 Total 16.4 244.7 261.1 Our Principal Offices Our principal corporate headquarters are located in Jersey City, New Jersey, United States, and consist of approximately 15,467 square feet under a lease that expires in 2030.
Biggest changeThe table below shows a summary of the square footage of our office and other facilities owned and leased domestically and internationally as of December 31, 2023: (Square feet in thousands) Location Owned Leased Total U.S. — 49.8 49.8 International 16.4 221.9 238.3 Total 16.4 271.7 288.1 Our Principal Offices Our principal corporate headquarters are located in Jersey City, New Jersey, United States, and consist of approximately 15,467 square feet under a lease that expires in 2030.
Our principal operating offices are located in Richmond, Virginia, United States, where we lease approximately 11,965 square feet under a lease that expires in 2027. Use of Facilities We use our principal corporate headquarters primarily for our executive management, information technology, human resources, and marketing, as well as for certain of data privacy and security teams.
Our principal operating offices are located in Richmond, Virginia, United States, where we lease approximately 11,965 square feet under a lease that expires in 2027. Use of Facilities We use our principal corporate headquarters primarily for our executive management, information technology, human resources, and marketing teams, as well as for certain of data privacy and security teams.
As of December 31, 2022, we had approximately 244,725 square feet of leased office space across the United States, Australia, China, France, Germany, Japan, Netherlands, the Philippines, Singapore, South Africa, South Korea, Sweden, Switzerland, the United Kingdom, and Vietnam.
As of December 31, 2023, we had approximately 271,713 square feet of leased office space across the United States, Australia, China, France, Germany, Japan, Netherlands, the Philippines, Singapore, South Africa, South Korea, Sweden, Switzerland, the United Kingdom, and Vietnam.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeExcept for such claims that arise in the normal course of business, as of and for the fiscal quarter and the fiscal year ended December 31, 2022, we are not a party to any material asserted, ongoing, threatened, or pending claims, suits, assessments, proceedings, or other litigation for which a material claim is reasonably possible, probable, or estimable.
Biggest changeExcept for such claims that arise in the normal course of business, as of and for the fiscal quarter and the fiscal year ended December 31, 2023, we are not a party to any material asserted, ongoing, threatened, or pending claims, suits, assessments, proceedings, or other litigation.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+1 added−4 removed2 unchanged
Biggest changeThe following table presents information with respect to common stock shares repurchased under the Share Repurchase Program during the period from October 1, 2022, to December 31, 2022: Period Total number of shares purchased (1) Average price paid per share (2) Cumulative number of shares purchased Maximum remaining dollar value of shares that may yet be purchased under the Share Repurchase Program (3) October 1, 2022 - October 31, 2022 Nil Nil 3,970,037 $130,445,253 November 1, 2022 - November 30, 2022 Nil Nil 3,970,037 $130,445,253 December 1, 2022 - December 31, 2022 76,149 $4.8892 4,046,186 $130,072,946 (1) All shares reported herein were purchased pursuant to the publicly announced Share Repurchase Program.
Biggest changeThe following table presents information with respect to common stock shares repurchased under the Share Repurchase Program during the period from October 1, 2023 to December 31, 2023: Period Total number of shares purchased (1) Average price paid per share (2) Total number of shares purchased as part of the Share Repurchase Program Approximate dollar value of shares that may yet be purchased under the Share Repurchase Program (3) October 1, 2023 - October 31, 2023 577,145 $7.0953 577,145 $92,333,439 November 1, 2023 - November 30, 2023 27,306 $7.5507 27,306 $92,127,260 December 1, 2023 - December 31, 2023 130,930 $8.3304 130,930 $91,036,562 (1) All shares reported herein, including shares repurchased to satisfy employee taxes on vesting RSUs, were purchased pursuant to the publicly announced Share Repurchase Program.
Dividend Policy We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and, therefore, we do not anticipate paying any cash dividends in the foreseeable future.
Dividend Policy We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and, therefore, we do not anticipate paying any dividends in the foreseeable future.
Under the Share Repurchase Program, we have the authority to buy up to a maximum of $150 million of our common stock shares via acquisitions in the open market or privately negotiated transactions. The Share Repurchase Program will remain open for a period of three years from the date of authorization.
Under the Share Repurchase Program, we have the authority to buy up to $150 million of our common stock via acquisitions in the open market or privately negotiated transactions. The Share Repurchase Program will remain open for a period of three years from the date of authorization.
Securities Authorized for Issuance Under Equity Compensation Plans See “ Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ” (Part III, Item 12 of this Annual Report) and “ Note 16 — Stock-Based Compensation ” (Part II, Item 8 of this Annual Report) for more information. 29 Table of Contents PART II Items 5 and 6 Issuer Purchaser of Equity Securities On March 17, 2022, we announced that our Board of Directors authorized a new share repurchase program (the “ Share Repurchase Program ”) for us to buy back shares of our common stock.
Securities Authorized for Issuance Under Equity Compensation Plans See “ Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ” (Part III, Item 12 of this Annual Report) and “ Note 15 — Stock-Based Compensation ” (Part II, Item 8 of this Annual Report) for more information. 40 Table of Contents PART II Items 5 and 6 Issuer Purchaser of Equity Securities On March 17, 2022, we announced that our Board authorized a new share repurchase program (the “ Share Repurchase Program ”) for us to buy back shares of our common stock.
Any future determination to pay dividends is at the discretion of our Board, subject to compliance with covenants in current and future agreements governing our and our subsidiaries’ indebtedness, and will depend on our results of operations, financial condition, capital requirements, and other factors that our Board may deem relevant. Except as noted in “ Item 7.
Any future determination to pay dividends is at the discretion of our Board, subject to compliance with covenants in current and future agreements governing our and our subsidiaries’ indebtedness, and will depend on our results of operations, financial condition, capital requirements, and other factors that our Board may deem relevant.
(2) Average price paid per share includes costs associated with the repurchases. (3) The maximum remaining dollar value of shares that may yet be purchased under the Share Repurchase Program is reduced by the aggregate price paid for share purchases in addition to any fees, commissions, or other costs that may arise as a result of the purchases.
(3) The maximum remaining dollar value of shares that may yet be purchased under the Share Repurchase Program is reduced by the aggregate price paid for share purchases in addition to any fees, commissions, or other costs that may arise as a result of the purchases.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock began trading on the Nasdaq Global Select Market (the “ Nasdaq ”) under the symbol “AVPT,” and our public warrants began trading on the Nasdaq under the symbol “AVPTW” on July 2, 2021.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the Nasdaq Global Select Market (the “ Nasdaq ”) under the symbol “AVPT,” and our public warrants are traded on the Nasdaq under the symbol “AVPTW”.
Management ’ s Discussion and Analysis of Financial Condition and Results of Operations ” below, there are currently no contractual restrictions on our ability to pay dividends in cash or shares.
Except as noted in “ Management ’ s Discussion and Analysis of Financial Condition and Results of Operations ” (Part II, Item 7 of this Annual Report) below, there are currently no contractual restrictions on our ability to pay dividends in cash or shares.
Purchases made pursuant to the Share Repurchase Program will be conducted in compliance with Exchange Act Rule 10b-18 (or pursuant to a plan implemented in response to Exchange Act Rule 10b5-1(c) for parties that frequently have access to material nonpublic information, such as our executive officers and directors) and all other applicable legal, regulatory, and internal policy requirements, including our Insider Trading Policy.
Purchases made pursuant to the Share Repurchase Program may be conducted in compliance with Exchange Act Rule 10b-18 and/or Exchange Act Rule 10b5-1. Purchases made pursuant to the Share Repurchase Program will be conducted in compliance with all other applicable legal, regulatory, and internal policy requirements, including our Insider Trading Policy.
Current Stockholder and Common Stock Information On March 31, 2023, just prior to the date of this Annual Report, there were 191,399,177 shares of common stock issued and outstanding held of record by twenty-seven holders, and 17,905,000 warrants outstanding held of record by two holders.
Current Stockholder and Common Stock Information On February 29, 2024, there were 184,010,832 shares of common stock issued and outstanding held of record by thirteen holders, and 17,905,000 warrants outstanding held of record by two holders.
Removed
Prior to the consummation of the Apex Business Combination on July 1, 2021, Apex Units, Apex Public Shares, and Apex Public Warrants were each traded on the Nasdaq Capital Market under the symbols “APXTU,” “APXT,” and “APXTW,” respectively.
Added
(2) Average price paid per share includes costs associated with the repurchases, but excludes the 1% excise tax on stock repurchases enacted by the Inflation Reduction Act of 2022.
Removed
Apex Units commenced public trading on September 17, 2019, and Apex’s Public Shares and Public Warrants commenced separate public trading on November 5, 2019.
Removed
In connection with the closing of the Apex Business Combination, each Apex Unit was separated into its components, which consisted of one share of Class A common stock and one-half of one warrant, and such Units no longer exist.
Removed
As of December 31, 2022, there were 189,467,338 shares of our common stock, including treasury shares, issued and outstanding held of record by 27 holders, and 17,905,000 warrants outstanding held of record by two holders.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

71 edited+25 added−43 removed24 unchanged
Biggest changeWithin personnel costs, a one-time expense of $0.2 million was associated with the Company's reduction in workforce announced in December of 2022, primarily related to severance and compensation benefits. 36 Table of Contents Operating Expenses Sales and Marketing Sales and marketing expenses during the years ended December 31, 2022 and 2021 were as follows: Year Ended December 31, Change 2022 2021 Amount % (in thousands, except percentages) Sales and marketing $ 109,805 $ 100,512 $ 9,293 9.2 % Percentage of revenue 47.3 % 52.4 % — — GAAP sales and marketing $ 109,805 $ 100,512 $ 9,293 9.2 % Stock-based compensation expense (11,393 ) (15,906 ) 4,513 (28.4 )% Non-GAAP sales and marketing $ 98,412 $ 84,606 $ 13,806 16.3 % Non-GAAP percentage of revenue 42.4 % 44.1 % — — Sales and marketing expenses increased 9.2% to $109.8 million for the year ended December 31, 2022, primarily due to an increase of $10.0 million in personnel costs from higher headcount as well as increasing employee compensation which includes commissions, and also from a $1.2 million increase in travel costs, which have risen as business shifts to a more normalized pre-pandemic state.
Biggest changeBoth hosting and personnel costs increased to support the larger number of AvePoint software licenses used by customers. 47 Table of Contents PART II Item 7 Operating Expenses Sales and Marketing Sales and marketing expenses during the years ended December 31, 2023 and 2022 were as follows: Year Ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) Sales and marketing $ 112,105 $ 110,638 $ 1,467 1.3 % Percentage of revenue 41.2 % 47.6 % — — GAAP sales and marketing $ 112,105 $ 110,638 $ 1,467 1.3 % Stock-based compensation expense (9,518 ) (11,393 ) 1,875 (16.5 )% Amortization of acquired intangible assets (492 ) (338 ) (154 ) 45.6 % Non-GAAP sales and marketing $ 102,095 $ 98,907 $ 3,188 3.2 % Non-GAAP percentage of revenue 37.6 % 42.6 % — — Sales and marketing expenses increased 1.3% to $112.1 million for the year ended December 31, 2023 , primarily due to a $0.9 million increase in personnel costs and a $0.6 million increase in travel costs.
This provides a strategic advantage, allowing us to invest efficiently in both new product development and increasing our existing product capabilities. We believe delivering expanding product functionality is critical to enhancing the success of existing customers while new product development further reinforces our breadth of software solutions.
We believe this provides a strategic advantage, allowing us to invest efficiently in both new product development and increasing our existing product capabilities. We believe delivering expanding product functionality is critical to enhancing the success of existing customers while new product development further reinforces our breadth of software solutions.
Many of these revenue and expenses are denominated in currencies other than the U.S. dollar. As a result, changes in foreign exchange rates may significantly affect revenue and expenses. Refer to the section titled “ Risk Factors ” (Part I, Item 1A of this Annual Report) for a discussion of these factors and other risks.
Many of these revenues and expenses are denominated in currencies other than the U.S. dollar. As a result, changes in foreign exchange rates may significantly affect revenue and expenses. Refer to the section titled “ Risk Factors ” (Part I, Item 1A of this Annual Report) for a discussion of these factors and other risks.
Critical Accounting Policies and Estimates Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. We also make estimates and assumptions on the reported revenue generated and reported expenses incurred during the reporting periods.
Critical Accounting Estimates Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. We also make estimates and assumptions on the reported revenue generated and reported expenses incurred during the reporting periods.
This was partially offset by cash inflows related to an increase in deferred revenue that is partially offset by an increase in accounts receivable as a result of the business growth, and an increase in accrued expenses primarily due to personnel related expenses.
This was partially offset by cash inflows related to an increase in deferred revenue that is partially offset by an increase in accounts receivable as a result of business growth, and an increase in accrued expenses primarily due to personnel related expenses.
We believe these non-GAAP measures aid investors by providing additional insight into our operational performance and help clarify trends affecting our business. Management uses these non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate financial performance.
We believe these non-GAAP measures aid investors by providing additional insight into our operational performance and into trends affecting our business. Management uses these non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate financial performance.
Investing Activities Net cash used in investing activities for the year ended December 31, 2022, was $21.5 million, consisting of $18.6 million in acquisitions and $3.9 million of purchases of property and equipment, as well as $183.5 million in maturities of short-term investments and $180.9 million in the purchase of investments.
Net cash used in investing activities for the year ended December 31, 2022, was $21.5 mill ion, consisting of $18.6 million in acquisitions and $3.9 million of purchases of property and equipment, as well as $183.5 million in maturities of short-term investments and $180.9 million in the purchase of investments.
Company Earn-Out Shares In evaluation of the Company Earn-Out Shares and Company Earn-Out RSUs, management determined that the Company Earn-Out Shares represent derivatives to be marked to market at each reporting period, while the Company Earn-Out RSUs represent equity under ASC 718. Refer to "Note 16 — Stock-Based Compensation" for more information regarding the Company Earn-Out RSUs.
Company Earn-Out Shares In evaluation of the Company Earn-Out Shares and Company Earn-Out RSUs, management determined that the Company Earn-Out Shares represent derivatives to be marked to market at each reporting period, while the Company Earn-Out RSUs represent equity under ASC 718. Refer to "Note 15 — Stock-Based Compensation" for more information regarding the Company Earn-Out RSUs.
ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management's Discussion and Analysis of Financial Condition and Results of Operations ( “ MD&A ” ) summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of our Company as of and for the periods presented below.
ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management ’s Discussion and Analysis of Financial Condition and Results of Operations ( “ MD&A ” ) summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of our Company as of and for the periods presented below.
The CODM does not receive discrete financial information about asset allocation, expense allocation, or profitability by product or geography. See “ Note 18 – Segment Information ” (Part II, Item 8 of this Annual Report) for more information.
The CODM does not receive discrete financial information about asset allocation, expense allocation, or profitability by product or geography. See “ Note 17 – Segment Information ” (Part II, Item 8 of this Annual Report) for more information.
The description of the Amended Loan Agreement is qualified in its entirety by the full text of such agreement, a copy of which is attached as an exhibit to our Annual Report. Leasing Obligations We are obligated under various non-cancelable operating leases for office space. The initial terms of the leases expire on various dates through 2030.
The description of the Loan Agreement is qualified in its entirety by the full text of such agreement, a copy of which is attached as an exhibit to this Annual Report. Leasing Obligations We are obligated under various non-cancelable operating leases for office space. The initial terms of the leases expire on various dates through 2030.
Seasonality Our quarterly revenue fluctuates and does not necessarily grow sequentially when measuring any one fiscal quarter’s revenue with another (e.g. comparing the fourth fiscal quarter of fiscal year 2021 with the first fiscal quarter of fiscal year 2022).
Seasonality Our quarterly revenue fluctuates and does not necessarily grow sequentially when measuring any one fiscal quarter’s revenue with another (e.g. comparing the fourth fiscal quarter of fiscal year 2022 with the first fiscal quarter of fiscal year 2023).
Recently Issued and Adopted Accounting Pronouncements For information about recent accounting pronouncements, see Note 2 to the Consolidated Financial Statements of this Annual Report. 43 Table of Contents PART II Item 7A
Recently Issued and Adopted Accounting Pronouncements For information about recent accounting pronouncements, see Note 2 to the consolidated financial statements of this Annual Report. 55 Table of Contents PART II Item 7A
See “ Note 10 – Line of Credit ” in Part II, Item 8 “ Financial Statements and Supplementary Data ” of this Annual Report. The Amended Loan Agreement provides for a revolving line of credit of up to $30.0 million, with an additional $20.0 million accordion feature for additional capital we may draw at our request.
See “ Note 9 – Line of Credit ” in Part II, Item 8 “ Financial Statements and Supplementary Data ” of this Annual Report. The Loan Agreement provides for a revolving line of credit of up to $30.0 million, with an additional $20.0 million accordion feature for additional capital we may draw upon at our request.
We expect that these costs will increase in absolute dollars but may fluctuate as a percentage of SaaS and term license and support revenue from period to period. Cost of maintenance consists of all direct costs to support our perpetual license products, including salaries, benefits, stock-based compensation and related expenses and allocated overhead.
We expect that these costs will increase in absolute dollars but may fluctuate as a percentage of SaaS and term license and support revenue from period to period. Cost of maintenance consists of all direct costs to support our legacy perpetual license products, including salaries, benefits, stock-based compensation and related expenses, overhead, depreciation and amortization.
General and Administrative General and administrative expenses consist primarily of personnel-related expenses for finance, legal and compliance, human resources, and IT personnel, as well as, stock-based compensation expense, external professional services, allocated overhead costs and other administrative functions.
General and Administrative General and administrative expenses consist primarily of personnel-related expenses for finance, legal and compliance, human resources, and IT personnel, as well as stock-based compensation expense, external professional services, overhead costs, other administrative functions, depreciation and amortization.
During the years ended December 31, 2022 and 2021, total rent expense for facilities amounted to $6.8 million and $6.4 million, respectively. As of December 31, 2022, letters of credit have been issued in the amount of $0.9 million as security for operating leases. The letters of credit are secured by certificates of deposit.
During the years ended December 31, 2023 and 2022, total rent expense for facilities amounted to $6.8 million and $6.8 million, respectively. As of December 31, 2023, letters of credit have been issued in the amount of $1.0 million as security for operating leases. The letters of credit are secured by certificates of deposit.
Research and Development Research and development expenses consist primarily of personnel-related expenses incurred for our engineering and product and design teams, as well as stock-based compensation expense and allocated overhead costs. We have a research and development presence in the United States, China, Singapore and Vietnam.
Research and Development Research and development expenses consist primarily of personnel-related expenses incurred for our engineering and product and design teams, as well as stock-based compensation expense, overhead costs, depreciation and amortization. We have a geographically dispersed research and development presence in the United States, China, Singapore and Vietnam.
The MD&A should be read in conjunction with the other sections of this Form 10-K, including our audited, consolidated financial statements and related notes contained in Item 8. Financial Statements and Supplementary Data, and the discussion of risk factors that may affect future results in Item 1.A.
The MD&A should be read in conjunction with the other sections of this Annual Report on Form 10-K, including our audited, consolidated financial statements and related notes contained in Part II, Item 8. Financial Statements and Supplementary Data, and the discussion of risk factors that may affect future results in Part I, Item 1.A. Risk Factors.
While our significant accounting policies are described in more detail in the section titled “ Notes to Consolidated Financial Statements ” (Part II, Item 8 of this Annual Report), we believe the following critical accounting policies are most important to understanding and evaluating our reported financial results. 41 Table of Contents PART II Item 7 Revenue Recognition We derive revenue from four primary sources: SaaS, term license and support, services, and maintenance.
While our significant accounting policies are described in more detail in the section titled “ Note - 2 Summary of Significant Accounting Policies ” (Part II, Item 8 of this Annual Report), we believe the following critical accounting policies are most important to understanding and evaluating our reported financial results. 53 Table of Contents PART II Item 7 Revenue Recognition We derive revenue from four primary sources: SaaS, term license and support, services, and maintenance.
However, to build and deliver an efficient digital workplace today, companies must address this abundance of applications and the associated explosive growth and sprawl of data with a platform offering that is well governed, fit for purpose, easy to use and built on automation.
However, to deliver an efficient digital workplace today, companies must manage this range of applications – and the associated explosive growth and sprawl of critical data – with a platform offering that is well governed, fit for purpose, easy to use and built on automation.
Cost of Revenue Cost of SaaS and cost of term license and support consists of all direct costs to deliver and support our SaaS and term license and support products, including salaries, benefits and related expenses, allocated overhead, and third-party hosting fees related to our cloud services. We recognize these expenses as they are incurred.
Cost of Revenue Cost of SaaS and cost of term license and support consists of all direct costs to deliver and support our SaaS and term license and support products, including salaries, benefits, stock-based compensation and related expenses, overhead, third-party hosting fees related to our cloud services, depreciation and amortization. We recognize these expenses as they are incurred.
We believe that our existing cash and cash equivalents, our cash flows from operating activities, and our borrowing capacity under our credit facility with HSBC, described below, will be sufficient to meet our working capital and capital expenditure needs and debt service obligations for at least the next twelve months.
We believe that our existing cash and cash equivalents, our cash flows from operating activities, and our borrowing capacity under our Loan Agreement will be sufficient to meet our working capital and capital expenditure needs and debt service obligations for at least the next twelve months.
The effective tax rate, which equals the income tax provision divided by income from continuing operations, was (15.0)% for the year ended December 31, 2022, compared to (1.4)% for the year ended December 31, 2021.
The effective tax rate, which equals the income tax provision divided by pretax loss from continuing operations, was (15.5)% for the year ended December 31, 2023 , compared to (15.0)% for the year ended December 31, 2022 .
In the future, we may attempt to raise additional capital through the sale of additional equity or debt financing. The sale of additional equity would be dilutive to our stockholders. Additional debt financing could result in increased debt service obligations and more restrictive financial and operational covenants.
In the future, we may attempt to raise additional capital through equity or debt financing. The sale of additional equity would be dilutive to our stockholders. Additional debt financing could result in increased debt service obligations and more restrictive financial and operational covenants. Cash Flows The following table sets forth a summary of our cash flows for the periods indicated.
Our line of credit under the Amended Loan Agreement will mature on April 7, 2023. To date, we are in compliance with all covenants under the Amended Loan Agreement. We have not at any time, including as of and for the fiscal year ending as of December 31, 2022, borrowed under the Amended Loan Agreement.
To date, we are in compliance with all covenants under the Loan Agreement. We have not at any time, including as of and for the fiscal year ending as of December 31, 2023, borrowed under the Loan Agreement.
Many of our contracts with customers include multiple performance obligations. Judgment is required in determining whether each performance obligation is distinct. Our products and services generally do not require a significant amount of integration or interdependency; therefore, our products and services are generally not combined.
Many of our contracts with customers include multiple performance obligations. Our products and services generally do not require a significant amount of integration or interdependency; therefore, our products and services are generally not combined.
Overview AvePoint provides a cloud-native platform that organizations rely on to optimize IT operations, manage critical data and secure the digital workplace.
Overview AvePoint provides a cloud-native data management software platform that organizations rely on to manage and protect critical data, optimize IT operations, achieve meaningful cost savings, and efficiently secure the digital workplace.
We recognize these expenses as they are incurred. Gross Profit and Gross Margin Gross profit is revenue less cost of revenue, and gross margin is gross profit as a percentage of revenue.
We recognize these expenses as they are incurred. 44 Table of Contents PART II Item 7 Gross Profit and Gross Margin Gross profit is revenue less cost of revenue, and gross margin is gross profit as a percentage of revenue.
In determining the SSP of license and support in a term license arrangement, we apply observable inputs using the value relationship between support and term license, the value relationship between support and perpetual licenses, the average economic life of our products, software renewals rates and the price of the bundled arrangement in relation to the perpetual licensing approach.
In determining the SSP of license and support in a term license arrangement, we utilize observable inputs and consider the value relationship between support and term license when compared to the value relationship between support and perpetual licenses, the average economic life of our products, and software renewals rates.
The adoption of this portfolio of solutions – what has been generally described as the “digital transformation” – is a substantial and ongoing challenge for most organizations, which for decades had previously relied upon only a small number of multi-purpose on-premises applications to drive business outcomes.
The adoption of this portfolio of solutions is a substantial and ongoing challenge for most organizations, which for decades had used only a small number of multi-purpose on-premises applications to drive business outcomes.
Accordingly, our effective tax rate could be affected by the relative proportion of foreign to domestic income, use of foreign tax credits, changes in the valuation of our deferred tax assets and liabilities, applicability of any valuation allowances, and changes in tax laws in jurisdictions in which we operate. 33 Table of Contents PART II Item 7 Results of Operations The following table summarizes our historical consolidated statement of operations data for the periods indicated.
Accordingly, our effective tax rate could be affected by the relative proportion of foreign to domestic income, use of foreign tax credits, changes in the valuation of our deferred tax assets and liabilities, applicability of any valuation allowances, and changes in tax laws in jurisdictions in which we operate. 45 Table of Contents PART II Item 7 Results of Operations The below period-to-period comparison of operating results are not necessarily indicative of results for future periods.
GAAP operating margin for the years ended December 31, 2022 and 2021 was (17.7)% and (27.9)% respectively. Non-GAAP operating margin for the years ended December 31, 2022 and 2021 was (1.2)% and 3.1%, respectively.
GAAP operating margin for the years ended December 31, 2023 and 2022 was (5.6)% and (17.7)% respectively. Non-GAAP operating margin for the years ended December 31, 2023 and 2022 was 8.1% and (1.2)% , respectively.
The situation remains uncertain, and while it is difficult to predict the impact of any of the foregoing, the conflict and actions taken in response to the conflict could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition, and results of operations. 42 Table of Contents PART II Item 7 Our international operations provide a significant portion of our total revenue and expenses.
These in turn could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition, and results of operations. 54 Table of Contents PART II Item 7 Our international operations provide a significant portion of our total revenues and expenses.
We compete for talented individuals globally by offering an exceptional working environment, broad customer reach, scale in resources, the ability to grow one’s career across many different products and businesses, and competitive compensation and benefits. Aggregate demand for our software, services, and devices is correlated to global macroeconomic and geopolitical factors, which remain dynamic.
We compete for talented individuals globally by offering an exceptional working environment, broad customer reach, scale in resources, the ability to grow one’s career across many different products and businesses, and competitive compensation and benefits.
Year Ended December 31, 2022 2021 (in thousands) Net cash (used in) provided by operating activities $ (774 ) $ 5,030 Net cash used in investing activities (21,452 ) (3,377 ) Net cash (used in) provided by financing activities (17,148 ) 198,617 39 Table of Contents PART II Item 7 Operating Activities Net cash used in operating activities for the year ended December 31, 2022, was $0.8 million, reflecting our net loss of $38.7 million, adjusted for non-cash items of $46.2 million and net cash outflows of $8.3 million from changes in our operating assets and liabilities.
Year Ended December 31, 2023 2022 (in thousands) Net cash provided by (used in) operating activities $ 34,694 $ (774 ) Net cash used in investing activities (5,648 ) (21,452 ) Net cash used in financing activities (33,667 ) (17,148 ) 51 Table of Contents PART II Item 7 Operating Activities Net cash provided by operating activities for the year ended December 31, 2023, was $34.7 million, reflecting our net loss of $21.5 million, adjusted for non-cash items of $58.6 million and net cash outflows of $2.4 million from changes in our operating assets and liabilities.
The primary driver of cash flows from financing activities was due to $19.9 million in purchases of common stock, partially offset by $2.8 million of proceeds from the exercising of stock options. Net cash provided by financing activities for the year ended December 31, 2021, was $198.6 million.
Financing Activities Net cash used in financing activities for the year ended December 31, 2023, was $33.7 million. The primary driver of cash flows from financing activities was due to $39.0 million in purchases of common stock, partially offset by $5.6 million of proceeds from the exercising of stock options.
Net cash used in investing activities for the year ended December 31, 2021, was $3.4 mill ion, consisting of $2.5 million of purchases of property and equipment and $1.4 million of purchases of short-term investments. Financing Activities Net cash used in financing activities for the year ended December 31, 2022, was $17.1 million.
Investing Activities Net cash used in investing activities for the year ended December 31, 2023, was $5.6 million, consisting of $2.1 million of purchases of property and equipment, as well as $2.6 million in maturities of short-term investments and $3.5 million in the purchase of investments.
Income Tax Provision Income tax provision during the years ended December 31, 2022 and 2021 was as follows: Year Ended December 31, Change 2022 2021 Amount % (in thousands, except percentages) Income tax expense $ 5,038 $ 457 $ 4,581 1,002.4 % Our income tax expense for the year ended December 31, 2022 was $5.0 million as compared to $0.5 million for the year ended December 31, 2021.
Income Tax Provision Income tax provision during the years ended December 31, 2023 and 2022 was as follows: Year Ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) Income tax expense $ 2,887 $ 5,038 $ (2,151 ) (42.7 )% Income tax expense for the year ended December 31, 2023 was $2.9 million as compared to $5.0 million for the year ended December 31, 2022.
Net cash provided by operating activities for the year ended December 31, 2021, was $5.0 million, reflecting our net loss of $33.2 million, adjusted for non-cash items of $39.9 million and net cash outflows of $1.6 million from changes in our operating assets and liabilities.
Net cash used in operating activities for the year ended December 31, 2022, was $0.8 million, reflecting our net loss of $38.7 million, adjusted for non-cash items of $46.2 million and net cash outflows of $8.3 million from changes in our operating assets and liabilities.
Annual Recurring Revenue We calculate annual recurring revenue (“ ARR ”) at the end of a particular period as the annualized sum of contractually obligated Annual Contract Value (“ ACV ”) from SaaS, term license and support, and maintenance revenue sources, with the exception of migration products, from all active customers.
Annual Recurring Revenue December 31, Change 2023 2022 % Total ARR ($ in mil) $ 264.5 $ 214.7 23.2 % We calculate ARR at the end of a particular period as the annualized sum of contractually obligated Annual Contract Value (“ ACV ”) from SaaS, term license and support, and maintenance revenues from all active customers.
Borrowings under the line bear interest at a rate equal to LIBOR plus 3.5%. The line carries an unused fee of 0.5% per year. Any proceeds of borrowings under the Amended Loan Agreement will be used for general corporate purposes.
Borrowings under the line bear interest at a rate equal to term SOFR plus 3.00% to 3.25% depending on the Consolidated Total Leverage Ratio. The line carries an unused fee ranging from 0.50% to 0.55% depending on the Consolidated Total Leverage Ratio. Any proceeds of borrowings under the Loan Agreement will be used for general corporate purposes.
Term license and support revenue sources are generated from the sales of on-premises or hybrid licenses which include a distinct support component. Both SaaS and term license and support revenue sources are primarily billed annually. SaaS and term license and support are generally sold per user license or based upon the amount of data protected.
SaaS revenues are generated from our cloud-based solutions. Term license and support revenues are generated from the sales of on-premise or hybrid licenses which include a distinct support component. Both SaaS and term license and support revenues are primarily billed annually.
Income Taxes We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions. Tax laws, regulations, administrative practices, principles, and interpretations in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions.
Tax laws, regulations, administrative practices, principles, and interpretations in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions. The foreign jurisdictions in which we operate have different statutory tax rates than those of the United States.
As of December 31, 2022, we are compliant with all covenants under the line and had no borrowings outstanding under the line of credit.
As of December 31, 2023, the Company was compliant with all covenants and had no borrowings outstanding under the Loan Agreement.
As of December 31, 2022, and December 31, 2021, total ARR was $201.7 million and $159.2 million, respectively, representing growth of 27%. Growth in ARR is driven by both new business and the expansion of existing business.
As of December 31, 2023, and December 31, 2022, total ARR was $264.5 million and $214.7 million, respectively, representing growth of 23.2%. Adjusted for FX, total ARR increased 24.0% year-over-year. Growth in ARR is driven by both new business and the expansion of existing business.
The change in effective tax rates for the year ended December 31, 2022, as compared to the year ended December 31, 2021, was primarily due to the mix of pre-tax income (loss) results by jurisdictions taxed at different rates than 21%, a permanent item recorded for the executive compensation limitation and changes in the valuation allowance in the U.S. and certain foreign jurisdictions. 38 Table of Contents PART II Item 7 Non-GAAP Operating Income and Non-GAAP Operating Margin Non-GAAP operating income and non-GAAP operating margin are non-GAAP financial measures that our management uses to assess our overall performance.
The change in effective tax rates for the year ended December 31, 2023 , as compared to the year ended December 31, 2022 , was primarily due to the mix of pre-tax income (loss) results by jurisdictions taxed at different rates than 21%, a permanent item recorded for stock-based compensation and changes in the valuation allowance in the U.S. and certain foreign jurisdictions. 49 Table of Contents PART II Item 7 Non-GAAP Operating Income (loss) and Non-GAAP Operating Margin The following table presents a reconciliation of non-GAAP operating income from the most comparable GAAP measure, operating income, for the periods presented: Year Ended December 31, 2023 2022 (in thousands, except percentages) GAAP operating loss $ (15,351 ) $ (41,066 ) GAAP operating margin (5.6 )% (17.7 )% Add: Stock-based compensation 36,048 37,218 Amortization of acquired intangible assets 1,456 955 Non-GAAP operating income (loss) $ 22,153 $ (2,893 ) Non-GAAP operating margin 8.1 % (1.2 )% Non-GAAP operating income and non-GAAP operating margin are non-GAAP financial measures that our management uses to assess our overall performance.
The primary drivers for non-cash items were stock-based compensation, which reflects ongoing compensation charges for the entity’s equity- and pre-merger liability-classified awards, mark to market adjustments on earnout and warrant liabilities and changes in deferred tax assets as a result of timing differences in tax related to stock option awards.
The main considerations for non-cash items were stock-based compensation, which reflects ongoing compensation charges for the entity’s equity- and pre-merger liability-classified awards, operating lease right-of-use asset expense and mark to market adjustments on earnout and warrant liabilities.
Revenue by geographic area during the years ended December 31, 2022 and 2021 was as follows: Year Ended December 31, Change 2022 2021 Amount % (in thousands, except percentages) North America $ 102,025 $ 83,034 $ 18,991 22.9 % EMEA 71,635 58,285 13,350 22.9 % APAC 58,679 50,590 8,089 16.0 % Total $ 232,339 $ 191,909 $ 40,430 21.1 % From the year ended December 31, 2021 to the year ended December 31, 2022, North America revenues increased by $19.0 million, driven by a $21.1 million increase in SaaS, term license and support, and services revenues, partially offset by a $2.1 million decrease in maintenance and perpetual license revenue.
Revenue by geographic area during the years ended December 31, 2023 and 2022 was as follows: Year Ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) North America $ 118,490 $ 102,025 $ 16,465 16.1 % EMEA 81,753 71,635 10,118 14.1 % APAC 71,582 58,679 12,903 22.0 % Total $ 271,825 $ 232,339 $ 39,486 17.0 % For the year ended December 31, 2023 , North America revenues increased 16.1% to $118.5 million, driven by a 29.2%, or $15.9 million, increase in SaaS revenue and a $2.2 million combined increase in services revenue and term license and support revenue, partially offset by a $1.6 million decrease in maintenance revenue.
On a consolidated basis with our subsidiaries, we are required to maintain a specified adjusted quick ratio, tested by HSBC each quarter. Pursuant to the Amended Loan Agreement, we pledged, assigned, and granted HSBC a security interest in all shares of our subsidiaries, future proceeds, and certain assets as security for our obligations under the Amended Loan Agreement.
Pursuant to the Loan Agreement, we pledged, assigned, and granted HSBC a security interest in all shares of our subsidiaries, future proceeds, and certain assets as security for our obligations under the Loan Agreement. Our line of credit under the Loan Agreement will mature on November 3, 2026.
We recognize these expenses as they are incurred. We expect that cost of maintenance will decrease in absolute dollars as maintenance revenue declines but may fluctuate as a percentage of maintenance revenue. Cost of services consists of salaries, benefits, stock-based compensation and related expenses for our services organization, allocated overhead and IT necessary to provide services for our customers.
We recognize these expenses as they are incurred. We expect that cost of maintenance revenue will decrease in absolute dollars as maintenance revenue declines but may fluctuate as a percentage of maintenance revenue.
APAC revenues increased by $8.1 million, driven by a $10.6 million increase in SaaS, term license and support, and services revenue, partially offset by a $2.5 million decrease in maintenance and perpetual license revenue.
EMEA revenues increased by 14.1% to $81.8 million, driven by a 43.7%, or $18.1 million, increase in SaaS revenue, partially offset by a $8.0 million combined decrease in term license and support, services and maintenance revenue.
As our customers seek to rapidly reduce costs, improve productivity and make more informed business decisions, they depend on our platform for data-driven insights, critical business intelligence and ongoing operational value through automation.
As our customers seek to rapidly reduce costs, improve productivity and make more informed business decisions, they depend on our platform for data-driven insights, critical business intelligence and ongoing operational value through automation. 42 Table of Contents PART II Item 7 Key Business Metric Our management reviews the following key business metric to measure our performance, identify trends affecting our business, formulate business plans, make strategic decisions, and effectively allocate resources.
Incremental sales commissions for new customer contracts are deferred and amortized ratably over the estimated period of our relationship with such customers. We plan to continue our investment in sales and marketing by hiring additional sales and marketing personnel, executing our go-to-market strategy globally, and building our brand awareness.
We plan to continue our investment in sales and marketing by hiring additional sales and marketing personnel, executing our go-to-market strategy globally, and building our brand awareness.
Other Income (Expense), net Other income (expense), net consists primarily of fair value adjustments on earn-out and warrant liabilities and realized gain/loss for securities. Other income (expense), net also consists of foreign currency remeasurement gains/losses and interest income on corporate funds invested in money market instruments and highly liquid short-term investments.
Other (Expense) Income, net Other (expense) income, net consists primarily of fair value adjustments on earn-out and warrant liabilities, realized gain/loss for securities, and of foreign currency remeasurement gains/losses. Income Taxes We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions.
These cash outflows were partially offset by $5.6 million of cash inflows from the proceeds collected upon exercise of stock options. 40 Table of Contents PART II Item 7 Indebtedness Credit Facility We maintain a line of credit under a Loan Agreement, as amended (the “ Amended Loan Agreement ”) with HSBC, as the lender.
The primary driver of cash flows from financing activities was due to $19.9 million in purchases of common stock, partially offset by $2.8 million of proceeds from the exercising of stock options. 52 Table of Contents PART II Item 7 Indebtedness Credit Facility We maintain a line of credit under the Loan Agreement with HSBC, as lender.
As companies around the world embrace the new normal of hybrid work, they must build and deliver a new, seamless workplace experience for knowledge workers, centered around an extensive portfolio of SaaS solutions and productivity applications aimed at improving collaboration across the organization.
Companies around the world have now fully adopted a hybrid work model, and they are now tasked with delivering a seamless and secure workplace experience for knowledge workers, centered around an extensive portfolio of Software-as-a-Service (“ SaaS ”) solutions and productivity applications.
We pledged, assigned and granted the HSBC a security interest in all shares, future proceeds and assets (except for excluded assets, including material intellectual property) as a security for the performance of the loan and security agreement obligations.
Pursuant to the Loan Agreement, the Company pledged, assigned and granted HSBC a security interest in all shares of its subsidiaries, future proceeds, and assets as security for its obligations under the Loan Agreement. The line will mature on November 3, 2026.
Sales and Marketing Sales and marketing expenses consist primarily of personnel-related expenses for sales, marketing and customer success personnel, stock-based compensation expense, sales commissions, marketing programs, travel-related expenses, and allocated overhead costs. We focus our sales and marketing efforts on creating sales leads and establishing and promoting our brand.
We expect that our gross margin will fluctuate from period to period depending on the interplay of these various factors. Sales and Marketing Sales and marketing expenses consist primarily of personnel-related expenses for sales, marketing and customer success personnel, stock-based compensation expense, sales commissions, marketing programs, travel-related expenses, overhead costs, depreciation and amortization.
These offerings are not inherently recurring in nature and as such are subject to more period-to-period volatility than other elements of our business. Services revenue from managed services are recognized ratably or on a straight-line basis over the contract term. Maintenance revenue is a result of selling ongoing support for perpetual licenses.
Services revenue from managed services are recognized ratably or on a straight-line basis over the contract term. Maintenance revenue is a result of selling on-going support for legacy perpetual licenses. It also includes recurring professional services such as technical account management. Maintenance revenue is recognized ratably over the term of the maintenance agreement, which is typically one year.
Refer to “ Note 13 - Commitments and Contingencies ” for more information regarding the purchase commitments. We also maintain a loan and security agreement with HSBC Venture Bank USA, Inc.
Refer to “ Note 12 - Commitments and Contingencies ” for more information regarding the purchase commitments.
Research and Development Research and development expenses during the years ended December 31, 2022 and 2021 were as follows: Year Ended December 31, Change 2022 2021 Amount % (in thousands, except percentages) Research and development $ 30,519 $ 31,765 $ (1,246 ) (3.9 )% Percentage of revenue 13.1 % 16.6 % — — GAAP research and development $ 30,519 $ 31,765 $ (1,246 ) (3.9 )% Stock-based compensation expense (3,787 ) (16,062 ) 12,275 (76.4 )% Non-GAAP research and development $ 26,732 $ 15,703 $ 11,029 70.2 % Non-GAAP percentage of revenue 11.5 % 8.2 % — — Research and development expenses decreased 3.9% to $30.5 million for the year ended December 31, 2022.
General and Administrative General and administrative expenses during the years ended December 31, 2023 and 2022 were as follows: Year Ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) General and administrative $ 61,271 $ 65,132 $ (3,861 ) (5.9 )% Percentage of revenue 22.5 % 28.0 % — — GAAP general and administrative $ 61,271 $ 65,132 $ (3,861 ) (5.9 )% Stock-based compensation expense (19,338 ) (19,398 ) 60 (0.3 )% Non-GAAP general and administrative $ 41,933 $ 45,734 $ (3,801 ) (8.3 )% Non-GAAP percentage of revenue 15.4 % 19.7 % — — General and administrative expenses decreased 5.9% to $61.3 million for the year ended December 31, 2023 .
ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with, or to replace, either of those items. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.
ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or replace these items.
(“ HSBC ”) as lender for a revolving line of credit of up to $30.0 million, with an additional $20.0 million accordion feature for additional capital we may draw at our request. Borrowings under the line bear interest at a rate equal to LIBOR plus 3.5%. The line carries an annual unused fee of 0.5%.
The Loan Agreement provides for a revolving line of credit of up to $30.0 million, with an additional $20.0 million accordion feature for additional capital which the Company may draw upon at its request.
Services revenue includes revenue generated from implementation, training, consulting, migration, license customization and managed services. These revenues are recognized by applying a measure of progress, such as labor hours, to determine the percentage of completion of each contract.
These revenues are recognized by applying a measure of progress, such as labor hours, to determine the percentage of completion of each contract. These offerings are not inherently recurring in nature and as such are subject to more period-to-period volatility than other elements of our business.
For the year ended December 31, 2022, North America SaaS revenue increased 39% on a constant currency basis, EMEA SaaS revenue increased 48% on a constant currency basis, and APAC SaaS revenue increased 57% on a constant currency basis. 35 Table of Contents PART II Item 7 Non-GAAP Financial Measures In addition to our financial results determined in accordance with GAAP, we disclosed non-GAAP cost of revenue, non-GAAP sales and marketing expense, non-GAAP general and administrative expense, non-GAAP research and development expense, non-GAAP operating income and non-GAAP operating margin.
APAC revenues increased 22.0% to $71.6 million, driven by a 45.9%, or $9.7 million increase in SaaS revenue and a 20.9%, or $4.9 million, increase in services revenue, partially offset by a $1.7 million combined decrease in term license and support and maintenance revenue. 46 Table of Contents PART II Item 7 Non-GAAP Financial Measures In addition to our financial results determined in accordance with GAAP, we disclose non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP sales and marketing expense, non-GAAP general and administrative expense, non-GAAP research and development expense, non-GAAP operating income and non-GAAP operating margin.
General and Administrative General and administrative expenses during the years ended December 31, 2022 and 2021 were as follows: Year Ended December 31, Change 2022 2021 Amount % (in thousands, except percentages) General and administrative $ 64,874 $ 59,221 $ 5,653 9.5 % Percentage of revenue 27.9 % 30.9 % — — GAAP general and administrative $ 64,874 $ 59,221 $ 5,653 9.5 % Stock-based compensation expense (19,398 ) (24,063 ) 4,665 (19.4 )% Non-GAAP general and administrative $ 45,476 $ 35,158 $ 10,318 29.3 % Non-GAAP percentage of revenue 19.6 % 18.3 % — — General and administrative expenses increased 9.5% to $64.9 million for the year ended December 31, 2022. 37 Table of Contents PART II Item 7 The year over year increase was partially due to an increase of $4.8 million in personnel costs as a result of increased headcount and overall costs to support the growth in our business.
The decrease in overall general and administrative expenses reflects the Company ’s enhanced focus on cost management. 48 Table of Contents PART II Item 7 Research and Development Research and development expenses during the years ended December 31, 2023 and 2022 were as follows: Year Ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) Research and development $ 36,340 $ 31,359 $ 4,981 15.9 % Percentage of revenue 13.4 % 13.5 % — — GAAP research and development $ 36,340 $ 31,359 $ 4,981 15.9 % Stock-based compensation expense (4,031 ) (3,787 ) (244 ) 6.4 % Non-GAAP research and development $ 32,309 $ 27,572 $ 4,737 17.2 % Non-GAAP percentage of revenue 11.9 % 11.9 % — — Research and development expenses increased 15.9% to $36.3 million for the year ended December 31, 2023, primarily driven by a $4.3 million increase in personnel costs, as the Company continues to invest in the development of new offerings and enhancements to existing offerings.
Cost of Revenue, Gross Profit, and Gross Margin Cost of revenue, gross profit, and gross margin during the years ended December 31, 2022 and 2021 were as follows: Year Ended December 31, Change 2022 2021 Amount % (in thousands, except percentages) Cost of revenue: SaaS $ 26,617 $ 19,039 $ 7,578 39.8 % Term license and support 1,969 950 1,019 107.3 % Services 35,629 30,726 4,903 16.0 % Maintenance 908 1,949 (1,041 ) (53.4 )% Total cost of revenue $ 65,123 $ 52,664 $ 12,459 23.7 % Gross profit 167,216 139,245 27,971 20.1 % Gross margin 72.0 % 72.6 % — — GAAP cost of revenue $ 65,123 $ 52,664 $ 12,459 23.7 % Stock-based compensation expense (2,640 ) (3,477 ) 837 (24.1 )% Non-GAAP cost of revenue $ 62,483 $ 49,187 $ 13,296 27.0 % Non-GAAP gross profit 169,856 142,722 27,134 19.0 % Non-GAAP gross margin 73.1 % 74.4 % — — Cost of revenue expenses increased 23.7% to $65.1 million for the year ended December 31, 2022, driven by an $8.8 million increase from higher aggregated hosting costs resulting from increased SaaS revenue and a $4.9 million increase in personnel costs primarily due to higher headcount.
Cost of Revenue, Gross Profit, and Gross Margin Cost of revenue, gross profit, and gross margin during the years ended December 31, 2023 and 2022 were as follows: Year Ended December 31, Change 2023 2022 Amount % (in thousands, except percentages) Cost of revenue: SaaS $ 35,924 $ 27,313 $ 8,611 31.5 % Term license and support 1,946 2,006 (60 ) (3.0 )% Services 38,807 36,037 2,770 7.7 % Maintenance 783 920 (137 ) (14.9 )% Total cost of revenue $ 77,460 $ 66,276 $ 11,184 16.9 % Gross profit 194,365 166,063 28,302 17.0 % Gross margin 71.5 % 71.5 % — — GAAP cost of revenue $ 77,460 $ 66,276 $ 11,184 16.9 % Stock-based compensation expense (3,161 ) (2,640 ) (521 ) 19.7 % Amortization of acquired intangible assets (964 ) (617 ) (347 ) 56.2 % Non-GAAP cost of revenue $ 73,335 $ 63,019 $ 10,316 16.4 % Non-GAAP gross profit 198,490 169,320 29,170 17.2 % Non-GAAP gross margin 73.0 % 72.9 % — — Cost of revenue increased 16.9% to $77.5 million for the year ended December 31, 2023 , driven by a $6.6 million increase in aggregated hosting costs and a $4.1 million increase in personnel costs.
Without material perpetual license sales, there will be limited opportunities to sell maintenance contracts to new customers. Existing maintenance customers have transitioned and will continue to transition to SaaS and term licenses, which will continue the decline in maintenance revenue. For the year ended December 31, 2022, total revenue increased 29% year over year on a constant currency basis.
Term license and support revenue is expected to continue declining as some existing customers are moving from on-prem term license subscriptions to SaaS subscriptions. Maintenance revenue is expected to continue declining as revenues from the sales of legacy perpetual licenses are immaterial. As a result, there will be limited opportunities to sell maintenance contracts to new customers.
SaaS revenue growth comprised approximately 78% of the net increase year over year. For the year ended December 31, 2022, SaaS revenue increased 36.9% to $117.2 million, as we continued to see strong customer demand for these and our term license and services offerings.
For the year ended December 31, 2023 , SaaS revenue increased 37.4% to $161.0 million, as we continued to see strong customer demand for this offering. The increase in SaaS revenue was partially offset by an expected decrease in both term license and support and maintenance revenue.
For 2022 and 2021, this metric was 103% and 110%, respectively. 32 Table of Contents PART II Item 7 Components of Results of Operations Revenue We generate revenue from four primary sources: SaaS, term license and support, services, and maintenance. SaaS revenue sources are generated from our cloud-based solutions.
ARR is not a forecast of future revenue, and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers. 43 Table of Contents PART II Item 7 Components of Results of Operations Revenue We generate revenue from four primary sources: SaaS, term license and support, services, and maintenance.
Removed
Risk Factors. 2022 Business Highlights ■ Total ARR increased 27% year-over-year to $201.7 million as of December 31, 2022. On an FX adjusted basis, total ARR increased 32% year-over-year; ■ Total revenue increased 21% year-over-year to $232.3 million for the year ended December 31, 2022.
Added
This section generally discusses the results of our operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Removed
On a constant currency basis, total revenue increased 29% year-over-year; ■ SaaS revenue increased 37% year-over-year to $117.2 million for the year ended December 31, 2022.
Added
For a discussion of the year ended December 21, 2022 compared to the year ended December 31, 2021, please refer to Part II, Item 7, “ Management ’s Discussion and Analysis of Financial Condition and Results of Operations ” in our Annual Report on Form 10-K for the year ended December 31, 2022. 2023 Business Highlights ■ Total annual recurring revenue (“ ARR ”) increased 23% year-over-year to $264.5 million as of December 31, 2023.
Removed
On a constant currency basis, SaaS revenue increased 46% year-over-year; ■ Completed the acquisition of four companies during 2022, further enhancing the Company's talent, product offerings, and distribution capabilities with a strong focus in the digital workplace and EdTech markets; and ■ Announced a 100 million SGD international research and development hub in Singapore to support the growing demand for our SaaS solutions.
Added
On a foreign exchange (“ FX ”) adjusted basis, total ARR increased 24% year-over-year; ■ Total revenue increased 17% year-over-year to $271.8 million; ■ SaaS revenue increased 37% year-over-year to $161.0 million; ■ GAAP operating loss was $15.4 million dollars, or a GAAP operating margin of (5.6)%, representing year-over-year margin improvement of more than 1,200 basis points.
Removed
The 2021 Business Combination On November 23, 2020, Legacy AvePoint and the members of the Apex Group entered into the Business Combination Agreement, and following a series of subsequent mergers, on July 26, 2021, we became the successor to an SEC-registered and Nasdaq-listed company. 31 Table of Contents PART II Item 7 Key Business Metrics Our management reviews the following key business metrics to measure our performance, identify trends affecting our business, formulate business plans, make strategic decisions, and effectively allocate resources.
Added
Non-GAAP operating income was $22.2 million dollars, or a non-GAAP operating margin of 8.1%, representing year-over-year margin expansion of over 930 basis points; and ■ Cash flow from operations was $34.7 million, compared to $(0.8) million for the year ended December 31, 2022.
Removed
We disclose key business metrics within the MD&A and elsewhere in this Annual Report to enable investors to evaluate progress against our growth strategies, provide transparency into performance trends, and reflect the continued evolution of our products and services. Our key business metrics are fundamentally interconnected and indicative of how customers use our products and services.

… 59 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−2 removed4 unchanged
Biggest changeNo customer accounted for more than 10% of billings for the years ended December 31, 2022 and 2021, and no customers made up more than 10% of accounts receivable as of December 31, 2022. 44 Table of Contents PART II Item 8
Biggest changeAdditionally, no customer accounted for more than 10% of billings for the years ended December 31, 2023 and 2022, and no customers made up more than 10% of accounts receivable for the years ended December 31, 2023 and 2022. 56 Table of Contents PART II Item 8
If overall foreign currency exchange rates in comparison to the U.S. Dollar uniformly would have been weaker by 10% as of December 31, 2022, and December 31, 2021, the amount of cash, cash equivalents and marketable securities AvePoint would have reported in U.S.
If overall foreign currency exchange rates in comparison to the U.S. Dollar uniformly would have been weaker by 10% as of December 31, 2023, and December 31, 2022, the amount of cash, cash equivalents and marketable securities AvePoint would have reported in U.S.
Dollars would have decreased by approximately $2.7 million and $2.6 million, respectively, assuming constant foreign currency cash, cash equivalents and marketable securities balances. Concentration of Credit Risk We deposit our cash with financial institutions, and, at times, such balances may exceed federally insured limits.
Dollars would have decreased by approximately $3.4 million and $2.7 million, respectively, assuming constant foreign currency cash, cash equivalents and marketable securities balances. Concentration of Credit Risk We deposit our cash with financial institutions, and, at times, such balances may exceed federally insured limits.
The effect of a hypothetical 10% change in interest rates would not have a material negative impact on our consolidated financial statements. As of December 31, 2022, we had no outstanding obligations under our line of credit with HSBC under the Amended Loan Agreement.
The effect of a hypothetical 10% change in interest rates would not have a material negative impact on our consolidated financial statements. As of December 31, 2023, we had no outstanding obligations under our line of credit with HSBC under the Loan Agreement.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risks Interest Rate Risk We had cash and cash equivalents, marketable securities, and short-term deposits of $229.8 million as of December 31, 2022. We hold cash and cash equivalents, marketable securities, and short-term deposits for working capital purposes. Our cash and cash equivalents are held in cash deposits and money market funds.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risks Interest Rate Risk We had cash and cash equivalents, marketable securities, and short-term deposits of $226.9 million as of December 31, 2023. We hold cash and cash equivalents, marketable securities, and short-term deposits for working capital purposes. Our cash and cash equivalents are held in cash deposits and money market funds.
Removed
As the U.S. Dollar fluctuated against certain international currencies as of December 31, 2022, the balances that we reported in U.S. Dollars for foreign subsidiaries that hold international currencies as of December 31, 2022, increased relative to what it would have reported using a constant currency rate from December 31, 2021.
Removed
As reported in our consolidated statements of cash flows, the estimated effects of exchange rate changes on our reported cash and cash equivalents balances in U.S. Dollars was a decrease of $1.7 million for the year ended December 31, 2022, and a decrease of $1.2 million for the year ended December 31, 2021.

Other AVPT 10-K year-over-year comparisons