Q4 2024 AvePoint Inc Earnings Call

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Unknown Executive: Good day and welcome to the Avepoint, Inc. fourth quarter 2024 earnings call. All participants will be in listen-only mode.

Speaker Change: Good day and welcome to the <unk>, Inc. Fourth quarter 2024 earnings call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

Unknown Executive: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touch-tone phone. To withdraw your question, please press star, and then 2.

Jamie Arrestia: To ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star and then two please note. This event is being recorded I would now like to turn the conference over to Jamie arrest Tia Vice President of Investor Relations. Please go ahead.

Unknown Executive: Please note this event is being recorded.

James Arestia: I would now like to turn the conference over to Jamie Arestia, Vice President of Investor Relations. Please go ahead. Thank you, operator.

Speaker Change: Thank you operator, good afternoon, and welcome to our fourth quarter and full year 2024 earnings call with me on the call. This afternoon is Dr. T J's Yang Chief Executive Officer, and Jim <unk>, Chief Financial Officer. After preliminary remarks, we will open the call for a question and answer session.

James Arestia: Good afternoon and welcome to Avepoint's fourth quarter and full year 2024 earnings call. With me on the call this afternoon is Dr. TJ Zhang, Chief Executive Officer, and Jim Caci, Chief Financial Officer.

Unknown Executive: After preliminary remarks, we will open the call for a question and answer session.

Unknown Executive: Please note that this call will include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations. We encourage you to review the safe harbor statements contained in our press release for a more complete description.

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

Speaker Change: We encourage you to review the Safe Harbor statements contained in our press release for a more complete description.

Unknown Executive: All material in the webcast is the sole property and copyright of Avepoint with all rates reserved.

Speaker Change: All material in the webcast is the sole property and copyright about point with all rights reserved.

Unknown Executive: Please note that this presentation describes certain non-GAAP measures, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, and non-GAAP operating margin, which are not measures prepared in accordance with US GAAP. The non-GAAP measures are presented in this presentation as we believe they provide investors with a means of understanding how management evaluates the company's operating performance. These non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to, financial measures prepared in accordance with U.S. GAAP.

Speaker Change: Please note that this presentation describes certain non-GAAP measures, including non-GAAP gross profit non-GAAP gross margin non-GAAP operating income and non-GAAP operating margin, which are not measures prepared in accordance with U S. GAAP.

Speaker Change: The non-GAAP measures are presented in this presentation as we believe they provide investors with the means of understanding how management evaluates the company's operating performance.

Speaker Change: These non-GAAP measures should not be considered in isolation from as substitutes for or superior to financial measures prepared in accordance with U S. GAAP.

Unknown Executive: A reconciliation of these measures to the most directly comparable gap financial measure is available in our fourth quarter and full year 2024 earnings press release, as well as our update investor presentation and financial tables, all of which are available on our investor relations website.

Speaker Change: A reconciliation of these measures to the most directly comparable GAAP financial measure is available in our fourth quarter and full year 2024 earnings press release as well as our updated investor presentation and financial tables, all of which are available on our Investor Relations website with that let me turn the call over to T. J.

Tianyi Jiang: With that, let me turn the call over to TJ. Thank you, Jamie. And thank you to everyone joining us on the call today. I'm fond of saying that at Avepoint, we do the hard things. By this, I'm referring to strategic decisions we have made in the last 20 plus years since founding the company, including our decision to sell first to large corporations in highly regulated industries, which required us to build and constantly refine enterprise grade software. Our decision to sell in countries and regions that historically have been hard to break into such as Japan. and our decision to undergo a subscription transition without borrowing money.

T. J.: Thank you Jamie and thank you to everyone joining us on the call today.

T. J.: I'm fond of saying that at a point, we do the hard things first.

T. J.: This I'm, referring to strategic decisions, we have made in the last 20 plus years since founding the company, including our decision to sell first showed large corporations in highly regulated industries, which required us to build and constantly refine enterprise grade software.

T. J.: Our decision to sell in countries and regions.

T. J.: <unk> historically have been hard to break into such as Japan and.

T. J.: And our decision to undergo a subscription transition without borrowing money with.

Tianyi Jiang: We made these decisions because we are naturally attracted to big challenges. But we also did them as a part of a larger vision to steadily put the pieces in place to support durable, profitable growth at scale, and to position Avepoint to become the world's leading data management software company.

We made these decisions because we're naturally attracted two big challenges, but we also did them as a part of a larger vision to steadily put the pieces in place to support durable profitable growth at scale and to position <unk> to become the world's leading data management software company.

Tianyi Jiang: As we conclude 2024 and look to 2025 and beyond, we're ready for the next chapter in the Avepoint story. We have been innovating and growing for more than 20 years, and we have learned valuable lessons in overcoming each of the challenges I just shared. And now, with eight consecutive quarters of exceptional performance behind us, which include accelerating growth, expanding profitability, meaningful cash flow generation, and steady innovation, we are that much closer to our vision and to the billion-dollar AIR company we intend to become. And we're excited to continue this journey with.

T. J.: As we conclude 'twenty 'twenty, four and look to 2020 five and beyond we're ready for the next chapter in the I appoint story.

T. J.: We have been innovating and growing for more than 20 years, and we have learned valuable lessons. He overcoming each of the challenges I just shared and now with eight consecutive quarters of exceptional performance behind US which include accelerating growth expanding profitability meaningful cash flow generation.

T. J.: And steady innovation, we are that much closer to our vision and to the billion dollar a our company we intend to become.

And we're excited to continue this journey with you.

Tianyi Jiang: So let's turn to the quarter. Q4 was a strong close to an outstanding year for Avepoint, and our results, as well as our outlook for 2025, reflect two central themes. First, the growing demand from companies around the world to prepare, secure, and optimize their most critical data. And second, the continuing improvement in our ability to effectively and efficiently deliver on that demand. We're pleased with the team's steady execution as we continue to capitalize on the enormous opportunity ahead of us.

T. J.: So, let's turn to the quarter Q4 was a strong close to an outstanding year for our point in our results as well as our outlook for 2025 reflect two central themes.

T. J.: First the growing demand from companies around the world to prepare secure and optimize their most critical data.

T. J.: And second the continued improvement in our ability to effectively and efficiently deliver on that demand.

T. J.: We're pleased with the team's steady execution as we continue to capitalize on the enormous opportunity ahead of us and we look forward to sharing more on this with a deeper dive into our business and our next week's investor day.

Tianyi Jiang: And we look forward to sharing more on this with a deeper dive into our business at our next week's Investor Day. Today, I want to focus on the following. First, the current business landscape, highlighted by the challenges we consistently see our customers facing. Second, the multiple ways our platform solves these data management challenges. And lastly, our beyond secure philosophy, which informs how we think about addressing these needs and partnering with our customers. Along the way, I will share some key customer wins this quarter.

T. J.: Today I want to focus on the following.

First the current business landscape highlighted by the challenges we consistently see our customers facing second the multiple ways. Our platform solves these data management challenges and lastly, our beyond secure philosophy, which informs how we think about addressing these needs and partnering with our customers.

T. J.: <unk>.

T. J.: Along the way I will share some key customer wins this quarter I will then turn it over to Jim to cover our financial performance in more detail.

Tianyi Jiang: I will then turn it over to Jim to cover our financial performance in more detail. Let's start with the current business landscape, where Avepoint has a unique and all-encompassing view of the data management space, given the diversity of our business. This view starts with our end customer. where we ended the year with more than 25,000. We have customers in the Fortune 50, and we have customers with fewer than 50 employees. We serve U.S. federal agencies and we serve Asian governments. We're just as mission critical for European manufacturing conglomerates as we are for North America credit cards.

T. J.: Let's start with the current business landscape. We're at a point has a unique and all encompassing view of the data management space given the diversity of our business. This.

T. J.: This view starts with our end customers, where we ended the year with more than 25000, we have customers in the fortune 50, and we have customers with fewer than 50 employees, we serve U S. Federal agencies, and we serve Asian governments, where justice mission critical for European manufacturing conglomerates as we are for north.

T. J.: Credit card companies. The point is a point customers coming all shapes and sizes, but they all face the same data management challenges and it is clear that successfully solving beef has never been more urgent than it is today.

Tianyi Jiang: The point is Avepoint customers come in all shapes and sizes, but they all face the same data management challenges, and it is clear that successfully solving these has never been more urgent than it is today. This is because all competitive business today are propelled by the relentless force of their digital transformations, which inherently are linked to managing data. At the heart of their transformations lies data modernization, a critical strategy that involves upgrading and optimizing data infrastructure, tools, and processes. This includes hybrid cloud transformation, adopting new data management tools, and implementing data governance strategies to ensure data quality and accessibility.

T. J.: This is because all competitive business today are propelled by the relentless force of their digital transformations, which inherently are linked to managing data.

T. J.: At the heart of their transformation lies data modernization a critical strategy that involves upgrading and optimizing data infrastructure tools and processes. This include hybrid cloud transformation adopting new data management tools and implementing data governance strategies to ensure data quality and <unk>.

Tianyi Jiang: They're also trying to transform while dealing with explosive growth of data, sophisticated cybersecurity threat landscape, complex regulatory environment, and the need for automation. And as we have said, AI is only expected to amplify these challenges. Today, rapid innovation is making large language models more accessible, leveling the playing field for all participants. More companies will lean into AI adoption, which is unquestionably a good thing. In turn, this shift in value from who has the best model to who has the most high quality data only strengthens Avepoint's role in the AI value chain. As companies navigate this rapidly evolving landscape, they need a technology partner who can help them thrive securely and efficiently.

T. J.: S ability, they're also trying to transform while dealing with the explosive growth of data sophisticated cyber security threat landscape complex regulatory environment and the need for automation.

T. J.: And as we have said AI is only expected to amplify. These challenges today rapid innovation is making large language models more assessable leveling the playing field for all participants more companies will lead into AI adoption, which is unquestionably a good thing in turn this.

T. J.: Shift in value from who has the best model to who has the most high quality data only strengthens appellees role in the AI value chain as companies navigate this rapidly evolving landscape they need a technology partner, who can help them thrive securely and efficiently.

Tianyi Jiang: is that partner. Our expertise in data security, governance, and resilience enables businesses to unlock the full potential of their data, to accelerate radical business transformation, and to securely drive innovation. By integrating cutting-edge technologies and robust data management strategies, we position businesses for unprecedented success.

T. J.: Our point is that partner our expertise in data security governance, and resilience enables businesses to unlock the full potential of their data to accelerate radical business transformation and to security drive innovation.

T. J.: By integrating cutting edge technologies, and robust data management strategies, we position businesses for unprecedented success.

Tianyi Jiang: So as we look across our global business today, those are the challenges and opportunities our customers are facing.

T. J.: So as we look across our global business say those are the challenges and opportunities our customers are facing.

Tianyi Jiang: Now I want to turn to why our platform is the perfect fit for this moment and why we're so excited about the opportunity ahead. First and foremost is our platform strategy, ensuring every feature and solution works together to maximize interoperability. As I mentioned a moment ago, there are a number of big problems we can help customers solve. They need to protect their data and ensure that it is backed up and easily recoverable, especially given today's heightened level of crippling ransomware attacks and breaches. They need to govern their data and ensure that proper data access policies are in place.

T. J.: Now I want to turn to why our platform is a perfect fit for this moment and why we're so excited about the opportunity ahead.

T. J.: First and foremost is our platform strategy, ensuring every feature and solution works together to maximize interoperability as I mentioned, a moment ago. There are a number of big problems, we can help customers solve.

T. J.: They need to protect their data and ensure that it is backed up and easily recoverable, especially given today's heightened level of crippling ransomware attacks and breaches.

T. J.: They need to govern their data and ensure that proper data access policies are in place.

Tianyi Jiang: They want to archive or dispose of redundant, obsolete, or trivial data so they can effectively leverage AI strategies and reduce storage costs. And they need to seamlessly do all of these things for a data estate that is larger and more dispersed than ever before.

T. J.: They want to archive or dispose of a redundant absolutely or trigger data. So they can effectively leverage our strategies and reduced storage costs.

T. J.: And they need to seamlessly do all of these things for a daily state that is larger and more dispersed than ever before.

Tianyi Jiang: These data management challenges are so big that most software companies only focus on one of them, which is what we see as a pinpoint for customers seeking true platform plays and fewer vendors. as our ability to deliver on this demand again lead to significant expansions and new customer wins this quarter, demonstrating the power of our platform approach.

T. J.: These data management challenges are so big that most software companies only focus on one of them, which is what we see as a pinpoint for customers seeking true platform plays and fewer vendors.

T. J.: As our ability to deliver on this demand again lead to significant expansions and new customer wins this quarter, demonstrating the power of our platform approach.

Tianyi Jiang: A major global automaker with 60,000 users expanded their relationship with Avepoint in Q4. They added our data resilience solutions for their Microsoft and Google environments to ensure compliance with the NIST 2 Directive, a cybersecurity focused EU regulation.

T. J.: A major global automaker with 60000 users expanded their relationship with Apple in Q4.

T. J.: They added our data resilience solutions for their Microsoft and Google environments to ensure compliance with the NIST Chu director, a cyber security focus EU regulation. Similarly American mortgage company and a staffing agency became the new Apple customers this quarter in competitive wins over.

Tianyi Jiang: Similarly, an American mortgage company and a staffing agency became new Avepoint customers this quarter in competitive wins over traditional backup vendors who could not offer the same holistic data resilience and data governance approach that Avepoint does. Lastly, a leading global producer of renewable packaging with 100,000 users expanded their Avepoint deployment to not only consolidate and protect this data, but to also understand how its employees are adopting and using Microsoft 365 Copilot through our TiGraph product. The second value proposition we offer are robust data security and data governance policies that ensure their data is not just protected, but strategically governed.

T. J.: Our traditional backup vendors, who could not offer the same holistic data resilience and data governance approach that Apple does.

T. J.: Lastly, a leading global producer of a renewable packaging with 100000 users expanded their app when deployment to not only consolidate and protect this data but to also understand how its employees are adopting and using Microsoft sixty-five copilot through our <unk> product.

T. J.: The second value proposition, we offer a robust data security and data governance policies that ensure their data is not just protected by strategically governed.

Tianyi Jiang: This led to an expansion of our relationship with a leading global bank with more than 100,000 users, which needed to seamlessly monitor storage growth, alleviate data sprawl, and satisfy security access audits. Another example was a top global consulting firm which needed to strategically govern its Microsoft 365 environment before deploying 22,000 co-pilot licenses. By expanding their Avepoint deployment in Q4, they can now automate policy enforcement, ensure proper permissions are in place, gain visibility into who is oversharing data, and implement information lifecycle management, all of which will enable them to securely deploy co-pilot.

T. J.: This led to an expansion of our relationship with a leading global bank with more than 100000 users, which needed to seamlessly monitor storage growth alleviate data sprawl and satisfy security access audits.

T. J.: Another example was a top global consulting firm, which needed to strategically govern is Microsoft who sees five environment before deploying 22000 copilot licenses by.

T. J.: By expanding their App point deployment in Q4, they can now automate policy forsman ensure proper permissions are in place gang visibility into who is oversharing data and implement information lifecycle management, all of which will enable them to securely deploy copilot.

Tianyi Jiang: Lastly, business continuity has always been a customer priority. But essential to this is our ability to bring data resilience and data quality into a single seamless experience. This led to a significant customer expansion with a Canadian-based defense company turning to our resilience and control suites to secure their environment with FedRAMP authorized solutions.

T. J.: Lastly business continuity has always been a customer priority, but essential to this is our ability to bring data resilience and data quality into a single seamless experience.

T. J.: This led to a significant customer expansion with a Canadian based defense company, turning to our resilience and control suites to secure their environment with fat ramp authorized solutions.

Tianyi Jiang: It also led to a 30,000 person Australia health organization becoming a new customer in Q4. They leverage our resilience suite to quickly achieve essential A And we're already discussing how the governance solutions in our control suite can flawlessly work with and build upon our backup solution.

T. J.: He also led to a 30000 person, Australia health organization, becoming a new customer in Q4.

T. J.: They leverage our resilient suite to quickly achieve essential a compliance and we're already discussing how the governance solutions, our control suites, Kent flawlessly worked with and build upon our backup solution.

Tianyi Jiang: Ultimately, Avepoint's holistic approach to AI deployment integrates data security, governance, and business continuity solutions into an easy-to-deploy platform, making us the preferred vendor for organizations worldwide. This approach is the foundation of our Beyond Secure philosophy and addresses the inadequacies of traditional data management, which often involves piecemeal solutions that breed complexity and erode confidence. By comprehensively tackling these challenges, we inspire trust and enable our customers to thrive, focusing on innovation and competitive advantage without worrying about their data.

T. J.: Ultimately athletes' holistic approach to AI deployment integrates data security governance and business continuity solutions into a easy to deploy platform, making us the preferred vendor for organizations worldwide. This approach is the foundation of our beyond secure philosophy and addresses the E.

T. J.: Adequacy of traditional data management, which often involves piecemeal solutions that breed complexity and erode confidence.

T. J.: By comprehensively tackling these challenges, we inspire trusts and enable our customers to thrive focusing on innovation and competitive advantage without worrying about their data.

Tianyi Jiang: In line with this are two exciting developments.

T. J.: In line with this our two exciting developments first our strategic acquisition of Identic, a SaaS company specializing in centralized multi tenant management for Microsoft managed service providers or M. S piece by integrating Identics advanced automation and IP management capabilities into the next generation of our.

Tianyi Jiang: First, our strategic acquisition of IDENTIC, a SaaS company specializing in centralized multi-tenant management for Microsoft Managed Service Providers, or MSPs. By integrating IDENTIC's advanced automation and IT management capabilities into the next generation of our Elements platform, we will drive further competitive differentiation and economic opportunities for MSPs. ensuring that these valuable partners can deliver exceptional value and innovation to their customers.

T. J.: Elements platform, we will drive further competitive differentiation and economic opportunities for Msp's, ensuring that these valuable partners can deliver exceptional value and innovation to their customers and.

Tianyi Jiang: And second are the release of new data security solutions for Google Workspace and Google Cloud customers, reinforcing our commitment to securing and protecting data across multi-cloud environments. So we have done the hard things first. And today, Avepoint stands at the forefront of addressing the pivotal challenges in data security, governance, and resilience. Our innovative platform approach sets us apart from traditional point solutions, enabling our customers to achieve transformative results and give them the confidence to excel in today's digital age.

T. J.: And second are the release of new data security solutions for Google Workspace, and Google cloud customers, reinforcing our commitment to securing and protecting data across multi cloud environments.

T. J.: So we have done the hard things first and today at point stands at the forefront of addressing the pivotal challenges in data security governance and resilience.

T. J.: Our innovative platform approach sets us apart from traditional point solutions, enabling our customers to achieve transformative results and give them the confidence to excel in today's digital age.

Tianyi Jiang: I'm proud of the team's many accomplishments this year and we're excited to double down and make an even larger impact in 2025.

T. J.: Proud of the team's many accomplishments this year and we're excited to double down and make it even larger impact in 2020 five.

James Caci: With that, I will turn the call over to Jim to discuss our financial performance and 2025 outlook. Thank you, TJ. And thank you to everyone for joining us this afternoon. We are pleased to deliver another outstanding set of results in Q4. The team's broad based execution enabled us to again outperform our guided growth and profitability metrics.

T. J.: With that I will turn the call over to Jim to discuss our financial performance and 2025 outlook. Thank.

Jim: Thank you T J and thank you to everyone for joining us. This afternoon, we were pleased to deliver another outstanding set of results in Q4.

Jim: The team's broad based execution enabled us to again outperform our guided growth and profitability metrics and there are four key takeaways I want to call out for the quarter.

James Caci: And there are four key takeaways I want to call out for the quarter. The first total ARR growth, which accelerated to 24% year over year, and was 25% when adjusted for FX. Second, net new ARR growth, which was 30% year-over-year and just shy of the record 31% growth, we delivered in Q3. Third, both gross and net retention rates improved to all-time highs. And finally, substantial improvements in both non-GAAP operating income and cashflow generation. Another quarter of strong top line growth is a testament to our leadership in the data management space and our platform differentiation, as we continue to see healthy demand from organizations of all sizes, in all regions, and across all industry verbs.

Jim: First total AOR growth, which accelerated to 24% year over year and was 25% when adjusted for FX.

Jim: Second net new AOR growth, which was 30% year over year and just shy of the record 31% growth we delivered in Q3.

Jim: Third both gross and net retention rates improved to all time highs and finally substantial improvements in both non-GAAP operating income and cash flow generation.

Jim: Another quarter of strong topline growth is a testament to our leadership in the data management space and our platform differentiation as we continue to see healthy demand from organizations of all sizes in all regions and across all industry verticals. This demand includes both new.

James Caci: This demand includes both new customers making larger upfront commitments, as well as existing customers looking to expand their deployments and realize even greater value from our solution. We are equally pleased that our exceptional top line performance is not coming at the expense of profitability.

Jim: Customers, making larger upfront commitments as well as existing customers looking to expand their deployments and realize even greater value from our solutions.

Jim: We are equally pleased that our exceptional top line performance is not coming at the expense of profitability.

James Caci: At our inaugural Investor Day two years ago, we stated that profitable growth was our top priority. Since then, we have committed to balancing strong growth at scale with improving profitability, and our results in Q4, as well as the previous seven quarters, are evidence of our ability to deliver on this promise. Our Q4 non-GAAP operating margin was 16.2%, comfortably above the high end of our guidance and a meaningful improvement from a year ago. And in turn, our improved profitability has led to record cash flow generation as we generated $32.8 million of operating cash flow in Q4, surpassing last quarter's record and nearly $90 million for the full year.

At our inaugural Investor Day, two years ago, we stated that profitable growth was our top priority. Since then we have committed to balancing strong growth at scale with improving profitability in our results in Q4 as well as the previous seven quarters are evidence of our ability to deliver on.

Jim: Promise.

Jim: Our Q4 non-GAAP operating margin was 16, 2% comfortably above the high end of our guidance and a meaningful improvement from a year ago.

Jim: And in turn our improved profitability has led to record cash flow generation as we generated $32 $8 million of operating cash flow in Q4, surpassing last quarter's record and nearly $90 million for the full year.

James Caci: So there's plenty to be excited about. The demand and the market opportunity are there for us. And our relentless focus on execution and realizing efficiencies across the business leave us well positioned to continue driving shareholder value.

Jim: So there is plenty to be excited about the demand and the market opportunity are there for us and our relentless focus on execution and realizing efficiencies across the business leave us well positioned to continue driving shareholder value.

James Caci: With that, let's turn to our results. For the fourth quarter ended December 31st, total revenues were $89.2 million, representing year-over-year growth of 20% and above the high end of our guidance. On a constant currency basis, total revenues grew 20% year-over-year.

Jim: With that let's turn to our results.

Jim: For the fourth quarter ended December 31, total revenues were $89 $2 million representing year over year growth of 20% and above the high end of our guidance on a constant currency basis total revenues grew 20% year over year.

James Caci: Once again, SASTRO of our overall business. Fourth quarter SAS revenue was $64.8 million, growing 43% year over year, and representing 73% of total Q4 revenues, the highest mix we have delivered yet. For reference, SAS represented 61% of Q4 revenues last year. And on a constant currency basis, SAS revenues grew 44% year over year. Our other revenue lines continue to perform in line with our expectations. Term license and support declined to $9.4 million and represented 11% of Q4 revenues as more customers continue to opt for our SaaS offering. Maintenance revenue, which is tied to our legacy perpetual licenses, also declined year over year and represented 3% of total Q4 revenue.

Jim: Once again SAS drove our overall business.

Jim: Fourth quarter, SaaS revenue was $64.8 million growing 43% year over year, and representing 73% of total Q4 revenues the highest mix we have delivered yet for.

Jim: For reference SAS represented 61% of Q4 revenues last year and on a constant currency basis, SaaS revenues grew 44% year over year.

Jim: Our other revenue lines continued to perform in line with our expectations term license and support declined to $9.4 million and represented 11% of Q4 revenues as more customers continued to opt for our SaaS offerings.

Jim: Maintenance revenue, which is tied to our legacy perpetual licenses also declined year over year and represented 3% of total Q4 revenues Lastly services revenue was $12 $2 million and represented 14% of total Q4 revenues and because services is our only.

James Caci: Lastly, services revenue was $12.2 million and represented 14% of total Q4 revenue. And because services is our only non-recurring revenue stream, our recurring revenue mix in the fourth quarter was 86%.

Jim: Nonrecurring revenue stream, our recurring revenue mix in the fourth quarter was 86%.

James Caci: Switching now to our regional performance, where we continue to see a healthy contribution from all three geographies, again, driven by SAC. In North America, SAS revenues grew 46% year-over-year and represented 77% of total North America revenues, which in turn grew 8% year-over-year. In EMEA, SAS revenues grew 37% year-over-year and represented 86% of total EMEA revenues, which in turn grew 29% year-over-year. And in APAC, SAS revenues grew 50% year-over-year and represented 52% of total APAC revenues, which in turn grew 30% year-over-year.

Jim: Switching now to our regional performance, where we continue to see a healthy contribution from all three geographies again, driven by SaaS in North America SaaS revenues grew 46% year over year and represented 77% of total North America revenues, which in turn grew.

Jim: <unk>, 8% year over year in EMEA SaaS revenues grew 37% year over year and represented 86% of total EMEA revenues, which in turn grew 29% year over year.

Jim: And in APAC SAS revenues grew 50% year over year and represented 52% of total APAC revenues, which in turn grew 30% year over year.

James Caci: Sticking with our regional performance, we again saw strong results when looking at ARR, which accounts for the different ways we recognize revenue, and also focuses on our recurring revenue stream. This was especially important in North America in Q4, where our 8% revenue growth was due to much higher SaaS mix, as well as a greater shift of services business to partners this year compared to last year. This is why we believe ARR is the best indicator of business momentum, and in Q4, North America ARR grew 21%. At the same time, EMEA ARR grew 24%, and APAC ARR grew 29%, as each region was again a strong contributor to the 24% consolidated ARR growth we reported.

Jim: Sticking with our regional performance, we again saw strong results when looking at <unk>, which accounts for the different ways. We recognize revenue and also focuses on our recurring revenue streams. This is especially important in North America in Q4, where our 8% revenue growth was due to <unk>.

Jim: Higher SaaS mix as well as a greater shift of services business. So partners this year compared to last year. This.

Jim: This is why we believe <unk> is the best indicator of business momentum and in Q4, North America <unk> grew 21% at the same time EMEA AOR grew 24% and APAC error grew 29% as each region was again a strong contributor to <unk>.

Jim: The 24% consolidated AOR growth we reported.

James Caci: Continuing now with total ARR and other key metrics we assess on a quarterly basis. As of December 31st, total ARR was $327 million, representing year-over-year growth of 24 percent and 25 percent when adjusted for FX. As a result, net new ARR in Q4 was $18.1 million and grew 30 percent year-over-year. Additionally, we ended Q4 with 666 customers with ARR of over $100,000, a 22 percent increase from the prior year, and a net addition of 37 such customers from Q3, which surpassed the record 35 that we added last quarter. And lastly, we also are pleased to report that we ended Q4 with 225 customers with ARR of over $250,000, which is a 26% increase over 23.

Jim: Continuing now with total error and other key metrics, we assess on a quarterly basis.

Jim: As of December 31st total <unk> was $327 million representing year over year growth of 24% and 25% when adjusted for FX. As a result, net new <unk> in Q4 was $18 $1 million and grew 30% year over year.

Jim: Additionally, we ended Q4 with 666 customers with <unk> of over $100000, a 22% increase from the prior year and a net addition of 37 such customers from Q3, which surpassed the record 35 that we added last quarter.

<unk> and.

Jim: And lastly, we also are pleased to report that we ended Q4 with 225 customers with <unk> of over $250000, which is a 26% increase over 23.

James Caci: As of the end of Q4, 55% of our total ARR came through the channel, compared to 51% a year ago. And for Q4 specifically, 61% of our incremental ARR came through the channel, compared to 68% for Q3 of 2024 and 65% for Q4 of 2023.

As of the end of Q4, 55% of our total air are came through the channel compared to 51% a year ago and for Q4, specifically, 61% of our incremental <unk> came through the channel compared to 68% for Q3 of 2024.

Jim: And 65% for Q4 of 2023.

James Caci: Turning now to our customer retention rates, which, as I mentioned, improved to all-time highs in Q4. Adjusted for FX, our trailing 12-month gross retention rate for the fourth quarter improved to 89%, and our trailing 12-month net retention rate improved to 111%. In both instances, these retention rates were a two-percentage-point improvement from a year ago and a one-percentage-point improvement from Q3. On a reported basis, Q4 GRR improved to 88% compared to 86% in Q4 of 2023, and 87% in Q3. Q4 reported NRR was 110%, a two percentage point improvement from a year ago, and a one percentage point improvement from the prior quarter.

Jim: Turning now to our customer retention rates, which as I mentioned improved to all time highs in Q4.

Jim: Adjusted for FX, our trailing 12 month gross retention rate for the fourth quarter improved to 89% and our trailing 12 month net retention rate improved to 111% in both instances. These retention rates were a two percentage point improvement from a year ago and a one person.

Jim: <unk> point improvement from Q3.

Jim: On a reported basis Q4 G. R R improved to 88% compared to 86% in Q4 of 2023 and 87% in Q3 Q.

Jim: Q4 reported NRI was 110% a two percentage point improvement from a year ago, and a one percentage point improvement from the prior quarter.

James Caci: Turning back to the income statement, gross profit for Q4 was $67.3 million, representing a gross margin of 75.5% compared to 75.2% in Q4 of 2023 and to 77% in Q3 of 2024. The year over year improvement in our gross margin is primarily the result of our product. where there was a greater mix of SAS revenue, as well as improved SAS margins, which more than offset the weaker services margin we saw in the quarter. Moving down the income statement, fourth quarter operating expenses totaled $52.8 million, or 59% of revenues, compared to $45.8 million, or 61% of revenues a year ago.

Jim: Turning back to the income statement gross profit for Q4 was $67 $3 million, representing a gross margin of 75, 5% compared to 75, 2% in Q4 of 2023 and to 77% in Q3 of 2024.

Jim: The year over year improvement in our gross margin is primarily the result of our product mix, where there was a greater mix of SaaS revenue as well as improved SaaS margins, which more than offset the weaker services margin we saw in the quarter.

Jim: Moving down the income statement fourth quarter operating expenses totaled $52 8 million or 15, 9% of revenues compared to $45.8 million or 61% of revenues a year ago. As a result, Q4 operating income was $14 5 million.

James Caci: As a result, Q4 operating income was $14.5 million, or an operating margin of 16.2%, a year-over-year improvement of more than 240 basis To remind you, these results are on a non-GAAP basis, but I also want to point out that Q4 represented our second consecutive quarter of GAAP Operating Profitability and also allowed us to deliver GAAP Operating Profitability for the full year 2024, a year ahead of our 2025 commitment we made at our inaugural Investor Day. Turning to the balance sheet and statement of cash flows, we ended the fourth quarter with $290.9 million in cash and short-term investments.

Jim: For an operating margin of 16, 2% a year over year improvement of more than 240 basis points.

Jim: To remind you. These results are in a non-GAAP basis, but I also want to point out that Q4 represented our second consecutive quarter of GAAP operating profitability and also allowed us to deliver GAAP operating profitability for the full year 2024, a year ahead of our 2025.

Jim: Commitment, we made at our inaugural Investor day.

Jim: Turning to the balance sheet and statement of cash flows we ended the fourth quarter with $299 million in cash and short term investments and as I mentioned for the 12 months ended December 31st cash generated from operations was $88 $9 million, while free cash flow was $85 9 million.

James Caci: And as I mentioned, for the 12 months ended December 31st, cash generated from operations was $88.9 million, while free cash flow was $85.9 million. This compares to cash generated from operations of $34.7 million and free cash flow of $32.6 million in 2023.

Jim: This compares to cash generated from operations of $34 $7 million and free cash flow of $32 $6 million in 2023, and I would point out that our full year free cash flow margin of 26% more than doubled the 12% margin we delivered in 2002.

James Caci: And I would point out that our full year free cash flow margin of 26% more than doubled the 12% margin we delivered in 2023.

Jim: Three.

James Caci: Lastly, I want to provide an update on our publicly traded warrants. First, our cash balance at year end of $290.9 million includes $17.2 million of proceeds from warrant exercises in the fourth quarter. And for Q1, another 7.6 million warrants have been exercised through the close of trading on Tuesday, resulting in an additional $87.3 million of proceeds. This leaves 7.2 million warrants outstanding as of Tuesday.

Jim: Lastly, I want to provide an update on our publicly traded warrants.

Jim: First our cash balance at year end of $290.9 million includes $17 $2 million of proceeds from warrant exercises in the fourth quarter and for Q1, another $7 6 million warrants have been exercised through the close of trading on Tuesday, resulting in an additional eight.

Jim: $87.3 million of proceeds this leaves $7 2 million warrants outstanding as of Tuesday.

James Caci: Before I turn to our guidance, I'll briefly recap our full year 2024 results. Total revenues were $330.5 million, representing growth of 22% on a reported and constant currency basis, and an acceleration from 2023. Within total revenues, SAS revenues were $230.7 million, with growth accelerating to 43%. For the full year, SAS revenues represented 70% of total revenues compared to 59% in 2023 and 50% in 2022. As mentioned, total ARR as of December 31st was $327 million, representing growth of 24% or 25% when adjusted for FX. As a result, net new ARR for the full year was $62.5 million, representing growth of 25%.

Jim: Before I turn to our guidance I'll briefly recap our full year 2024 results.

Jim: Total revenues were $335 million, representing growth of 22% on a reported and constant currency basis, and an acceleration from 2023 within total revenues SaaS revenues were $237 million with growth accelerating to 43%.

Jim: For the full year SaaS revenues represented 70% of total revenues compared to 59% in 2023 and 50% in 2022 as.

Jim: As mentioned total air or as of December 31 was $327 million representing growth of 24% or 25% when adjusted for FX. As a result, net new <unk> for the full year was $62 $5 million representing growth of 25%. This.

James Caci: This compares to net new ARR in 2023 of $49.8 million, which grew 5% over 2022. Non-GAAP operating income for the full year was $47.6 million, or an operating margin of 14.4%, compared to $22.2 million in 2023, or a margin of 8.1%. And as I mentioned earlier, GAAP operating income for the year was $7.2 million as we delivered our commitment to GAAP profitability a year ahead of schedule. During the year, we repurchased approximately 3.3 million shares for a total cost of $33.1 million.

Jim: Pairs to net new <unk> in 2023 of $49.8 million, which grew 5% over 2022.

Jim: non-GAAP operating income for the full year was $47 $6 million or an operating margin of 14, 4% compared to $22 $2 million in 2023, or a margin of eight 1% and as I mentioned earlier GAAP operating income for the year was seven.

Jim: Point $2 million as we delivered our commitment to GAAP profitability a year ahead of schedule.

During the year, we repurchased approximately three 3 million shares for a total cost of $33 $1 million and lastly on a rule of 40 basis, which for AD point is the sum of AOR growth and non-GAAP operating margin. We finished 2024 at 38 compared to <unk>.

James Caci: And lastly, on a rule of 40 basis, which for Avepoint is the sum of ARR growth and non-GAAP operating margin, we finished 2024 at 38 compared to 31 for 2023 and 27 for 2022.

Jim: <unk> 31 for 2023 and 27 for 2022.

James Caci: I would now like to turn to our financial outlook for the first quarter and full year of 2025. For the first quarter, we expect total revenues of $87.8 million to $89.8 million, or growth of 18% to 21%. And on a constant currency basis, we expect revenue growth of 19% to 22%. We expect non-GAAP operating income of $11.1 million to $12.1 million.

Jim: I would now like to turn to our financial outlook for the first quarter and full year of 2025 for.

Jim: For the first quarter, we expect total revenues of $87.8 million to $89.8 million or growth of 18% to 21% and on a constant currency basis, we expect revenue growth of 19% to 22%.

Jim: We expect non-GAAP operating income of $11 $1 million to $12 $1 million.

James Caci: And for the full year, we expect total ARR of $401.3 million to $407.3 million, or growth of 23% to 25%. This implies net new ARR for the year of $77.3 million, or year-over-year growth of 24% at the midpoint. Adjusted for FX, we expect total ARR growth of 24% to 26% for the year.

Jim: And for the full year, we expect total error or a $401.3 million to $407.3 million or growth of 23% to 25%. This implies net new air or for the year of $77.3 million or year over year growth of <unk>.

Jim: <unk>, 4% at the midpoint adjusted for FX, We expect total <unk> growth of 24% to 26% for the year.

James Caci: We expect total revenues of $380 million to $388 million, or growth of 15% to 17%. And on a constant currency basis, we expect revenue growth of 17% to 19%. Lastly, we expect full year non-GAAP operating income of $52.3 million to $55.3 million. As we think about the Rule of 40, today's full-year guidance reflects a range of 37 to 39 on a reported basis, and a range of 38 to 40 when adjusted for FX.

Jim: We expect total revenues of 380 million to $388 million or growth of 15% to 17% and on a constant currency basis, we expect revenue growth of 17% to 19%.

Jim: Lastly, we expect full year non-GAAP operating income of $52 $3 million to $55 $3 million.

Jim: As we think about the rule of 40 today's full year guidance reflects a range of 37 to 39 on a reported basis and a range of 38 to 40 when adjusted for FX.

Unknown Executive: In summary, we are extremely proud of our Q4 and full-year results, and we look forward to sharing a deeper dive into the business at Monday's Investor Day.

Jim: In summary, we are extremely proud of our Q4 and full year results and we look forward to sharing a deeper dive into the business at Mondays Investor day.

Unknown Executive: Thanks for joining us today. And with that, we would be happy to take your questions.

Jim: Thanks for joining us today and with that we would be happy to take your questions operator.

Unknown Executive: Operator. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then 2.

Jim: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

Jim: If you're using a speakerphone please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star and then two are.

Jason Ader: Our first question comes from Jason Ader with William Blair. Please go ahead. Thank you. All right, almost got that right. Hey, guys. Good afternoon. Just wanted to ask a few questions about the business here. First, Can you disclose what your U.S. federal exposure is and how are you thinking about that business in light of what's going on in D.C. right now?

Speaker Change: Our first question comes from Jason Adar with William Blair. Please go ahead.

Speaker Change: Alright, almost cut that right hey, guys.

Speaker Change: Good afternoon, just wanted to ask a few questions.

Speaker Change: The business here first.

Speaker Change: Can you disclose what your U S. Federal exposure is and how are you thinking about that business in light of what's going on in D. C right now.

Tianyi Jiang: Hey, Jason. Good question. So to start, it's important to, to know that our federal business, our public sector business is a global public sector business. Specifically to US public sector, we actually have three separate business divisions that's federal, that's state and local education, as well as DOD. So we actually take a look at the specific agencies that are and also looking at, because we have multi-year contracts with government as well, looking at which agencies are due for renewal cycles this year. So all of that effectively narrowed down to just basically 2% of our total AR.

Jason Adar: Hey, Jason good.

Jason Adar: Good question so to start it's important to to know that our federal business, our public sector business as a global public sector business, specifically to U S. Public sector Wise you have three separate our business divisions, that's federal state and local education as.

Jason Adar: As well as D. O D. So we actually are taking a look at the specific agencies that are impacted by some of the staff reduction initiatives.

Jason Adar: And also looking at because we have multi year contracts with government as well, but you know what agencies are due for renewal cycles. This year.

Jason Adar: So all of that.

Jason Adar: Effectively narrowed down to just basically 2% of our total E. R. So the exposures are.

Tianyi Jiang: So the exposure is around that. Having said that, though, while there are staff reduction actions happening, the fundamental requirement of digital transformation, elevating, advancing technology deployments, and also AI deployments, still allow us to have very active conversations with the agencies around their data estate postures and their AI readiness capabilities. So there's lots of technology discussion ongoing.

Jason Adar: That having said that though.

Jason Adar: They are staff reduction.

Jason Adar: Actions happening.

Jason Adar: The fundamental requirement of digital transformation.

Jason Adar: Elevating advancing technology deployments and also AI deployments.

Jason Adar: Still allow us to have a very active conversations with the agencies around their data you stay postures and their AI readiness capabilities. So there's lots of technology discussion ongoing.

Unknown Executive: Okay, thank you.

Jason Adar: Okay. Thank you and then.

James Caci: And then. Jim, maybe for you, so your gap between error or growth. and RemedyGrowth in 2024 was what? or Points, something like that. I'm just looking at 25. It seems like it's a bit of a wider gap. Is there something going on in In 25 just from a revenue standpoint that is causing that. You know, is it effects related or any specific nuances that you can call out would be helpful just in explaining the discrepancy between error. Yeah, I think you touched on a key there. I do think there's an FX impact for sure. As you know, obviously, we're a global business, a significant portion of our revenues are in non-USD denominated currencies.

Speaker Change: Jim maybe for you.

Speaker Change: So your gap between air growth.

Speaker Change: The growth in 2024.

Speaker Change: What about.

Speaker Change:

Speaker Change: Four points something like that.

Speaker Change: So I'm just looking at 25, it seems like it's a bit of Oh.

Speaker Change: <unk> is there something going on in.

Speaker Change: And twenty-five just from a revenue standpoint that.

Speaker Change: Is causing that.

Speaker Change: Is it FX related or any any any specific nuances that you can call out.

Speaker Change: Would be helpful. Just explaining that the discrepancy between Ara growth from revenue growth and 25.

Speaker Change: Yes, I think you touched on a key there I do think there's an FX impact for sure.

Speaker Change: As you know obviously.

Speaker Change: We're a global business a significant portion of our revenues.

Speaker Change: Are in non USD denominated currencies. So that's definitely a factor I would say beyond that there's nothing really to call out.

James Caci: So that's definitely a factor. I would say beyond that, there's nothing really to call out or to highlight any other kind of vectors that are creating any disparity there. We are obviously continuing to, you know, continue to see an increase in our ARR, particularly when we think of our revenue mix, where we think of services as the only component that's not really ARR focused. We're definitely seeing that continue to decline as a percentage of the overall revenues. So again, I think nothing really to call out other than the FX.

Speaker Change: Or highlight any other.

Speaker Change: Vectors that are creating any any disparity there.

Speaker Change: We are obviously continuing to continue.

Speaker Change: Continue to see an increase in our E. R R and particularly when we think of our revenue mix, where do we think of services as the only component that's not really a or are focused.

Speaker Change: We're definitely seeing that continued to decline as a percentage of the overall revenues. So again I think nothing really to call out other than the FX.

Speaker Change: Alright, thank you.

Fatima Boulani: And the next question comes from Fatima Boulani with Citi. Please go ahead.

Fatima Fulani: And the next question comes from Fatima Fulani with Citi. Please go ahead.

Unknown Executive: Hi, this is Joel on for Fatima. Thanks for taking our question. So maybe one for Jim.

Speaker Change: Alright. This is Joe on for <unk>, Thanks for taking our questions here.

Speaker Change: So maybe one for Jim so in terms of pricing, it's been great to see the trajectory over the past several quarters.

James Caci: So in terms of pricing, it's been great to see the NRR and ARR trajectory over the past several quarters, but Could you characterize perhaps the impact of any price increases on ARR and NRR in 2024 and, you know, to the extent that you can quantify any magnitude of and then I have a quick. Sure. So in thinking about pricing, and really NRR specifically, you know, Joel, we've probably talked about this before, you know, the big driver for us when we think about NRR is really customers consuming more and more of the platform, which is really them consuming additional products more so than more of any one product.

Speaker Change: Could you characterize the impact of any price increases on <unk>.

Speaker Change: And in our or in 2024 and two.

Speaker Change: To the extent that you can quantify any magnitude that would be very helpful. And then I have two quick follow ups.

Speaker Change: Sure.

Speaker Change: And thinking about pricing and really enter our specifically.

Speaker Change: You know Joel we've probably talked about this before the big driver for US when we think about NR are is really customers consuming more and more of the platform, which is really them consuming additional products more so than more of any one product. So that's the biggest driver behind our in our growth.

James Caci: So that's the biggest driver behind our NRR growth. And then secondarily, as you alluded to, we do look at prices across multiple different products within our suites. And we look obviously at market conditions, and where there's there's elasticity to improve pricing, we're doing that. Obviously, we we play in competitive markets. So I would say in terms of quantification, we did increase prices across multiple products this year. But I would say overall, it's a very small percentage of our overall improvement in NRR. And so I wouldn't think of that as a driver for going forward NRR increases.

Speaker Change: And then secondarily as you alluded to we do look at prices across multiple different products within our suites.

Speaker Change: And we look obviously at market conditions, and where there is there is elasticity to improve pricing. We're doing that obviously, we play in competitive markets. So I would say in terms of quantification, we did increase prices across multiple products. This year, but I would say overall, it's a very small person.

Speaker Change: <unk> of our overall improvement and NR are and so I wouldn't.

Speaker Change: Think of that as a driver for going forward and our our increases I think that's really coming from customers consuming more of the platform.

Unknown Executive: I think that's really coming from customers consuming more of the platform. Okay, got it. Okay.

Speaker Change: Okay got it Okay and then on the recent announcement for the data security solutions for Google.

Tianyi Jiang: And then on the recent announcement for the data security solutions for Google, I'm hoping you can give us a bit more color, maybe TJ on just how big of a step or a leap forward this is in your journey to expand beyond Microsoft environments. And then also, if this is, you know, perhaps a significant driver to calendar 25. Yeah, great question. So our customers are multi cloud. We talked about this quite a bit before. So that expansion into Google, we have already been covering Google from a backup as a service perspective before. But this time, we're also layering risk intelligence, as well as lifecycle management, as well as data analytics and modernization.

Speaker Change: Hoping you could give us a bit more color on maybe you T. J on just how big of a step toward a leap forward dishes and your journey to expand beyond Microsoft environments.

And then also if this is.

Speaker Change: Perhaps a significant driver to calendar 'twenty.

Speaker Change: Yeah.

Speaker Change: Yeah, Joe Great question. So our customers are multi cloud we talked about this quite.

Speaker Change: Quite a bit before.

Speaker Change: So that expansion into Google, we have already been covering Google from a backup as a service perspective before.

Speaker Change: At this time, we're also layer in our risk intelligence as well as our lifecycle management as well as our data analytics and monetization so essentially full fidelity seamless data migration.

Unknown Executive: So essentially, full fidelity, seamless data migration between the hyperscalers. So we're pretty excited about this expansion that positions us well, as a more strategic partner for our customers who are multi cloud. So yeah, it's a it's a really a large new IP expansion versus what we offered before. Got it. Thank you. Thanks, Joel.

Speaker Change: Migration between the Hyperscale or.

Speaker Change: So we're pretty excited about this.

Speaker Change: Expansion that positions us well as a more strategic partner for our customers who are multi cloud.

Speaker Change: So yeah, it's a it's really a large new IP expansion versus where we offered before.

Speaker Change: Okay got it thank you.

Speaker Change: Thanks, Joe.

Gabriela Borges: And the next question comes from Gabriela Borges with Goldman Sachs. Please go ahead. Hi, good afternoon.

Speaker Change: And the next question comes from Cabriolet Bouygues with Goldman Sachs. Please go ahead.

Speaker Change: Hi, Good afternoon. This is Max can pearl on for Gabriela. Thanks, So much for taking our questions.

Maxime Gamperl: This is Max Gamperl on for Gabriela. Thanks so much for taking our questions. TJ, we're hearing a greater number of companies highlight the opportunity in data security posture management. I'm curious if you're seeing any change in the competitive environment as more companies are targeting the data security market. How is this market evolving given the heightened awareness within the DSPM category specifically? Yeah, so it's always been pretty competitive. We have also continued to evolve our platform. We have definitely a platform approach towards governance and security. So DSPN is an aspect of our platform. So we are also active conversation and coverage by Gartner and Forrester and also G2, these industry analysts.

T J.

Speaker Change: We're hearing a greater number of companies highlight the opportunity and data security posture management.

Speaker Change: Im curious if youre seeing any change in the competitive environment as more companies are targeting the data security market. How is this market evolving given the heightened heightened awareness within the D. S. P M category specifically.

Speaker Change: Yeah. So it's always been pretty competitive are we have also continued to evolve our platform we have definitely a platform approach.

Speaker Change: Two words governance and security.

Speaker Change: So D S P N as a aspect of our platform.

Speaker Change: So we are also active conversation and coverage fought by Gartner and Forrester and also G. Tube. These are industry analysts. So yeah, I mean, the landscape continued to be competitive.

Tianyi Jiang: So, yeah, I mean, the landscape continues to be competitive, but we are able to take our enterprise grade platform and win there and then also be able to cross out and also expand our segmentation coverage into mid-market SMB and do that at a global level. So we're very bullish and confident on where we're going.

Speaker Change: But we are able to take our enterprise grade platform and win there and then also be able to cross sell and also expand our segmentation coverage into mid market SMB and do that at a global level. So we're very bullish and confident on where we're going you'll hear more from us on specific.

Tianyi Jiang: You'll hear more from us on specific product evolutions at our Monday and yesterday conference. So where we'll disclose more details about product and also competitive landscape.

Speaker Change: Product evolutions at our Monday Investor Day Conference. So, we're we'll disclose more details about product and also competitive landscape. So we will welcome you to see you there.

Unknown Executive: So we'll welcome you to see you there. Got it. Thank you.

Speaker Change: Got it. Thank you and then with regards to your Identic acquisition can you elaborate on the integration goals with this company as it relates to your managed services platform.

Tianyi Jiang: And then with regards to your identic acquisition, can you elaborate on the integration goals with this company as it relates to your managed services platform? And maybe you could touch on how we should think about your M&A strategy on a go-forward basis. Yeah, that's a great question. So, we're excited about the acquisition of IDENTIC. It's a Netherland company. They're focused on Microsoft MSPs in terms of identity, security, and user management. They allow us to speed up our IP expansion of our MSP offerings to include more day-to-day-three solutions. So, as I covered in previous earnings before, MSP vertical is our fastest-growing vertical.

Speaker Change: Maybe you could touch on how we should think about your M&A strategy on a go forward basis.

Speaker Change: Yeah, that's a great question.

Speaker Change: So we're excited about the acquisition of Identic, It's a Netherlands company their focus on Microsoft Msp's in term of identity security and user management, a allow us to speed up our IP expansion of our MSP offerings to <unk>.

Speaker Change: Include more day to day three solutions, so as I covered in previous earnings before MSP vertical. It's a now our fastest growing vertical and allow us to become mission critical to this new segment of our managed services providers that actually allow us to then.

Tianyi Jiang: It allows us to become mission-critical to this new segment of managed services providers that actually allow us to then expand and unlock our reach into SMB and medium-sized customers in a very efficient way. We also have this Elements go-to-market platform that solves the go-to-market, lowers the barrier to entry, digital integration, pool licensing, monthly contracts to really roll up and get that mission-critical usage patterns for the MSPs. So, we're very excited about that expansion.

Speaker Change: Getting our expand and unlock.

Speaker Change: Our reach into SMB and medium size customers in a very efficient way. We also have this elements. Our go to market platform that solves the go to market lowered the barrier to entry digital integration pool licensing monthly contracts to really roll up and get that.

Speaker Change: Mission critical usage patterns for the M. S piece. So we're very excited about that expansion in terms of M&A. We will continue to be quite focused on that as well as our organic investments again, we will share more on the strategic.

Tianyi Jiang: In terms of M&A, we will continue to be quite focused on that as well as our organic investment. Again, we'll share more on the strategic vectors of growth at our investor day, but you hear from Jim our latest cash position. We're cash-generating. We have a very healthy balance sheet. We will invest for growth. So, profitable growth is the mantra here, but we feel that we have a very strong cash position, and we're also expanding and see a very good market position. So, that also leads to very active M&A targeting today. Thanks so much. Thank you.

Speaker Change: Vectors of growth at our Investor day by you hear from Jim our latest.

Speaker Change: Our cash position, where we're cash generating we will have a very healthy balance sheet, we will invest for growth so profitable growth as the mantra here, but we feel that we have a very strong cash position and where.

Speaker Change: Also.

Speaker Change: Expanding and see a very good market position.

Speaker Change: So that also leads to a very active M&A targeting today.

Speaker Change: Great. Thanks, so much.

Unknown Executive: Thanks, Max.

Max: Okay. Thanks Max.

Nehal Chokshi: And the next question comes from Nehal Chokshi with Northland Capital Markets. Please go ahead. Thank you. I want to go back to Jason's second question regarding the spread between ARR and revenue growth. If I look at it on a constant currency basis, in calendar 24, it looks like the spread is 300 basis points, and then on a constant currency basis, it's 700 basis points for calendar 25. It doesn't seem like FX is the main driver of the delta in the increasing spread here. It is an element, but not the main driver.

Speaker Change: And the next question comes from Nihon Chuck Ski with Northland Capital markets. Please go ahead.

Speaker Change: Thank you.

Speaker Change: And congratulations on a stronger share.

Speaker Change: I want to go back to Jason the second question.

Speaker Change: Regarding the spread between <unk> and revenue growth.

Speaker Change: I look at it on a constant currency basis in calendar 'twenty four.

It looks like the spread is 300 basis points and then on a constant currency basis.

Speaker Change: 700 basis points for calendar 'twenty five so it.

Speaker Change: It doesn't seem like FX is the main driver of the Delta and the increase in spread here. It is an element, but not the main driver so.

James Caci: Maybe my math is wrong, or maybe there is something else there that you want to highlight. Yeah, I mean, I think, you know, FX is obviously a key component, but you're right. It's also mixed in terms of the different types of revenue that we're seeing. And obviously, whether that's services or SAS, so that's definitely going to play a factor, too, in terms of, obviously, the more SAS, we're creating a little bit more of a dynamic there, just in terms of the REVREC. You've seen over the past year, our term license revenue declining. That gives us that upfront bump in the term revenue piece.

Speaker Change: Could you maybe my math is wrong or maybe theres something else there that you want to highlight there Jim.

Speaker Change: Yeah, I mean, I think you know FX.

Speaker Change: FX is obviously, a key component but euro.

Speaker Change: Youre right. Its also mix in terms of the different types of revenue.

Speaker Change: That we're seeing and obviously, whether that's services or SaaS. So that's definitely going to play a factor too in terms of obviously the more SaaS.

Speaker Change: We're creating a little bit more of a dynamic there just in terms of the Rev. Rec, you've seen over the past year. Our term license revenue declining that gives us that upfront bump in the term revenue piece. So as that continues to shrink and become less of a percentage of the total then we create a.

James Caci: So as that continues to shrink and, you know, become less a percentage of the total, then we create a little bit more gap between ARR and revenue in the short term. And that's partly what you're seeing in addition to the FX in 2022. Okay, so you would expect the term license decline to accelerate here in calendar 25 relative to the growth rate you saw in calendar 24? Yeah, what we've got in the plan, like you've seen over the past couple years, we've seen that term license continue to decline, right? It declined not only as a percentage of revenue, but also in actual dollars.

Speaker Change: A little bit more gap between <unk> and revenue in the short term.

Speaker Change: And that's partly what Youre seeing in addition to the FX in 2025.

Speaker Change: Okay. So you would expect the term license decline to accelerate here in calendar 'twenty five relative to the growth rate you saw in calendar 'twenty four.

Speaker Change: Yeah, what we've got in the plan like you've seen over the past couple of years, we've seen that term license.

Speaker Change: Continued to decline it declined not only as a percentage of revenue, but also in actual dollars and so we would expect that to continue again in 'twenty five where we're going to see a further deterioration in dollars and obviously, even a greater decline in percentage of revenue. So again, we would expect that.

James Caci: And so we would expect that to continue again in 2025, where we're going to see a further deterioration in dollars, and obviously even a greater decline in percentage of revenue. So again, we would expect that for the full year next year, to continue that trend, and obviously have an impact on the mix that we just Got it.

Speaker Change: For the full year next year.

Speaker Change: To continue that trend and.

Speaker Change: And obviously have an impact on the mix that we just talked about.

James Caci: Okay, that makes a lot of sense. And then you, you know, following two years of about 700 basis points per year EBIT margin expansion, you're projecting a flattening here, a non-GAAP EBIT margin.

Speaker Change: Got it okay that makes a lot of sense.

Speaker Change: Than you.

Speaker Change: Following two years of about 700 basis points for Europe EBIT margin expansion you are projecting a flattening here the non-GAAP EBIT margin.

James Caci: Is this basically a signal that, hey, it's time to invest aggressively again? So, great question, Nehal, and I appreciate you bringing it up, because I do think there's a couple points to make here. One, and maybe the first point, really, is our focus has been on profitable growth, and I don't want this to take away from our focus still is on profitable growth. So, that's first and foremost. Second, you're right, we do see a healthy pipeline. We see, you know, good momentum in the business that we've been able to execute, and we feel really good about the demand environment that we see out there.

Speaker Change: Is it takes a signal that hey, it's time to invest aggressively again.

Speaker Change: So great question the hall.

Speaker Change: Eight you're bringing it up because I do think there's a couple of points to make here. One maybe the first point really is our focus has been unprofitable growth and I don't want this to take away from our our focus still is on profitable growth. So that's first and foremost second youre right, we do see a healthy pipeline.

Speaker Change: We see good momentum in the business that we've been able to execute and we feel really good about the demand environment that we see out there. So that does give us some confidence to actually invest and we do think that the third component is it's important to make strategic investments.

James Caci: So, that does give us some confidence to actually invest. And we do think that the third component is it's important to make strategic investments and really position us for the long-term growth that we do see. Now, you're right, two years ago, we talked about profitable growth. We talked about hitting targets of gap profitability, which we've already exceeded in a year earlier than anticipated. And we focused on being at the Rule of 40 in 2025, which, again, we're still committed to doing. But we do recognize that in order for the long-term success, we do need to make investments, and those are broadly in two key areas, sales and marketing.

Speaker Change: And really position us for the long term growth that we do see now you're right two years ago, we talked about profitable girls, we talked about hitting targets of GAAP profitability, which we've already exceeded in a year earlier than anticipated and we focused on being at the rule of 40 in 2025.

Speaker Change: Which again, we're still committed to doing but we do recognize that in order for the long term success, we do need to make investments and those are broadly in two key areas sales and marketing we're going to invest additional dollars next year and also in R&D and so again. This this kind of sets us up nicely we.

James Caci: We're going to invest additional dollars next year, and also in R&D. And so, again, this kind of sets us up nicely, we think, for the long-term growth. Now, having said that, we're going to continue to look and see where we can find efficiencies and still focus on that profitable growth. But we're setting ourselves up here with our guidance that we're putting out today, that we're focused on profitable growth but also the long-term success of the business.

Speaker Change: Thank for the long term growth now having said that we're going to continue to look and see where we can find efficiencies and still focused on that profitable growth, but we're setting ourselves up here with our guidance that we're putting out today that we're focused on profitable growth, but also the long term success of the business.

James Caci: And if you do deliver top line upside, will you plow that back into further off-episodes? You know, that's a great question. You know, I would say that, you know, that's something we'll continue to evaluate. Similar to, you know, we take a very measured approach on investments, as you know, I think we've we've done a good job and demonstrated over the past eight quarters, that I think we're able to make those kind of quarter to quarter decisions. We're constantly looking out 12 to 24 months. So I would say that I don't want to commit to what you just said.

Speaker Change: And if you do deliver top line upside will you plow that back into further opex investments.

Speaker Change: No that's a great question.

Speaker Change: I would say.

Speaker Change: That you know that.

Speaker Change: It's something we'll continue to evaluate similar to we take a very measured approach on investments as you know.

I think we've done a good job and demonstrated over the past eight quarters that I think we're able to make those kind of quarter to quarter decisions. We're constantly looking out 12 to 24 months.

Speaker Change: So I would say that I don't want to commit to what you just said I do think there is a balance between over performance of investing that into the future and also recognizing some of that in the current so I think it could be a mix.

Unknown Executive: I do think there's a balance between overperformance of investing that into the future, and also recognizing some of that in the current. So I think it could be a mix. But I would say, you know, again, we're really satisfied with the execution in 24. We've got a good plan for executing in 25. And we're excited about delivering again. Okay, thank you. I'll see the floor. Thanks.

Speaker Change: But I would say you know again, we're really satisfied with the execution in 'twenty four we've got a good plan for executing in 'twenty five and we're excited about delivering against that.

Speaker Change: Okay. Thank you I'll cede the floor.

Speaker Change: Thanks.

Chirag Ved: And the next question comes from Kirk Materne with Evercore ISI, please go ahead. Hi, this is Chirag on for Kirk. Thanks for taking the question and congratulations on closing out a very strong fiscal 24. TJ, from your perspective, how much further along are we on the data modernization and AI adoption timeline today versus this time last year for companies and customers? And where do you still see the largest opportunities that Avepoint can capitalize on over the next year as every company is still looking and trying to figure out how to implement AI in their tech stacks?

Speaker Change: And the next question comes from Kirk <unk> with Evercore ISI. Please go ahead.

Speaker Change: Hi, This is Charlie on for Kirk Thanks for taking the question and congratulations on closing out a very strong fiscal 'twenty four.

T.J.: T J from your perspective, how much further along are we on the data modernization and AI adoption timeline today versus this time last year.

T.J.: For companies and customers and where do you still see the largest opportunities that off point can capitalize on over the next year. As every company is still looking and trying to figure out how to implement AI in their tech stocks. Thank you.

Tianyi Jiang: Thank you.

Tianyi Jiang: Yeah, great question. So with the recent disruption in commoditization and lowering the cost of large language models, we see a lot more excitement from customers to really make AI more accessible. However, from our perspective, we say that the experimentation and enterprise rollout still fundamentally depend on data quality, addressing potential loss and oversharing risks, as well as data governance and security, which is our core business. So we think making large language models more accessible and lower cost is fundamentally a very good thing. And we continue to see more and more global deployments of AI capabilities, especially in the form of Microsoft Copilot and also Google Duet.

T.J.: Yeah, Great question.

T.J.: So with the recent.

T.J.: Disruption in Commoditization and lowering the cost of large language models.

T.J.: We see a lot more excitement from customers, it's really make AI more accessible.

Speaker Change: However, we from our perspective, we say that the experimentation and our enterprise rollout still fundamentally depend on.

Speaker Change: Data quality addressing potential laws and oversharing risks as well as the data governance and security, which is our core business. So this we think making larger language model is more accessible and lower costs is fundamentally a very good thing.

Speaker Change: And we continue to see and more and more global deployment of our AI capabilities, especially in the form of Microsoft.

Speaker Change: Microsoft Copilot and also a Google duet so from that perspective, we are.

Tianyi Jiang: So from that perspective, we are very confident on how we continue to add value, because fundamentally, your AI is only as good as your data. So that's our wheelhouse. And that's something that we've been helping customers solve for the last 20 plus years.

Speaker Change: Confident on how we continue to add value because fundamentally your AI is only as good as your data. So that's our wheelhouse and that's something that we've been helping customers solve for the last one plus years.

James Caci: Great. And Jim, maybe one for you. Do you have any comments on seasonality that we should factor in when thinking about the next? That's a great question. And, you know, historically, we have had significant seasonality. And I do think that when we think about different components, we think about revenue, I think you're going to see similar seasonality that we've seen in the past. So I, I think, you know, if I were modeling, I think that's pretty good guide is that we probably see some, you know, seasonality that'd be similar to 24. I do think, you know, we've talked about ARR before, that, you know, it is a little bit more difficult to predict quarter to quarter, because of, you know, obviously, you know, a deal slips one day, and, and it's in one quarter, or it's not in that quarter.

Speaker Change: Great and Jim maybe one for you do you have any comments on seasonality that we should factor in when thinking about the next fiscal year.

Jim: Yes, it's a great question.

Jim: And you know historically, we have had significant seasonality.

Jim: And I do think that when we think about different components. We think about revenue I think youre going to see similar seasonality.

Jim: That we've seen in the past so I think if.

Jim: If I were modeling I think that's pretty good guide is that we'd probably see some seasonality that would be similar to 'twenty four.

Jim: I do think we've talked about <unk> before that it is a little bit more difficult to predict quarter to quarter because of.

Jim: A deal slips one day in and its in one quarter or it's not in that quarter. So hence the reason we guide are our only annually, but I do think that we may start to see a little flattening out of that.

James Caci: So hence the reason we guide ARR only annually. But I do think that we may start to see a little flattening out of that. So but again, I think that's a little too hard to predict. And again, we stick to the annual guidance. And then operating income, I do think here, we may see a little bit more flattening out. It's still going to be seasonal, as you've seen this year, but I do think there's an opportunity for that to be, you know, a little bit more flat, and kind of be more correlated with the the revenue.

Jim: So, but again I think that's a little too hard to predict and again, we stick to the annual guidance and then operating income I do thing here, we may see a little bit more flattening out.

Jim: It's still going to be seasonal as you've seen this year, but I do think there's an opportunity.

Jim: For that to be a little bit more.

Jim: Flat.

Jim: And kind of be more correlated with the revenue and then maybe just one last comment on a R. R.

James Caci: And then maybe just one last comment on ARR. And I do think similar to last year, where we kind of didn't guide per quarter, but gave some indications that, you know, historically, Q1 is our lowest ARR quarter, Q2 is a little bit better. And then the second half of the year is better than the first half. And you saw that play out in 24. And I would, I would suggest that that same kind of, you know, that mix will probably be similarly played out in 2025. of it.

Jim: I do think similar to last year, where we kind of didn't guide per quarter, but gave some indications that.

Jim: Historically Q1 is our lowest quarter Q2 was a little bit better and then the second half of the year is better than the first half and you saw that play out in 'twenty, four and I would I would suggest that that same kind of.

Jim:

Jim: You know.

Jim: That mix will probably be similarly played out in 2025.

Unknown Executive: Really appreciate it. Thank you.

Jim: Really appreciate it thank you.

Derek Wood: And the next question comes from Derek Wood with TD Cowan. Please go ahead. Great. Thanks, guys. This is Cole. I'm for Derek here. You've talked about Google a little bit. Can you just, TJ, maybe comment on demand or adoption trends outside of the Microsoft ecosystem across Google and Salesforce? That'd be helpful. So, yeah, we actually see, because we have a data on these other ecosystems, there's tons of experimentation, the enterprise-wide deployment is still in various single percentages in terms of total population, but obviously the opportunity is there. So, we also see Salesforce agent force adoption is also not as fast as they actually would like to see.

Speaker Change: And the next question comes from Derrick Wood with TD Cowen. Please go ahead.

Great. Thanks, guys. This is coal on for Derek here.

Speaker Change: You've talked about Google a little bit can you just TJ, maybe comment on demand or adoption trends outside of the Microsoft ecosystem across Google and Salesforce that'd be helpful.

Speaker Change: So yeah, we actually see.

Speaker Change: Because we have a beta on these other ecosystems.

Speaker Change: There is tons of experimentation the enterprise wide deployment is still.

Speaker Change: So in various single percentages in term of total population.

Speaker Change: But obviously the opportunity is there so we also see salesforce.

Speaker Change: <unk> force.

Speaker Change: Adoption is also not as.

Speaker Change: Fast as they they actually would like to see.

Tianyi Jiang: So, there's cautiousness, of course, in the enterprise, because fundamentally it's based on how well organizations organize their data and to feed them to the AI models for productive output. So, that's where this time is spent to actually organize data in a good, high-fidelity fashion. And this is where governance and data lifecycle and access control of AI become very, very important. And this is where we are involved with a lot of organizations on sorting out that first step. that is coming at an accelerated pace.

Speaker Change: So there is cautiousness of course in the enterprise because fundamentally it's based on how well our organizations organize their data and to feed them to the AI models for productive output.

Speaker Change: So that's where this time is spend to actually organize data in in and even a good high fidelity fashion and this is where governance and data lifecycle and access control of AI become very very important and this is where we are involved with a lot of organization.

Speaker Change: <unk> on sorting out that first step with most AI deployments I would say 70% of effort is actually data preparation and data management and also at Alpert of these AI models. They are increasingly being used as additional inputs. So we do we see that 10% of unstructured data are also now generated by AI. So this.

Speaker Change: Further reinforces the need for.

Speaker Change: Industries.

Speaker Change: Companies all industries to make sure that they have a robust data governance and management framework in place so that they can deploy.

Speaker Change: So we see that we're still in the early endings of enterprise wide AI deployments.

Speaker Change: But we think that given the speed breakneck speed of improvements in the fundamental AI capabilities.

Speaker Change: That is.

Speaker Change: It's coming.

Speaker Change: At accelerated pace.

James Caci: Super helpful, and then just one quick follow-up. talked a little bit about investing back into the sales and marketing org. Could you just break that down for us a little bit? You know, is that across direct sales channel, any go to market tweaks that you might be making into next year will be helpful to hear about. Yeah, sure. I mean, I think it's across both of those that you just mentioned, and maybe even beyond that. I do think, you know, as we pointed out, we've made significant investments in the channel part of our business and really the indirect sales motion.

Speaker Change: Super Helpful. And then just one quick follow up.

Speaker Change: Talked a little bit about investing back into the sales and marketing Org can you just break that down for us a little bit.

Speaker Change: Is that across direct sales channel and the go to market tweaks need margin, making a move next year would be helpful to hear about.

Speaker Change: Yes sure.

Speaker Change: I mean, I think it's across both of those that you just mentioned and maybe even beyond that I do think as.

Speaker Change: As we pointed out we've made significant investments in the channel part of our business and really the indirect sales motion.

James Caci: We'll continue to do that. We're going to expect to see continued progress and improvement in the really the deal flow and the incremental ARR that's coming through the channel. So we would expect that to continue to grow. But obviously, we have a healthy direct business as well. And we're continuing to make investments there. So we're doing that both in terms of people costs, technology to help those individuals, as well as marketing dollars to support their efforts and initiatives. So we're really making and plan to be making these investments. And again, most of this will have contribution in 26 and beyond for the investments that we make in 25.

Speaker Change: We will continue to do that.

Speaker Change: We're going to expect to see continued progress and improvement in the really the deal flow and the incremental <unk> that's coming through the channel. So we would expect that to continue to grow but obviously, we have a healthy direct business as well and we're continuing to make investments there.

Speaker Change: So we're doing that both in terms of people costs technology to help those individuals.

Speaker Change: As well as marketing dollars to support their efforts and initiatives. So we're really making and planned to be making these investments and again most of this will have contribution in 'twenty six and beyond for the investments that we make in 'twenty five because most of 'twenty five is supported by the investments we've made in 'twenty four so.

Unknown Executive: Because most of 25 is supported by the investments we've made in 24. So again, this is very much more forward looking, but it's across the variety of items you just mentioned, and then also different initiatives as helpful caller.

Speaker Change: Again this is very much more forward looking but it's across the variety of items. You just mentioned and then also different initiatives as well.

Unknown Executive: Thank you guys. Thank you.

Speaker Change: Helpful color. Thanks, guys.

Speaker Change: Thank you.

Brett Knoblauch: And the next question comes from Brett Knoblauch with Cantor Fitzgerald. Please go ahead. Hi, guys, thanks for taking my question and congrats on the quarter. Just on your operating income guidance, I think you kind of just touched on it, but it seems like we're not getting that much margin expansion this year, despite, you know, AR growth, I guess, in terms of your guide. Accelerating year-over-year. How should we think about that when it comes to free cash flow as well? This year, free cash flow margin was quite ahead of non-GAAP operating income margin. Should we expect those to be closer as we look at 25%?

Speaker Change: And the next question comes from Brett Knoblauch with Cantor Fitzgerald. Please go ahead.

Brett Knoblauch: Hi, guys. Thanks for taking my question and congrats on the quarter.

Brett Knoblauch: Just on your operating income guidance I think you kind of just touched on it but it seems like we're not getting that much margin expansion. This year. Despite a our growth I guess in terms of your guide.

Brett Knoblauch: Accelerating year over year.

Brett Knoblauch: How should we think about that when it comes to free cash flow as well.

Brett Knoblauch: This year free cash flow margin was quite ahead of call. It non-GAAP operating income margin.

Brett Knoblauch: We expect those to be closer as you look at 25.

James Caci: Yeah, thanks, Brett. Yeah, I think, you know, we definitely touched on, like you mentioned, some of the impact and the investments that we're making that I think do have an impact on the growth. So maybe I won't go back and repeat those. But in terms of the cash flow that you referred to, you're right, we had a very strong cash flow generation this year. I would expect next year that we're going to see improvement in cash flow. You know, probably not the same acceleration that we saw this year, obviously, the step up from 23 to 24.

Brett Knoblauch: Yeah. Thanks, Brett.

Brett Knoblauch: Yes, I think.

Brett Knoblauch: We definitely touched on like you mentioned some of the.

Brett Knoblauch: Some of the impact and the investments that we're making that I think do have an impact on the growth.

Brett Knoblauch: So maybe I won't go back and repeat those but in terms of the cash flow that you referred to you're right. We had a very strong cash flow generation. This year I would expect next year that we're going to see improvement in cash flow.

Brett Knoblauch: Probably not the same acceleration that we saw this year, obviously the step up from 23 to 24.

James Caci: As you called out, we, you know, 14.4% operating income margins compared to 8.1% in 23. Obviously, that was a significant contributor to that growth. But I would expect us to see growth in the free cash flow from operations, but also in free cash flow, you know, over what we just did in 24. But again, you're right, it's really our focus on taking that excess profitability, investing it back into the business, and really setting ourselves up for success in 26 and beyond.

Brett Knoblauch: As you called out 14, 4% operating.

Brett Knoblauch: Income margins compared to eight 1% in 'twenty three obviously that was a significant contributor to that growth, but I would expect us to see growth.

Brett Knoblauch: In the in the free cash.

Brett Knoblauch: Cash flow from operations, but also in free cash flow.

Brett Knoblauch: Over what we just did in 'twenty four but again, you're right. It's really our focus on taking that debt excess profitability investing it back into the business and really setting ourselves up for success in 2006 and beyond.

Unknown Executive: Perfect. I appreciate you guys. Thank Thanks, Brett.

Speaker Change: Perfect I appreciate it guys. Thank you.

Brett Knoblauch: Thanks, Brad Thanks, Brett.

Unknown Executive: This concludes our question and answer session.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to T. J Jeong CEO for any closing remarks.

Tianyi Jiang: I would like to turn the conference back over to TJ Jiang, CEO, for any closing remarks. Thank you, everyone, for joining us today. As we reflect on our performance in Q4 and the full year, I'm incredibly proud of what we have achieved. Our results underscore the strength of our strategy and the dedication of our team. Over the past month, I've had the privilege of meeting with our global teams at our 2025 sales kickoffs around the world. These interactions have left me inspired and confident that we have the right people, the right market position, and the right technology to continue driving our success.

Speaker Change: Thank you everyone for joining us today as we reflect on our performance in Q4 and the full year I'm incredibly proud of all we have achieved our results underscore the strength of our strategy and the dedication of our team over the past month have had the privilege of meeting with our global teams and our 2020.

Five sales kickoffs around the world. These interactions have left me inspired and confident that we have the right people the right market position and the right technology to continue driving our success were excited about the future and the opportunities that lie ahead, we look forward to seeing many of you at our Investor Day next week.

Tianyi Jiang: We're excited about the future and the opportunities that lie ahead.

Tianyi Jiang: We look forward to seeing many of you at our Investor Day next week, where we will delve deeper into the market landscape, our innovative technology, and our business and financial outlook. Together, we'll continue to build on our momentum and achieve our ambitious goals. Thank you.

Speaker Change: Where we will delve deeper into the market landscape, our innovative technology and our business and financial outlook together will continue to build on our momentum and achieve our ambitious gulf's. Thank you.

Speaker Change: Okay.

Unknown Executive: The conference is now concluded. Thank you for attending today's presentation.

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

Unknown Executive: You may now disconnect.