# AvePoint, Inc.: Form 10-Q for the period ended Sep 30, 2023

- Company: [AvePoint, Inc.](/companies/avpt.md) (CIK 1777921)
- Form: 10-Q
- Filed: 2023-11-09
- Accepted by EDGAR: Nov 9, 2023, 17:01 ET
- Period: 2023-09-30
- Accession: 0001437749-23-031307
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1777921/000143774923031307/avpt20230930_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1777921/000143774923031307/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $72.8m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $197.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-07-01 to 2023-09-30 | $20.2m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2023-01-01 to 2023-09-30 | $57.8m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2023-07-01 to 2023-09-30 | $52.6m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2023-01-01 to 2023-09-30 | $139.4m | us-gaap:GrossProfit |
| Research and development | 3 months, 2023-07-01 to 2023-09-30 | $8.6m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2023-01-01 to 2023-09-30 | $26.9m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | −$313.0k | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | −$16.2m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $2.8m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $8.1m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | −$4.2m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | −$26.0m | us-gaap:NetIncomeLoss |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.02 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | −$0.14 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 181,769,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 182,630,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | $13.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $1.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 9 months, 2023-01-01 to 2023-09-30 | $33.6m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-09-30 | $205.8m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $286.9m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $398.2m | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $148.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $184.1m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-09-30 | $200.1m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 43,541 characters.

|  |  |
| --- | --- |
| General and Administrative | General and administrative expenses consist primarily of personnel-related expenses for finance, legal and compliance, human resources, and IT personnel, as well as stock-based compensation expense, external professional services, overhead costs, other administrative functions, depreciation and amortization. Our general and administrative expenses have increased as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, and increased expenses for insurance, investor relations, and professional services. |
| Research and Development | Research and development expenses consist primarily of personnel-related expenses incurred for our engineering and product and design teams, as well as stock-based compensation expense, overhead costs, depreciation and amortization. We have a research and development presence in the United States, China, Singapore and Vietnam. We believe this provides a strategic advantage, allowing us to invest efficiently in both new product development and increasing our existing product capabilities. We believe delivering expanding product functionality is critical to enhancing the success of existing customers while new product development further reinforces our breadth of software solutions. |
| Other Income (Expense), net | Other income (expense), net consists primarily of fair value adjustments on earn-out and warrant liabilities and realized gain/loss for securities. Other income (expense), net also consists of foreign currency remeasurement gains/losses and interest income on corporate funds invested in money market instruments and highly liquid short-term investments. |
| Income Taxes | We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions. Tax laws, regulations, administrative practices, principles, and interpretations in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions. The foreign jurisdictions in which we operate have different statutory tax rates than those of the United States. Accordingly, our effective tax rate could be affected by the relative proportion of foreign to domestic income, use of foreign tax credits, changes in the valuation of our deferred tax assets and liabilities, applicability of any valuation allowances, and changes in tax laws in jurisdictions in which we operate. |

30

### Results of Operations

The below period-to-period comparisons of operating results are not necessarily indicative of results for future periods.

### Comparison of Three Months Ended September 30, 2023 and September 30, 2022

#### Revenue

The components of AvePoint’s revenue during the three months ended September 30, 2023 and 2022 were as follows:

*(in thousands, except percentages)*

| Revenue: | Three Months Ended September 30, 2023 | 2022 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| SaaS | $41,910 | $29,959 | $11,951 | 39.9% |
| Term license and support | 16,293 | 18,288 | (1,995) | (10.9)% |
| Services | 11,194 | 10,458 | 736 | 7.0% |
| Maintenance | 3,363 | 4,034 | (671) | (16.6)% |
| Total revenue | $72,760 | $62,739 | $10,021 | 16.0% |

Total revenue increased 16.0% to $72.8 million for the three months ended September 30, 2023, primarily as a result of an increase in SaaS revenue. For the three months ended September 30, 2023, SaaS revenue increased 39.9% to $41.9 million, as we saw strong customer demand for this offering. For the three months ended September 30, 2023, SaaS revenues represented 58% of total revenue, up from 48% of total revenue in the prior year. The increase in SaaS revenue was partially offset by an expected decrease in both term license and support and maintenance revenue for the three months ended September 30, 2023. Term license revenue for the three months ended September 30, 2023 and 2022 includes $11.1 million and $13.7 million of revenue recognized at a point in time, respectively.

Services revenue is expected to fluctuate as the offerings are not inherently recurring in nature. Additionally, maintenance revenue is expected to continue declining as we have shifted away from the sale of perpetual licenses and towards SaaS and term licenses. Without perpetual license sales, there will be limited opportunities to sell maintenance contracts to new customers. Existing customers have and will continue to transition to SaaS and term licenses, which will continue the decline in maintenance revenue.

Revenue by geographic region for the three months ended September 30, 2023 and 2022 was as follows:

*(in thousands, except percentages)*

|  | Three Months Ended September 30, 2023 | 2022 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| North America | $31,751 | $29,416 | $2,335 | 7.9% |
| EMEA | 21,739 | 19,026 | 2,713 | 14.3% |
| APAC | 19,270 | 14,297 | 4,973 | 34.8% |
| Total | $72,760 | $62,739 | $10,021 | 16.0% |

For the three months ended September 30, 2023, North America revenue increased 7.9% to $31.8 million, driven by a 27.8%, or $3.9 million, increase in SaaS revenue, partially offset by a $1.6 million net decrease in term license and support, services, and maintenance revenues. EMEA revenues increased 14.3% to $21.7 million, driven by a 51.0%, or $5.3 million, increase in SaaS revenue, partially offset by a combined $2.6 million decrease in term license and support, services and maintenance revenues. APAC revenues increased 34.8% to $19.3 million, driven by a 50.0%, or $2.7 million, increase in SaaS revenue, a 42.6%, or $2.3 million, increase in services revenue, and a combined $0.1 million decrease in term license and support and maintenance revenues.

#### Cost of Revenue, Gross Profit, and Gross Margin

Cost of revenue, gross profit, and gross margin during the three months ended September 30, 2023 and 2022 were as follows:

*(in thousands, except percentages)*

| Cost of revenue: | Three Months Ended September 30, 2023 | 2022 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| SaaS | $9,561 | $7,164 | $2,397 | 33.5% |
| Term license and support | 484 | 524 | (40) | (7.6)% |
| Services | 9,922 | 9,218 | 704 | 7.6% |
| Maintenance | 189 | 192 | (3) | (1.6)% |
| Total cost of revenue | $20,156 | $17,098 | $3,058 | 17.9% |
| Gross profit | 52,604 | 45,641 | 6,963 | 15.3% |
| Gross margin | 72.3% | 72.7% | — | — |
| GAAP cost of revenue | $20,156 | $17,098 | $3,058 | 17.9% |
| Stock-based compensation expense | (806) | (667) | (139) | 20.8% |
| Amortization of acquired intangible assets | (241) | (133) | (108) | 81.2% |
| Non-GAAP cost of revenue | $19,109 | $16,298 | $2,811 | 17.2% |
| Non-GAAP gross profit | 53,651 | 46,441 | 7,210 | 15.5% |
| Non-GAAP gross margin | 73.7% | 74.0% | — | — |

Cost of revenue increased 17.9% to $20.2 million for the three months ended September 30, 2023, primarily driven by a $2.0 million increase from higher aggregate hosting costs resulting from increased SaaS revenue, and a $0.8 million increase related to higher personnel costs.

#### Operating Expenses

#### Sales and Marketing

Sales and marketing expenses during the three months ended September 30, 2023 and 2022 were as follows:

*(in thousands, except percentages)*

|  | Three Months Ended September 30, 2023 | 2022 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Sales and marketing | $28,436 | $27,425 | $1,011 | 3.7% |
| Percentage of revenue | 39.1% | 43.7% | — | — |
| GAAP sales and marketing | $28,436 | $27,425 | $1,011 | 3.7% |
| Stock-based compensation expense | (2,358) | (2,847) | 489 | (17.2)% |
| Amortization of acquired intangible assets | (112) | (96) | (16) | 16.7% |
| Non-GAAP sales and marketing | $25,966 | $24,482 | $1,484 | 6.1% |
| Non-GAAP percentage of revenue | 35.7% | 39.0% | — | — |

Sales and marketing expenses increased 3.7% to $28.4 million for the three months ended September 30, 2023, primarily driven by higher commission expense and third-party marketing spend, partially offset by lower personnel costs.

#### General and Administrative

General and administrative expenses during the three months ended September 30, 2023 and 2022 were as follows:

*(in thousands, except percentages)*

|  | Three Months Ended September 30, 2023 | 2022 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| General and administrative | $15,838 | $16,429 | $(591) | (3.6)% |
| Percentage of revenue | 21.8% | 26.2% | — | — |
| GAAP general and administrative | $15,838 | $16,429 | $(591) | (3.6)% |
| Stock-based compensation expense | (5,264) | (5,060) | (204) | 4.0% |
| Non-GAAP general and administrative | $10,574 | $11,369 | $(795) | (7.0)% |
| Non-GAAP percentage of revenue | 14.5% | 18.1% | — | — |

General and administrative expenses decreased 3.6% to $15.8 million for the three months ended September 30, 2023. The decrease was primarily driven by a $0.2 million decrease in facilities and related costs and a $0.3 million decrease in liability insurance costs.

#### Research and Development

Research and development expenses during the three months ended September 30, 2023 and 2022 were as follows:

*(in thousands, except percentages)*

|  | Three Months Ended September 30, 2023 | 2022 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Research and development | $8,643 | $9,214 | $(571) | (6.2)% |
| Percentage of revenue | 11.9% | 14.7% | — | — |
| GAAP research and development | $8,643 | $9,214 | $(571) | (6.2)% |
| Stock-based compensation expense | (857) | (1,035) | 178 | (17.2)% |
| Non-GAAP research and development | $7,786 | $8,179 | $(393) | (4.8)% |
| Non-GAAP percentage of revenue | 10.7% | 13.0% | — | — |

Research and development expenses decreased 6.2% to $8.6 million for the three months ended September 30, 2023 , primarily driven by a $0.7 million decrease in personnel costs, partially offset by a $0.1 million increase in rent and travel costs.

#### Income Tax Provision

Income tax expense during the three months ended September 30, 2023 and 2022 was as follows:

*(in thousands, except percentages)*

|  | Three Months Ended September 30, 2023 | 2022 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Income tax expense | $2,841 | $336 | $2,505 | 745.5% |

AvePoint's income tax expense for the three months ended September 30, 2023 was $2.8 million, as compared to a tax expense of $0.3 million for the three months ended September 30, 2022. The effective tax rate was (204.5)% for the three months ended September 30, 2023, compared to (5.2)% for the three months ended September 30, 2022. The change in effective tax rates was primarily due to the mix of pre-tax income (loss) results by jurisdictions taxed at different rates, certain jurisdictions with separate tax expense calculated, impact of foreign inclusions, stock-based compensation, and tax losses for which no benefit can be taken.

In assessing the need for a valuation allowance, the Company has considered all available positive and negative evidence including its historical levels of income, expectations of future taxable income, future reversals of existing taxable temporary differences and ongoing tax planning strategies. If in the future, the Company determines it is more likely than not that deferred tax assets will not be realized, the Company may set up a valuation allowance, which may result in income tax expense in the Company’s condensed consolidated statements of operations and condensed consolidated statements of comprehensive loss.

### Comparison of Nine Months Ended September 30, 2023 and September 30, 2022

#### Revenue

The components of AvePoint’s revenue during the nine months ended September 30, 2023 and 2022 were as follows:

*(in thousands, except percentages)*

| Revenue: | Nine Months Ended September 30, 2023 | 2022 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| SaaS | $115,701 | $84,131 | $31,570 | 37.5% |
| Term license and support | 40,474 | 42,501 | (2,027) | (4.8)% |
| Services | 31,007 | 29,231 | 1,776 | 6.1% |
| Maintenance | 10,019 | 12,868 | (2,849) | (22.1)% |
| Total revenue | $197,201 | $168,731 | $28,470 | 16.9% |

Total revenue increased 16.9% to $197.2 million for the nine months ended September 30, 2023, primarily as a result of an increase in SaaS revenue. For the nine months ended September 30, 2023, SaaS revenue increased 37.5% to $115.7 million, as we saw strong customer demand for this offering. For the nine months ended September 30, 2023, SaaS revenues represented 59% of total revenue, up from 50% of total revenue in the prior year. The increase in SaaS revenue was partially offset by an expected decrease in both term license and support and maintenance revenue for the nine months ended September 30, 2023. Term license revenue for the nine months ended September 30, 2023 and 2022 includes $24.9 million and $29.4 million of revenue recognized at a point in time, respectively.

Revenue by geographic region for the nine months ended September 30, 2023 and 2022 was as follows:

*(in thousands, except percentages)*

|  | Nine Months Ended September 30, 2023 | 2022 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| North America | $84,484 | $75,648 | $8,836 | 11.7% |
| EMEA | 60,800 | 51,938 | 8,862 | 17.1% |
| APAC | 51,917 | 41,145 | 10,772 | 26.2% |
| Total | $197,201 | $168,731 | $28,470 | 16.9% |

For the nine months ended September 30, 2023, North America revenue increased 11.7% to $84.5 million, driven by a 31.4%, or $12.2 million, increase in SaaS revenue, partially offset by a $3.4 million combined net decrease in term license and support, services, and maintenance revenues. EMEA revenues increased 17.1% to $60.8 million, driven by a 42.2%, or $12.6 million, increase in SaaS revenue, partially offset by a $3.8 million combined net decrease in term license and support, services, and maintenance revenues. APAC revenues increased 26.2% to $51.9 million, driven by a 44.1%, or $6.8 million, increase in SaaS revenue and a $4.3 million increase in services revenue, partially offset by a $0.3 million net decrease in term license and support and maintenance revenue.

#### Cost of Revenue, Gross Profit, and Gross Margin

Cost of revenue, gross profit, and gross margin during the nine months ended September 30, 2023 and 2022 were as follows:

*(in thousands, except percentages)*

| Cost of revenue: | Nine Months Ended September 30, 2023 | 2022 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| SaaS | $26,586 | $18,934 | $7,652 | 40.4% |
| Term license and support | 1,441 | 1,600 | (159) | (9.9)% |
| Services | 29,231 | 26,204 | 3,027 | 11.6% |
| Maintenance | 584 | 748 | (164) | (21.9)% |
| Total cost of revenue | $57,842 | $47,486 | $10,356 | 21.8% |
| Gross profit | 139,359 | 121,245 | 18,114 | 14.9% |
| Gross margin | 70.7% | 71.9% | — | — |
| GAAP cost of revenue | $57,842 | $47,486 | $10,356 | 21.8% |
| Stock-based compensation expense | (2,292) | (1,948) | (344) | 17.7% |
| Amortization of acquired intangible assets | (725) | (224) | (501) | 223.7% |
| Non-GAAP cost of revenue | $54,825 | $45,314 | $9,511 | 21.0% |
| Non-GAAP gross profit | 142,376 | 123,417 | 18,959 | 15.4% |
| Non-GAAP gross margin | 72.2% | 73.1% | — | — |

Cost of revenue increased 21.8% to $57.8 million for the nine months ended September 30, 2023, primarily driven by a $6.4 million increase from higher aggregate hosting costs resulting from increased SaaS revenue and a $3.1 million increase related to higher personnel costs.

#### Operating Expenses

#### Sales and Marketing

Sales and marketing expenses during the nine months ended September 30, 2023 and 2022 were as follows:

*(in thousands, except percentages)*

|  | Nine Months Ended September 30, 2023 | 2022 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Sales and marketing | $82,978 | $82,002 | $976 | 1.2% |
| Percentage of revenue | 42.1% | 48.6% | — | — |
| GAAP sales and marketing | $82,978 | $82,002 | $976 | 1.2% |
| Stock-based compensation expense | (7,267) | (8,705) | 1,438 | (16.5)% |
| Amortization of acquired intangible assets | (381) | (204) | (177) | 86.8% |
| Non-GAAP sales and marketing | $75,330 | $73,093 | $2,237 | 3.1% |
| Non-GAAP percentage of revenue | 38.2% | 43.3% | — | — |

Sales and marketing expenses increased 1.2% to $83.0 million for the nine months ended September 30, 2023, which was primarily driven by higher commission expense, partially offset by lower third-party marketing spend and personnel costs.

#### General and Administrative

General and administrative expenses during the nine months ended September 30, 2023 and 2022 were as follows:

*(in thousands, except percentages)*

|  | Nine Months Ended September 30, 2023 | 2022 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| General and administrative | $45,679 | $48,411 | $(2,732) | (5.6)% |
| Percentage of revenue | 23.2% | 28.7% | — | — |
| GAAP general and administrative | $45,679 | $48,411 | $(2,732) | (5.6)% |
| Stock-based compensation expense | (14,551) | (14,825) | 274 | (1.8)% |
| Non-GAAP general and administrative | $31,128 | $33,586 | $(2,458) | (7.3)% |
| Non-GAAP percentage of revenue | 15.8% | 19.9% | — | — |

General and administrative expenses decreased 5.6% to $45.7 million for the nine months ended September 30, 2023. The decrease was primarily driven by a $1.1 million decrease in personnel related costs, a $0.7 million decrease in facilities expenses, and a $0.5 million decrease in insurance expenses.

#### Research and Development

Research and development expenses during the nine months ended September 30, 2023 and 2022 were as follows:

*(in thousands, except percentages)*

|  | Nine Months Ended September 30, 2023 | 2022 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Research and development | $26,931 | $23,850 | $3,081 | 12.9% |
| Percentage of revenue | 13.7% | 14.1% | — | — |
| GAAP research and development | $26,931 | $23,850 | $3,081 | 12.9% |
| Stock-based compensation expense | (2,865) | (2,809) | (56) | 2.0% |
| Non-GAAP research and development | $24,066 | $21,041 | $3,025 | 14.4% |
| Non-GAAP percentage of revenue | 12.2% | 12.5% | — | — |

Research and development expenses increased 12.9% to $26.9 million for the nine months ended September 30, 2023, primarily driven by a $2.6 million increase in headcount and personnel costs. The increase in headcount further supports the Company's continued efforts to develop new offerings and improve its existing offerings.

#### Income Tax Provision

Income tax expense during the nine months ended September 30, 2023 and 2022 was as follows:

*(in thousands, except percentages)*

|  | Nine Months Ended September 30, 2023 | 2022 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Income tax expense | $8,132 | $99 | $8,033 | 8,114.1% |

AvePoint's income tax expense for the nine months ended September 30, 2023 was $8.1 million, as compared to a tax expense of $0.1 million for the nine months ended September 30, 2022. The effective tax rate was (45.7)% for the nine months ended September 30, 2023, compared to (0.4)% for the nine months ended September 30, 2022. The change in effective tax rates was primarily due to the mix of pre-tax income (loss) results by jurisdictions taxed at different rates, certain jurisdictions with separate tax expense calculated, impact of foreign inclusions, stock-based compensation, and tax losses for which no benefit can be taken.

In assessing the need for a valuation allowance, the Company has considered all available positive and negative evidence including its historical levels of income, expectations of future taxable income, future reversals of existing taxable temporary differences and ongoing tax planning strategies. If in the future, the Company determines it is more likely than not that deferred tax assets will not be realized, the Company may set up a valuation allowance, which may result in income tax expense in the Company’s condensed consolidated statements of operations and condensed consolidated statements of comprehensive loss.

### Certain Non-GAAP Financial Measures

We believe that, in addition to our financial results determined in accordance with GAAP, non-GAAP operating income (loss) and non-GAAP operating margin are useful in evaluating our business, results of operations, and financial condition.

### Non-GAAP Operating Income (loss) and Non-GAAP Operating Margin

Non-GAAP operating income (loss) and non-GAAP operating margin are non-GAAP financial measures that our management uses to assess our overall performance. We define non-GAAP operating income (loss) as GAAP operating income (loss) plus stock-based compensation and the amortization of acquired intangible assets. We define non-GAAP operating margin as non-GAAP operating income divided by revenue. We believe non-GAAP operating income (loss) and non-GAAP operating margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these metrics eliminate the effects of stock-based compensation which has had historical volatility from period to period due to marked-to-market securities, and of acquired intangible assets, which are unrelated to current operations and are neither comparable to the prior period nor predictive of future results. We believe the elimination of the effect of variability caused by stock-based compensation expense and the amortization of acquired assets, both of which are non-cash expenses, provides a better representation as to the overall operating performance of the Company. We use non-GAAP financial measures (a) to evaluate our historical and prospective financial performance and trends as well as our performance relative to our peers, (b) to set and approve spending budgets, (c) to allocate resources, (d) to measure operational profitability and the accuracy of forecasting, and (e) to assess financial discipline over operational expenditures.

Non-GAAP operating income (loss) and non-GAAP operating margin should not be considered as an alternative to operating income, operating margin or any other performance measures derived in accordance with GAAP as measures of performance. Non-GAAP operating income (loss) and non-GAAP operating margin should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.

The following table presents a reconciliation of (i) non-GAAP operating income (loss) from the most comparable GAAP measure, operating income, and (ii) non-GAAP operating margin from the most comparable GAAP measure, operating margin, for the periods presented:

*(in thousands, except percentages)*

|  | Three Months Ended September 30, 2023 | 2022 | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| GAAP operating loss | $(313) | $(7,427) | $(16,229) | $(33,018) |
| GAAP operating margin | (0.4)% | (11.8)% | (8.2)% | (19.6)% |
| Add: |  |  |  |  |
| Stock-based compensation | 9,285 | 9,609 | 26,975 | 28,287 |
| Amortization of acquired intangible assets | 353 | 229 | 1,106 | 428 |
| Non-GAAP operating income (loss) | $9,325 | $2,411 | $11,852 | $(4,303) |
| Non-GAAP operating margin | 12.8% | 3.8% | 6.0% | (2.6)% |

### Liquidity and Capital Resources

As of September 30, 2023, we had $205.8 million in cash and cash equivalents and $3.5 million in short-term investments.

Our short-term liquidity needs primarily include working capital for sales and marketing, research and development, and continued innovation. Our long-term capital requirements will depend on many factors, including our growth rate, levels of revenue, the expansion of sales and marketing activities, market acceptance of our platform, the results of business initiatives, and the timing of new product introductions.

We also maintained a loan and security agreement with HSBC Venture Bank USA, Inc., (“***HSBC Venture”***) as lender, for a revolving line of credit of up to $30.0 million with an accordion feature that provides up to $20.0 million of additional borrowing capacity we were permitted to draw upon at our request. The line bore interest at a rate equal to SOFR plus 3.6%. The line carried an unused fee of 0.5%. We were required to maintain a specified adjusted quick ratio and a minimum annual recurring revenue tested by HSBC Venture each quarter. We had pledged, assigned and granted HSBC Venture a security interest in all shares of our subsidiaries, future proceeds and assets (except for excluded assets, including material intellectual property) as a security for the performance of the loan and security agreement obligations. The line matured on September 7, 2023.

We currently maintain a loan and security agreement (the "***Loan Agreement***"), dated as of November 3, 2023, with HSBC Bank USA, National Association, (“***HSBC”***) as lender, for a revolving line of credit of up to $30.0 million with an accordion feature that provides up to $20.0 million of additional borrowing capacity we may to draw upon at our request. The line currently bears interest at a rate equal to term SOFR plus 3.00% to 3.25% depending on the Consolidated Total Leverage Ratio (as defined in the Loan Agreement). The line carries an unused fee ranging from .50% to .55% depending on the Consolidated Total Leverage Ratio. The line will mature on November 3, 2026. We are required to maintain a minimum Consolidated Fixed Charge Coverage Ratio (as defined in the Loan Agreement) as well as a maximum Consolidated Total Leverage Ratio, tested by HSBC each quarter. We pledged, assigned, and granted HSBC a security interest in all shares of our subsidiaries, future proceeds and assets (except for excluded assets, including material intellectual property) as a security for the performance of the loan and security agreement obligations.

We believe that our existing cash, cash equivalents and short-term investments, our cash flows from operating activities, and our borrowing capacity under our credit facility with HSBC are sufficient to meet our working capital and capital expenditure needs for at least the next twelve months. In the future, we may attempt to raise additional capital through the sale of additional equity or debt financing. The sale of additional equity would be dilutive to our stockholders. Additional debt financing could result in increased debt service obligations and more restrictive financial and operational covenants.

### Cash Flows

The following table sets forth a summary of AvePoint’s cash flows for the periods indicated.

*(in thousands)*

|  | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Net cash provided by (used in) operating activities | $13,284 | $(6,893) |
| Net cash used in investing activities | (4,224) | (22,817) |
| Net cash used in financing activities | (29,809) | (17,760) |

#### Operating Activities

Net cash provided by operating activities for the nine months ended September 30, 2023 was $13.3 million, reflecting AvePoint’s net loss of $25.9 million, adjusted for non-cash items of $43.9 million and net cash outflows of $4.7 million from changes in its operating assets and liabilities. The primary drivers of non-cash items were stock-based compensation which reflects ongoing compensation and an increase in the mark to market value of earn-out and warranty liabilities. The drivers of changes in operating assets and liabilities are seasonal in nature. These drivers are related to a decrease in accounts receivable due primarily to timing of customer invoices and decrease in prepaid expenses and other current assets primarily related to prepaid insurance, an increase in deferred revenue and a decrease in accrued expenses primarily due to accrued bonuses, commissions and VAT/sales tax payable.

Net cash used in operating activities for the nine months ended September 30, 2022 was $6.9 million, reflecting AvePoint’s net loss of $27.0 million, adjusted for non-cash items of $32.3 million and net cash outflows of $12.2 million from changes in its operating assets and liabilities. The primary drivers of non-cash items were stock-based compensation which reflects ongoing compensation partially offset by a decrease in the mark to market value of earn-out and warranty liabilities. The drivers of changes in operating assets and liabilities are seasonal in nature. These drivers are related to a decrease in accounts receivable due primarily to timing of customer invoices and decrease in prepaid expenses and other current assets primarily related to prepaid insurance and offset by a decrease in accrued expenses primarily due to the payment of accrued bonuses and commissions.

#### Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2023 was $4.2 million. It primarily consisted of $2.1 million of purchases of short-term investments, $1.5 million of purchases of property and equipment, and $1.0 million from the capitalization of internal use software, and partially offset by $1.3 million in the maturity of short-term investments.

Net cash used in investing activities for the nine months ended September 30, 2022 was $22.8 million. It primarily consisted of $180.5 million of purchases of short-term investments, $18.6 million as a result of acquisition activities, $3.4 million of purchases of property and equipment, and $1.2 million capitalization of internal use software, partially offset by $180.8 million in the maturity of short-term investments.

#### Financing Activities

Net cash used in financing activities for the nine months ended September 30, 2023 was $29.8 million. The primary driver of cash used in financing activities was $33.6 million in repurchases of common stock under the previously announced Share Repurchase Program that authorizes us to repurchase up to $150 million of our common shares (the "***Share Repurchase Program***"), partially offset by $3.9 million of proceeds from the exercise of stock options.

Net cash used in financing activities for the nine months ended September 30, 2022 was $17.8 million. The primary driver of cash used in financing activities was $19.6 million in repurchases of common stock under the Share Repurchase Program, partially offset by $1.8 million of proceeds from the exercise of stock options.

#### Indebtedness

#### Credit Facility

We maintained a line of credit under a loan and security agreement, as amended, (the “***Amended Loan Agreement”***) with HSBC Venture, as the lender. See “*Note 7 - Line of Credit ”* in Part I, Item 1 “*Financial Statements”* of this Quarterly Report on Form 10-Q.

The Amended Loan Agreement provided for a revolving line of credit of up to $30.0 million and an additional $20.0 million accordion feature for additional capital we were permitted to draw upon at our request. Borrowings under the line bore interest at a rate equal to SOFR plus 3.6%. The line carried an unused fee of 0.5% per year. Any proceeds of borrowings under the Amended Loan Agreement were used for general corporate purposes.

On a consolidated basis with our subsidiaries, we were required to maintain a specified adjusted quick ratio and minimum annual recurring revenue, tested by HSBC Venture each quarter. Pursuant to the Amended Loan Agreement, we pledged, assigned, and granted HSBC Venture a security interest in all shares of our subsidiaries, future proceeds, and certain assets as security for our obligations under the Loan Agreement. Our line of credit under the Amended Loan Agreement matured on September 7, 2023.

Prior to this maturity, we were in compliance with all covenants under the Amended Loan Agreement. We did not at any time borrow under the Amended Loan Agreement. The description of the Amended Loan Agreement is qualified in its entirety by the full text of the form of such agreement, a copy of which is attached as an exhibit to our Annual Report.

On November 3, 2023, we entered into the Loan Agreement with HSBC, as the lender. See “*Note 7 - Line of Credit ”* in Part I, Item 1 “*Financial Statements”* of this Quarterly Report on Form 10-Q.

The Loan Agreement provides for a revolving line of credit of up to $30.0 million and an additional $20.0 million accordion feature for additional capital we may draw upon at our request. Borrowings under the line currently bear interest at a rate equal to term SOFR plus 3.00% to 3.25% depending on the Consolidated Total Leverage Ratio (as defined in the Loan Agreement). The line carries an unused fee ranging from .50% to .55% depending on the Consolidated Total Leverage Ratio. Any proceeds of borrowings under the Loan Agreement will be used for general corporate purposes.

On a consolidated basis with our subsidiaries, we are required to maintain a minimum Consolidated Fixed Charge Coverage Ratio as well as a maximum Consolidated Total Leverage Ratio, tested by HSBC each quarter. Pursuant to the Loan Agreement, we pledged, assigned, and granted HSBC a security interest in all shares of our subsidiaries, future proceeds, and certain assets as security for our obligations under the Loan Agreement. Our line of credit under the Loan Agreement will mature on November 3, 2026.

To date, we are in compliance with all covenants under the Loan Agreement. We have not at any time borrowed under the Loan Agreement. The description of the Loan Agreement is qualified in its entirety by the full text of the form of such agreement, a copy of which is attached as an exhibit to this Quarterly Report.

#### Leasing Activities

We are obligated under various non-cancelable operating leases for office space. The initial terms of the leases expire on various dates through 2030. As of September 30, 2023, the commitments related to these operating leases is $17.1 million, of which $6.1 million is due in the next twelve months.

### Operating Segment Information

We operate in one segment. Our products and services are sold throughout the world, through direct and indirect sales channels. Our chief operating decision maker (the “***CODM”***) is our Chief Executive Officer. The CODM makes operating performance assessment and resource allocation decisions on a global basis. The CODM does not receive discrete financial information about asset allocation, expense allocation, or profitability by product or geography. See the section titled “*Notes to Condensed Consolidated Financial Statements”* (Part I, Item 1 of this Quarterly Report) under the sub-heading “*Note 15 – Segment Information”* for more information.

### Critical Accounting Policies and Estimates

Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. We also make estimates and assumptions on the reported revenue generated and reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that our management believes are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

While our significant accounting policies are described in more detail in the section titled “*Notes to Condensed Consolidated Financial Statements”* (Part I, Item 1 of this Quarterly Report), we believe the following critical accounting policies and estimates are most important to understanding and evaluating our reported financial results.

#### Revenue Recognition

We derive revenue from four primary sources: SaaS, term license and support, services, and maintenance. Many of our contracts with customers include multiple performance obligations. Judgement is required in determining whether each performance obligation is distinct. Our products and services generally do not require a significant amount of integration or interdependency; therefore, our products and services are generally not combined. We allocate the transaction price for each contract to each performance obligation based on the relative standalone selling price (“***SSP”***) for each performance obligation within each contract.

We use judgment in determining the SSP for products and services. For substantially all performance obligations except term licenses, we are able to establish the SSP based on the observable prices of products or services sold separately in comparable circumstances to similar customers. We typically establish an SSP range for our products and services which is reassessed on a periodic basis or when facts and circumstances change. Term licenses are sold only as a bundled arrangement that includes the rights to a term license and support. In determining the SSP of license and support in a term license arrangement we applied observable inputs using the value relationship between support and term license, the value relationship between support and perpetual licenses, the average economic life of our products, software renewal rates and the price of the bundled arrangement in relation to the perpetual licensing approach. Using a combination of the relative fair value method or the residual value method the SSP of the performance obligations in an arrangement was allocated to each performance obligation within a sales arrangement.

#### Company Earn-Out Shares

In evaluation of the Company Earn-Out Shares and Company Earn-Out RSUs, management determined that the Company Earn-Out Shares represent derivatives to be marked to market at each reporting period, while the Company Earn-Out RSUs represent equity under ASC 718. Refer to *"Note 13 — Stock-Based Compensation"* for more information regarding the Company Earn-Out RSUs.

In order to capture the market conditions associated with the Company Earn-Out Shares, the Company applied an approach that incorporated a Monte Carlo simulation, which involved random iterations that took different future price paths over the Sponsor Earn-Out Shares’ contractual life based on the appropriate probability distributions. The fair value was determined by taking the average of the fair values under each Monte Carlo simulation trial. The Monte Carlo model requires highly subjective assumptions including the expected volatility of the price of our common stock, and the expected term of the earn-out shares.

### Economic Conditions, Challenges, and Risks

The markets for software and cloud-based services are dynamic and highly competitive. Our competitors are developing new software while also deploying competing cloud-based services for consumers and businesses. Customer preferences evolve rapidly, and choices in hardware, products, and devices can and do influence how users access services in the cloud, and in some cases, the user’s choice of which suite of cloud-based services to use. We must continue to evolve and adapt over an extended time in pace with this changing environment. The investments we are making in infrastructure, research and development, marketing, and geographic expansion will continue to increase our operating costs and may decrease our operating margins.

Our success is highly dependent on our ability to attract and retain qualified employees. We hire a mix of university and industry talent worldwide. We compete for talented individuals globally by offering an exceptional working environment, broad customer reach, scale in resources, the ability to grow one’s career across many different products and businesses, and competitive compensation and benefits.

Aggregate demand for our software, services, and devices is correlated to global macroeconomic and geopolitical factors, which remain dynamic. By way of example, Russia's ongoing military action against Ukraine has created general macroeconomic uncertainty. While we have only limited and largely immaterial economic, financial, and operational exposure to Russia or Belarus (or any individuals and entities connected to Russian or Belarusian political, business, and financial organizations), we are nevertheless monitoring the developments as they unfold in order to react accordingly. The impact of the conflict on our operational and financial performance may depend on future developments that cannot be predicted; we do not, however, believe the impacts to be material at this time.

Our international operations provide a significant portion of our total revenue and expenses. Many of these revenue and expenses are denominated in currencies other than the U.S. dollar. As a result, changes in foreign exchange rates may significantly affect revenue and expenses. Due to the global nature of the Company, we do have a natural hedge against material changes in foreign exchange rates. Refer to the section titled “*Risk Factors”* (Part I, Item 1A of our Annual Report) for a discussion of these factors and other risks.

### Seasonality

Our quarterly revenue fluctuates and does not necessarily grow sequentially when measuring any one fiscal quarter's revenue with another (e.g. comparing the fourth fiscal quarter of fiscal year 2022 with the first fiscal quarter of fiscal year 2023). Historically, our third and fourth quarters have been our highest revenue quarters, however those results are not necessarily indicative of future quarterly revenue or full year results. Higher third and fourth quarter revenue is driven primarily by increased sales resulting from our customers’ fiscal year ends. Additionally, new product and service introductions (including the timing of those introductions) can significantly impact revenue. Revenue can also be affected when customers anticipate a product introduction. Our operating expenses have generally increased sequentially due to increases in personnel in connection with the expansion of our business.

### Emerging Growth Company Accounting Election

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable. The Company is currently an "emerging growth company" as defined in Section 2(a) of the Securities Act.

Because the market value of our common stock held by non-affiliates exceeded $700.0 million as of June 30, 2023, we will meet the conditions to be deemed a "large-accelerated filer" as of December 31, 2023, and will, consequently, no longer be an emerging growth company as of that date. We will be subject to the regulations applicable to all large-accelerated filers as of December 31, 2023.

### Recently Issued and Adopted Accounting Pronouncements

For information about recent accounting pronouncements, see “*Note 2 - Summary of Significant Accounting Policies”* in Part I, Item 1 “*Financial Statements”* of this Quarterly Report on Form 10-Q.

## Market risk

As filed, 2,356 characters.

We are exposed to potential economic risk from interest rates, foreign exchange rates, and concentration of credit. We have considered changes in our exposure to market risks during the nine months ended September 30, 2023, and have determined that there have been no material changes to our exposure to market risks from those described in our Annual Report. However, we have provided the following information to supplement or update our disclosures in our Annual Report.

### Interest Rate Risk

We had cash and cash equivalents, marketable securities, and short-term deposits of $209.3 million as of September 30, 2023. We hold cash and cash equivalents, marketable securities, and short-term deposits for working capital purposes. Our cash and cash equivalents are held in cash deposits and money market funds. Due to the short-term nature of these instruments, we believe that it does not have any material exposure to changes in its fair value due to changes in interest rates. Declines in interest rates, however, would reduce our future interest income. The effect of a hypothetical 10% change in interest rates would not have a material negative impact on our condensed consolidated financial statements. To the extent we enter into other long-term debt arrangements in the future, we would be subject to fluctuations in interest rates which could have a material impact on our future financial condition and results of operation.

### Foreign Currency Exchange Risk

Fluctuations in foreign currencies impact the amount of total assets and liabilities that we report for our foreign subsidiaries upon the translation of these amounts into U.S. Dollars. In particular, the amount of cash, cash equivalents and marketable securities that we report in U.S. Dollars for a significant portion of the cash held by these subsidiaries is subject to translation variance caused by changes in foreign currency exchange rates as of the end of each respective reporting period, the offset to which is substantially recorded to accumulated other comprehensive income on our condensed consolidated balance sheets and is also presented as a line item in its condensed consolidated statements of comprehensive income.

### Concentration of Credit Risk

We deposit our cash with financial institutions, and, at times, such balances may exceed federally insured limits.

## Controls and procedures

As filed, 6,957 characters.

We maintain “disclosure controls and procedures,” as defined in Rule 13a–15(e) and Rule 15d–15(e) under the Exchange Act, that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer (in his capacity as principal executive officer) and our Chief Financial Officer (in his capacity as principal financial and accounting officer), as appropriate to allow timely decisions regarding required disclosure.

### Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act, as of the end of the period covered by this Quarterly Report. Based upon that evaluation, our principal executive officer and principal financial and accounting officer concluded that our disclosure controls and procedures were not effective as of December 31, 2022 or during the nine months ended September 30, 2023 due to the material weaknesses described below. Notwithstanding such material weaknesses in internal control over financial reporting, our principal executive officer and principal financial and accounting officer have concluded that our audited Consolidated Financial Statements included in this Quarterly Report present fairly, in all material respects, our financial position, results of operations, and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles.

### Material Weaknesses in Internal Control over Financial Reporting

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. Because the control deficiencies described below could have resulted in a material misstatement of our annual or interim financial statements, we determined that these deficiencies constitute material weaknesses. Based upon the evaluation described above, our management identified the following material weaknesses in internal control over financial reporting in fiscal year 2020 which continued to exist during the nine months ended September 30, 2023:

- the completeness and accuracy of financial accounting, reporting and disclosures;
- the identification, review and accounting for nonroutine transactions and/or complex accounting transactions; and
- segregation of duties with respect to the processing of financial transactions.

### Remediation of Material Weaknesses

Our management has been and continues to be committed to remediating these material weaknesses and has identified and implemented several steps to enhance our internal controls over financial reporting. We have implemented a remediation plan (the “***Remediation Plan”***), the actions under which coincide with and are incorporated into our overarching Sarbanes-Oxley Act of 2002 compliance implementation plan. The Remediation Plan actions include, but are not limited to:

- the hiring of personnel with technical accounting and financial reporting experience to further enhance our ability to accurately and expediently respond to increased accounting and financial complexities and increased resource demand with respect thereto, and to aid in further identification and oversight with respect to disclosure control activities in response;
- the engagement of external consultants in the assistance of the evaluation of complex accounting matters;
- the establishment of formalized internal controls to review and maintain segregation of duties between appropriate control operators; and
- the implementation of improved accounting and financial reporting procedures to enhance the completeness and accuracy of our financial accounting, reporting, and disclosures.

We have implemented documented policies and procedures for, and are in the process of testing the implementation and operating effectiveness of, the newly designed controls. The material weakness in our internal control over financial reporting will not be considered remediated until the newly designed controls operate for a sufficient period of time. In addition, we may discover additional material weaknesses that require additional time and resources to remediate and we may decide to take additional measures to address the material weaknesses or modify the remediation steps described above.

### Changes in Internal Control Over Financial Reporting

Other than the Remediation Plan discussed above and the ongoing implementation of measures under the Remediation Plan designed to accurately maintain our financial records, enhance the flow of financial information, improve data management, and provide timely information to our management team, there have been no changes in internal control over financial reporting during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### Inherent Limitations on Effectiveness of Controls

Our management, including our principal executive officer and principal financial and accounting officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in any control system, misstatements due to error or fraud may occur and not be detected.

### Part II

### Items 1 and 1A

## Risk factors

As filed, 518 characters.

Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “*Risk Factors”* in our Annual Report, which risks and uncertainties could affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock. There have been no material changes to the risk factors previously disclosed in our Annual Report. We urge you to read the risk factors in our Annual Report.

### Part II

### Items 2, 3, 4, and 5

Filed Nov 9, 2023.
Source: SEC EDGAR, the filing index for accession 0001437749-23-031307. Last ingested by Listed: Nov 5, 2026, 17:33 ET. No prices; not investment advice.