We came across a bullish thesis on AvePoint, Inc. (AVPT) on Substack by Shareholdersunite Essentials. In this article, we will summarize the bulls’ thesis on AVPT. AvePoint, Inc. (AVPT)’s share was trading at $17.05 as of Feb 24th.
A tech savvy businessperson working on multiple devices, utilizing the company’s cloud-based platform.
AvePoint is capitalizing on strong market tailwinds driven by the digitization of business, increasing compliance demands, the explosion of big data, and the rapid advancements in AI. These factors underscore the growing need for effective data management solutions, positioning AvePoint as a key player in this expanding market. The company’s competitive product suite consists of three core SaaS platforms that optimize the digital workplace, delivering tangible benefits such as cost reductions, enhanced productivity, and improved decision-making. Growth drivers include the widespread adoption of multi-cloud solutions, increasing demand for vendor consolidation, opportunities for cross-selling and up-selling, and the integration of generative AI into enterprise workflows.
Recent product launches further strengthen AvePoint’s position. AvePoint Opus, introduced in late 2023, is a comprehensive content lifecycle management solution that integrates records management, retention, archiving, and classification, all enhanced by AI. tyGraph for Copilot enables organizations to assess their readiness for Microsoft 365 Copilot by analyzing collaboration patterns and data estates, ensuring a strategic rollout that maximizes ROI. Backup Express, now generally available, provides accelerated, secure data protection for enterprises. Additionally, the next generation of Elements empowers managed service providers (MSPs) to standardize security and compliance configurations across multiple tenants, addressing the rising complexity of IT environments and expanding opportunities in the cybersecurity market.
AvePoint has secured major enterprise wins, demonstrating strong market traction. Key recent customers include a global online payment processor focused on data security before deploying Microsoft 365 Copilot, a Canadian insurance company improving workspace governance, a U.S. healthcare provider addressing sensitive data risks, and a Japanese municipal government automating data governance. The company also landed an eight-figure deal in the Asia-Pacific region with a major higher education institution replacing its legacy system with a modern, centralized enterprise student management platform.
A significant catalyst for future growth is the acquisition of Ydentic in January 2025. Ydentic specializes in centralized multi-tenant management for Microsoft MSPs, a market segment that represents AvePoint’s fastest-growing business. The acquisition enhances AvePoint’s automation capabilities, streamlining user lifecycle management, license administration, and service desk operations, effectively reducing costs and improving operational efficiency. Ydentic’s integration with AvePoint’s Elements platform strengthens the company’s competitive position against established players like ConnectWise and Kaseya, while also offering cross-selling opportunities with Ydentic’s existing base of 75–100 MSPs.
Financially, AvePoint delivered a strong Q3 2024, with revenue up 22% year-over-year to $88.8 million, driven by improved sales efficiency and an increasingly mature channel strategy. SaaS revenue surged 45%, accounting for 69% of total revenue. Annual recurring revenue (ARR) climbed 23% to $308.9 million, with net new ARR growing 31% to a record $18.8 million. The company reported an 87% gross retention rate and a 110% net retention rate, indicating strong customer loyalty and expansion. Operating income rose to $17.8 million, with operating margins expanding 720 basis points to 20.1%, aided by disciplined expense management and improved vendor negotiations. Free cash flow for the first nine months of 2024 reached $53.8 million, with cash and short-term investments totaling $250 million.
Despite these impressive results, AvePoint’s Q4 2024 guidance suggests a slight sequential revenue decline due to planned operational investments and a shift in operating expenses. However, full-year expectations remain strong, with projected revenue growth of 21% and ARR growth of 23%. Long-term, AvePoint continues to improve profitability, achieving GAAP operating profitability in Q3 and for the first nine months of the year.
From a valuation standpoint, AvePoint trades at an enterprise value of approximately $3.68 billion, with a 9.44x EV/sales multiple for FY25. While its valuation appears steep, the company is approaching the Rule of 40, with its growth and operating leverage improving significantly. With a $150 million share buyback program nearing expiration and a rapidly growing cash position, AvePoint has options for capital deployment, including potential acquisitions to strengthen its competitive position outside the Microsoft ecosystem.
In conclusion, AvePoint remains well-positioned for long-term growth, benefiting from strong industry tailwinds, a differentiated product suite, expanding market opportunities, and improving financial performance. While macroeconomic uncertainties such as inflation and interest rates remain, the company’s execution, rising cash flows, and continued innovation make it a compelling investment opportunity.
AvePoint, Inc. (AVPT) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 40 hedge fund portfolios held AVPT at the end of the third quarter which was 24 in the previous quarter. While we acknowledge the risk and potential of AVPT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AVPT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.