AvePoint (AVPT) Q1 2025: Net New ARR Surges 57%, Channel and AI Governance Fuel Upside

May 8, 2025 | By EarningsIQ Research

AvePoint’s Q1 marked a decisive acceleration in net new annual recurring revenue, underpinned by demand for integrated data governance and AI readiness solutions. Channel execution and managed service provider (MSP) momentum are expanding reach, while management balances FX tailwinds with prudent guidance amid macro uncertainty. Investors should watch for continued traction in large enterprise and MSP segments as AI adoption matures.

Summary

  • AI Governance Drives Platform Demand: Integrated data security and governance are now central as customers move from AI experimentation to operational deployment.
  • Channel and MSP Expansion Accelerates Growth: Recurring revenue mix and partner-led routes to market are lifting both scale and profitability.
  • Prudent Outlook Amid Macro Uncertainty: Management maintains a conservative stance on full-year growth, despite strong Q1 outperformance and FX tailwinds.

Performance Analysis

AvePoint delivered a standout quarter, with total revenue up 25% year over year and SaaS revenue climbing 34%, now representing 74% of total revenue. The most notable signal came from net new annual recurring revenue (ARR), which reached $18.5 million—an organic growth rate of 57%, and the highest since becoming public. This surge was supported by balanced regional performance: North America, EMEA, and APAC all posted double-digit ARR growth, highlighting the company’s geographic diversification and resilience.

The recurring revenue mix hit a record 88%, driven by both SaaS and term license strength, while service revenue declined as a share of the total, reflecting the business’ transition toward higher-margin, subscription-based models. Operating margin expanded nearly 550 basis points to 14.4%, as subscription leverage and disciplined cost controls offset one-time tax-related cash outflows. Customer cohort health also improved, with gross retention rising to 89% and net retention to 111%, both trending toward long-term targets.

  • Net New ARR Momentum: 57% organic growth in net new ARR, with large deal activity up 43% year over year, underscores enterprise traction.
  • Channel and MSP Gains: Channel-sourced ARR rose to 55% of the total, with MSP ARR up 60% CAGR since 2020, signaling scalable partner-led expansion.
  • Margin Expansion: Gross margin improved to 75%, while operating expenses fell to 61% of revenue, reflecting improved efficiency and subscription mix.

FX tailwinds and a strong Q1 beat led to raised full-year guidance, but management’s tone remains measured given potential second-half macro disruptions.

Executive Commentary

"Our Q1 results reflect two foundational themes. First, the intensifying convergence of data security, governance, and resilience needs. As organizations move from planning to implementing their data management strategies, and second, our increasing ability to deliver comprehensive solutions that address these interconnected challenges as companies modernize their data stores."

Dr. T.J. Jang, Chief Executive Officer

"Our focus remains on controlling what we can control. But this mindset is not merely about cost savings in a time of macro uncertainty. Instead, our goal for several years has been to deliver profitability improvements while strategically investing for growth and to capture the market opportunity we see."

Jim Cassie, Chief Financial Officer

Strategic Positioning

1. Integrated Data Management Platform

AvePoint’s platform-centric approach addresses the convergence of security, governance, and compliance in a single suite. As organizations accelerate AI adoption, demand for holistic solutions—spanning backup, access controls, lifecycle management, and AI data readiness—has intensified. Customers increasingly seek end-to-end offerings rather than point solutions, positioning AvePoint’s platform as a competitive differentiator.

2. Channel and MSP-Led Scale

Channel partnerships and the managed service provider (MSP) segment are now core to AvePoint’s go-to-market strategy. The MSP business, supported by the recent Identik acquisition and the launch of the Elements platform, enables AvePoint to reach SMBs and large enterprises alike via partners. Channel-sourced ARR now exceeds half of total ARR, and MSP ARR has maintained a 60% CAGR since 2020, outpacing direct sales. This leverages partner distribution for efficient, scalable growth.

3. AI Readiness and Governance as Entry Points

Data governance—especially for AI deployment—has become the primary “tip of the spear” for new customer wins, overtaking migration as the main entry point. As enterprises move from AI pilots to deployment, AvePoint’s control suite (focused on unstructured data governance and Copilot readiness) is seeing the fastest growth. Customers cite the need to prepare for Microsoft Copilot and other AI tools as a driver for adopting AvePoint’s solutions.

4. Balanced Regional Growth and Large Enterprise Penetration

Strong execution across North America, EMEA, and APAC, with each region posting over 20% ARR growth, reflects AvePoint’s diversified customer base. Large enterprise wins are increasing, with 689 customers now above $100,000 ARR—up 23% year over year. This cohort is expanding faster than the overall base, supporting durable growth and higher retention metrics.

5. Prudent Financial Management and Guidance Discipline

Despite robust Q1 upside and FX tailwinds, management maintained a conservative approach to full-year ARR guidance, citing potential macro and geopolitical risks in the second half. This discipline preserves credibility and positions AvePoint to outperform if current demand trends persist.

Key Considerations

This quarter’s results highlight several strategic dynamics shaping AvePoint’s trajectory:

Key Considerations:

  • AI Implementation Drives Urgency: Customers are moving from AI experimentation to real deployment, making data governance and security mission critical.
  • MSP and Channel Leverage: Expansion in MSP and channel-sourced ARR is broadening reach and supporting margin improvement, especially in the SMB and mid-market segments.
  • Retention and Upsell Progress: Improving gross and net retention rates signal strengthening customer relationships and cross-sell opportunities, especially in large enterprise accounts.
  • FX and Macro Uncertainty: While FX provided a Q1 and full-year tailwind, management’s guidance embeds caution around potential macro headwinds in H2.

Risks

Macro volatility and geopolitical uncertainty remain the most material risks to AvePoint’s outlook, particularly in the second half of the year. While the company’s solutions are mission critical, prolonged economic disruption could lengthen sales cycles or delay enterprise IT spending. FX tailwinds may reverse if currency trends shift, and execution risk remains as AvePoint scales its channel and MSP strategies globally.

Forward Outlook

For Q2 2025, AvePoint guided to:

  • Total revenue of $95.3 million to $97.3 million, reflecting 22% to 25% growth.
  • Non-GAAP operating income of $13.2 million to $14.2 million.

For full-year 2025, management raised guidance to:

  • Total ARR of $411.8 million to $417.8 million (26% to 28% growth), including a $10.5 million FX tailwind.
  • Total revenue of $397.4 million to $405.4 million (20% to 23% growth), with an FX tailwind of $13.8 million.
  • Non-GAAP operating income of $61.4 million to $64.4 million (operating margin of 15.5% to 15.9%).

Management emphasized continued demand signals and a healthy pipeline, but reinforced guidance discipline given macro risks and the need for prudent forecasting.

  • FX tailwinds are supporting raised outlook, but core demand trends remain the primary driver.
  • Large deal activity and channel expansion are expected to remain growth levers in Q2 and beyond.

Takeaways

AvePoint’s Q1 results confirm structural demand for integrated data management and AI governance, with channel and MSP strategies unlocking new market segments.

  • Net New ARR and Channel Execution: The 57% net new ARR growth and rising channel mix validate the platform’s relevance and partner leverage at scale.
  • AI Governance as a Growth Catalyst: As customers move from AI pilots to deployment, AvePoint’s control suite is becoming the primary entry point, driving higher-value customer wins.
  • Watch for Continued Large Enterprise and MSP Penetration: Investors should monitor customer cohort expansion and the impact of new MSP offerings as key indicators of sustained growth.

Conclusion

AvePoint’s Q1 showcased accelerating ARR growth, expanding channel leverage, and rising demand for AI-ready data governance. While FX and macro uncertainty temper the full-year outlook, the company’s platform strategy and disciplined execution position it well to capitalize on durable industry trends.

Industry Read-Through

AvePoint’s results reinforce that enterprise data management is entering a new phase, where integrated security, governance, and AI readiness are non-negotiable for both compliance and innovation. The surge in channel and MSP-driven growth signals a broader industry shift toward partner-led distribution and recurring revenue models. As AI deployment accelerates, vendors offering unified, scalable governance platforms are likely to see outsized demand, while point solution providers risk marginalization. AvePoint’s experience suggests that channel and MSP leverage, coupled with deep enterprise integrations, will be critical for software vendors navigating the next wave of digital transformation.

AVPT Technology Software AI Governance Channel MSP Recurring Revenue