Earnings Call Transcript - AVPT Q1 2024

James Arestia, Vice President of Investor Relations

Thank you, operator. Good afternoon, and welcome to AvePoint's First Quarter 2024 Earnings Call. With me on the call this afternoon is Dr. Tianyi Jiang, Chief Executive Officer; and Jim Caci, Chief Financial Officer. After preliminary remarks, we will open the call for a question-and-answer session. 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. All material and the webcast is the sole property and copyright of AvePoint with all rights reserved. Please note 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. 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. A reconciliation of these measures to the most directly comparable GAAP financial measures is available in our first quarter 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 TJ.

Tianyi Jiang, CEO

Thank you, Jamie, and thank you to everyone joining us on the call today. Our first quarter was a very strong start to the year as we outperformed our guidance for total revenue and non-GAAP operating margin while delivering strong growth in total and net new ARR. Our performance was again driven by the robust capabilities of our platform as well as the growing recognition among customers and partners of the need, now more important than ever, to build a strong data foundation. Doing so will empower them to govern their mission-critical information assets, optimize operational costs, boost workplace efficiency, and foster more insightful data-driven decision making. While these goals have always been top of mind, they're now more critical than ever as organizations around the world seek to leverage generative AI to unlock business value and gain a competitive advantage. It's this dynamic I would like to discuss today with two areas of focus. First, the challenges and obstacles organizations face in adopting AI, primarily due to data security issues that prevent a comprehensive strategy to manage their data estate; and second, the customer demand for AI to improve productivity and the overall employee experience. Along the way, I'll highlight some key customer wins in Q1 that demonstrate how we solve these challenges and close by touching on our ongoing investments to innovate in this dynamic business environment. I will then turn over to Jim to discuss our Q1 results and updated financial guidance. So let's jump in. It's no surprise companies everywhere want to incorporate AI into their businesses. I recently had the privilege to keynote the SkillsFuture SG Training & Adult Education Conference in Singapore. In speaking with the many CXOs in attendance, it was clear the ambition to use AI to transform upskilling is palpable. But the elephant in the room is the concern that their data is not ready for AI. These conversations align with the findings in our inaugural AI and Information Management Report, which we published a few weeks ago. Our report surveyed nearly 800 organizations globally and found that 83% plan to increase their AI spending this year, with 60% intending to allocate at least a quarter of their technology budget to AI in the next five years. However, our survey also confirmed a significant delta between these ambitious plans and the reality facing these organizations. Simply put, they're not ready to deploy an effective AI strategy because their data estates are not in good order. This is where our Confidence Platform comes into play, by bolstering organizations' data security postures, providing robust cybersecurity measures, offering comprehensive control and visibility across the digital workplace, and delivering intelligent data insights through automation. By leveraging all our platform has to offer, customers can realize a secure and compliant digital environment that also improves the employee experience and then build on this foundation with a meaningful AI strategy. But without taking these steps to solidify their data estates, the challenges businesses face are amplified when incorporating AI, particularly around data security and data governance. According to recent research from Gartner, 72% of organizations believe oversharing and exposing sensitive information is the biggest risk when deploying generative AI applications such as Copilot for Microsoft 365. The AvePoint Confidence Platform can mitigate these risks by helping companies understand the quality of the data AI relies on, controlling permissions, and rapidly setting up proper access controls. In the health and life sciences industry, for example, we worked with a leading U.S.-based medical technology company in the quarter to ensure its data was ready for AI as they prepared to deploy Copilot for Microsoft 365. With AvePoint Policies, AvePoint Cloud Governance and AvePoint MyHub, the company is drastically reducing the risk of exposing sensitive information, streamlining their workspace policies, and securing data access so the company's 15,000 employees can utilize Copilot. Our study also found that before implementing AI, 71% of organizations were concerned about data privacy and security, and 61% were worried about the quality and categorization of their internal data. But despite these concerns, many forge ahead in the flawed belief that their existing information management strategy will suffice. Specifically, our report found nearly half of the organizations lack basic measures such as archiving and retention policies, and just 29% of organizations use automation. These shortcomings are even more glaring when compared to the size and volume of data our customers need to secure. Driven by the relentless growth of data for many years, more than 40% of companies today manage at least 500 petabytes of data, and they're seeing that growth accelerate due to AI. Addressing the challenges related to data growth and sprawl has always been a key use case for AvePoint and led to a new customer win in Q1 with a Germany-based real estate firm with over 130,000 tenants and 1,500 employees. The firm turned to AvePoint's secure backup solution to protect its growing data across Microsoft 365, Entra ID, Power Platform, and to rapidly identify crucial data sprawl and storage optimization challenges with AvePoint Opus. With these critical AvePoint solutions, the customer can now quickly and intelligently archive its data and enhance its data governance and cyber resilience posture. As noted in our report, we believe the most effective approach for all companies is to establish a robust information management strategy from the outset because organizations with mature information management strategies are 1.5 times more likely to realize benefits from AI than those with less mature strategies. For example, let's take a look at the CPG industry, where nearly half of the companies are facing challenges collecting and integrating the volume of data needed for successful AI adoption. This is largely due to data fragmentation across large numbers of SKUs, expansive supply chains and warehousing networks, and complex product categories. In Q1, we expanded our relationship with one of the largest CPG companies in the world to streamline its information management approach with the purchase of AvePoint Opus. Already an existing customer with a number of AvePoint solutions and a growing data estate, Opus will streamline data management policies for their 123,000 users, providing better visibility into data utilization, improve data quality, and lower the risk of breaches. We know a healthy data estate is essential to an effective AI strategy. An effective AI strategy, obviously, makes good business sense in creating a more secure organization, reducing costs, and addressing macro challenges. But one additional benefit of effective AI strategy is the improvement of the overall employee experience. For example, Gartner finds AI can drive productivity gains by up to 20%. Why does that matter? Research shows that more than 60% of a typical workday is lost to repetitive and mundane tasks, that knowledge workers spend 25% of their time searching for information, and they use an average of 6 to 8 apps to complete a single process. If AI can successfully mitigate these employee frustrations, companies can retain talent and reduce turnover, further strengthening the organization. Our best-in-class abilities to solve these problems for many years have established a strong competitive moat, and it is why we continue to innovate and invest in further enhancements for our customers and for the AvePoint team. Our AvePoint AI program aimed at integrating AI into everything we do continues to progress with internal and external applications of AI. One example is our tyGraph product, where we recently introduced new advanced analytics capabilities for Copilot for Microsoft 365. We're proud to be first to market with this offering to support Copilot, which enables companies to identify areas of high collaboration to better prepare for Copilot readiness. This is just the latest of our AI readiness solutions for organizations to prepare, secure and optimize data, which collectively will enable them to fully take advantage of AI in the workplace. In closing, successful AI deployments require a strong and healthy data estate, which in turn mandates a robust data management strategy. As companies become increasingly aware of this, we have a massive opportunity to drive AI adoption in the years to come, underpinned by our platform technology and our experience solving the most urgent challenges facing organizations around the world. I'm excited for the years ahead, and I want to thank the entire AvePoint team for their tireless efforts and dedication. Our Q1 results are another strong step forward, and we're laser-focused on continuing execution and capitalizing on the growing demand for our platform. With that, let me turn the call over to Jim.

James Caci, CFO

Thanks, TJ, and good afternoon, everyone. Thanks for joining us today. As we review our strong first quarter results today, let me remind you that unless otherwise noted, I'll be referring to non-GAAP metrics. For the first quarter ended March 31, 2024, total revenues were $74.5 million, up 25% year-over-year and above the high end of our guidance. Within total revenue, first quarter SaaS revenue was $51.3 million and grew 44% year-over-year. And in Q1, SaaS comprised 69% of total revenues compared to 60% a year ago. SaaS continues to be our fastest growing revenue segment with 44% year-over-year growth, representing our highest in 8 quarters. In addition, our other revenue lines continue to perform in line with our expectations and commentary. Term License & Support as well as Maintenance revenue declined year-over-year both in dollars and as a percentage of total revenue. At the same time, Services revenues grew 8% year-over-year, but declined as a percentage of revenue to 14% for Q1. And because Services represents our only non-recurring business, 86% of our total Q1 revenue was recurring, our highest ever percentage. Our strong SaaS performance is also evident as we look at our results from a regional perspective, where SaaS revenue growth was above 40% in every region. In North America, SaaS revenues grew 42% year-over-year and represented 77% of total North America revenues, which in turn grew 22% year-over-year. In EMEA, SaaS revenues grew 46% year-over-year and represented 81% of total EMEA revenues, which in turn grew 17% year-over-year. And in APAC, SaaS revenues grew 47% year-over-year and represented 45% of total APAC revenues, which in turn grew 40% year-over-year. Last quarter, we began disclosing our regional ARR performance as these growth rates provide a better view of the underlying momentum of the business everywhere we operate. We were again pleased with the year-over-year growth we saw in Q1 as North America ARR grew 22%, EMEA ARR grew 27% and APAC ARR grew 27%. Once again, each region was a strong contributor to our overall performance, with their respective ARR growth rates in line with the total ARR growth we reported on a consolidated basis. Continuing now with total ARR and other key metrics we regularly assess. As of March 31, 2024, total ARR was $274.5 million, representing year-over-year growth of 23%. As a result, net new ARR in Q1 was $10 million and grew 29% year-over-year. Additionally, we ended the first quarter with 560 customers with ARR of over $100,000, an increase of 20% from the prior year. As of the end of Q1, 51% of total ARR came through the channel compared to 48% a year ago. And for Q1 specifically, 62% of our incremental ARR came through the channel compared to 65% for Q4 of '23 and 56% in Q1 of 2023. As we discussed, the channel contribution to our incremental ARR will fluctuate from quarter to quarter, but we expect the channel contributions to total ARR to continue increasing each quarter. Turning now to our customer retention rates, where we continue to make progress toward our medium-term goals, which, to remind you, are 90% plus for GRR and 110% to 115% for NRR. Adjusted for the impact of FX, our trailing 12-month gross retention rate for the first quarter was 87%, consistent with our performance in 2023. And we are pleased that our FX-adjusted net retention rate for the first quarter was 110% compared to 106% a year ago and to 109% in Q4 of 2023. On a reported basis, Q1 GRR was 86%, in line with the 86% we reported in Q4 2023. Q1 NRR was 110% compared to 108% in Q4 of 2023. Turning back to the income statement, gross profit for Q1 was $55.2 million, representing a gross margin of 74.1% compared to 71.5% in Q1 of 2023. The improvement in our gross margin is a result of improved SaaS margins as well as our product mix as we had more SaaS revenue and less low margin Services revenue as a percentage of our overall revenue this quarter versus a year ago. Moving down the income statement, operating expenses for Q1 totaled $48.6 million or 65% of revenue compared to $42.9 million or 72% of revenues a year ago. As a result, Q1 operating income was $6.6 million or an operating margin of 8.9%. While Q1 non-GAAP operating income was well ahead of our guidance, I would point out that approximately $1.5 million of expenses we had expected for Q1 shifted to Q2 and the second half of the year, and this is reflected in our updated guidance, which I will cover shortly. But even after adjusting for this, Q1 operating income would have come in comfortably above the high end of our guidance as our commitment to profitable growth and our sustained focus on expense management again allowed us to realize more of the substantial embedded leverage in our business. Turning to the balance sheet and cash flow statement. We ended the first quarter with $219.3 million in cash and short-term investments. For the three months ended March 31, 2024, cash generated from operations was $7.8 million while free cash flow was $7.3 million. This compared to cash generated from operations of $1.3 million and free cash flow of $1 million in the first quarter of 2023. During the three months ended March 31, we repurchased 1.8 million shares for a total cost of approximately $13.7 million. I would now like to turn to our financial outlook, where for the full year, we are pleased to raise our expectations for total ARR, total revenue and non-GAAP operating income. For the second quarter, we expect total revenues of $73.8 million to $75.8 million, or approximately 15% year-over-year growth at the midpoint. We expect non-GAAP operating income of $3.6 million to $4.6 million. For the full year, we now expect total ARR of $316.8 million to $321.8 million, or approximately 21% year-over-year growth at the midpoint. We now expect total revenues of $314.3 million to $320.3 million, or approximately 17% year-over-year growth at the midpoint. And lastly, we now expect full year non-GAAP operating income of $30 million to $32 million, or an operating margin of 9.5% to 10%. And on a Rule of 40 basis, which for AvePoint is the sum of our ARR growth and non-GAAP operating margin, our updated guidance reflects a 31 compared to the 29 that we initially guided for the year in February, with each component contributing equally to the increase. In summary, Q1 was a strong start to 2024 and we are excited for another year of continued execution and capitalizing on the substantial long-term opportunity ahead of us. Thanks for joining us today. And with that, we'd be happy to take your questions.

James Wood, Analyst

Congrats on a strong quarter. TJ, I'll start with you. Can you talk about the rollout of the Copilot analytics offering within tyGraph? When was this made available? What's the feedback from customers? And I imagine dollars tied to this will start small, but I'd be curious if marketing this kind of tool could draw incremental interest for some of your core offerings, whether it's cross-selling the base or generating new customers?

Tianyi Jiang, CEO

Yes, great question. The rollout for tyGraph or Office 365 Copilot is the first such solution in the market where we actually help customers zone in onto the high-density collaboration areas and data estate to focus their efforts around Copilot readiness. Around the world, we have seen tremendous activities of companies across the board to actively experiment with GenAI and traditional AI capabilities. And Microsoft has done a fantastic job in commoditizing and democratizing AI approach, especially offering Copilot to well over 500 million users on M365. So, a ton of experimentation. We haven't seen massive enterprise-wide deployment yet. So, this is why the solution like tyGraph for Copilot from AvePoint that was released just this quarter is the way to zoom in onto the specific areas of collaboration and user groups. So, this allowed them to, in pilot mode, essentially in POC mode, in small group settings, to really experiment and take advantage of the power of GenAI. And as we mentioned in our prepared remarks, a very important aspect of making sure that your AI deployment strategy works is to have a very confident and solid trust in your data estate. So, a lot of that preparation work goes into preparing, making sure that you have the right privilege, right access, right information management lifecycle, life control, as well as removing much of the redundant, out-of-date trivial data. And what tyGraph for Copilot does is allow you to not just look at your entire data estate, which could well be over 500 petabytes for a lot of customers, zone into the specific areas and user groups that you start with and get the bigger ROI right away. So, it's a very unique product set. And you're right, we see robust pipeline building from all these information management requirements.

James Wood, Analyst

Very interesting. And one for Jim, 44% SaaS growth is really impressive. And even if I look at double sequential growth, it was double digits. We haven't seen that since, I think, the first half of '21. Can you talk about what's driving that inflection in SaaS? Has there been a pickup in on-prem migrations or are there other factors like more cross-selling, new customer generation, etc.? And then how do we triangulate that strength with your guide in Q2 of, I guess, relatively flat sequential growth on total revenue?

James Caci, CFO

We're observing a few different factors at play. There's been solid growth from new customers, and in Q1, we also experienced significant expansion within our existing customer base. This contributed to achieving 110% of Net Revenue Retention, which helped drive SaaS expansion as well. It's not limited to just one particular product or migration; it's happening across our entire platform. We're pleased to see growth both from new customers and from existing ones. Looking ahead to Q2, we're satisfied with the guidance we've provided. We've raised our revenue forecast from a 15% year-over-year growth to 17% and increased our Annual Recurring Revenue growth from 20% to 21%. We're confident in the guidance we've set. However, we acknowledge the variability between SaaS and term revenue, which can impact our results and may fluctuate each quarter. Despite this, we're optimistic about the guidance we have in place and believe we are well-positioned to achieve our goals.

Thomas Shinske, Analyst

This is Tommy Shinske on for Brett. Congrats on another solid quarter. I guess last quarter, we talked a little bit about the MSP approach to the SMB sector and how that's kind of shielded you from a lot of the SMB headwinds that, you know, the SaaS industry is kind of seeing as we head into 2024. I guess, is there any update if you're seeing any, you know, SMB weakness, or maybe even some budget constraints from the MSPs themselves?

Tianyi Jiang, CEO

Yeah. That's a great question. So, MSP segmentation is our approach to the SMB segment. For Microsoft SMB segment, it's well over 40% of their total revenue. So, for us today, it is just under 20% of our total recurring. It's still the fastest-growing segment for us. We see a level of abstractions. So, we don't because what we do is we offer essentially a management platform for these managed service providers to enable their businesses to scale, to manage hundreds if not thousands of Microsoft cloud tenants behind the scenes. So from that perspective, it's a different layer. And from there, we actually continue to see very strong demand. We do have a very differentiated platform approach in the Microsoft cloud play with information management, and we continue to see very strong demand from MSPs. Before, it was really focused around data protection, data integration and control. And now the very, very hot topic, of course, is Microsoft Copilot readiness. Policy Insight is the product and Opus is probably the product, the hero SKUs now among the MSP community. So yes, we actually don't see much softness in that segmentation perhaps as I indicated before, is because we're really targeting and enabling the MSP business to grow. And for us, SMB, the small and medium business segment is still just 20% recurring while the overall market is at least 40% of the total market. So, still tremendous headroom and green space for us to grow into.

Nehal Chokshi, Analyst

And congrats on the strong quarter, strong raise. Your net new ARR was up 29% for the March quarter. How are you thinking about that net new ARR yearly growth as we move through the remainder of the year here?

James Caci, CFO

Yes, I think our guidance now for that we just put out implies $55 million of net new ARR for the year, and that'll be up about 10% over the full year, year-over-year. So, I think when we think about it over the course of the year on the net new, that's kind of how we're expecting the full year to shake out.

Nehal Chokshi, Analyst

I think that translates to approximately $46 million in net new annual recurring revenue for the remaining three quarters, compared to $42 million in the same period last year. This represents a growth of about 10% year-over-year. However, you just achieved 30%, which raises the question of whether this is the reason for what seems to be a slowdown in the net new annual recurring revenue you are anticipating.

James Caci, CFO

Well, I think there's a couple of factors. I wouldn't say it's deceleration, but if you think about Q1, last year, Nehal, when we were sitting here, we had a relatively low Q1 last year. It's definitely the weakest part of last year, and it's definitely a comp that we're comparing against. So, we're pleased with the growth at 29%, but it's also coming off a weak Q1 in particular. So again, we're pleased with the guidance that we have out there. I wouldn't call it a deceleration. We had strong performance in Q2 through Q4 of last year. And again, I think on that net incremental ARR, we feel good about that and that gets us to our, you know, annual target of that 21%, which again, for the year we're focused on achieving that growth rate and feel good about that guidance we have out there.

Nehal Chokshi, Analyst

Great. Yes. And by the way, I mean, 10% incremental ARR growth for the remainder of the year is nothing to cry about. That's very good by itself anyhow. TJ, thanks for the customer examples and especially the concrete example around how Opus is helping customers get their data GenAI ready. Can you give us a sense as to what is the ARPU add as customers look at leveraging AvePoint's capabilities with respect to getting their data GenAI ready?

Tianyi Jiang, CEO

Hi Nehal, that's a great question. As we've mentioned, there's still a lot of experimentation taking place. You may also hear from other large cloud providers that the expectation for real revenue realization and monetization will likely occur in 2025. This year, the challenge many face with AI deployment comes from change management, which needs to originate from business leaders rather than just the IT side of things. There is still a lot of experimentation happening, and ensuring a solid business return on investment is crucial before companies are willing to make significant budget allocations for enterprise-wide deployment. Therefore, we are in an experimentation phase. This is reflected in the growing number of conversations and opportunities in our pipeline, but it's likely that we won't see substantial dollar value until next year.

Jason Ader, Analyst

I wanted to ask about multi-product, multi-suite customers. I know that you've talked a little bit about that. I don't know if you have specific metrics for us, but maybe you can just talk to any momentum there. And then beyond that, if you could build upon that and just maybe talk about the relative growth rates of each of your three suites and any color commentary on what is happening within each of those product suites.

James Caci, CFO

Yes, addressing the first part of your question, we offer various products and suites to our customers. We provide an annual metric for this. In Q1, we observed strong growth from our existing customer base. Most upselling comes from cross-selling rather than just selling more of the same products. Q1 was a robust quarter for us in this regard. Approximately 50% of our customers use two or more products, while about 24% utilize four or more products. Regarding suites, around 25% of our customers are on two or more suites. This is an annual metric we will continue to report. We experienced significant upsell progression in Q1, contributing to an NRR of 110, marking a strong quarter for us.

Tianyi Jiang, CEO

Overall, we are very pleased with the upsell performance. We experienced a 25% increase in upsell deals in the first quarter compared to the same period last year, and deals exceeding $100,000 saw a 40% increase. Regarding our suites, as I mentioned earlier, the control suite, which focuses on information management and access control, is the most active. In terms of dollar value, we are observing smaller deployments because we operate on a subscription basis, approaching Microsoft's licensing model for their cloud services. Consequently, experimentation across accounts is primarily focused on smaller groups and business leaders to roll out GenAI capabilities. We have developed a playbook for Copilot readiness that utilizes all three suites, as people need to prepare, secure, and optimize their data estate. Step one is to prepare by centralizing and enhancing data integrity. Step two is to secure by identifying and enforcing content policies. The final step is to optimize through governance and automation. Both inputs and outputs of the AI model need to be managed because nearly 10% of data generated is now produced by GenAI. Thus, the outputs need to be carefully controlled, filtered, and moderated, given the inherent 10% hallucination rate associated with large language models. This output often serves as input for data models to capture and account for concept drift as the business environment changes for large enterprises. Therefore, it is essential to maintain software governance and a man-in-the-middle approach to ensure that the continuous feedback loop to the model is effectively managed, measured, and optimized. This strategy is driving all three of our product suites.

Gabriela Borges, Analyst

TJ, AvePoint has this unique vantage point in two ways. One is the savings that you enable for your customers when they think through things like storage optimization, and the other is the projects that you have visibility into from an AI deployment standpoint. So, my question for you is how is that push towards cost optimization trending in some of your larger customers relative to last year? And the second part of the question is where is the budget for some of these AI projects coming from? And can AvePoint maybe connect the two pieces where you're enabling savings in one area of the business that then goes towards funding AI projects in another area of the business?

Tianyi Jiang, CEO

That's a great question, Gabriela. So, we continue to see consolidation place from customers where they like platform vendors, they like less singular products and less vendor and this decreases risks and allows them to focus on high-quality platform providers. So, that economics focus and platform approach continues into this year. So, we do, as you mentioned, give customers significant savings. One of the important values we provide in the Microsoft cloud ecosystem is to help our customers maximize their ROI, return on investment, on their existing cloud investments. So, we ourselves actually consumed about $100 million of Azure over a three-year period, and that's growing very rapidly. And from that kind of economic scale, we're able to drive further savings for our customers. So, storage optimization is just one such savings. The others are also being able to provide consistent data management capabilities across different license-type tiers as well as multi-cloud. I can't emphasize enough that today's world, customers are not only on one hyperscaler; in fact, most enterprise customers, including government agencies, have a mandate to do business continuity reasons, so they actually intentionally have multiple cloud vendors just to ensure that they have business resiliency. And the second part of your question is the budget bucket. It is true, increasingly the conversations are shifting towards the business budget versus the IT budget. If you only look at pure IT budget, it's very hard to say hi, I'm going to spend the extra $30 per user per month just on genetic capabilities from an IT infrastructure planning perspective, considering that that's equivalent to what more than most customers pay for the entirety of Office suite pack today with Teams, with Office, with email, with 1 terabyte or OneDrive, etc., combined. However, when you take it into a business context, when you're driving business outcomes, that it's a much easier and different conversation. And this is where we're seeing very, very aggressive and active experimentation across the board to drive that business ROI. So yes, while the Copilot experimentation happening are limited to smaller footprints within the overall user population in companies, but those user populations today are all your power users among business community, you know, your head of sales, your head of marketing, head of HR, CFOs. So, when you have that kind of conversation, it's a very different conversation than just pure IT, CIO level conversation. So yes, it is actually a very different budget conversation altogether. Thank you. The rate of innovation always switches in our sector. It's gaining even more momentum powered by the rise of AI. The energy was tangible during my recent visit with fellow Microsoft AGM partners at the Executive Briefing Center in Redmond. As I mentioned earlier, it was an inspiring experience to be part of such a massive technology ecosystem as we embrace the AI transformation wave together. At that point, we're excited by the transformational potential of AI, and we're equally aware of the challenges it poses to organizations around the world. We're ready to capture the many opportunities ahead of us, and we look forward to a strong 2024. Thank you again for joining us today, and we look forward to speaking with you more this quarter.

James Arestia, Vice President of Investor Relations

Thank you. The AvePoint Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.