AvePoint's CEO on Confide, a secure virtual data room

• A VDR (Confide) from a Microsoft 365 ISV, AvePoint.
• Highly secure collaboration as the pitch.

A reminder that the VDR market extends beyond the core specialists.

We're watching stocks come under a little bit of pressure here as small caps go red.

Let's dive into software and the cloud.

Shares of AvePoint debuted with a big rally last year after spacking into the public market but have gotten caught up in the tech selling.

Now down 60% off the highs.

The CEO and co-founder at AvePoint, TJ Jung, joins us from Singapore.

TJ, thanks for staying up late with us and joining the program again.

.

Pleasure.

Good to see you again, Oliver.

Thank you very much.

We spoke after your guys' debut, and you got me real excited about the business connected into this huge network within Microsoft's cloud business.

Stock's been punished since.

What's going on?

Oliver, you know, we came out with our investment thesis of 30% growth on revenue, 35% growth on AR, of course, NR, .

We did two public earning calls.

We have another one coming up.

We have been executing on our investment thesis.

The market, small cap tech, as you know, are getting some beating there.

Of course, this SPAC tent is a real thing.

SPAC went from the most popular way to go public and efficient way in 2020 and 2021 to now many, most of the companies are getting penalized.

But, you know, for us, for 20 years.

We continue to focus on execution.

We have a fantastic market.

Our message to the markets, we're bullish and confident to remain at minimum 30% growth for the next five years.

You look at our research coverage, all outperformed.

Six research coverage firms, the city will come back again.

They will be seventh.

So again, the market sometimes is not efficient.

I think there is a bit of a throw the baby out, you know, with bathwater phenomenon happening right now.

But hey, we've been here for 20 years.

We'll continue to look at the .

And we believe that in time, the market will recognize that and correct the value placed on ABPT.

You raised $350 million in the public offering.

And the overall market here, to your point, has not been favorable to the type of the category, rather, of the vehicle that you debuted with.

with this for sure.

How do you get away from that?

Right now, there was also some selling around the latest earnings where you generally hit pretty much in line with the expected revenues.

The net loss was smaller than the prior year, but some analysts were expecting you to make a cent on the bottom line, but you couldn't quite pull it off.

Lost five cents per share.

What happened there?

.

Yeah, a lot of that has to do with the stock-based comp.

We have a lot of long-term employees been with us for 15 years or so.

So that comes into that.

If you actually look at the cash balance sheet, cash flow, we're a cash-positive company growing at 30-plus percent clip rate here.

And now for the first time, we're actually very well capitalized.

We built this company with just $60 million primary capital.

So now we have just under $270 million balance sheet, and we are looking at ways to aggressively deploy that to invest for further growth, not only organic, but also inorganic expansion.

So there's a lot of exciting things that we're planning for the horizon.

For example, we just announced a new product today called Confide, which is the only virtual data room product that's fully integrated with Microsoft 365 on market, where business users can actually provision and security, share internal, external data for deal room scenarios, workflow scenarios, so they can control who has access to confident data, , but it is not even access them.

So these are things that we actually experience and learn ourselves as we were doing deals going to IPO.

We realize how much of a painful process that is to work with bankers and lawyers and external parties to get actually a highly secure and cloud based data room solution out there.

And this is our brand and butter, right?

We are very much in the Microsoft specify business data platform governance and security space.

And this is the vertical extension of that industry application.

And we're very excited.

about that launch today.

Okay, so data room.

Just want to make sure I've got this fully understood.

We're not talking like data center.

We're not talking because when you hear cloud and then data, a lot of times we're thinking about the storage of massive amounts of data.

This is more project specific for particular customers and the way they interact with the other clients.

This is about data for particular projects that they can keep and accessible to everyone involved?

That's exactly right.

So we today already orchestrate, touch, manage hundreds of petabytes of data on a daily basis on our core platform.

What we're doing now is extending that up into a vertical industry use case of virtual data rooms that's fully integrated with Microsoft CC5.

It's the only such solution on the market today.

.

So today, we actually are at a high, all high time for M&A transactions since 2008.

And 87% of M&A transactions today are done virtually.

We actually just done a survey of 1000 plus MSPs, managed service provider, partner of ours, and over 50% of them have reported on ransomware attacks.

So the sense of high level of very sensitive data orchestration and collaboration in the cloud.

.

It's a problem that companies face in real time.

So this is our vertical solution that focuses on use case on top of our massive data orchestration and governance platform already.

And the customers that you're targeting for this, as you mentioned M&A a few times, is this specifically targeting a financial institution as a customer?

, right?

We are doing M&A deals, right?

We are doing M&A deals.

So it's really targeting businesses that's in high growth mode.

It's actually targeting businesses that are doing transactions, whether it's acquisitions or divestitures.

So yeah, we have over 16,000 enterprise customers around the world, and we have quite the expansive international expansion as well.

We're quite unique in that sense, right?

Yes, this year, last year, we're sub to 200 million, but yet we are in North America, we're in Asia, we're in EMEA, with the enterprise and mid-market and even SMB through channel distribution.

So we cover quite a wide spectrum and we believe that there's a massive demand for such type of Microsoft 365 cloud integrated data room solution to do these type of M&A or divestiture projects.

Very interesting.

TJ, in terms of the costs associated with that, and I just want to correct myself as well because when I mentioned the size of the deal, is for $2 billion.

The company Apex that emerged with their IPO was for $350, just to correct myself there.

So that sum of money that you got when you did the deal, how much of that is being used here?

Is there a cost associated with this new program to hire more engineers, hire more programmers, or is this a natural, cheap addition to the existing offering?

This is an organic expansion, so you're absolutely right.

.

We have zero redemptions.

And then we also secured $140 million in private placement.

So in aggregate, essentially $490 million, $200 plus million came over to the company.

So in aggregate, we have over $260 million on the balance sheet.

We haven't deployed that capital as of yet.

We are using our organic R&D capability to develop these new products.

And we've been doing that for almost two decades now.

We're very well known as a is a very sophisticated engineering enterprise company and so it's all part of our organic effort to grow of course that capital we have we're looking at ways to both grow invest to grow our organization globally to accelerate our channel and distribution and go after new market segments as we have indicated in our investment thesis but also to do some inorganic acquisitions okay TJ thanks for the updates and looking forward to more appreciate you joining us and giving us the details .

Thank you, Oliver.

It's a pleasure.

Thank you very much.

T.

J.

Jung is co-founder and CEO at AvePoint.

AVPT is a ticker.