AI Governance And Multi Cloud Data Complexity Will Drive Powerful Long Term Tailwinds

Catalysts

About AvePoint

AvePoint provides a cloud-native platform to protect, govern and optimize critical enterprise data across modern collaboration and AI environments.

What are the underlying business or industry changes driving this perspective?

• Rising urgency to safely deploy AI and agentic AI across regulated industries is accelerating demand for AvePoint’s governance-first platform, supporting durable double-digit ARR growth and expanding high-margin SaaS revenue.
• Deep, expanding partnerships with hyperscalers such as Microsoft, Google and Salesforce, together with a growing MSP and channel ecosystem, are multiplying distribution reach while lowering customer acquisition costs. This should further improve operating margins.
• Increasing complexity of multi-SaaS, multi-cloud data estates and converging needs around data protection, security and governance favor AvePoint’s unified Confidence Platform. This is driving larger platform deals, higher net retention and continued ARR per customer expansion.
• Broadening coverage of high-value SaaS and infrastructure workloads, including Microsoft 365, Google, Salesforce and additional SaaS apps, positions AvePoint to capture more data protection and AI governance spend per customer. This supports its path to the 2029 one billion dollars ARR target.
• Embedding AI into AvePoint’s own products and operations, from automated records management to AI-accelerated development and cloud security, is increasing customer ROI and internal productivity. This should sustain strong revenue growth while enabling continued non GAAP operating margin expansion.

Assumptions

This narrative explores a more optimistic perspective on AvePoint compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming AvePoint's revenue will grow by 22.3% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 0.5% today to 16.8% in 3 years time.
• The bullish analysts expect earnings to reach $121.2 million (and earnings per share of $0.52) by about December 2028, up from $2.0 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $79.4 million.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 70.3x on those 2028 earnings, down from 1521.5x today. This future PE is greater than the current PE for the US Software industry at 32.9x.
• The bullish analysts expect the number of shares outstanding to grow by 6.92% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.45%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• AvePoint is heavily tied to long-term AI governance and modernization projects across the public sector and large enterprises. Continued uncertainty, budget pressure or prolonged shutdowns in U.S. federal and other government markets could structurally dampen demand for new deployments and upsells, weighing on ARR growth and revenue.
• The strategy and 2029 one billion dollars ARR target assume that agentic AI and multi-SaaS governance mature into large, standardized use cases. If customers remain cautious, keep agents in small scale experiments or adopt simpler built in tools from hyperscalers instead, seat expansion and platform wide adoption could fall short, limiting revenue growth and earnings.
• Long-term diversification away from the Microsoft ecosystem is central to the plan, yet management acknowledges that just over 90 percent of current revenue is Microsoft related. Any slowdown in Microsoft 365 or Copilot adoption, or tighter native governance offerings from hyperscalers, could compress deal sizes and pricing power, pressuring revenue and net margins.
• The business model depends on maintaining high gross margin SaaS mix and improving operating leverage. Faster growth in lower margin services, expanded field engineering and partner enablement, as well as heavy ongoing R and D to keep pace with AI driven security and compliance requirements, could cap margin expansion and slow earnings growth.
• The long-term outlook assumes stable or improving customer retention and contract duration. Exposure to migration products with naturally lower renewal rates, potential price sensitivity as AI workloads scale and competitive offerings from both large platforms and specialist vendors could push down gross and net retention rates over time, reducing ARR efficiency and profitability.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for AvePoint is $25.32, which represents up to two standard deviations above the consensus price target of $19.18. This valuation is based on what can be assumed as the expectations of AvePoint's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $26.0, and the most bearish reporting a price target of just $16.0.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2028, revenues will be $721.3 million, earnings will come to $121.2 million, and it would be trading on a PE ratio of 70.3x, assuming you use a discount rate of 8.5%.
  
• Given the current share price of $13.89, the analyst price target of $25.32 is 45.2% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.