AvePoint, Inc.

Previous wording

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of our Company as of and for the periods presented below. The MD&A should be read in conjunction** with the other sections of this Annual Report on Form 10-K, including our audited, consolidated financial statements and related notes contained in Part II, Item 8. Financial Statements and Supplementary Data, and the discussion of risk factors that may affect future results in Part I, Item 1.A. Risk Factors. This section generally discusses the results of our operations for the year ended December 31, 2024 compared to the year ended December 31, 2023. For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022, please refer to Part II, Item 7,“Management’s Discussion and Analysis of Financial Condition and Results of Operations*”* in our Annual Report on Form 10-K for the year ended December 31, 2023***, which discussion is incorporated herein by reference.*

Current wording

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of our Company as of and for the periods presented below. The MD&A should be read in conjunction** with the other sections of this Annual Report on Form 10-K, including our audited, consolidated financial statements and related notes contained in Part II, Item 8. Financial Statements and Supplementary Data, and the discussion of risk factors that may affect future results in Part I, Item 1A. Risk Factors. This section generally discusses the results of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. For a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023, please refer to Part II, Item 7,“Management’s Discussion and Analysis of Financial Condition and Results of Operations*”* in our Annual Report on Form 10-K for the year ended December 31, 2024***, which discussion is incorporated herein by reference.*

Previous wording

We believe ARR further enables measurement of our business performance, is an important metric for financial forecasting, and better enables us to make strategic business decisions. We calculate ARR as the annualized sum of contractually obligated Annual Contract Value (“ACV”) from SaaS, term license and support, and maintenance revenue sources from all active customers at the end of a reporting period.

Current wording

We believe ARR enables measurement of our business performance, is an important metric for financial forecasting, and better enables us to make strategic business decisions. We calculate ARR as the annualized sum of contractually obligated Annual Contract Value (“ACV”) from SaaS, term license and support, and maintenance revenue sources from all active customers at the end of a reporting period.

Previous wording

As of December 31, 2024 and 2023, total ARR was $327.0 million and $264.5 million, respectively, representing growth of 24%. Adjusted for FX, total ARR increased 25% year-over-year.

Current wording

As of December 31, 2025 and 2024, total ARR was $416.8 million and $327.0 million, respectively, representing growth of 27%. Adjusted for FX, total ARR increased 26% year-over-year.

Previous wording

Total revenue increased 21.6% to $330.5 million for the year ended December 31, 2024, due to an increase in SaaS revenue, which increased 43.3% to $230.7 million, and represented 70% of total revenue, up from 59% of total revenue in the prior year. The increase in SaaS revenue, which was driven by strong customer demand for our SaaS solutions, was partially offset by an expected decrease in both term license and support and maintenance revenue.

Current wording

Total revenue increased 26.9% to $419.5 million for the year ended December 31, 2025, primarily due to an increase in SaaS revenue, which increased 38.4% to $319.2 million, and represented 76% of total revenue, up from 70% of total revenue in the prior year. Total revenue growth was also due to an increase in Services revenue, which grew 22.3% to $53.8 million. The increases in SaaS and Services revenue were, partially offset by an expected decrease in both term license and support and maintenance revenue.

Previous wording

Services revenue is expected to fluctuate as the services generally are not recurring in nature. Additionally, maintenance revenue is expected to continue declining as we have shifted away from the sale of perpetual licenses and towards SaaS and term licenses. Without perpetual license sales, there will be limited opportunities to sell maintenance contracts to new customers. Existing customers have and will continue to transition to SaaS and term licenses, which will further support the continued decline in maintenance revenue.

Current wording

While SaaS revenue growth was again driven by consistently strong customer demand for our SaaS solutions, Services revenue is expected to fluctuate as the services generally are not recurring in nature. Additionally, maintenance revenue, which is tied to the sale of perpetual licenses, is expected to continue declining, as we no longer offer these products to new customers. Additionally, existing maintenance customers have and will continue to transition to SaaS and term licenses, which will further support the continued decline in maintenance revenue.

Previous wording

For the year ended December 31, 2024, North America revenues increased 14.7% to $135.9 million, driven by a 43.6%, or $30.7 million, increase in SaaS revenue, partially offset by a $13.3 million combined decrease in term license and support, services and maintenance revenue. EMEA revenues increased by 21.4% to $99.3 million, driven by a 39.8%, or $23.8 million, increase in SaaS revenue, partially offset by a $6.3 million combined decrease in term license and support, services and maintenance revenue. APAC revenues increased 33.2% to $95.4 million, primarily driven by a 49.2%, or $15.2 million, increase in SaaS revenue, a 24.1%, or $6.9 million, increase in services revenue, and a $1.7 million combined increase in term license and support and maintenance revenue.

Current wording

For the year ended December 31, 2025, North America revenues increased 21.3% to $164.8 million, driven by a 34.7%, or $35.1 million, increase in SaaS revenue, partially offset by a $6.2 million combined net decrease in term license and support, services and maintenance revenue. EMEA revenues increased by 35.3% to $134.3 million, driven by a 43.1%, or $36.0 million, increase in SaaS revenue, partially offset by a $0.9 million combined net decrease in term license and support, services and maintenance revenue. APAC revenues increased 26.2% to $120.4 million, primarily driven by a 37.7%, or $17.4 million, increase in SaaS revenue, a 26.3%, or $9.3 million, increase in services revenue, and a $2.5 million increase in term license and support revenue, partially offset by a $4.2 million decrease in maintenance revenue.

Previous wording

Cost of revenue increased 6.5% to$82.5 million for the year ended December 31, 2024, driven by a $3.0 million increase in aggregated hosting costs and a $2.3 million increase in personnel costs resulting from increased SaaS revenue.

Current wording

Cost of revenue increased 31.8% to$108.8 million for the year ended December 31, 2025, driven primarily by a $12.2 million increase in aggregated hosting costs resulting from increased SaaS revenue and a $11.0 million increase in personnel costs.

Previous wording

Sales and marketing expenses increased 9.6% to$122.9 million for the year ended December 31, 2024, primarily driven by a $8.5 million increase in personnel costs, which included additional headcount and other investments in the business to respond to strong customer demand for our solutions and provide support for future growth. The decline in sales and marketing expenses as a percentage of revenue reflects the continued scaling of the company’s focus on channel partnerships and strategies as well as ongoing improvements in overall sales efficiency.

Current wording

Sales and marketing expenses increased 17.2% to$144.0 million for the year ended December 31, 2025, primarily driven by a $17.5 million increase in personnel costs, which included additional headcount and other investments in the business to respond to strong customer demand for our solutions and provide support for future growth. The continued decline in sales and marketing expenses as a percentage of revenue reflects the ongoing scaling of the Company’s channel strategy as well as consistent improvements in overall sales efficiency.

Previous wording

General and administrative expenses increased 13.0% to$69.2 million for the year ended December 31, 2024. The increase was primarily driven by a $3.9 million increase in personnel costs and $2.4 million in new fees related to the Company’s investment in a growth equity fund.

Current wording

General and administrative expenses increased 17.1% to$81.1 million for the year ended December 31, 2025. The increase was primarily driven by a $7.2 million increase in personnel costs, a $2.9 million of costs related to the Company’s secondary listing on the SGX-ST, and $1.9 million of net costs related to the discontinuation of the Company’s participation in A3 Ventures Fund 1, L.P. (the "Fund").

Previous wording

Research and development expenses increased 34.0% to$48.7 million for the year ended December 31, 2024, primarily driven by a $10.7 million increase in personnel costs, which included additional headcount and ongoing investment in the development of new offerings and enhancements to existing offerings.

Current wording

Research and development expenses increased 8.0% to$52.6 million for the year ended December 31, 2025, primarily driven by a $2.2 million increase in personnel costs, which included additional headcount and ongoing investment in the development of new offerings and enhancements to existing offerings, and a $0.7 million increase in training and development costs.

Previous wording

Income tax expense for the year ended December 31, 2024 was$4.7 million as compared to$2.9 million for the year ended December 31, 2023. The effective tax rate, which equals the income tax provision divided by pretax loss from continuing operations, was (19.4)% for the year ended December 31, 2024, compared to (15.5)% for the year ended December 31, 2023. The change in effective tax rates for the year ended December 31, 2024, as compared to the year ended December 31, 2023, was primarily due to the mix of pre-tax income (loss) results by jurisdictions taxed at different rates than 21%, a permanent item recorded for stock-based compensation, GILTI, fair value of earnout liability and changes in the valuation allowance in the U.S. and certain foreign jurisdictions.

Current wording

Income tax expense for the year ended December 31, 2025 was$5.4 million as compared to$4.7 million for the year ended December 31, 2024. The effective tax rate, which equals the income tax provision divided by pretax income (loss) from continuing operations, was 13.3% for the year ended December 31, 2025, compared to (19.4)% for the year ended December 31, 2024. The change in effective tax rates for the year ended December 31, 2025, as compared to the year ended December 31, 2024, was primarily due to the mix of pre-tax income (loss) results by jurisdictions taxed at different rates than 21%, a permanent item recorded for stock-based compensation, GILTI and changes in the valuation allowance in the U.S. and certain foreign jurisdictions. The amount of the valuation allowance, however, could be reduced in the near term. The exact timing will be based on the level of profitability that we are able to achieve and our visibility into future results. Such a release would increase our effective tax rate in subsequent periods but would not affect cash paid for income taxes.

Previous wording

Non-GAAP operating income and non-GAAP operating margin are non-GAAP financial measures that our management uses to assess our overall performance. We define non-GAAP operating income as GAAP operating income plus stock-based compensation and the amortization of acquired intangible assets. We define non-GAAP operating margin as non-GAAP operating income divided by revenue. We believe non-GAAP operating income and non-GAAP operating margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these metrics eliminate the effects of stock-based compensation, which has had historical volatility from period to period due to mark-to-market securities, and of acquired intangible assets, which are unrelated to current operations and are neither comparable to the prior period nor predictive of future results. The elimination of the effect of variability caused by stock-based compensation expense and the amortization of acquired intangible assets, both of which are non-cash expenses, provides a better representation as to the overall operating performance of the company. We use non-GAAP financial measures (a) to evaluate our historical and prospective financial performance and trends as well as our performance relative to our peers, (b) to set and approve spending budgets, (c) to allocate resources, (d) to measure operational profitability and the accuracy of forecasting, and (e) to assess financial discipline over operational expenditures.

Current wording

Non-GAAP operating income and non-GAAP operating margin are non-GAAP financial measures that our management uses to assess our overall performance. We define non-GAAP operating income as GAAP operating income plus the following items: stock-based compensation, the amortization of acquired intangible assets, the costs associated with our secondary listing on the SGX-ST, and the costs associated with the discontinuation of our participation in the Fund. We define non-GAAP operating margin as non-GAAP operating income divided by revenue. We believe non-GAAP operating income and non-GAAP operating margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these metrics eliminate the effects of stock-based compensation, which has had historical volatility from period to period due to mark-to-market securities, and of acquired intangible assets, which are unrelated to current operations and are neither comparable to the prior period nor predictive of future results. While the amortization expense of acquired intangible assets is excluded from certain non-GAAP measures, the revenue related to acquired intangible assets is reflected in such measures as those assets contribute to revenue generation. The elimination of the effect of variability caused by stock-based compensation expense and the amortization of acquired intangible assets, both of which are non-cash expenses, and the one-time nature of the costs associated with our secondary listing on the SGX-ST and the net costs associated with the discontinuation of our participation in the Fund, provides a better representation as to the overall operating performance of the Company. We use non-GAAP financial measures (a) to evaluate our historical and prospective financial performance and trends as well as our performance relative to our peers, (b) to set and approve spending budgets, (c) to allocate resources, (d) to measure operational profitability and the accuracy of forecasting, and (e) to assess financial discipline over operational expenditures.

Previous wording

GAAP operating margin for the years ended December 31, 2024 and 2023 was 2.2% and(5.6)%, respectively. Non-GAAP operating margin for the years ended December 31, 2024 and 2023 was 14.4% and 8.1%, respectively. The increase in non-GAAP operating margin was primarily attributable to the Company’s enhanced focus on expense management and continued scaling of the Company’s channel partner strategy.

Current wording

GAAP operating margin for the years ended December 31, 2025 and 2024 was 7.9% and 2.2%, respectively. Non-GAAP operating margin for the years ended December 31, 2025 and 2024 was 18.9% and 14.4%, respectively. The increase in both GAAP and non-GAAP operating margins was attributable to the Company’s revenue growth (in part benefitting from the continued scaling of the Company’s channel partner strategy) as well as to the Company’s continued focus on expense management, while GAAP operating margins also improved due to the Company’s ongoing management of stock-based compensation expense, which represented less than 10% of total revenue in the year ended December 31, 2025.

Previous wording

As of December 31, 2024, we had$290.7 million in cash and cash equivalents,$0.2 million in short-term investments and no outstanding debt.

Current wording

As of December 31, 2025, we had$481.1 million in cash and cash equivalents and no outstanding debt.

Previous wording

Our short-term liquidity needs primarily include working capital for sales and marketing, research and development, and continued innovation. In addition, we extended a credit facility with a remaining commitment of $1.5 million, and committed $50.0 million to a growth equity fund. We also have letters of credit issued in the amount of $1.0 million as security for operating leases, and $4.4 million as security for customer contingency agreements. Our long-term capital requirements will depend on many factors, including our growth rate, levels of revenue, the expansion of sales and marketing activities, market acceptance of our platform, the results of business initiatives, and the timing of new product introductions. Refer to “Note 12 - Commitments and Contingencies” for more information regarding the purchase commitments.

Current wording

Our short-term liquidity needs primarily include working capital for sales and marketing, research and development, and continued innovation. We also have letters of credit issued in the amount of $1.0 million as security for operating leases, and $5.4 million as security for customer contingency agreements. In addition, we extended a credit facility with a remaining commitment of $1.5 million, and a committed $50.0 million to the Fund. Our long-term capital requirements will depend on many factors, including our growth rate, levels of revenue, the expansion of sales and marketing activities, market acceptance of our platform, the results of business initiatives, and the timing of new product introductions. Refer to “Note 12 - Commitments and Contingencies” for more information regarding the purchase commitments.

Previous wording

Net cash provided by operating activities for the year ended December 31, 2023, was $34.7 million, reflecting our net loss of $21.5 million, adjusted for non-cash items of $58.6 million and net cash outflows of $2.4 million from changes in our operating assets and liabilities. The main considerations for non-cash items were stock-based compensation, which reflects ongoing compensation charges for the entity’s equity- and pre-merger liability-classified awards, operating lease right-of-use asset expense and mark to market adjustments on earnout and warrant liabilities. The main considerations of changes in operating assets and liabilities that resulted in cash outflows related to an increase in deferred contract costs and operating lease liabilities. This was partially offset by cash inflows related to an increase in deferred revenue that is partially offset by an increase in accounts receivable as a result of business growth.

Current wording

Net cash provided by operating activities for the year ended December 31, 2025, was $85.3 million, reflecting our net income of $35.1 million, adjusted for non-cash items of $60.5 million and net cash outflows of $10.4 million from changes in our operating assets and liabilities. The main considerations for non-cash items were stock-based compensation, operating lease right-of-use asset expense and depreciation and amortization. The main considerations of changes in operating assets and liabilities that resulted in cash inflows related to an increase in deferred revenue that is partially offset by an increase in accounts receivable as a result of business growth. This was offset by cash outflows related to an increase in deferred contract costs and operating lease liabilities.

Previous wording

Net cash provided by operating activities for the year ended December 31, 2024, was $88.9 million, reflecting our net loss of $29.1 million, adjusted for non-cash items of $89.3 million and net cash inflows of $28.8 million from changes in our operating assets and liabilities. The main considerations for non-cash items were stock-based compensation, which reflects ongoing compensation charges for the entity’s equity- and pre-merger liability-classified awards, operating lease right-of-use asset expense and mark to market adjustments on earnout and warrant liabilities. The main considerations of changes in operating assets and liabilities that resulted in cash inflows related to an increase in deferred revenue that is partially offset by an increase in accounts receivable as a result of business growth. This was partially offset by cash outflows related to an increase in deferred contract costs and operating lease liabilities.

Current wording

Net cash provided by operating activities for the year ended December 31, 2024, was $88.9 million, reflecting our net loss of $29.1 million, adjusted for non-cash items of $89.3 million and net cash inflows of $28.8 million from changes in our operating assets and liabilities. The main considerations for non-cash items were stock-based compensation, operating lease right-of-use asset expense and mark to market adjustments on earnout and warrant liabilities. The main considerations of changes in operating assets and liabilities that resulted in cash inflows related to an increase in deferred revenue that is partially offset by an increase in accounts receivable as a result of business growth. This was partially offset by cash outflows related to an increase in deferred contract costs and operating lease liabilities.

Previous wording

Net cash used in investing activities for the year ended December 31, 2023, was $5.6 million, primarily consisting of $3.5 million in the purchase of investments,$2.1 million of purchases of property and equipment, $1.4 million in software development, and $1.3 million investment in notes, partially offset by $2.6 million in maturities of short-term investments.

Current wording

Net cash used in investing activities for the year ended December 31, 2025, was $20.2 million, primarily consisting of $14.9 million paid in a business acquisition, $3.7 million of purchases of property and equipment, and $1.6 million in software development.

Previous wording

Net cash used in investing activities for the year ended December 31, 2024, was $2.6 million, primarily consisting of $3.0 million of purchases of property and equipment, $1.8 million in the purchase of investments, $1.8 million investment in notes, and $1.2 million in software development, partially offset by $5.4 million in maturities of short-term investments.

Current wording

Net cash used in investing activities for the year ended December 31, 2024, was $2.6 million, primarily consisting of $3.0 million of purchases of property and equipment, $1.8 million in the purchase of investments, $1.8 million investment in notes, and $1.2 million in software development, partially offset by the release of $5.4 million of certificates of deposit that were replaced by a sublimit of our line of credit.

Previous wording

Net cash used in financing activities for the year ended December 31, 2023, was $33.7 million, primarily due to $39.0 million in purchases of common stock, partially offset by $5.6 million of proceeds from the exercising of stock options.

Current wording

Net cash provided by financing activities for the year ended December 31, 2025, was $124.0 million, primarily consisting of $168.2 million of proceeds from the exercises of warrants and, $17.7 million of proceeds from the exercises of stock options, partially offset by $49.8 million in purchases of common stock and $12.1 million to repurchase the noncontrolling interest in MaivenPoint Pte. Ltd.

Previous wording

Net cash used in financing activities for the year ended December 31, 2024, was $15.5 million, primarily due to $33.1 million in purchases of common stock, $6.1 million in the redemption of the redeemable noncontrolling interest of MaivenPoint, and $4.0 million in the purchase of public warrants, partially offset by $17.2 million of proceeds from the exercising of warrants, and $11.0 million of proceeds from the exercising of stock options.

Current wording

Net cash used in financing activities for the year ended December 31, 2024, was $15.5 million, primarily consisting of $33.1 million in purchases of common stock, $6.1 million in the redemption of the redeemable noncontrolling interest of MaivenPoint, and $4.0 million in the purchase of public warrants, partially offset by $17.2 million of proceeds from the exercising of warrants, and $11.0 million of proceeds from the exercising of stock options.

Previous wording

The Loan Agreement provides for a revolving line of credit of up to $30.0 million, with an additional $20.0 million accordion feature for additional capital we may draw upon at our request. Borrowings under the line bear interest at a rate equal to term SOFR plus 3.0% to 3.3% depending on the Consolidated Total Leverage Ratio. The line carries an unused fee at a rate equal to 0.5%. Any proceeds of borrowings under the Loan Agreement will be used for general corporate purposes.

Current wording

The Loan Agreement provides for a revolving line of credit of up to $30.0 million, with an additional $20.0 million accordion feature for additional capital we may draw upon at our request. Borrowings under the line bear interest at a rate equal to term SOFR plus 3.0% to 3.3% depending on the Consolidated Total Leverage Ratio. The line carries an unused fee at a rate equal to 0.5%. Any borrowings under the Loan Agreement will be used for general corporate purposes.

Previous wording

We are obligated under various non-cancelable operating leases for office space. The initial terms of the leases expire on various dates through 2030. During the years ended December 31, 2024 and 2023, total rent expense for facilities amounted to $7.2 million and $6.8 million, respectively. As of December 31, 2024, letters of credit have been issued in the amount of $1.0 million as security for operating leases. The letters of credit are secured by certificates of deposit and a line of credit.

Current wording

We are obligated under various non-cancelable operating leases for office space and other facilities. The initial terms of the leases expire on various dates through 2032. During the years ended December 31, 2025 and 2024, total rent expense for facilities amounted to $9.2 million and $7.2 million, respectively. As of December 31, 2025, letters of credit have been issued in the amount of $1.0 million as security for operating leases. The letters of credit are secured by a sublimit of our line of credit (refer to“Note 9 - Line of Credit” for further details).

Previous wording

For information about recent accounting pronouncements, see Note 2 to the consolidated financial statements of this Annual Report.

Current wording

For information about recent accounting pronouncements, see“Note 2 - Summary of Significant Accounting Policies” in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report.