What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2023-03-31 compared with 2022-03-31 · 192 added, 327 removed, 258 unchanged (67% of the section changed)

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on July 2, 2021.

Prior to the consummation of the Business Combination on July 1, 2021, Apex Units, Public Shares, and Public Warrants were each traded on the Nasdaq Capital Market under the symbols “APXTU,”

Prior to the consummation of the Apex Business Combination on July 1, 2021, Apex Units, Apex Public Shares, and Apex Public Warrants were each traded on the Nasdaq Capital Market under the symbols “APXTU,”

“APXT,”

2 unchanged sentences

Apex Units commenced public trading on September 17, 2019, and Apex’s Public Shares and Public Warrants commenced separate public trading on November 5, 2019.

In connection with the Closing of the Business Combination, each Apex Unit was separated into its components, which consisted of one share of Class A common stock and one-half of one Warrant, and such Units no longer exist.

As of December 31, 2021, there were 181,801,404 shares of our Common Stock issued and outstanding held of record by 111 holders, and 17,905,000 Warrants outstanding held of record by three holders.

In connection with the closing of the Apex Business Combination, each Apex Unit was separated into its components, which consisted of one share of Class A common stock and one-half of one warrant, and such Units no longer exist.

As of December 31, 2022, there were 189,467,338 shares of our common stock, including treasury shares, issued and outstanding held of record by 27 holders, and 17,905,000 warrants outstanding held of record by two holders.

Current Stockholder and Common Stock Information

On March 30, 2022, just prior to the date of this Annual Report, there were 182,602,086 shares of Common Stock issued and outstanding held of record by 113 holders, and 17,905,000 Warrants outstanding held of record by three holders.

On March 31, 2023, just prior to the date of this Annual Report, there were 191,399,177 shares of common stock issued and outstanding held of record by twenty-seven holders, and 17,905,000 warrants outstanding held of record by two holders.

This figure does not include a substantially greater number of beneficial holders of our common stock and public warrants whose shares (or warrants to purchase shares) are held by banks, brokers, and other financial institutions.

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Items 5 and 6

Unregistered Sales of Equity Securities

The following list sets forth information regarding all unregistered securities sold by us since the Closing Date of the Business Combination:

On the Closing Date of the Business Combination, a number of qualified institutional buyers and accredited investors (each, a “

PIPE Investor ”) purchased from AvePoint an aggregate of 14,000,000 shares of Apex common stock (the " PIPE Shares "), for a purchase price of $10.00 per share and an aggregate purchase price of $140.0 million, pursuant to separate subscription agreements (each, a “

Subscription Agreement ”) entered into effective as of November 23, 2020 in one or more private placement transactions (the " Private Placements ").

The PIPE Shares issued in connection with the Subscription Agreements were not registered under the Securities Act and were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act (and Regulation D promulgated thereunder) as transactions by an issuer not involving any public offering or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer under benefit plans and contracts relating to compensation as provided under Rule 701.

None of the Private Placements involved any underwriters, underwriting discounts or commissions, or any public offering.

The recipients of the securities in these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed on the share certificates issued in these transactions.

All recipients had adequate access, through their relationships with us, to information about us.

The sales of these securities were made without any general solicitation or advertising.

Pursuant to the Subscription Agreements, we granted certain registration rights to the PIPE Investors with respect to the PIPE Shares. 

On the Closing Date of the Business Combination, certain persons and entities receiving shares of Common Stock pursuant to the Business Combination Agreement and certain persons and entities holding securities of Apex prior to the Closing entered into that certain Amended and Restated Registration Rights Agreement (the “

A&R Registration Rights Agreement ”). In the A&R Registration Right Agreement, we agreed that, within 15 business days after the Closing, we would file with the SEC a registration statement registering the resale of certain of our securities held by the Sponsor, the PIPE Investors, holders of the Warrants, and other selling securityholders, and that we would use commercially reasonable efforts to have the Resale Registration Statement declared effective as soon as practicable after the filing thereof. 

On June 23, 2021, in fulfilment of our obligations under the A&R Registration Rights Agreement, we filed a Registration Statement on Form S-1 (File No.

333-258109) (the “

Preliminary S-1 ”) registering for sale or resale, as applicable, certain securities offered by us and by named selling securityholders (including the holders of PIPE Shares) therein.

The Preliminary S-1 became effective on August 9, 2021, and the prospectus relating thereto was filed on August 10, 2021.

On August 5, 2021, we filed an amendment to the Preliminary S-1 (the “

Amended S-1 ”).

In the Amended S-1, we registered for primary offering 17,905,000 shares of Common Stock, consisting of:

405,000 shares of Common Stock issuable upon exercise of the Private Warrants and

17,500,000 shares of Common Stock issuable upon exercise of the Public Warrants.

In the Amended S-1, certain selling securityholders registered for secondary offering an aggregate of 136,029,478 shares of Common Stock, consisting of:

Up to 14,000,000 PIPE Shares;

Up to 8,750,000 Common Stock shares held by the Sponsor and Cantor (the “

Sponsor Shares ”), which number includes 2,916,700 Sponsor Earn-Out Shares (as defined in the Amended S-1)

Up to 810,000 Placement Shares issued upon separation of the Placement Units;

Up to 405,000 shares of Common Stock issuable upon the exercise of the Private Warrants;

Up to 112,064,478 shares of Common Stock pursuant to the Registration Rights Agreement (including up to 13,329,196 shares of Common Stock issuable pursuant to outstanding options and up to 1,912,155 shares of Common Stock issuable as Earnout Shares (as such term is defined in the Amended S-1)).

Pursuant to the Amended S-1, certain selling securityholders also offered 405,000 Private Warrants.

Equity Incentive Plans - Conversion of Options

Legacy AvePoint granted to certain employees, directors and consultants of it and its subsidiaries, options to purchase an aggregate of 29,423,382

shares of common stock at exercise prices of $0.0334 to $3.905 per share under our 2016 Equity Incentive Plan and $0.0334 to $1.8915 per share under our 2006 Equity Incentive Plan.

Upon the closing of the Business Combination, such options were automatically and without any required action on the part of any holder or beneficiary thereof, were assumed by us and converted into options to purchase an aggregate of 255,731,562 shares of our Common Stock at exercise prices of $0.0038 to $0.4493 per share and $0.0038 to $0.2176 per share under our 2016 Equity Incentive Plan and our 2006 Equity Incentive Plan, respectively.

Capitalized terms used but not defined in this section under the heading " Unregistered Sales of Equity Securities " are defined in the section title " Business - 2021 Consummation of the Business Combination " (Part 1, Item 1 of this Annual Report).

Issuer Purchases of Equity Securities

In April of 2021, we purchased approximately $1.6 million of pre-Business Combination Apex common stock shares via a publicly announced share purchase program (the " Apex Share Purchase Program "), which shares are now recorded as treasury stock. In a press release issued on April 14, 2021, we announced that the board of directors of Legacy AvePoint authorized Legacy AvePoint to thereafter purchase up to an aggregate of $20.0 million of pre-Business Combination Apex common stock via the Apex Share Purchase Program until the date on which the SEC declared Apex's amended registration statement on Form S-4 effective (which date was June 2, 2021).

However, we elected to terminate the Apex Share Purchase Program on April 30, 2021.

See our consolidated financial statements (Part II, Item 8 of this Annual Report) for more information regarding this purchase and cash outflows related thereto.

Period

Issuer Purchaser of Equity Securities

On March 17, 2022, we announced that our Board of Directors authorized a new share repurchase program (the “

Share Repurchase Program ”) for us to buy back shares of our common stock.

Under the Share Repurchase Program, we have the authority to buy up to a maximum of $150 million of our common stock shares via acquisitions in the open market or privately negotiated transactions.

The Share Repurchase Program will remain open for a period of three years from the date of authorization.

Purchases made pursuant to the Share Repurchase Program will be conducted in compliance with Exchange Act Rule 10b-18 (or pursuant to a plan implemented in response to Exchange Act Rule 10b5-1(c) for parties that frequently have access to material nonpublic information, such as our executive officers and directors) and all other applicable legal, regulatory, and internal policy requirements, including our Insider Trading Policy. We are not obligated to make purchases of, nor are we obligated to acquire any particular amount of, common stock under the Share Purchase Program.

The Share Repurchase Program may be suspended or discontinued at any time.

The following table presents information with respect to common stock shares repurchased under the Share Repurchase Program during the period from October 1, 2022, to December 31, 2022:

Total number of shares purchased (1)

Average price paid per share (2)

Total number of shares purchased as part of publicly announced plans or programs

Maximum number (or approximate dollar value) of shares that may yet be purchased under the Apex Share Purchase Program (2)

April 14 - April 30, 2021 (3)

(1) All shares were purchased pursuant to the publicly announced Apex Share Purchase Program via open market purchases.

(2) The Apex Share Purchase Program authorized Legacy AvePoint to purchase up to an aggregate of $20.0 million of pre-Business Combination Apex common stock until the date on which the SEC declared Apex's amended registration statement on Form S-4 effective (which date was June 2, 2021).

The Apex Share Purchase Program was terminated on April 30, 2021, and no additional purchases were made thereunder.

(3) The Apex Share Purchase Program began on April 14, 2021 and ended on April 30, 2021.

Other than the period presented in this table, there are no other periods in which the Apex Share Purchase Program was active.

Use of Proceeds from the Business Combination

As a result of the Business Combination, we received net cash consideration of $204.5 million.

Legacy AvePoint and Apex incurred costs that are considered direct and incremental costs associated with the transactions contemplated by the Business Combination Agreement and those transactions ancillary thereto.

These costs amounted to $56.2 million and were treated as a reduction of additional paid-in capital.

In addition to the payment of the direct and incremental costs associated with consummation of the Business Combination, the remaining proceeds (including proceeds from the Private Placements) we received from the Business Combination are used (and will continue to be used) for our working capital and general corporate purposes, including potential merger and acquisition activity in accordance with our acquisition and growth strategies.

Cumulative number of shares purchased

Maximum remaining dollar value of shares that may yet be purchased under the Share Repurchase Program (3)

October 1, 2022 - October 31, 2022

November 1, 2022 - November 30, 2022

December 1, 2022 - December 31, 2022

(1) All shares reported herein were purchased pursuant to the publicly announced Share Repurchase Program.

(2) Average price paid per share includes costs associated with the repurchases.

(3) The maximum remaining dollar value of shares that may yet be purchased under the Share Repurchase Program is reduced by the aggregate price paid for share purchases in addition to any fees, commissions, or other costs that may arise as a result of the purchases.

MANAGEMENT ’

S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management ’

s Discussion and Analysis of Financial Condition and Results of Operations ( “

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 our consolidated financial statements and the related notes included elsewhere in this Annual Report.

The MD&A  

should also be read together with (A)(i) our audited consolidated financial statements as of  

December 31, 2020 and for the year ended December 31, 2020 , (ii) the  

section  

titled “

Information About AvePoint ”

and (iii) the section titled  

Selected Historical Consolidated Financial Information of AvePoint, ”

in each case as set forth in Amendment No.

to our Form  

S-4, as filed with the SEC on May  

28, 2021, and (B) the section entitled “

Management ’

s Discussion and Analysis of Financial Condition and Results of Operations ”

as set forth in Amendment No.

to our Registration Statement on Form  

S-1, as filed with the SEC on August 5, 2021 (and declared effective on August 9, 2021).

The MD&A contains forward-looking statements that involve risks, uncertainties, and assumptions that are based on the beliefs of management, as well as assumptions made by, based on information currently available to, our management.

Actual results and timing of selected events may differ materially from those anticipated in the forward-looking statements as a result of various factors, including those discussed below and those set forth under the section  

titled  “

Risk Factors ”

(Part I, Item  

1A of this Annual Report) . 

Please also see the section of this Annual Report titled  “

Forward-Looking Statements.

) 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 Form 10-K, including our audited, consolidated financial statements and related notes contained in Item 8.

Financial Statements and Supplementary Data, and the discussion of risk factors that may affect future results in Item 1.A.

Risk Factors.

2022 Business Highlights

Grew total ARR 34% year-over-year to $159.2 million;

Increased dollar-based net retention rate to 110%, up 3 percentage points year-over-year;

Eclipsed 2,800 total channel partners in 2021, of which, roughly three quarters are managed service providers (MSPs).

AvePoint’s channel presence has further expanded to include over 100 cloud marketplaces and distributors across 7 continents;

Expanded cloud user base to 9.4 million, up 34% from 7.0 million as of December 31, 2020;

Recognized as a Leader in The Forrester New Wave:

SaaS Application Data Protection, Q4 2021 Report.

According to the report, AvePoint offers strong capabilities in Microsoft 365, Google Workspace and Salesforce backup capabilities, and was the only vendor to receive a differentiated rating in all three criteria.

Our goal is to be the catalyst of business transformation by empowering organizations with relevant technologies that are efficient, secure, and well governed.

We help transform data and collaboration so users can be more productive with the latest cloud services (like Microsoft 365 (" M365 ")), and drive efficiency in delivery and management of those services for service providers.

Our strategy is focused on supporting cloud and hybrid cloud customers and partners as they transition to and mature their cloud deployments.

We do this through our Confidence Platform, a SaaS platform that assists organizations who use M365 and more than a half dozen cloud collaboration platforms.

The Confidence Platform (built on “

AvePoint Online Services ”

or " AOS ") supports the collaboration of 8 million users across 7 continents with a scalable, secure, and intelligent architecture.

Total ARR increased 27% year-over-year to $201.7 million as of December 31, 2022.

On an FX adjusted basis, total ARR increased 32% year-over-year;

Total revenue increased 21% year-over-year to $232.3 million for the year ended December 31, 2022.

On a constant currency basis, total revenue increased 29% year-over-year;

SaaS revenue increased 37% year-over-year to $117.2 million for the year ended December 31, 2022.

On a constant currency basis, SaaS revenue increased 46% year-over-year;

Completed the acquisition of four companies during 2022, further enhancing the Company's talent, product offerings, and distribution capabilities with a strong focus in the digital workplace and EdTech markets;

Announced a 100 million SGD international research and development hub in Singapore to support the growing demand for our SaaS solutions.

AvePoint provides a cloud-native platform that organizations rely on to optimize IT operations, manage critical data and secure the digital workplace.

As companies around the world embrace the new normal of hybrid work, they must build and deliver a new, seamless workplace experience for knowledge workers, centered around an extensive portfolio of SaaS solutions and productivity applications aimed at improving collaboration across the organization.

The adoption of this portfolio of solutions –

what has been generally described as the “digital transformation”

is a substantial and ongoing challenge for most organizations, which for decades had previously relied upon only a small number of multi-purpose on-premises applications to drive business outcomes.

However, to build and deliver an efficient digital workplace today, companies must address this abundance of applications and the associated explosive growth and sprawl of data with a platform offering that is well governed, fit for purpose, easy to use and built on automation.

AvePoint’s Confidence Platform empowers organizations –

of all sizes, in all regions, and across all industries –

to optimize and secure the solutions that most commonly establish and underpin the digital workplace.

As our customers seek to rapidly reduce costs, improve productivity and make more informed business decisions, they depend on our platform for data-driven insights, critical business intelligence and ongoing operational value through automation.

The 2021 Business Combination

On November 23, 2020, Legacy AvePoint and the members of the Apex Group entered into the Business Combination Agreement.

The Business Combination by and among Legacy AvePoint and the members of the Apex Group was effected on July 1, 2021 by the merger of Athena Technology Merger Sub, Inc. (" Merger Sub 1 ") with and into Legacy AvePoint (the “

First Merger ”), with Legacy AvePoint surviving the First Merger as a wholly-owned subsidiary of Apex, and promptly following the First Merger, Legacy AvePoint was merged with and into Athena Technology Merger Sub 2, LLC (" Merger Sub 2 ") (the “

Second Merger ”), with Merger Sub 2 surviving the Second Merger (the “

Surviving Entity ”) as a wholly-owned subsidiary of Apex (the Second Merger together with the First Merger, the “

Mergers ”).

Following the consummation of the Mergers, the Surviving Entity changed its name to AvePoint US, LLC and Apex changed its name to AvePoint, Inc.

(hereinafter referred to as “

AvePoint ,”

" us ," or “

our ”).

On July 26, 2021, AvePoint US, LLC was merged with and into AvePoint, with AvePoint surviving.

The Business Combination is accounted for as a reverse recapitalization.

We are the accounting predecessor and we are the successor SEC registrant, meaning that our financial statements for previous periods will be disclosed in our future periodic reports filed with the SEC.

Under this method of accounting, Apex is treated as the acquired company for financial statement reporting purposes.

The most significant change in the successor’s subsequent reported financial position and results reflect the net increase in cash of approximately $204.5 million, including $140 million in gross proceeds from the PIPE by Apex.

Total transaction costs were approximately $56.2 million. See the section of this Annual Report titled “

Consolidated Financial Statements ”

for additional information.

As a result of the Business Combination, we are the successor to an SEC-registered and Nasdaq-listed company, which has required us to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices.

We have incurred and expect to continue to incur additional annual expenses as a public company for, among other things, directors’

and officers’

liability insurance, director fees, and additional internal and external accounting, legal, and administrative resources, including increased personnel costs, audit and other professional service fees

Capitalized terms used but not defined in this section under the heading "The 2021 Business Combination" are defined in the section titled “

Business - 2021 Consummation of the Business Combination”

(Part I, Item 1 of this Annual Report).

On November 23, 2020, Legacy AvePoint and the members of the Apex Group entered into the Business Combination Agreement, and following a series of subsequent mergers, on July 26, 2021, we became the successor to an SEC-registered and Nasdaq-listed company.

Key Business Metrics

Our management reviews the following key business metrics to measure our performance, identify trends affecting our business, formulate business plans, make strategic decisions, and to make informed decisions regarding the allocation of our resources.

We disclose key business metrics within the MD&A and elsewhere in this Annual Report to enable investors to evaluate progress against our ambitions, provide transparency into performance trends, and reflect the continued evolution of our products and services.

We disclose key business metrics within the MD&A and elsewhere in this Annual Report to enable investors to evaluate progress against our growth strategies, provide transparency into performance trends, and reflect the continued evolution of our products and services.

Our key business metrics are fundamentally interconnected and indicative of how customers use our products and services.

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Core TTM dollar-based net retention rate (1)

(1) On an FX adjusted basis, Core TTM dollar-based net retention rate was 108% and 109% for 2022 and 2021, respectively.

Annual Recurring Revenue

We calculate our annual recurring revenue (“

We calculate annual recurring revenue (“

ARR ”) at the end of a particular period as the annualized sum of contractually obligated Annual Contract Value (“

ACV ”) from SaaS, term license and support, and maintenance revenue sources, with the exception of migration products, from all customers with a contract duration exceeding three months (such customers, our “

Core ”

customers, and such ARR, our “

Core ARR ”), and the product of the current month’s monthly recurring revenue (“

MRR ”) multiplied by twelve (to prospectively annualize SaaS and term license and support revenue).

ARR also includes some recurring professional services revenue, such as recurring TAM services.

MRR is attributable to our Channel business, and MRR-contributing customers are classified as customers with a contract duration of 3 months or less.

As of December 31, 2021 and December 31, 2020, our Channel business was transacting the equivalent of $9.4 million and $4.2 million in ARR, respectively, calculated as December’s MRR multiplied by twelve months.

Customer contracts used in calculating MRR may or may not be extended or renewed by our customers.

Growth in ARR is driven by both new business and the retention of existing business.

We believe ARR is indicative of growth in recurring revenue streams, leading to higher revenue growth in future periods.

ACV ”) from SaaS, term license and support, and maintenance revenue sources, with the exception of migration products, from all active customers.

As of December 31, 2022, and December 31, 2021, total ARR was $201.7 million and $159.2 million, respectively, representing growth of 27%. Growth in ARR is driven by both new business and the expansion of existing business.

ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with, or to replace, either of those items.

ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers (the same is true for those contracts used in calculating MRR, which may or may not be extended or renewed by the customer).

ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.

Beginning in 2023, the Company will include migration products in the calculation of ARR.

For 2022 and 2021, ARR from these products totaled $13.0 million and $8.0 million, respectively.

Core TTM Dollar-Based Net Retention Rate

We use a trailing twelve-month (" TTM ") dollar-based net retention rate to evaluate our ability to maintain and expand our revenue with our customer base over time. 

We use a TTM dollar-based net retention rate to evaluate our ability to expand our revenue with our Core customer base, which are those with a contract duration exceeding three months.

Core TTM Dollar-Based Net Retention Rate ”

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We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the Core TTM Dollar-Based Net Retention Rate.

A Core TTM Dollar-Based Net Retention Rate greater than 100% implies positive net revenue retention.

We believe this Core TTM Dollar-Based Net Retention Rate metric is indicative of our ability to grow our relationships with existing customers, and further grow ARR and revenue.

Improvement in this metric is driven by improvement in both customer retention, as well as cross-sell and up-sell capabilities.

Beginning in 2023, the Company plans to report this metric for its entire base of customers.

For 2022 and 2021, this metric was 103% and 110%, respectively.

Components of Results of Operations

We generate revenue from four primary sources: SaaS, term license and support, services, and maintenance across a variety of products.

We generate revenue from four primary sources: SaaS, term license and support, services, and maintenance.

SaaS revenue sources are generated from our cloud-based solutions.

Term license and support revenue sources are similar to SaaS revenue sources with the exception that term licenses and support are generated from the sales of on-premise or hybrid licenses which include a distinct support component.

Both SaaS and term license and support revenue sources are primarily billed annually, apart from our Channel business.

Term license and support revenue sources are generated from the sales of on-premises or hybrid licenses which include a distinct support component.

Both SaaS and term license and support revenue sources are primarily billed annually.

SaaS and term license and support are generally sold per user license or based upon the amount of data protected.

Services revenue includes revenue generated from implementation, training, consulting, migration, license customization and managed services.

Services revenue from implementation, training, consulting, migration, and license customization are recognized by applying a measure of progress, such as labor hours to determine the percentage of completion of each contract.

These revenues are recognized by applying a measure of progress, such as labor hours, to determine the percentage of completion of each contract.

These offerings are not inherently recurring in nature and as such are subject to more period-to-period volatility than other elements of our business.

Services revenue from managed services are recognized ratably or on a straight-line basis over the contract term.

Maintenance revenue is a result of selling on-going support for perpetual licenses.

It also includes recurring professional services such as TAM.

Maintenance revenue is a result of selling ongoing support for perpetual licenses.

It also includes recurring professional services such as Technical Account Management.

Maintenance revenue is recognized ratably over the term of the maintenance agreement, which is typically one year.

Over time, we expect SaaS and term license and support revenue will increase as a percentage of total revenue and more closely reflect our bookings mix as it continues to focus on increasing SaaS and term license and support revenue as a key strategic priority.

We expect SaaS revenue will continue to increase as a percentage of total revenue, as our focus on increasing revenues from this offering remains a strategic priority.

Cost of Revenue

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We recognize these expenses as they are incurred.

We expect that cost of maintenance revenue will decrease in absolute dollars as maintenance revenue declines but may fluctuate as a percentage of maintenance revenue.

We expect that cost of maintenance will decrease in absolute dollars as maintenance revenue declines but may fluctuate as a percentage of maintenance revenue.

Cost of services consists of salaries, benefits, stock-based compensation and related expenses for our services organization, allocated overhead and IT necessary to provide services for our customers.

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Gross profit has been and will continue to be affected by various factors, including the mix of our revenue, the costs associated with third-party cloud-based hosting services for our cloud-based subscriptions, and the extent to which we expand our customer support and services organizations.

We expect that our gross margin will fluctuate from period to period depending on the interplay of these various factors but should increase in the long term as our product mix continues to shift in favor of SaaS and term license and support revenue.

We expect that our gross margin will fluctuate from period to period depending on the interplay of these various factors but should increase in the long term as SaaS revenue continues to increase as a percentage of total revenue.

Sales and Marketing

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General and Administrative

General and administrative expenses consist primarily of personnel-related expenses for finance, legal and compliance, human resources, and IT, stock-based compensation expense, external professional services, allocated overhead costs and other administrative functions.

General and administrative expenses consist primarily of personnel-related expenses for finance, legal and compliance, human resources, and IT personnel, as well as, stock-based compensation expense, external professional services, allocated overhead costs and other administrative functions.

Our general and administrative expenses have increased as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, and increased expenses for insurance, investor relations, and professional services.

Research and Development

Research and development expenses consist primarily of personnel-related expenses incurred for our engineering, product and design teams, stock-based compensation expense and allocated overhead costs.

We have a research and development presence in the United States, China, and Vietnam.

This provides a strategic advantage, allowing us to efficiently invest in both new product development and increasing our existing product capabilities.

Research and development expenses consist primarily of personnel-related expenses incurred for our engineering and product and design teams, as well as stock-based compensation expense and allocated overhead costs.

We have a research and development presence in the United States, China, Singapore and Vietnam.

This provides a strategic advantage, allowing us to invest efficiently in both new product development and increasing our existing product capabilities.

We believe delivering expanding product functionality is critical to enhancing the success of existing customers while new product development further reinforces our breadth of software solutions.

Other Income (Expense)

Other income (expense), net consists primarily of fair value adjustments on earn-out and warrant liabilities.

In addition to fair value adjustment, other income (expense), net also consists of foreign currency remeasurement gains/losses partially offset by interest income on corporate funds invested in money market instruments and highly liquid short-term investments.

Other Income (Expense), net

Other income (expense), net consists primarily of fair value adjustments on earn-out and warrant liabilities and realized gain/loss for securities. Other income (expense), net also consists of foreign currency remeasurement gains/losses and interest income on corporate funds invested in money market instruments and highly liquid short-term investments.

We are subject to income taxes in the U.S.

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Stock-based compensation for the periods was included in the following line items:

Year Ended December 31,  

(in thousands)

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Comparison of the Years Ended December 31, 2022, and December 31, 2021 

The components of our revenue during the years ended December 31, 2021 and 2020 were as follows:

(dollars in thousands)

The components of AvePoint's revenue during the years ended December 31, 2022 and 2021 were as follows:

(in thousands, except percentages)

Term license and support

1 unchanged sentence

Total revenue

Revenue increased $40.4 million, or 26.6%, from $151.5 million for the year ended December 31, 2020 to $191.9 million for the year ended December 31, 2021, primarily as a result of an increase in SaaS and term license and support revenue.

Revenue from our SaaS offerings increased $33.5 million, or 64.3%, from $52.1 million for the year ended December 31, 2020 to $85.6 million for the year ended December 31, 2021.

Revenue from our term license and support offerings increased $12.0 million, or 30.9%, from $38.9 million for the year ended December 31, 2020 to $51.0 million for the year ended December 31, 2021.

The growth in revenue is primarily attributable to AvePoint’s investment in our global sales teams and increases in our marketing efforts driving sales of new customers. 

Another meaningful factor was the increase in our net retention rate, indicating that existing customers continued to provide more revenue from us than in past periods. 

This increase is attributable in our customer success organizations as well as research and development efforts to produce new products and product features.

The increases attributable to SaaS and term license and support revenue were offset by a decrease in service, maintenance, and perpetual license revenue.

Our services offerings decreased $2.2 million, or 6.5%, from $34.1 million for the year ended December 31, 2020 to $31.9 million for the year ended December 31, 2021.

Our maintenance offerings decreased $2.4 million, or 10.4%, from $23.5 million for the year ended December 31, 2020 to $21.0 million for the year ended December 31, 2021. Our perpetual license offerings decreased $0.5 million, or 16.9%, from $2.9 million for the year ended December 31, 2020 to $2.4 million for the year ended December 31, 2021. Services revenue is derived from services offerings related to software implementation, training, migration, customized solutions and managed services.

Our revenue from maintenance and perpetual license revenue is expected to continue to trend downward period over period.

This is driven from multiple strategic decisions to shift away from the sale of perpetual licenses and towards SaaS and term licenses.

The fundamental shift by our customers to the cloud has accelerated the adoption of our SaaS offerings.

This increased adoption rate is evidenced by the shift in bookings towards SaaS offerings from perpetual license and term license and support bookings.

Beginning in 2016, we shifted our focus from a perpetual license model to a subscription pricing model.

Over the last several years, we have experienced a gradual decline in sales of perpetual licenses, followed by a corresponding decline in maintenance revenue.

In contrast, we have experienced a rapid increase in SaaS and term license and support sales and corresponding revenue.

Term license and support revenue for the years ended

December 31, 2021 and

2020 includes

$37.3 million and

$29.5 million of revenue recognized at a point of time, respectively.

Revenue by geographic region during the years ended December 31, 2021 and 2020 was as follows:

(dollars in thousands)

United States

From the year ended December 31, 2020 to the year ended December 31, 2021, United States experienced a $15.2 million increase in revenue driven by a $20.1 million increase in SaaS and term license and support revenue, partially offset by a $3.4 million decrease in services revenue, a $1.2 million decrease in maintenance revenue and a $0.3 million decrease in perpetual license revenue.

EMEA experienced a $15.8 million increase in revenue driven by an $18.3 million increase in SaaS and term license and support revenue and $0.2 million increase in perpetual license, partially offset by a $1.6 million decrease in services revenue and a $1.1 million decrease in maintenance revenue.

APAC experienced a $9.3 million increase in revenue driven by a $7.1 million increase in SaaS and term license and support revenue and a $2.8 million increase in services revenue, partially offset by a $0.5 million decrease in perpetual license revenue. The overall decrease in services and maintenance revenue in United States, German and other locations is due to our continued shift towards SaaS and term license and support offerings, while the increase in perpetual license revenue in German and Singapore is a result of an increase in one-time sales of perpetual licenses.

The increase in SaaS, term license and support and maintenance revenue offerings in Japan is a result of increased bookings in the location, while the decrease in perpetual license revenue is a result of the strategic shift away from perpetual license offerings.

Total revenue increased 21.1% to $232.3 million for the year ended December 31, 2022, primarily as a result of an increase in SaaS revenue.

SaaS revenue growth comprised approximately 78% of the net increase year over year.

For the year ended December 31, 2022, SaaS revenue increased 36.9% to $117.2 million, as we continued to see strong customer demand for these and our term license and services offerings.

The increases were partially offset by a decrease in maintenance revenue, which decreased 24.5% to $15.9 million for the year ended December 31, 2022.

Our revenue from perpetual license and maintenance offerings is expected to continue declining as we shift away from the sale of perpetual licenses and towards SaaS licenses.

Without material perpetual license sales, there will be limited opportunities to sell maintenance contracts to new customers.

Existing maintenance customers have transitioned and will continue to transition to SaaS and term licenses, which will continue the decline in maintenance revenue.

For the year ended December 31, 2022, total revenue increased 29% year over year on a constant currency basis.

Within total revenue, SaaS revenue increased 46% year over year on a constant currency basis.

Revenue by geographic area during the years ended December 31, 2022 and 2021 was as follows:

(in thousands, except percentages)

North America

From the year ended December 31, 2021 to the year ended December 31, 2022, North America revenues increased by $19.0 million, driven by a $21.1 million increase in SaaS, term license and support, and services revenues, partially offset by a $2.1 million decrease in maintenance and perpetual license revenue.

EMEA revenues increased by $13.4 million, driven by an $15.6 million increase in SaaS, term license and support, and services revenue, partially offset by a $2.2 million decrease in maintenance and perpetual license revenue.

APAC revenues increased by $8.1 million, driven by a $10.6 million increase in SaaS, term license and support, and services revenue, partially offset by a $2.5 million decrease in maintenance and perpetual license revenue.

For the year ended December 31, 2022, North America total revenue increased 23% on a constant currency basis, EMEA total revenue increased 38% on a constant currency basis, and APAC total revenue increased 28% on a constant currency basis.

For the year ended December 31, 2022, North America SaaS revenue increased 39% on a constant currency basis, EMEA SaaS revenue increased 48% on a constant currency basis, and APAC SaaS revenue increased 57% on a constant currency basis.

Non-GAAP Financial Measures

In addition to our financial results determined in accordance with GAAP, we disclosed non-GAAP cost of revenue, non-GAAP sales and marketing expense, non-GAAP general and administrative expense, non-GAAP research and development expense, non-GAAP operating income and non-GAAP operating margin.

We believe these non-GAAP measures aid investors by providing additional insight into our operational performance and help clarify trends affecting our business.

Management uses these non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate financial performance.

Non-GAAP financial measures should not be considered as an alternative to operating income, operating margin or any other performance measures derived in accordance with GAAP as measures of performance.

Non-GAAP financial measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.

Cost of Revenue, Gross Profit, and Gross Margin

Cost of revenue, gross profit, and gross margin during the years ended December 31, 2021 and 2020 were as follows:

(dollars in thousands)

Cost of revenue, gross profit, and gross margin during the years ended December 31, 2022 and 2021 were as follows:

(in thousands, except percentages)

Cost of revenue:

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Non-GAAP gross margin

Cost of revenue increased $12.4 million, or 30.7%, from $40.3 million for the year ended December 31, 2020 to $52.7 million for the year ended December 31, 2021.

Stock-based compensation contributed $2.9 million of the increase primarily as a result of a one-time compensation expense relating to stock-based compensation awards to a group of our longstanding employees as a result of becoming a public company.

The remaining $9.5 million increase was driven primarily by higher hosting costs resulting from increased SaaS revenue and higher service costs associated with a greater number of customization services which typically incur higher costs.

Cost of revenue expenses increased 23.7% to $65.1 million for the year ended December 31, 2022, driven by an $8.8 million increase from higher aggregated hosting costs resulting from increased SaaS revenue and a $4.9 million increase in personnel costs primarily due to higher headcount.

Within personnel costs, a one-time expense of $0.2 million was associated with the Company's reduction in workforce announced in December of 2022, primarily related to severance and compensation benefits.

Operating Expenses

Sales and Marketing

Sales and marketing expenses during the years ended December 31, 2021 and 2020 were as follows:

(dollars in thousands)

Sales and marketing expenses during the years ended December 31, 2022 and 2021 were as follows:

(in thousands, except percentages)

Sales and marketing

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Non-GAAP percentage of revenue

Sales and marketing expenses increased $24.0 million, or 31.3%, from $76.5 million for the year ended December 31, 2020 to $100.5 million for the year ended December 31, 2021.

Stock-based compensation decreased by $4.1 million primarily as a result of a reduction of mark-to-market fair value on liability classified awards in the first half of 2021 compared to mark-to-market fair value on liability classified awards in 2020.

The primary drivers of the remaining $28.0 million increase consisted of increases in personnel and marketing costs.

Personnel costs, which comprised approximately $21.0 million of the increase, were driven by compensation and benefits increases related to the increases in headcount across global sales and marketing teams.

Of the remaining $7.0 million of increases, the majority of the increase was driven by expanded marketing campaigns throughout 2021.

Sales and marketing expenses increased 9.2% to $109.8 million for the year ended December 31, 2022, primarily due to an increase of $10.0 million in personnel costs from higher headcount as well as increasing employee compensation which includes commissions, and also from a $1.2 million increase in travel costs, which have risen as business shifts to a more normalized pre-pandemic state.

Within personnel costs, a one-time expense of $1.9 million was associated with the Company's reduction in workforce announced in December of 2022, primarily related to severance and compensation benefits.

General and Administrative

General and administrative expenses during the years ended December 31, 2021 and 2020 were as follows:

(dollars in thousands)

General and administrative expenses during the years ended December 31, 2022 and 2021 were as follows:

(in thousands, except percentages)

General and administrative

4 unchanged sentences

Non-GAAP percentage of revenue

General and administrative expenses increased $22.3 million, or 60.6%, from $36.9 million for the year ended December 31, 2020 to $59.2 million for the year ended December 31, 2021.

Stock-based compensation contributed $11.1 million of the increase as a result of a one-time compensation expense relating to existing stock-based compensation awards to a group of our international employees, unfavorable mark-to-market adjustments on liability classified awards in the first half of 2021 compared to mark-to-market adjustment on liability classified awards in 2020, and recognition of compensation expense for our Q3 2021 stock-based awards.

The primary drivers of the remaining $11.2 million increase consisted of increases in professional service, personnel, and insurance costs. Approximately 38% of the increase in general and administrative costs was due to increases in professional service costs, largely as a result of increased consumption of legal and consulting services due to the public listing of our securities in Q3 2021.

The increase in personnel costs, which made up approximately 29% of the increase, was driven by higher headcount required as we continue to expand and due to additional need for legal, finance and administrative personnel as we transitioned to become a publicly traded company.

Insurance increases, primarily related to increased coverage needed as a publicly traded company, made up approximately 14% of the increase. The remaining difference was driven by various general and administrative costs as we continue to expand our operations.

General and administrative expenses increased 9.5% to $64.9 million for the year ended December 31, 2022.

The year over year increase was partially due to an increase of $4.8 million in personnel costs as a result of increased headcount and overall costs to support the growth in our business. Within personnel costs, a one-time expense of $0.5 million was associated with the Company's reduction in workforce announced in December of 2022, primarily related to severance and compensation benefits. Of the remaining increase, professional services increased $1.4 million primarily due to increased legal fees relating to acquisitions.

Research and Development

Research and development expenses during the years ended December 31, 2021 and 2020 were as follows:

(dollars in thousands)

Research and development expenses during the years ended December 31, 2022 and 2021 were as follows:

(in thousands, except percentages)

Research and development

4 unchanged sentences

Non-GAAP percentage of revenue

Research and development expenses increased $19.6 million, or 160.3%, from $12.2 million for the year ended December 31, 2020 to $31.8 million for the year ended December 31, 2021.

Stock-based compensation represented the primary driver of the change, contributing approximately $15.8 million of the increase primarily as a result of a one-time compensation expense relating to existing stock-based compensation awards to a group of our international employees. 

The primary driver of the remaining $3.8 million increase resulted from higher compensation costs for research and development personnel as we seek to expand development of new offerings and improvements to existing offerings.

Research and development expenses decreased 3.9% to $30.5 million for the year ended December 31, 2022.

Stock-based compensation contributed a decrease of $12.3 million year over year, primarily as a result of a one-time compensation expense related to existing stock-based compensation awards to a group of AvePoint's international employees.

The primary driver of the offsetting increase resulted from $8.9 million higher compensation costs for research and development personnel as the Company seeks to expand development of new offerings and improvements to existing offerings.

Within personnel costs, a one-time expense of $0.5 million was associated with the Company's reduction in workforce announced in December of 2022, primarily related to severance and compensation benefits.

Income Tax Provision

Income tax provision during the years ended December 31, 2021 and 2020 was as follows:

(dollars in thousands)

Income tax provision during the years ended December 31, 2022 and 2021 was as follows:

(in thousands, except percentages)

Income tax expense

Our income tax expense for the year ended December 31, 2021 was $0.5 million as compared to the income tax expense of $1.1 million for the year ended 2020. The effective tax rate which equals the income tax provision divided by income from continuing operation was (1.42)% for the year ended December 31, 2021 compared to (6.7)% for the year ended December 31, 2020. The change in effective tax rates for the year ended December 31, 2021 as compared to the year ended December 31, 2020 was primarily due to the mix of pre-tax income (loss) results by jurisdictions taxed at different rates or tax losses for which no benefit can be taken in 2020, changes in the valuation allowance, and non-deductible equity compensation, offset by deductible transaction related expenses and non-taxable gain from change in earn out liability fair value.

Certain Non-GAAP Financial Measures

We believe that, in addition to our financial results determined in accordance with GAAP, non-GAAP operating income and non-GAAP operating margin are useful in evaluating our business, results of operations, and financial condition.

Non-GAAP operating income and non-GAAP operating margin should not be considered as an alternative to operating income, operating margin or any other performance measures derived in accordance with GAAP as measures of performance.

Non-GAAP operating income and non-GAAP operating margin should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.

Our income tax expense for the year ended December 31, 2022 was $5.0 million as compared to $0.5 million for the year ended December 31, 2021. The effective tax rate, which equals the income tax provision divided by income from continuing operations, was (15.0)% for the year ended December 31, 2022, compared to (1.4)% for the year ended December 31, 2021. The change in effective tax rates for the year ended December 31, 2022, as compared to the year ended December 31, 2021, 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 the executive compensation limitation and changes in the valuation allowance in the U.S.

and certain foreign jurisdictions.

Non-GAAP Operating Income and Non-GAAP Operating Margin

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 loss plus stock-based compensation.

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.

The elimination of the effect of variability of stock-based compensation expense, which is a non-cash expense, 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 resource, (d) to measure operational profitability and the accuracy of forecasting, (e) to assess financial discipline over operational expenditures.

GAAP operating margin for the years ended December 31, 2021 and 2020 was (27.9)% and (12.3)%, respectively.

Non-GAAP operating margin for the years ended December 31, 2021 and 2020 was 3.1% and 12.1%, respectively. 

The reduction in non-GAAP operating margin was primarily attributable to the significant investment in the business during late 2020 and through 2021 as well as a of increased expenses related to becoming a publicly traded company.

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 marked-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.

GAAP operating margin for the years ended December 31, 2022 and 2021 was (17.7)% and (27.9)% respectively.

Non-GAAP operating margin for the years ended December 31, 2022 and 2021 was (1.2)% and 3.1%, respectively. The reduction in non-GAAP operating margin was primarily attributable to higher personnel costs across the organization, increased Azure costs to support the growth in SaaS revenue, returning to a more normalized post-COVID travel routine and the full-year inclusion of expenses related to becoming a publicly traded company.

The following table presents a reconciliation of non-GAAP operating income from the most comparable GAAP measure, operating income, for the periods presented:

(dollars in thousands)

Loss from operations

Margin from operations

(in thousands, except percentages)

GAAP operating loss

GAAP operating margin

Stock-based compensation

Non-GAAP operating income

Amortization of acquired intangible assets

Non-GAAP operating (loss) income

Non-GAAP operating margin

1 unchanged sentence

As of December 31, 2022, we had an accumulated deficit of $416.9 million, $227.2 million in cash and cash equivalents and $2.6 million in short-term investments.

Historically, we have from time to time financed our operations with proceeds from the sale of preferred stock and other equity instruments.

Our short-term liquidity needs primarily include working capital for sales and marketing, research and development, and continued innovation.

Prior to 2020, we generated significant operating losses and negative cash flows from operations as reflected in our accumulated deficit and consolidated statements of cash flows.

We may continue to incur operating losses and negative cash flows from operations in the future and may require additional capital resources to execute strategic initiatives to grow our business.

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 10 - Commitments and Contingencies " for more information regarding the purchase commitments.

Our short-term liquidity needs primarily include working capital for sales and marketing, research and development, and continued innovation. 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 13 - Commitments and Contingencies ”

for more information regarding the purchase commitments.

We also maintain a loan and security agreement with HSBC Venture Bank USA, Inc.

HSBC ”) as lender 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 at our request.

Borrowings under the line bear interest at a rate equal to LIBOR plus 3.5%. The line carries an annual unused fee of 0.5%. The line will mature on April 7, 2023. We are required to maintain a specified adjusted quick ratio and a minimum annual recurring revenue tested by HSBC each quarter. We pledged, assigned and granted the HSBC a security interest in all shares, future proceeds and assets (except for excluded assets, including material intellectual property) as a security for the performance of the loan and security agreement obligations. As of December 31, 2022, we are compliant with all covenants under the line and had no borrowings outstanding under the line of credit.

We believe that our existing cash and cash equivalents, our cash flows from operating activities, and our borrowing capacity under our credit facility with HSBC, described below, will be sufficient to meet our working capital and capital expenditure needs and debt service obligations for at least the next twelve months.

1 unchanged sentence

The sale of additional equity would be dilutive to our stockholders.

Additional debt financing could result in increased debt service obligations and more restrictive financial and operational covenants. 

The following table sets forth a summary of our cash flows for the periods indicated.

(in thousands)

Net cash provided by operating activities

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Net cash (used in) provided by operating activities

Net cash used in investing activities

Net cash (used in) provided by financing activities

Operating Activities

provided by operating activities for the year ended

December 31, 2021 was

used in operating activities for the year ended

December 31, 2022, was

$0.8 million, reflecting our

4 unchanged sentences

$8.3 million from changes in our operating assets and liabilities.

The primary drivers for non-cash items were stock-based compensation, which reflects ongoing compensation charges for the entity’s equity- and pre-merger liability-classified awards, mark to market adjustments on earnout and warrant liabilities and changes in deferred tax assets as a result of timing differences in tax related to stock option awards.

The primary drivers of changes in operating assets and liabilities related to an increase in accounts receivable due primarily to timing of payments from customers and an increase in prepaid expenses and other current assets primarily related to prepaid insurance in Q3 2021 and an estimated tax payment in Q2 2021, partially offset by an increase in accounts payable and accrued expenses primarily due to billings related to professional services and an increase in deferred revenue due to continued increases in sales of our SaaS offerings which result in increased up-front payments.

Net cash 

provided by operating activities for the year ended

December 31, 2020 was 

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 the business growth, and an increase in accrued expenses primarily due to personnel related expenses.

Net cash provided by operating activities for the year ended

December 31, 2021, was 

$5.0 million, reflecting our

2 unchanged sentences

$39.9 million and net cash

inflows of

$1.3 million provided by changes in our operating assets and liabilities.

The primary drivers for non-cash items were stock-based compensation, which represented ongoing activity within the account, partially offset by deferred income taxes primarily due to the release of a valuation allowance in the first half of 2020.

The primary drivers of changes in operating assets and liabilities related to an increase in deferred revenue primarily due to continued increases in sales of our SaaS offerings which result in increased up-front payments and an increase in prepaid expenses and other current assets primarily due to timing of payments to suppliers, an increase in accounts receivable primarily due to timing of payments from customers.

outflows of

$1.6 million from changes in our operating assets and liabilities.

The primary drivers of changes in operating assets and liabilities related to an increase in accounts receivable due primarily to timing of payments from customers and an increase in prepaid expenses and other current assets primarily related to prepaid insurance in Q3 2021 and an estimated tax payment in Q2 2021, partially offset by an increase in accounts payable and accrued expenses primarily due to billings related to professional services and an increase in deferred revenue due to continued increases in sales of our SaaS offerings which result in increased up-front payments.

Investing Activities

1 unchanged sentence

used in investing activities for the year ended

December 31, 2021 was

$3.4 million.

It consisted of $2.5 million of purchases of property and equipment and $1.4 million of purchases of short-term investments.

December 31, 2022, was

$21.5 million, consisting of $18.6 million in acquisitions and $3.9 million of purchases of property and equipment, as well as $183.5 million in maturities of short-term investments and $180.9 million in the purchase of investments.

Net cash 

provided by investing activities for the year ended

December 31, 2020 was

used in investing activities for the year ended

December 31, 2021, was

$3.4 mill

It consisted of $2.4 million in maturities of short-term investments, partially offset by $1.0 million of purchases of property and equipment.

ion, consisting of $2.5 million of purchases of property and equipment and $1.4 million of purchases of short-term investments.

Financing Activities

provided by financing activities for the year ended

December 31, 2021 was

used in financing activities for the year ended

December 31, 2022, was

$17.1 million.

The primary driver of cash flows from financing activities was a result of the Business Combination, which resulted in a $441.6 million cash inflow, net of issuance costs paid immediately prior to the merger, partially offset by $130.9 million of cash outflows to Legacy AvePoint's preferred shareholders and $106.2 million of cash outflows to Legacy AvePoint's common shareholders.

Other cash flows from financing activities included $7.5 million of cash outflows to holders of Legacy AvePoint options, $3.0 million of cash outflows for Business Combination transaction costs paid directly by us, and $1.6 million of cash outflows related to Legacy AvePoint's purchase of pre-Business Combination Apex shares, which are now recorded as treasury stock.

These cash outflows were partially offset by $5.6 million of cash inflows from the proceeds collected upon exercise of stock options.

The primary driver of cash flows from financing activities was due to $19.9 million in purchases of common stock, partially offset by $2.8 million of proceeds from the exercising of stock options.

provided by financing activities for the year ended

December 31, 2020 was 

December 31, 2021, was 

$198.6 million.

It consisted primarily of proceeds from the issuance of Common Stock

, partially offset by payments made for the redemption of our Series B preferred stock.

The primary driver of cash flows from financing activities was a result of the Apex Business Combination, which resulted in a $441.6 million cash inflow, net of issuance costs paid immediately prior to the merger, partially offset by $130.9 million of cash outflows to Legacy AvePoint's preferred stockholders and $106.2 million of cash outflows to Legacy AvePoint's common stockholders.

Other cash flows from financing activities included $7.5 million of cash outflows to holders of Legacy AvePoint options, $3.0 million of cash outflows for Apex Business Combination transaction costs paid directly by us, and $1.6 million of cash outflows related to Legacy AvePoint's purchase of pre-Apex Business Combination Apex shares, which are now recorded as treasury stock.

These cash outflows were partially offset by $5.6 million of cash inflows from the proceeds collected upon exercise of stock options.

Credit Facility

On April 7 2020, Legacy AvePoint entered into a loan and security agreement (the “

Loan Agreement ”) with HSBC Ventures Bank USA Inc.

HSBC ”), a commercial bank.

On July 1, 2021, Legacy AvePoint effected an assignment of its existing rights and obligations under the Loan Agreement to AvePoint US, LLC (which, at the time of the assignment, was a wholly-owned subsidiary of ours) through entry into a limited consent and first amendment to the Loan Agreement (the “

First Amendment ,”

and the Loan Agreement as amended thereby, the “

First Amended Loan Agreement ”) and an assignment and assumption agreement (the “

First Assignment and Assumption Agreement ”).

In addition, our Board approved the entry into a pledge agreement (the “

Pledge Agreement ”) and limited guaranty (the “

Limited Guaranty ”) in favor of HSBC, pursuant to which we pledged 100% of the AvePoint US, LLC equity held by us (the “

Pledged Equity ”) as collateral in support of the borrower’s obligations under the Amended Loan Agreement and further provided a payment guarantee to HSBC on behalf of AvePoint US, LLC equal to the value of the Pledged Equity and capped at the amount actually borrowed under the First Amended Loan Agreement.

On July 26, 2021, we effected a merger with AvePoint US, LLC, following the consummation of which we were the surviving entity (the “

Rollup Merger ”).

In connection therewith, on July 23, 2021, we entered into that certain second assignment and assumption agreement (the “

Second Assignment and Assumption Agreement ”) by and among us, AvePoint US, LLC, and HSBC, pursuant to which we would assume AvePoint US, LLC’s obligations as borrower under the First Amended Loan Agreement as of the effective time of the Rollup Merger (the “

Assumption ”).

We, the guarantors party to the Loan Agreement (the “

Guarantors ”), and HSBC also entered into that certain limited consent, dated as of July 23, 2021 (the “

Limited Consent ”), whereby HSBC consented to the Rollup Merger, the entry into the Second Assignment and Assumption Agreement, and the Assumption, and all other actions taken by or necessary or permissible to be taken by us, AvePoint US, LLC, or the Guarantors related thereto, whether occurring prior to, on, or after the effective time of the Rollup Merger.

On October 31, 2021, we entered into that certain Second Amendment (the " Second Amendment ") to the First Amended Loan Agreement.

The First Amended Loan Agreement as amended by the Second Amendment (the " Second Amended Loan Agreement ") provides for, among other things, completion of the Post-Closing Amendments (as defined in the Limited Consent) and the removal of "Holdings" (as defined in the First Amended Loan Agreement) as a limited guarantor of the Borrower's (as defined in the First Amended Loan Agreement) obligations under the First Amended Loan Agreement and the de facto termination of the Pledge Agreement and Limited Guaranty.

The Second Amended Loan Agreement’s substantive economic terms were not amended from the original Loan Agreement, the substantive economic terms of which are described as follows:

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 at our request.

We maintain a line of credit under a Loan Agreement, as amended (the “

Amended Loan Agreement ”) with HSBC, as the lender.

Note 10 –

Line of Credit ”

in Part II, Item 8 “

Financial Statements and Supplementary Data ”

of this Annual Report.

The Amended 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 at our request.

Borrowings under the line bear interest at a rate equal to LIBOR plus 3.5%.

The line carries an unused fee of 0.5% per year.

The proceeds of borrowings under the Second Amended Loan Agreement will be used for general corporate purposes.

We, on a consolidated basis with our subsidiaries, are required to maintain a specified adjusted quick ratio, tested by HSBC each quarter.

Pursuant to the Second Amended Loan Agreement, we pledged, assigned, and granted HSBC a security interest in all shares of our subsidiaries, future proceeds, and certain assets as security for our obligations under the Second Amended Loan Agreement.

Our line of credit under the Second Amended Loan Agreement will mature on April 7, 2023.

To date, we are in compliance with all covenants under the Second Amended Loan Agreement.

We have not at any time, including as of and for the fiscal year ending as of December 31, 2021, borrowed under the Second Amended Loan Agreement.

The descriptions of the Loan Agreement, the First Amendment, the Second Amendment, the First Amended Loan Agreement, the Second Amended Loan Agreement, the First Assignment and Assumption Agreement, the Second Assignment and Assumption Agreement, the Limited Consent, the Pledge Agreement, and the Limited Guaranty, are qualified in their entirety by the full text of the forms of such agreements, copies of which are attached hereto as Exhibits and are incorporated herein by reference.

Any proceeds of borrowings under the Amended Loan Agreement will be used for general corporate purposes.

On a consolidated basis with our subsidiaries, we are required to maintain a specified adjusted quick ratio, tested by HSBC each quarter.

Pursuant to the Amended Loan Agreement, we pledged, assigned, and granted HSBC a security interest in all shares of our subsidiaries, future proceeds, and certain assets as security for our obligations under the Amended Loan Agreement.

Our line of credit under the Amended Loan Agreement will mature on April 7, 2023.

To date, we are in compliance with all covenants under the Amended Loan Agreement.

We have not at any time, including as of and for the fiscal year ending as of December 31, 2022, borrowed under the Amended Loan Agreement.

The description of the Amended Loan Agreement is qualified in its entirety by the full text of such agreement, a copy of which is attached as an exhibit to our Annual Report.

Leasing Obligations

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The initial terms of the leases expire on various dates through 2030.

During the years ended December 31, 2021 and 2020, total rent expense for facilities amounted to $6.4 million and $5.6 million, respectively.

During the years ended December 31, 2022 and 2021, total rent expense for facilities amounted to $6.8 million and $6.4 million, respectively.

As of December 31, 2022, letters of credit have been issued in the amount of $0.9 million as security for operating leases.

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The CODM does not receive discrete financial information about asset allocation, expense allocation, or profitability by product or geography.

Note 15 –

Note 18 

Segment Information ”

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We typically establish an SSP range for our products and services which is reassessed on a periodic basis or when facts and circumstances change.

Term license are sold only as a bundled arrangement that includes the rights to a term license and support.

In determining the SSP of license and support in a term license arrangement we applied observable inputs using the value relationship between support and term license, the value relationship between support and perpetual licenses, the average economic life of our products, software renewals rates and the price of the bundled arrangement in relation to the perpetual licensing approach.

Using a combination of the relative fair value method or the residual value method the SSP of the performance obligations in an arrangement was allocated to each performance obligation within a sales arrangement.

Term licenses are sold only as a bundled arrangement that includes the rights to a term license and support.

In determining the SSP of license and support in a term license arrangement, we apply observable inputs using the value relationship between support and term license, the value relationship between support and perpetual licenses, the average economic life of our products, software renewals rates and the price of the bundled arrangement in relation to the perpetual licensing approach.

Using a combination of the relative fair value method or the residual value method, the SSP of the performance obligations in an arrangement is allocated to each performance obligation within a sales arrangement.

Company Earn-Out Shares

In evaluation of the Company Earn-Out Shares and Company Earn-Out RSUs, management determined that the Company Earn-Out Shares represent derivatives to be marked to market at each reporting period, while the Company Earn-Out RSUs represent equity under ASC 718.

"Note 13 —

"Note 16 —

Stock-Based Compensation" for more information regarding the Company Earn-Out RSUs.

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The Monte Carlo model requires highly subjective assumptions including the expected volatility of the price of our common stock, and the expected term of the earn-out shares.

Impact of COVID-19 on Our Business

In the fiscal year ended December 31, 2021, the COVID-19 pandemic and related voluntary and government-imposed social and business restrictions have had, and will likely continue to have, a significant impact on global economic conditions, the environment in which we operate our business, and on our financial results.

We have seen a strong demand for our existing products, as well as products released during the pandemic as a result of our customers' need for security, governance, and collaboration in both remote and hybrid work settings.

During the fiscal year ended December 31, 2021, we experienced a 26.6% increase in revenue compared to the fiscal year ended December 31, 2020.

We believe that market volatility during the pandemic has caused organizations to accelerate their digital transformation priorities, as evidenced by increased cloud usage and demand for remote technology solutions among our customers.

This transformation requires advanced technology solutions and ample automation to support new organizational realities, all of which we are in a prime position to provide.

We remain focused on improving and investing in the products and services we offer to support our long-term growth while continuing to innovate and develop new products and services in response to customer needs, whether directly as a result of the COVID-19 pandemic or otherwise.

Although our business has not been adversely affected by the COVID-19 pandemic, and in fact has been positively affected by, among other things, our customers’

increased focus on our ability to provide multiple core services and products as solutions to pandemic-driven obstacles, the extent of the continuing impact of COVID-19 is uncertain and will depend on numerous factors outside of our control.

Refer to the section titled “

Risk Factors ”

(Part I, Item 1A of this Annual Report) for our consideration of risks related to COVID-19.

Economic Conditions, Challenges, and Risks

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Customer preferences evolve rapidly, and choices in hardware, products, and devices can and do influence how users access services in the cloud, and in some cases, the user’s choice of which suite of cloud-based services to use.

We must continue to evolve and adapt over an extended time in pace with this changing environment.

We must continue to evolve and adapt to keep pace with this changing environment.

The investments we are making in infrastructure, research and development, marketing, and geographic expansion will continue to increase our operating costs and may decrease our operating margins.

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Aggregate demand for our software, services, and devices is correlated to global macroeconomic and geopolitical factors, which remain dynamic.

Recently, Russia initiated significant military action against Ukraine.

In 2022, Russia initiated significant military action against Ukraine.

In response, the U.S.

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(Part I, Item 1A of this Annual Report) for a discussion of these factors and other risks.

Our quarterly revenue fluctuates and does not necessarily grow sequentially when measuring any one fiscal quarter’s revenue against another (e.g.

comparing the fourth fiscal quarter of fiscal year 2020 against the first fiscal quarter of fiscal year 2021). Historically, our third and fourth quarters have been our highest revenue quarters, however those results are not necessarily indicative of future quarterly revenue or full year results. Higher third and fourth quarter revenue is driven primarily by increased sales resulting from our customers’

fiscal year ends. The ongoing COVID-19 pandemic may have an impact on consumer behaviors and customer activities that may result in temporary changes to and increased fluctuations in the quarterly revenue of our business.

Our quarterly revenue fluctuates and does not necessarily grow sequentially when measuring any one fiscal quarter’s revenue with another (e.g.

comparing the fourth fiscal quarter of fiscal year 2021 with the first fiscal quarter of fiscal year 2022). Historically, our third and fourth quarters have been our highest revenue quarters, however those results are not necessarily indicative of future quarterly revenue or full year results. Higher third and fourth quarter revenue is driven primarily by increased sales resulting from our customers’

fiscal year ends.

Additionally, new product and service introductions (including the timing of those introductions) can significantly impact revenue.

Revenue can also be affected when consumers and customers anticipate a product introduction.

Revenue can also be affected when customers anticipate a product introduction.

Our operating expenses have generally increased sequentially due to increases in personnel in connection with the expansion of our business.

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The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable.

We will be an emerging growth company at least until December 31, 2021.

We will be an emerging growth company at least until June 30, 2023.

As a result, we have elected to avail ourselves of the extended transition period and will take advantage of the benefits of the extended transition period emerging growth company status permits.

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Recently Issued and Adopted Accounting Pronouncements

For information about recent accounting pronouncements, see Note 2 to the Consolidated Financial Statements of this Annual Report on Form 10-K.

For information about recent accounting pronouncements, see Note 2 to the Consolidated Financial Statements of this Annual Report.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity