Asure Software (ASUR) Q3 Earnings call transcript Oct 31, 2024
AInvestTuesday, Nov 5, 2024 9:56 am ET
2min read
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Asure Software's third quarter earnings call for 2024 provided a comprehensive overview of the company's financial health and strategic initiatives. The call, led by Chairman and CEO Pat Goepel, highlighted several key themes and trends that underscore the company's position in the market and its outlook for the future.

Financial Performance and Revenue Growth

The company reported a third quarter revenue of $29.3 million, which remained flat compared to the prior year. However, this figure was influenced by a non-recurring ERTC revenue decrease of nearly $5 million. When excluding this one-time factor, total revenue and total recurring revenue both grew by 20% compared to the previous year. Recurring revenue, which now accounts for 98% of the total revenue, is a significant improvement from the 81% in the prior year's period.

Acquisition Strategy and Product Expansion

Asure Software's acquisition strategy has been a major focus, with 12 companies acquired over the past 4 quarters. These acquisitions, primarily payroll resellers, have been integral in expanding the company's solution set. The acquisition of HireClick, for instance, is a scalable solution for hiring programs, and the company plans to expand its applicant tracking system nationally. Additionally, the introduction of workmen's compensation solutions and preventative health care solutions for small businesses is part of the company's broader product expansion strategy.

Organic Growth and Sales Momentum

While the company fell short of expectations in terms of organic growth, with a 5% increase in the third quarter, it is optimistic about the future. Sales bookings were up 141% compared to the previous year, and the current backlog has grown 35% sequentially. These figures, coupled with a strong pipeline of tax solutions for large enterprises, indicate a robust sales momentum and a positive outlook for 2025.

Margin Expansion and Future Guidance

The company's guidance for 2024 revenue is updated to a range of $119 million to $121 million, with an adjusted EBITDA margin of 18% to 19%. For 2025, the company expects revenue to reach $134 million to $138 million, with adjusted EBITDA margins of 23% to 24%. These figures reflect the company's confidence in its business model and its ability to continue scaling operations while maintaining profitability.

Challenges and Competition

Despite the positive outlook, Asure Software faces challenges, particularly in managing acquisitions and navigating the competitive landscape. The company is working to improve business processes, technology, and create scale economies from its revenue growth. It also faces competition from larger legacy competitors like ADP and Paychex, but is confident in its value proposition for small businesses and its ability to drive growth and increase market share.

Investor Relations and Future Outlook

Asure Software's investor relations strategy includes attending several industry conferences and meetings with analysts, demonstrating its commitment to transparency and investor engagement. The company's focus on organic and inorganic growth, margin expansion, and product innovation positions it well for the future. However, the challenges of managing acquisitions and navigating a competitive market will require careful execution and strategic decision-making.

In conclusion, Asure Software's third quarter earnings call provided a detailed snapshot of its financial performance, strategic initiatives, and future outlook. While the company faced challenges in the third quarter, its robust sales momentum, product expansion, and strategic acquisitions position it for growth in the coming year. The company's focus on innovation, investor relations, and operational efficiency will be key in navigating the competitive landscape and delivering value to shareholders.

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