• Revenue: $34.9 million, a 10% increase compared to the prior year.
• Recurring Revenue: $33.2 million, representing 95% of total revenue.
• Net Loss: $2.4 million, compared to a net loss of $308,000 in the prior year.
• Adjusted EBITDA: $7.3 million, up from $6.8 million in the prior year.
• Gross Margin: 71%, consistent with the prior year.
• Contracted Revenue Backlog: $82 million, a 339% increase year over year.
• Cash and Cash Equivalents: $14.1 million at the end of the first quarter.
• Debt: $14 million as of March 31, 2025.
• 2025 Full-Year Revenue Guidance: $134 million to $138 million.
• Adjusted EBITDA Margin Guidance: 23% to 24% for the full year 2025.
• Second Quarter 2025 Revenue Guidance: $30 million to $32 million.
• Second Quarter 2025 Adjusted EBITDA Guidance: $5 million to $6 million.

• Warning! GuruFocus has detected 4 Warning Signs with ASUR.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Asure Software Inc (NASDAQ:ASUR) reported strong first-quarter revenues of $34.9 million, marking a 10% increase compared to the previous year.
• The company has successfully launched new capabilities for its Payroll Tax Management product, targeting large Canadian companies and global enterprises.
• AsurePay, a new product offering, is showing positive early trends with over 70% of active card users utilizing it more than three times per month.
• The company has a robust pipeline of potential acquisitions and recently secured a $60 million credit facility to support its growth strategy.
• Recurring revenues accounted for 95% of total revenue in the first quarter, providing a stable and predictable income stream.

Negative Points

• The company reported a net loss of $2.4 million for the first quarter, compared to a smaller net loss of $308,000 in the prior year.
• EBITDA for the first quarter decreased to $4.1 million from $4.4 million in the previous year.
• The wind down of the ERTC program negatively impacted revenue growth by 300 basis points in the quarter.
• HR compliance revenues remain depressed due to the ERTC-related product attachment activity in 2023.
• Float revenue was slightly down due to rate reductions made in the fall of 2024 to the Federal funds rate.

Q & A Highlights

Q: What are you seeing in terms of productivity now that you've put in place some dedicated sales teams for different product areas? A: Patrick Goepel, CEO: We've seen double-digit improvement in attach rates, and having sales specialists drive these rates is crucial. An example is a client who expanded from a $4,000 payroll-only customer to a $120,000 customer by adding multiple products. This progress is early, but promising.

Q: How much progress have you made on maintaining HR Compliance with customers who have the ERTC and HR Compliance bundle? A: Patrick Goepel, CEO: We've seen retention rates drop after the ERTC benefit, but we're starting to see more customers than we're losing. We expect strong growth in the second half of 2025 and double-digit growth in 2026.

Q: Any slowdown in pipeline based on economic uncertainty, particularly with SMBs? A: Patrick Goepel, CEO: Despite macroeconomic concerns, our pipeline and sales productivity remain strong. We modeled flat employment and potential rate cuts, but haven't seen significant impacts on our customer base.

Q: Could you discuss your product roadmap and investments, both organic and inorganic? A: John Pence, CFO: We've filled gaps in our suite with acquisitions like Broker of Record and Recruiting. AsurePay addresses the move away from paper checks. We're also focusing on resellers to expand our customer base and cross-sell products.

Q: How should we think about acquisitions with the new credit facility? A: Patrick Goepel, CEO: We completed two acquisitions in Q1 and expect the cadence to ramp up in the second half of the year. The new $60 million credit facility gives us flexibility to pursue more deals and grow quickly.

Q: What are the primary drivers for accelerated revenue growth in the second half of the year? A: Patrick Goepel, CEO: Growth will be driven by increased attach rates, a growing contracted backlog, and contributions from new partnerships and acquisitions. We expect strong sales team momentum and partner contributions.

Q: Can you provide more color on the Canada tax product and its competition? A: Patrick Goepel, CEO: We've already turned on Canadian tax capabilities for some clients, and there's a strong pipeline. The product has a modern design and is generating interest from existing and potential clients.

Q: Any updates on the competitive environment? A: Patrick Goepel, CEO: Our engagements and pipeline remain strong, with no significant changes in the competitive landscape. Sales cycles have slightly elongated, but interest levels are high.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.