Yahoo Finance Asure Software Inc (ASUR) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges ...
Revenue: Q1 2024 revenue was $31.7 million, a 4% decrease year-over-year but a 10% increase excluding ERTC.
Net Loss: Reported a net loss of $300,000 in Q1 2024, compared to a net income of $300,000 in the previous year.
Gross Margin: Decreased to 71% in Q1 2024 from 74% the previous year; non-GAAP gross margin also fell to 75% from 78%.
EBITDA: Q1 2024 EBITDA was $4.4 million, down from $6.8 million year-over-year.
Adjusted EBITDA: Decreased to $6.8 million in Q1 2024 from $8.2 million, with a margin of 22% compared to 25% the previous year.
2024 Revenue Guidance: Reiterated at $125 million to $129 million with adjusted EBITDA margins between 20% and 21%.
Cash and Cash Equivalents: Ended Q1 2024 with $23.2 million.
Debt: Reported at $5.3 million at the end of Q1 2024.
Q2 2024 Revenue Guidance: Expected to be between $28 million and $29 million.
Q2 2024 Adjusted EBITDA Guidance: Anticipated to be between $4 million and $5 million.
Release Date: May 02, 2024
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 $31.7 million, driven by core business, strategic initiatives, and acquisitions.
The company highlighted successful partnerships and certifications with major platforms like Workday and SAP, enhancing its enterprise client base and technology offerings.
Asure Software Inc (NASDAQ:ASUR) has formed a new partnership with HR logics to provide small business clients with access to capital through employer tax credits, potentially boosting client financial resources and compliance.
The company maintains a strong sales booking which contributes to growth and repetitive revenue, supported by a robust product pipeline and digital marketing efforts.
Asure Software Inc (NASDAQ:ASUR) reiterated its 2024 revenue guidance of $125 million to $129 million with adjusted EBITDA margins of 20% to 21%, reflecting confidence in continued business growth.
Negative Points
Asure Software Inc (NASDAQ:ASUR) experienced a net loss of $300,000 for the first quarter, compared to a net income of $300,000 in the prior year.
The company reported a decrease in gross margins to 71% from 74% in the previous year, primarily due to decreased nonrecurring ERTC revenue.
Adjusted EBITDA for the first quarter decreased to $6.8 million from $8.2 million in the prior year, with a reduction in adjusted EBITDA margin from 25% to 22%.
There was a notable decline in cash balance from Q4 to Q1, with a decrease of $7.1 million, attributed to seasonal impacts and spending on acquisitions.
Asure Software Inc (NASDAQ:ASUR) faces challenges in the competitive and pricing environment, although it has managed to maintain its pricing structure so far.
Q & A Highlights
Q: Can we get an update on how many acquisitions you've made now year to date, how valuations are trending? And where are you relative to the inorganic revenue assumptions that you laid out in the guide initially for the year? A: Patrick Goepel, CEO, Board Member - Asure Software Inc: We've made significant progress with acquisitions in the first quarter and expect similar progress in the second quarter. We've completed roughly a handful of acquisitions, and we are on track, if not slightly ahead, with our acquisition plans. The purchase prices have been slightly under two times, which we are thrilled about. These acquisitions have been a mix of equity deals and cash and loans.
Q: What was interest income in the quarter and maybe compared to last year in the same quarter? And is the yield on the float balances up year over year or is that consistent with what it was last year? A: Patrick Goepel, CEO, Board Member - Asure Software Inc: Last year, the yield on client funds balances was about 3.5%, and this year it's roughly 4.5%. The balances have slightly increased, which gives a rough idea of how that's progressed.
Q: Can you give us a sense of how you're thinking about the growth potential of the tax business and the potential scale as a mix of the overall company over the medium term? A: Patrick Goepel, CEO, Board Member - Asure Software Inc: The tax business, including partnerships with enterprise solutions like SAP and Workday, is a significant growth area. We anticipate that tax filing and related services will be a major part of our value proposition, contributing to a high percentage of recurring revenue. This segment is profitable, sticky, and has a longer book-to-bill cycle compared to our small business segment.
Q: How would you characterize the overall HCM demand environment as well as the competitive and pricing environment dynamics in the market? A: Eyal Goldstein, President and Chief Revenue Officer - Asure Software Inc: We are not seeing any pricing pressures or issues around pricing for new deals and upsells within our customer base. Many of our competitors have shifted their focus upmarket, leaving a significant underserved market in the under 200 employee segment, which is beneficial for us.
Q: Looking deeper at that 68% increase in payroll sales year over year, can you talk about your comfort with your sales capacity now, hiring plans or goals throughout the year, and how is the sales tenure trending? A: Patrick Goepel, CEO, Board Member - Asure Software Inc: We are very pleased with the sales execution, especially with the 68% growth in payroll sales. Our goal is to reach about 130 quota carriers by the end of the year. The pivot from ERTC to core payroll and HCM sales has been successful, and we expect this momentum to continue.
Q: Can you provide any quantification on the ramp in deal counts, bookings pipeline for the treasury management and 401(k) solutions? A: John Pence, Chief Financial Officer, Corporate Secretary - Asure Software Inc: We've launched the treasury management solution with partners like JPMorgan and have seen unsolicited demand. For the 401(k) solutions, we are a few months behind in marketing and sales, but we are quickly picking up the pace and expect the book-to-bill cycle to improve significantly.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
