Asure Software Inc ((ASUR)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Asure Software Inc.’s recent earnings call painted a picture of both optimism and caution. The company reported several positive developments, including revenue growth, strategic acquisitions, and increased guidance, which were tempered by challenges such as declining bookings and a rise in net loss. The sentiment conveyed was one of cautious optimism, with a strong backlog and improved attach rates suggesting a favorable outlook, despite short-term setbacks in bookings and profitability.
Revenue Growth
The second quarter saw Asure Software Inc. achieve revenues of $30.1 million, marking a 7% increase year-over-year. When excluding the impact of the Employee Retention Tax Credit (ERTC), the revenue growth was even more impressive at 10%. This growth underscores the company’s ability to expand its financial footprint despite external challenges.
Lathem Time Corporation Acquisition
Asure’s acquisition of Lathem Time Corporation for $39.5 million is a strategic move aimed at enhancing its workforce management solutions. This acquisition is expected to bring in additional high-margin revenue and bolster Asure’s time and attendance solutions, positioning the company for future growth.
Increased Full-Year Revenue Guidance
The company raised its full-year 2025 revenue guidance to a range of $138 million to $142 million, up from the previous $134 million to $138 million. This increase reflects Asure’s confidence in its growth trajectory and the anticipated positive impact of its recent strategic initiatives.
Record Contracted Revenue Backlog
Asure reported a contracted revenue backlog of $82 million, a significant 68% increase from the previous year. This record backlog indicates strong future revenue potential and reflects the company’s successful efforts in securing long-term contracts.
Attach Rates Improvement
The company achieved a 400 basis point increase in attach rates year-over-year, highlighting its success in cross-selling multiple products to existing clients. This improvement is a testament to Asure’s effective sales strategies and product offerings.
Decline in Bookings
Bookings for the second quarter declined by 53% year-over-year, primarily due to large enterprise deals booked in the prior year. This decline presents a challenge for Asure as it seeks to maintain its growth momentum.
Net Loss Increase
Asure reported a net loss of $6.1 million for the second quarter, compared to a net loss of $4.4 million in the prior year. This increase in net loss highlights the financial pressures the company is facing amidst its expansion efforts.
Organic Growth Challenges
Organic growth was limited to 1%, impacted by a 4% decline due to HR Compliance revenue issues related to ERTC bundling. This challenge underscores the need for Asure to address these issues to enhance its organic growth trajectory.
Lower Margin Guidance
The company revised its adjusted EBITDA margins guidance to 22% to 24%, down from the previous 23% to 24%. This revision is partly due to the Lathem acquisition, which, while strategically beneficial, presents short-term margin challenges.
Forward-Looking Guidance
Looking ahead, Asure Software Inc. has updated its guidance for the remainder of the year, projecting full-year revenue between $138 million and $142 million. The adjusted EBITDA margins are expected to be between 22% and 24%. The recent acquisition of Lathem Time Corporation is anticipated to contribute approximately $7 million in revenue for the second half of 2025. Despite challenges in HR Compliance due to ERTC bundling, the company remains optimistic about reducing these impacts and enhancing its organic growth.
In summary, Asure Software Inc.’s earnings call reflects a balanced outlook, with positive developments in revenue growth and strategic acquisitions countered by challenges in bookings and profitability. The company’s increased guidance and strong backlog suggest a promising future, though it must navigate short-term hurdles to fully realize its potential.