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AS

ASURE SOFTWARE INC (ASUR)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $34.854M, up 10.1% YoY, driven by Payroll Tax Management and contributions from payroll, benefits, and marketplace; GAAP diluted EPS was $(0.09) versus $(0.01) in Q1 2024 as investment ahead of enterprise implementations and ERTC wind-down weighed on profitability .
  • Versus consensus, revenue modestly exceeded Wall Street ($34.203M*) and Primary EPS was above expectations ($0.1903 actual* vs $0.1825*) while EBITDA was below ($4.145M vs $6.548M*), reflecting deliberate cost ramp in Q1 and softer float revenue amid 2024 rate cuts . Values retrieved from S&P Global.
  • Guidance was maintained: FY 2025 revenue $134–$138M and adjusted EBITDA margin 23–24%; Q2 2025 revenue $30–$32M and adjusted EBITDA $5–$6M; the company added a $60M credit facility (drew $20M) to accelerate reseller/customer acquisitions .
  • Strategic catalysts: enterprise tax partnerships (Strata, large audit/tax/advisory firm), launch of Canadian Payroll Tax Management solution, AI initiatives (Luna agent; AWS collaboration), and contracted backlog of $82M (+339% YoY) supporting H2 acceleration .

What Went Well and What Went Wrong

  • What Went Well

    • “Our sales efforts... resulted in a 45% increase in new bookings versus the prior year” and contracted revenue backlog reached $82M, +339% YoY, enhancing H2 visibility .
    • Payroll Tax Management momentum with enterprise partners: first phase live with Strata; multi-year agreement with a leading audit/tax/advisory firm to resell payroll and tax services .
    • Non-GAAP metrics improved: adjusted EBITDA rose to $7.316M (21.0% margin), and non-GAAP gross profit to $26.267M (75.4% margin), signaling underlying operational leverage .

  • What Went Wrong

    • GAAP net loss widened to $(2.398)M, with diluted EPS $(0.09) vs $(0.01) prior year, reflecting Q1 investment ahead of revenue and ERTC headwinds (~300 bps drag on growth) .
    • EBITDA missed Street consensus (company EBITDA $4.145M vs $6.548M*), impacted by subdued float revenue following 2024 rate reductions and higher Q1 cost base before expected H2 leverage . Values retrieved from S&P Global.
    • HR Compliance remained depressed due to cohorts bundled with ERTC in 2023; management expects improvement in H2 2025 as comps lap and attach/cross-sell normalizes .

Financial Results

Sequential performance (oldest → newest):

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$29.304 $30.792 $34.854
Diluted EPS ($USD)$(0.15) $(0.12) $(0.09)
Gross Margin (%)67.2% 68.0% 70.6%
EBITDA ($USD Millions)$2.220 $3.448 $4.145
EBITDA Margin (%)7.6% 11.2% 11.9%
Adjusted EBITDA ($USD Millions)$5.440 $6.229 $7.316
Adjusted EBITDA Margin (%)18.6% 20.2% 21.0%

YoY comparison:

MetricQ1 2024Q1 2025
Revenue ($USD Millions)$31.652 $34.854
Recurring Revenue ($USD Millions)$30.273 $33.187
Gross Profit ($USD Millions)$22.607 $24.608
Gross Margin (%)71.4% 70.6%
Diluted EPS ($USD)$(0.01) $(0.09)
Net Loss ($USD Millions)$(0.308) $(2.398)
EBITDA ($USD Millions)$4.429 $4.145
Adjusted EBITDA ($USD Millions)$6.808 $7.316
Non-GAAP Gross Profit ($USD Millions)$23.846 $26.267

Revenue mix:

MetricQ3 2024Q4 2024Q1 2025
Recurring Revenue ($USD Millions)$28.626 $28.521 $33.187
Professional Services, Hardware & Other ($USD Millions)$0.678 $2.271 $1.667

KPIs:

KPIQ3 2024Q4 2024Q1 2025
Recurring Revenue Share (%)98% —95%
New Bookings YoY Growth (%)141% —45%
Contracted Revenue Backlog ($USD Millions)——$82

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($)Q1 2025$33.0M–$35.0M Actual: $34.854M Achieved within range
Adjusted EBITDA ($)Q1 2025$6.0M–$7.0M Actual: $7.316M Above midpoint
Revenue ($)Q2 2025—$30.0M–$32.0M New
Adjusted EBITDA ($)Q2 2025—$5.0M–$6.0M New
Revenue ($)FY 2025$134.0M–$138.0M $134.0M–$138.0M Maintained
Adjusted EBITDA Margin (%)FY 202523%–24% 23%–24% Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Payroll Tax Mgmt (Enterprise)Went live with Workday/SAP clients; backlog up; wins incl. national grocer and SI Major multi-year agreement with industry leader to resell payroll/tax First phase live with Strata; accounting firm implementations ramping in H2 Strengthening
AI/Technology InitiativesBeta of new AI agent; modularized API services Introduced Luna AI agent Advancing AI with AWS (Amazon Q in QuickSight) and Luna use cases Expanding
AsurePayAnnounced launch Nov 2024 —Early adoption: >70% of active card users use 3+ times per month Early traction
HR Compliance (ERTC cohort)ERTC headwinds fading into 2025 —Depressed on ERTC bundles; improvement expected H2 2025 as comps lap Improving H2
Macro/tariffs/SMB demand——SMB demand stable; watch tariffs; pipelines/MQLs/SQLs up; deals slightly lengthened Neutral-to-cautious
Regional/Intl expansion——New Canadian Payroll Tax Management for enterprises; integration with Workday/Oracle/SAP New growth vector
M&A cadence/financing——$60M credit facility; $20M drawn; aim to accelerate reseller acquisitions Accelerating H2

Management Commentary

  • “Our sales efforts during the first quarter of 2025 resulted in a 45% increase in new bookings versus the prior year. Our contracted revenue backlog has gone up 339% year-over-year to $82 million” .
  • “We recently entered into a credit agreement... the Company may borrow up to $60 million. At closing... we received $20 million of gross proceeds” .
  • “We are guiding second quarter revenues to be in the range $30 million to $32 million... maintaining our 2025 revenue guidance... $134 million to $138 million with adjusted EBITDA margins... 23% to 24%” .
  • “Float revenue was down slightly relative to prior year... owing to rate reductions... however, increases in our average fund balances and our laddered investment portfolio has mitigated most of that impact” .
  • “We’re collaborating with Amazon Web Services... using artificial intelligence to better understand trends... prioritize those trends using AI for product development” .

Q&A Highlights

  • Attach rates and sales specialization: Dedicated teams are lifting attach rates; case study of a payroll-only client expanding to time/attendance, 401(k), HRC, and broker of record, driving revenue step-up .
  • HR Compliance post-ERTC: HRC cohorts bundled with ERTC had lower retention; comps lap by Q2, with H2 growth expected as core HRC trends normalize .
  • Macro/tariffs: SMB demand steady; pipelines/SQLs up; deals modestly elongated; monitoring tariffs for late-year impact .
  • Product roadmap and M&A: AsurePay addresses shift away from paper checks; broker-of-record/licensing enables benefits cross-sell; facility supports faster acquisition cadence in H2 .
  • Canada tax solution and enterprise pipeline: Early uptake via Strata/Venture; modern design and cross-border demand broaden addressable market .

Estimates Context

MetricQ1 2025 ConsensusQ1 2025 ActualNotes
Revenue ($USD)$34.203M*$34.854M Slight revenue beat vs Street*
Primary EPS ($USD)$0.1825*$0.1903*Primary EPS above Street*; company GAAP diluted EPS was $(0.09)
EBITDA ($USD)$6.548M*$4.145M EBITDA below Street*; company EBITDA aligns with reported

Values retrieved from S&P Global.
Management cited ERTC drag (~300 bps) and Q1 cost inflection ahead of enterprise ramps; float revenue softness from 2024 rate cuts also contributed to margin pressure .

Key Takeaways for Investors

  • Revenue and Primary EPS modestly exceeded consensus while EBITDA missed; expect operating leverage to improve in H2 as costs stabilize and enterprise implementations ramp .
  • Backlog ($82M) and bookings (+45% YoY) provide strong visibility; watch conversion pace and phasing of enterprise tax deployments (Strata, audit/tax/advisory partner) .
  • FY 2025 guidance maintained; Q2 guide embeds subdued EBITDA as investments digest—set expectations for a back-half acceleration .
  • Strategic initiatives—Canadian Payroll Tax Management, Luna AI, AWS collaboration, AsurePay adoption—expand TAM and cross-sell opportunities across SMB and enterprise .
  • M&A pipeline supported by new $60M credit facility (with $20M drawn) should accelerate reseller roll-ups, aiding scale and margin trajectory .
  • HR Compliance headwind from ERTC cohorts should fade in H2; monitor attach rate progress (401(k), HRC, broker-of-record) and cross-sell momentum .
  • Trading lens: near-term volatility possible on EBITDA/margin scrutiny; medium-term thesis hinges on backlog conversion, attach-rate execution, and inorganic expansion delivering 23–24% adjusted EBITDA margins in FY 2025 .