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AS

ASURE SOFTWARE INC (ASUR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $30.8M (+17% YoY; +22% YoY excluding ERTC), recurring revenue was $28.5M (+14% YoY), GAAP diluted EPS was $(0.12), and adjusted EBITDA was $6.2M (20.2% margin) .
  • Management reiterated FY 2025 revenue guidance of $134–$138M and adjusted EBITDA margin of 23–24%, and introduced Q1 2025 guidance of $33–$35M revenue and $6–$7M adjusted EBITDA; contracted backlog is $79M with ~one-third expected to be recognized in 2025 .
  • Strategic highlights: multi-year reseller agreement with a leading audit/tax/consulting firm for payroll and payroll tax solutions, strong enterprise traction (e.g., Kroger, Nucor), launch of AsurePay and Luna AI agent; bookings rose 86% in 2024 and backlog expanded materially .
  • Capital and execution: pursuing a $20–$60M credit facility (SOFR +4%–7%) to accelerate customer acquisitions; near-term focus on cross-sell/attach rates and margin scaling as enterprise implementations ramp .

What Went Well and What Went Wrong

What Went Well

  • Recurring revenue mix and profitability improved: recurring reached $28.5M in Q4 (+14% YoY), non-GAAP gross margin rose to 73.2% and adjusted EBITDA to $6.2M (20.2%) .
  • Enterprise tax momentum and backlog: new multi-year agreements and backlog growth (contracted backlog $79M, ~1/3 expected in 2025); CEO: “we signed a multiyear agreement with... the industry leader in audit, tax, consulting and advisory services to resell our payroll and payroll tax management solutions” .
  • Product innovation: launch of Luna, “the industry’s first AI agent for payroll and HR,” and AsurePay (500 cards in use) to drive attach-rate expansion and future margin scale .

What Went Wrong

  • GAAP losses and margin pressure: Q4 GAAP net loss $(3.2)M; gross margin was 68.0% (down from historical levels), reflecting ERTC sunset and investment ahead of enterprise implementations .
  • Timing variability: revenue recognition and professional services tied to large enterprise tax deals slipped into later periods; Q4 bookings growth was +28% (below the Q2/Q3 pace) .
  • Financing and macro headwinds: credit facility not yet finalized (exclusive negotiations ongoing), and management modeled potential rate cuts that could pressure float income in 2025 .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$26.264 $28.044 $29.304 $30.792
Diluted EPS ($USD)$(0.14) $(0.17) $(0.15) $(0.12)
Gross Margin (%)67.9% 67.3% 67.2% 68.0%
Non-GAAP Gross Margin (%)71.7% 72.6% 73.0% 73.2%
EBITDA ($USD Millions)$1.127 $1.316 $2.220 $3.448
EBITDA Margin (%)4.3% 4.7% 7.6% 11.2%
Adjusted EBITDA ($USD Millions)$2.775 $4.057 $5.440 $6.229
Adjusted EBITDA Margin (%)10.6% 14.5% 18.6% 20.2%

Segment revenue mix:

Revenue BreakdownQ4 2023Q2 2024Q3 2024Q4 2024
Recurring ($USD Millions)$24.985 $27.051 $28.626 $28.521
Prof. Services/Hardware/Other ($USD Millions)$1.279 $0.993 $0.678 $2.271
Recurring (% of Total)95.1% 96.5% 97.7% 92.6%

KPIs and balance sheet snapshot:

KPIQ3 2024Q4 2024
Contracted Backlog ($USD Millions)$67 $79
New Bookings Growth (YoY)+141% +86% (full-year)
Q4 Bookings Growth (YoY)—+28%
AsurePay Cards in Use (Units)—500
Cash & Cash Equivalents ($USD Millions)$11.248 $21.425
Total Notes Payable ($USD Millions)$7.506 (LT) $12.717 (current $7.008 + LT $5.709)
Weighted Avg Diluted Shares (millions)26.429 26.602

Notes: Non-GAAP measures are defined and reconciled in the company’s materials; first quarters typically benefit from seasonal W2/ACA revenue recognition .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ1 2025—$33.0M–$35.0M New
Adjusted EBITDAQ1 2025—$6.0M–$7.0M New
RevenueFY 2025$134M–$138M $134M–$138M Maintained
Adjusted EBITDA MarginFY 202523%–24% 23%–24% Maintained

Management did not provide reconciliations for guidance due to uncertainty around non-recurring items .

Earnings Call Themes & Trends

TopicQ2 2024 (Prev)Q3 2024 (Prev)Q4 2024 (Current)Trend
AI/Technology initiativesAdded ATS (AI-assisted), expanded Asure Marketplace; emphasis on unified UI HCM architecture modularized; beta of AI agent Launch of Luna AI agent for payroll/HR Expanding scope and deployment
Enterprise payroll tax mgmtVensure agreement; robust pipeline Wins with large grocery chain and SI; backlog up 250% YoY Additional multi-year reseller agreement; implementations across Oracle/SAP/Workday Scaling implementations and channels
Macro/hiring environmentStrong demand in SMB; hiring needs persist Timing variability impacts enterprise PS; modeled rate cuts Main Street hiring steady; white-collar softness; conservative employment modeled flat Mixed; conservative planning
Product performance (AsurePay)Announced AsurePay Preparing launch; mobile app features ~500 end clients on AsurePay; ramping Q2 Early adoption, building
401(k) offeringSECURE 2.0-driven demand Initial momentum; attach/bundles strategy Dedicated retirement sales team; record unit sales month Accelerating
Credit facility / financingEvaluating debt options in 2025 ATM established for flexibility; considering debt Negotiating $20–$60M facility at SOFR +4–7% (exclusive through 4/13/25) Advancing toward close
Interest/floatFloat contributed in Q2 Modeled rate cuts (Sep/Dec) Float may remain stable despite rate reductions; modeled 2025 terminal rate ~3.5% Cautious on rates
M&A strategy~$15M ARR acquired over ~10 months; reseller-focused Average 2.6x revenue multiples across deals Pace depends on credit facility; 2 deals replaced a fallen LOI Pipeline robust, funding gating

Management Commentary

  • “Excluding the one-time impact of ERTC revenue, our fourth-quarter revenue grew 22% year-over-year, reaching $30.8 million—an impressive finish to the year… Recurring revenue… now represents 96% of total revenue” — Chairman & CEO Pat Goepel .
  • “We are reiterating our 2025 revenue guidance of $134 million to $138 million with EBITDA margins of between 23% and 24%” — CEO .
  • “We are contemplating a facility between $20 million to $60 million with a rate of SOFR plus 4% to 7%… to put the gas on the customer acquisition model” — CFO John Pence .
  • “In addition, our payroll tax management product experienced very strong momentum… several major multiyear agreements signed, such as… Kroger and Nucor” — CEO .

Q&A Highlights

  • Enterprise payroll tax pipeline and salesforce re-focusing: interfaces live with Oracle, SAP, Workday; specialized sales groups established to drive attach across benefits, retirement, HR compliance .
  • Credit facility rationale: main purpose is to fund upfront cash components of customer acquisitions; pace of M&A in 2025 hinges on facility completion .
  • Q1 seasonality and mix: ~$5M W2/ACA seasonal revenue; shift to more PEPM/annual pricing reduces one-time year-end concentration .
  • AsurePay ramp: ~500 clients live; broader roll-out planned in early Q2; expected to replace third-party card revenue and add high-margin streams .
  • Margin path: investments in enterprise staffing and unified UI/AI to reduce rework; margin lift more back-half weighted as revenues ramp against relatively stable cost base .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable at time of writing due to data access limitations. As a result, we cannot characterize the quarter as a beat/miss versus consensus. Future estimate comparisons will default to S&P Global once available.

Key Takeaways for Investors

  • Recurring model resilience: Q4 revenue growth (+17% YoY; +22% ex-ERTC) with adjusted EBITDA margin improving to 20.2% supports a durable mix shift toward subscription and services .
  • Guidance intact: FY 2025 guide maintained ($134–$138M revenue; 23%–24% adjusted EBITDA margin) despite implementation timing variability — a positive for medium-term visibility .
  • Enterprise tax catalysts: reseller agreement with a leading audit/tax/consulting firm and named enterprise wins (Kroger, Nucor) expand channel capacity and TAM; expect revenue recognition to stagger with ERP timelines .
  • Capital optionality: a potential $20–$60M credit facility (SOFR +4–7%) is aimed at accelerating accretive customer acquisitions; watch for closing updates as a stock catalyst .
  • Product attach strategy: AsurePay (early traction) and Luna AI agent are designed to raise ARPU and margins via cross-sell; management will track attach-rate improvements over 2025 .
  • Execution watchpoints: professional services timing and ERP-dependent deployments can shift revenue across quarters; management modeling rate cuts suggests prudent caution on float .
  • Near-term trading lens: confirmation of credit facility, enterprise go-live milestones, and attach-rate disclosures are likely to drive sentiment; Q1 guidance ($33–$35M revenue; $6–$7M adj. EBITDA) sets a reasonable bar for seasonal dynamics .