Asure Software Inc (ASUR) Q2 2024 Earnings Call Highlights: Navigating Revenue Challenges with ...
Revenue: $28 million for Q2 2024, down 8% year-over-year due to a $6.5 million reduction in ERTC revenue.
Recurring Revenue: $27.1 million, up 18% year-over-year, accounting for 96% of total revenues.
Net Loss: $4.4 million for Q2 2024, compared to a net loss of $3.8 million in the prior year.
Gross Margin: Decreased to 67% from 72% in the prior year; non-GAAP gross margin decreased to 73% from 77%.
EBITDA: $1.3 million for Q2 2024, down from $3.3 million in the prior year.
Adjusted EBITDA: $4.1 million, down from $6.1 million in the prior year; adjusted EBITDA margin was 15% compared to 20% in the prior year.
Cash and Cash Equivalents: $21 million at the end of Q2 2024.
Debt: $6 million.
Q3 2024 Revenue Guidance: $30 million to $33 million.
Q3 2024 Adjusted EBITDA Guidance: $6 million to $7 million.
Full Year 2024 Revenue Guidance: $123 million to $129 million.
Full Year 2024 Adjusted EBITDA Margin Guidance: 20% to 21%.
Organic Growth: Improved from 3.5% in Q1 to 7% in Q2 2024.
Release Date: August 01, 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 a solid second quarter with revenues of $28 million, driven by strong contributions from Asure Marketplace, Payroll Tax Management, and interest earned from client funds.
Recurring revenues grew by 18% year-over-year, accounting for 96% of total revenues, indicating a successful shift from one-time ERTC revenues to high-value recurring revenues.
The company achieved a significant deal with Vensure, enhancing its Payroll Tax Management solution's reach and potential for future growth.
Asure Software Inc (NASDAQ:ASUR) formed a partnership with MyHRScreens to expand background screening solutions, enhancing its product suite for small and medium-sized businesses.
The sales efforts resulted in a 131% increase in new bookings compared to the previous year, demonstrating strong demand and effective sales strategies.
Negative Points
Second quarter revenues decreased by 8% year-over-year due to a $6.5 million reduction in ERTC revenue.
The company reported a net loss of $4.4 million for the second quarter, compared to a net loss of $3.8 million in the prior year.
Gross margins decreased to 67% from 72% in the prior year, with non-GAAP gross margins also declining.
EBITDA for the second quarter was $1.3 million, down from $3.3 million in the prior year, reflecting the decrease in revenues.
The guidance for the full year 2024 revenue was updated to a range of $123 million to $129 million, reflecting variability in the timing of closing and implementing large enterprise arrangements and acquisitions.
Q & A Highlights
Q: Can you explain the wider range of guidance for 2024 revenue and any changes in assumptions from the previous quarter? A: The wider range is primarily due to the timing of large enterprise deals and tax opportunities. Some deals have phased installations or start dates that could shift, impacting revenue timing. The guidance reflects flexibility to accommodate these variables, but overall, the sales and backlog remain strong. (Patrick Goepel, CEO)
Q: Is the $15 million in ARR from acquisitions consistent with expectations, and how does it impact revenue recognition this year? A: Yes, the $15 million in ARR acquired over the last 10 months is consistent with expectations. The revenue recognition from these acquisitions aligns with our projections, and we anticipate closing more deals in the coming months. (John Pence, CFO)
Q: How is the demand environment compared to prior quarters, and what is the top-of-funnel activity like? A: Demand remains strong across the business, with an uptick in new payroll customers and increased activity in the tax business. The pipeline is robust, indicating healthy demand across all offerings. (Eyal Goldstein, President and CRO)
Q: Can you provide more details on the applicant tracking company acquired in July, including its impact on cash balance and revenue contribution? A: While specific details are limited, the acquisition adds technology we didn't have and offers cross-sell opportunities. The business is scalable, and we expect it to double in size shortly. (Patrick Goepel, CEO)
Q: What is the impact of potential rate cuts on float interest in the updated FY24 guidance? A: The guidance assumes two rate cuts, one in September and one in December, based on advice from Goldman Sachs. These cuts are factored into our model, though the impact is not substantial. (John Pence, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.