ASURE SOFTWARE INC Q3 FY2024 earnings call

• Acquisitions: 12 companies acquired over past four quarters with ~$15 million repetitive revenue, average purchase price ~2.6x multiple on repetitive revenue, including HireClick for applicant tracking system expansion.
• Organic performance: 5% organic recurring revenue growth in the quarter, sales bookings up 141% YOY, current backlog grew 35% Q2-Q3 2024 and 250% YOY.
• New initiatives: 401(k) solutions for small businesses leveraging Secure 2.0 Act, AsurePay financial services product, workbench compensation, preventative healthcare solutions.
• Operations: Multiple-pronged approach to improve processes, technology, and scale economies via acquisitions, with plans to integrate solutions on a common modern UI.

Third quarter revenue was $29.3 million, flat year-over-year due to a ~$5 million decrease in non-recurring ERTC revenue. Excluding ERTC, total revenue and recurring revenue both grew 20% year-over-year. Recurring revenue in the third quarter was 98% of total revenue, compared to 81% in the prior year's period. Recurring revenue growth was broad-based, driven by acquisitions and organic growth from expanding solutions portfolio.

• 2024 revenue revised to $119 million to $121 million range, adjusted EBITDA 18%-19%.
• 2025 revenue guidance $134 million to $138 million range, adjusted EBITDA 23%-24%.
• Q4 2024 revenue guidance $30 million to $32 million range, adjusted EBITDA $6 million to $7 million.
• Guidance excludes potential acquisitions but expects double-digit organic growth in 2025.

• Timing issues with large enterprise tax deals affecting revenue recognition.
• Potential impact of interest rates on free cash flow conversion.
• Visibility into IRS processing affecting accounts receivable related to ERTC.

Q: Joshua Reilly asked about revenue shortfall and enterprise payroll tax.

A: Pat Goepel and Eyal Goldstein responded, discussing timing of large deals, integration channels, and momentum in enterprise tax solutions.

Q: Brian Bergen asked about 2025 guide assumptions.

A: John Pence and Pat Goepel talked about underlying assumptions including interest rates, sales growth, and margin expansion from scale.

Q: Eric Martinuzzi asked about revenue delta buckets.

A: John Pence and Pat Goepel bucketized the shortfall into timing of tax deals, new product rollout, and acquisition timing.

Q: Jeff Van Rhee asked about tax deals, free cash flow, AR, debt leverage, sales reps.

A: John Pence and Pat Goepel addressed tax deal count, free cash flow conversion, AR expectations, debt leverage comfort level, and sales rep targets.

Q: Greg Gibas asked about organic growth, HireClick acquisition.

A: Pat Goepel and Eyal Goldstein discussed organic growth expectations, HireClick acquisition strategy, and synergies with recruiting and HR compliance.

Q: Charles Nabhan asked about acquisition multiples and competitive landscape.

A: John Pence and Pat Goepel spoke about acquisition multiples and competitive environment with legacy competitors like ADP and Paychex.

Q: Vincent Colicchio asked about bookings breakdown.

A: Pat Goepel stated bookings are ~70-30 new to existing clients, aiming to flip to 30-70 over time.