Asure Software (ASUR) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $28 million, down 8% year-over-year due to a $6.5 million reduction in ERTC revenue, while recurring revenue grew 18% to $27.1 million and now represents over 96% of total revenue.

• Organic growth improved to 7% in Q2 from 3.5% in Q1, with expectations for double-digit growth in the second half of 2024.

• Nine acquisitions in the last 10 months added $15 million in annual recurring revenue, supporting both organic and inorganic growth.

• Announced a major Payroll Tax Management deal with Vensure and expanded product suite with new background screening and applicant tracking technologies.

• Focused on technology improvements, product enhancements, and strategic acquisitions to drive growth.

Financial highlights

• Q2 2024 revenue (excluding ERTC) was $27.5 million, up 18% from $23.3 million in Q2 2023.

• Net loss for Q2 2024 was $4.4 million, compared to $3.8 million in the prior year.

• Gross margin decreased to 67% from 72% year-over-year; non-GAAP gross margin fell to 73% from 77%.

• Adjusted EBITDA for Q2 2024 was $4.1 million (14.5% margin), down from $6.1 million (20% margin) in the prior year.

• Cash and cash equivalents at quarter-end were $20.7 million, with $6 million in debt.

Outlook and guidance

• Full-year 2024 revenue guidance updated to $123–$129 million, with adjusted EBITDA margin expected between 20% and 21%.

• Q3 2024 revenue guidance is $30–$33 million, with adjusted EBITDA of $6–$7 million.

• Guidance reflects timing variability in large enterprise deals and acquisitions; two interest rate cuts are factored into float income assumptions.

• Management expects continued high demand and growth, supported by new partnerships and acquisitions.

• Seasonality is expected to persist, with higher revenues in Q1 due to payroll form processing.