Asure Software (ASUR) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $29.3M, nearly flat year-over-year, as a $5M decline in non-recurring ERTC revenue was offset by 20% growth in recurring revenue, now 98% of total revenue, up from 81% last year.

• Sales bookings rose 141% year-over-year, and backlog increased over 35% sequentially and over 250% year-over-year, positioning for double-digit organic growth in 2025.

• 12 acquisitions in the past year added $15M in recurring revenue, with an average purchase price of 2.6x recurring revenue.

• New product launches, including AsurePay and expanded 401(k) and benefits solutions, aim to enhance client offerings and cross-sell opportunities.

• Transition away from ERTC revenue completed, providing momentum into 2025.

Financial highlights

• Q3 net loss was $3.9M, compared to $2.2M in the prior year; adjusted EBITDA was $5.4M, down from $6.2M year-over-year.

• Gross margin declined to 67% from 73% year-over-year; non-GAAP gross margin fell to 73% from 76%.

• Cash and equivalents at quarter-end were $11.2M, down from $30.3M at year-end 2023; debt stood at $7.5M.

• Nine-month 2024 revenue was $89M, down 4% year-over-year, with recurring revenue up 15% and non-recurring revenue down 83%.

• Operating expenses increased to $69.4M from $66.9M year-over-year, driven by higher amortization and personnel costs.

Outlook and guidance

• FY 2024 revenue guidance is $119M–$121M, with adjusted EBITDA margin of 18–19%.

• Q4 2024 revenue expected at $30M–$32M; adjusted EBITDA of $6M–$7M.

• FY 2025 revenue guidance is $134M–$138M, with adjusted EBITDA margin of 23–24%.

• Guidance assumes only one additional acquisition in Q4 2024; no further acquisitions included.

• Interest rate headwinds modeled at a 3.5% Fed terminal rate, with $1M per quarter impact in 2025.