Asure Software, Inc. Q4 FY2025 earnings call

• Full year 2025 revenues strong at $140.5 million, 17% increase. Broad-based growth in product lines like payroll, benefits, etc. - Launch of Assure Central last October with over two-thirds of clients upgrading, improving workflow and enabling event-driven marketing and cross-selling. - AI initiatives: Built secure AI layer in payroll and tax system, launched Luna, the first true AI agent for payroll and HR, which performed over 50 actions, had 80,000+ messages in first 90 days of Assure Central's GA, driving operational efficiency. Used AI internally for product development, revenue productivity, and operational efficiency. - Introduced AssureWorks, an ASO model, taking responsibility for key administrative processes for clients, expanding share of wallet and deepening client relationships. - Sales kickoff in Austin introduced AssureWorks, which is launched in limited scope. - Plan for 2026 includes increased investment in sales and marketing, target of 150 sales reps, expecting improved productivity from sales force with new technology like Assure Central.

Full year 2025 revenues were $140.5 million, an increase of 17% versus prior year. Fourth quarter total revenues were $39.3 million, increasing by 28% compared to prior year period, with recurring revenue growing by 18% to $33.7 million. Full year recurring revenue grew by 11% to $127.3 million. Professional services and hardware revenue was $5.6 million in fourth quarter compared to $2.3 million in prior year's fourth quarter, and $13.3 million for full year 2025 compared to $5.3 million prior year. Organic growth in fourth quarter was 10%, improved from third quarter's 4%, and full year organic growth was 5%. Gross profit for fourth quarter was $27.2 million versus $21 million prior year's fourth quarter. Full year gross margins were 68% compared to 69% prior year. Non-GAAP gross margins for fourth quarter were 75% vs 73% prior year, and full year non-GAAP gross margins were 73% vs 74% prior year. Net income for fourth quarter was $0.8 million vs net loss of $3.2 million prior year. Full year net loss was $13.1 million vs $11.8 million prior year. EBITDA for fourth quarter was $8.7 million vs $3.4 million prior year. Full year EBITDA was $18.2 million vs $11.4 million prior year. Adjusted EBITDA for fourth quarter increased 82% to $11.4 million from $6.2 million prior year, with adjusted EBITDA margin 29% vs 20% prior year. Full year adjusted EBITDA increased 42% to $32 million vs $22.5 million prior year, with adjusted EBITDA margin 23% vs 19% prior year.

• First quarter 2026 revenues expected in range of $41 million to $43 million, adjusted EBITDA between $10 million and $11 million. - 2026 revenue expected between $159 million and $162 million, with adjusted EBITDA margins between 23% and 25%. - Expect cost structure, including capex and capitalized R&D, to remain relatively stable on dollar basis throughout 2026. - Plan to continue investing in technology and product offerings to support sustained revenue growth and improve profitability.

Q: Congrats on terrific results for Q4 and 2026 outlook, bumped up low end of revenue guidance, what caused that?

A: Closed an acquisition a couple weeks ago, wanted to give more upside as a result.

Q: Curious about attach rates, 10% increase in number of customers buying multiple products, any target for 2026?

A: Don't have specific target, have internal goals of going from two products to four products with every sale, will measure and report progress.

Q: Post Latham acquisition, non-recurring revenue stepped up, how about cadence next year?

A: Expect next year recurring revenue in low 90s range, pretty even throughout year, some professional services and implementation work with large tax deals sporadic.

Q: Perception of private market for acquisitions, valuation expectations?

A: Will be opportunistic, public company valuations will go up as people analyze the space, will be loud about the story, will be opportunistic if private valuations come down.

Q: How far can AI roll through internal cost saving side?

A: Early days, but see opportunities on revenue and cost sides, Luna example, event-driven marketing, etc.

Q: Rep count, where are we now and sales incentives?

A: Currently around 118 reps, plan to get to 150, investing in enablement and training, focusing on getting four or more products in salespeople's bag to drive attach rate.

Q: Implicit free cash flow expectation for 2026 guide and Latham acquisition revenue contribution?

A: Adjusted EBITDA midpoint, deduct software cap, take away interest, unlevered free cash flow in mid-teens. Latham acquisition contributed about four and a half million in revenue in quarter, about two and a half million recurring and two million hardware, performing as hoped.

Q: Assure Central, user experience and adoption?

A: Single pane of glass with common user interface across all products, better usability, Luna helps with various actions, rapid adoption with 65%+ of clients upgrading, will see improvements throughout 2026.

Q: Guidance and organic growth implied, pace of acquisitions in 2026?

A: Expect double-digit organic for full year, not 100% every quarter, no imminent acquisitions but opportunistic.

Q: Assure Central adoption timing?

A: Big cohort with Latham acquisition (14,000) available in early April, want most direct clients adopted into Assure Central by first half of year.

Q: Sales cycles and pipeline levels for key offerings?

A: Pipeline prospects good, about 120% where it was last year, increasing marketing spend, see pipeline increase in April, May, sales cycle not seen big changes, customer is Main Street America, pipeline will grow with AI as accelerant.