Asure Software Inc (ASUR) 2007 Q4 法說會逐字稿

Good day ladies and gentlemen and welcome to the Fourth Quarter Asure Software Earnings Conference Call.

My name is Katina and I will be your coordinator for today.

At this time, all participants are in a listen-only mode.

And we will conduct a question-and-answer session toward the end of this conference.

I now would like to turn the call over to Ms.

Lisa Gunter of Asure Software.

Please proceed, ma'am.

Thank you, Katina.

Welcome, everyone, to Asure Software's conference call.

Before we start, I would like to mention that some of the statements made by management during this call might include projections, estimates, and other forward-looking information.

This will include any discussion of the Company's business outlook.

These particular forward-looking statements and all of the statements that may be made on this call that are not historical are subject to a number of risks and uncertainties that could affect their outcome.

You're urged to consider the risk factors relating to the Company's business contained in our latest periodic reports on file with the Securities & Exchange Commission.

These risk factors are important and they could cause actual results to differ materially.

This call is also being recorded on behalf of Asure Software and is copyrighted material.

It cannot be recorded or rebroadcast without the Company's express permission and your participation implies consent to the call's recording.

After we've completed our review of quarter, we'll open up the call for questions from the financial analyst community.

I would like to turn the call over to Richard Snyder, Chairman and Chief Executive Officer of Asure Software.

Thank you, Lisa.

Good morning.

Thank you for joining us this morning and welcome to Asure Software's FY 'O7 fourth quarter conference call.

With me this morning is Jay Peterson, Vice President and Chief Financial Officer.

We will both give you some comments and analysis of our performance for the quarter and for the year and then answer your questions.

This fiscal year has had significant progress for the Company.

We were able to generate substantial returns from our intellectual property licensing program which effectively gave the Company the opportunity to transition to a new core business with excellent growth and much less volatility.

We were able to grow the NetSimplicity Software business 52% over the prior year showing that customers clearly value our solutions in the work force management space.

And providing a solid platform to build from in the future.

We continue to lower expenses in overhead to much better match, a smaller footprint.

Overall, it was a year of repositioning and preparing to launch a new mission.

As I mentioned to you in our last conference call in May, our vision is to be a leader in providing innovative, easy-to-use solutions in the work force management space.

The opportunity in the work force management space is extremely large.

In fact, in 2006, spending on this category was over $1 billion and the market is growing over 10% a year according to the Aberdeen Group.

This space includes advanced work force process automation, labor cost control and employee self-service.

Customers are seeking solutions in both small and medium-sized businesses as well as large enterprises.

This demand is being driven by companies' needs to be more competitive and to lower cost by replacing traditional manual intensive human resource and accounting functions with automated easy-to-use and self--service tools.

The NetSimplicity product line has been our opportunity to begin building a successful presence in this category.

We have tested demand for employee self-service in scheduling and asset tracking and it is strong.

We have a stable, extensible product built on Microsoft.net.

We have built an effective low-cost sales and marketing model and our efforts have resulted in an impressive roster of more than 2,000 customers.

I had also mentioned that we intend to grow not only organically through but also through acquisition as well.

This would allow us to scale to a much larger size and to be profitable as quickly as possible.

On September 13, just two weeks ago, I was pleased to announce the change of our name to Asure Software and the acquisition of IEmployee, an industry-leading provider of on-demand work force management solutions with International operations.

IEmployee's complimentary offerings will integrate well with NetSimplicity and its underlying technology is very appealing as it is an integrated suite of on-demand solutions that can be our foundation for significant growth as well as to augment future potential acquisitions.

This acquisition effectively doubles the size of our Software business today.

As Asure Software, we have a fresh start and a strategy to be a strong contender in the work force management market.

Offering deep domain expertise as a single source provider of these solutions ranging from HR benefits and time tracking to easy-to-use scheduling and asset management.

We will continue to focus our collective efforts on penetrating small to medium-sized organizations and divisions of large Enterprises.

Now, over to Jay.

Thank you, Dick.

Good morning.

This morning, I will are discuss the financial highlights from this past quarter for our NetSimplicity Software business.

The continued strength of our balance sheet and the recent growth in our working capital and cash and a brief financial overview of the IEmployee acquisition.

I will had conclude with high level guidance for the future.

Let me start off with the NetSimplicity Software business.

Our Software bookings, bookings and not revenue, increased this past quarter by 40% over the prior quarter and this is our best bookings performance to date.

In addition, Software revenues increased by 32% to $1.3 million.

And note as Dick said, this revenue performance is up 49% over the corresponding period one year ago.

Total Software revenue for the entire year grew by 52%.

In addition to growing bookings, we grew both Software backlog and license average selling price from prior quarter levels.

Since we acquired this Software business, we have seen nearly a four-fold increase in Software license ASPs.

Margins for NetSimplicity were 80% this past quarter.

Which was essentially flat with the prior quarter.

And this is our third consecutive quarter with our Software margins in the 80% range.

And we are forecasting our NetSimplicity margins to be in this approximate range on a go-forward basis.

Operating expenses for NetSimplicity were approximately $1.3 million, a 3% increase over the prior quarter.

In this 3% increase in spending corresponds with a 32% increase in revenue for the same period.

In this last quarter, we generated approximately $100,000 in cash for NetSimplicity versus a $300,000 investment in the prior quarter.

Our total operating expenses decreased by approximately $1 million for the quarter due to the conclusion of the 746 patent trial.

In addition, we decreased our total head count by 2 to a total of 42.

In terms of earnings, we were profitable for the fourth consecutive quarter and our earnings amounted to $0.08 a share versus a profit of $0.23 a share in the prior quarter.

And year-to-date, our earnings for the fiscal year have totaled over $12 million.

Let me now turn to the balance sheet.

Our cash balance increased by 34% to $35.1 million and this is the highest level in over 3 years.

And note that our working capital grew by approximately $2 million to $23 million and this is the largest working capital balance since the second quarter of fiscal year '04.

Our DSO this past quarter was a very healthy 10 days.

Our current ratio was 2.7 this past quarter.

And that's an increase from last quarter's 2.3.

Said a little differently, we have nearly $3 in cash and AR for every dollar in short-term liabilities.

Interest income this past quarter was just under $400,000.

Also, since the start of this fiscal year, we have more than doubled our shareholder's equity.

Let me now turn to a couple of comments, brief comments on the IEmployee acquisition that we announced several weeks ago.

The total consideration of $10.7 million consists of 5 million shares of Asure stock and the balance is to be paid in cash.

In addition, there is a $1.6 million escrow and that will be in place for 18 months.

Also, there is not any earn out in this transaction.

The trailing 12 months of revenue for IEmployee are approximately $5 million.

And they have been growing in excess of 25% a year.

They have a fast-based business model with 80% plus recurring revenue.

Their gross margins are approximately 80%.

Very similar to NetSimplicity and they have been profitable for the past two years and they are approximately a 15% bottom line net income business.

And one other point, the balance sheet that we are acquiring is a neutral balance sheet in that the current assets will be equal to the current liabilities.

Let me now turn to guidance.

I would like to provide guidance in four different areas.

First off, our overall spending excluding IEmployee will significantly decrease due to the conclusion of the 746 trial.

We will increase spending modestly in our NetSimplicity Software business this quarter.

And we believe we will generate $12 million in revenue this year and will generate cash in the second half of this fiscal year.

And the last guidance point is that we're forecasting that we'll maintain healthy cash balances and working capital for the foreseeable future.

And one last comment, Asure Software will be presenting at the upcoming Dutton Associates Conference in New York on November 13, and at that conference, we'll next be providing a corporate update on our progress.

I would now like to turn the call back over to Richard Snyder.

Thanks, Jay.

Let me just summarize a couple of key points.

If you can't tell, we're very excited about the future.

We've demonstrated success by generating cash in a strong balance sheet over the last year and tightly managing our expenses.

We have demonstrated success in the work force management market place by growing NetSimplicity 52% over the last year.

We have a clear strategy and a place in an attractive fast-growing market with a SaaS delivery model.

Now, we have essentially doubled the size of our Software business and we've demonstrated our commitment to this long-term operating business with the acquisition of an industry-leading company IEmployee.

Last but certainly not least, we have an experienced management team to lead this new plan.

I look forward to reporting our progress in the future conference calls.

Thank you very much.

(OPERATOR INSTRUCTIONS) .

Your first question will come from the line of Richard West representing J.

M.

Dutton Associates.

Please

Good morning.

Good morning, Richard.

Nice to see and listen to a Software company instead of that Court dependent company that you did so well with and so -- it ended differently, obviously.

Well, thank you.

I have a question.

Going forward, could you give us an idea of taking in IEmployee for your SG&A expenses.

Since the revenues are doubled, will they double on a quarterly basis going forward?

Could that be a guidance?

No, no, they will not double on a quarterly basis.

Richard, this is Jay.

This business will be accretive in terms of their contribution and one of the key areas with an acquisition is what synergies you can derive between the two businesses.

And that's an exercise we've already begun and will report more -- we'll report more on that over the next 90 to 180 days.

But our expenses will not double.

Ok.

And cashwise, you've really got a nice balance there.

All the way down to per share balance.

Going forward, you've indicated that modest increase in your Software capital spending.

Otherwise, it is just the normal accretive from IEmployee and then also the cash flow positive in the second half.

So, any ideas for the cash balance besides getting nice interest on our markets.

Yes, we've looked at several things, Richard.

One is that we believe there are some other products out there.

Other companies out there that could strengthen our suite of offerings.

So, we're not precluded in doing another transaction in the future.

And secondly, our board, in the past, has authorized over $1 million of additional share repurchase and it is possible that we will be in the market this current quarter.

That would be great because we got to get above that dollar number.

Thank you very much.

We believe we have the tools in which to accomplish that.

Thank you.

Thank you, Richard.

Please stand by.

There are no further questions at this time.

Ladies and gentlemen, I would like to thank you for your participation in today's conference.

This concludes your presentation.

You may now disconnect.

Good day.