Asure Software Inc (ASUR) 2010 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth quarter 2010 Asure Software earnings conference call. My name is Allie 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. (Operator Instructions) I'd now like to turn the call over to Cheryl Trbula of Asure Software. Please proceed.

Thank you, Allie, and welcome everyone to Asure Software's conference call.

Before we start I'd 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 are urged to consider the risk factors relating to the Company's business contained in our latest periodic reports on file with the Securities and 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 the quarter, we'll open up the call for questions from the financial analyst community. I would like to now turn the call over to Pat Goepel, CEO of Asure Software. Pat?

Thank you, Cheryl, and I'd like to personally welcome the shareholders, investors, analysts, potential investors and employees listening to the Asure fourth quarter conference call of 2010.

We are going to cover today the year 2010, as well as the quarter. We'll open with the quarterly comments. First of all for the quarter, we had EBITDA of $0.11. Which -- it was good to see the progress in EBITDA. And cash growth, which also trails very closely to EBITDA, was 23% higher in the fourth quarter. The repetitive initiatives that we've been working on have led to deferred revenue up 10% and that was encouraging as well. Finally, one other key point was earnings of $0.03 per share positive really led a good year -- in a year of momentum and change, we ended the year of 2010, and the quarter, on a high note with $0.03 a share, $0.02 excluding some one-time costs.

New clients this quarter, Blue Cross Blue Shield, University of Minnesota, Tennessee Valley Printing and the Boys and Girls Club of America. We're very proud of our new clients. All came on board in our SaaS model. 76% of our repetitive revenue was achieved this quarter and that's the highest I believe on record and it gives you proof the transformation to cloud-based systems that we've talked about is really taking hold.

Our product initiatives are going very well in the quarter. We announced, and we're going to have some further announcements, on our move to the mobile devices, both Blackberry as well as Apple iPhones, and we're excited about that. Our customers and potential customers are excited about that as well.

For the year, we're very proud of our profit going up -- some one-time items that are in the press release of $3.9 million for the year.

And, as you recall, after a proxy fight, we exited some businesses that we really shouldn't have been in. The video conferencing business, the patent business and the real estate business. And we're focused now on two businesses, time and attendance, which is iEmployee, as well as NetSimplicity, which is the meeting room scheduling business. Excluding the real estate transaction we talked about, we were in the black this year, which was the first time in over three years. So, again, very excited about that development.

I am now going to turn the call to our CFO, Dave Scoglio, and he's going to talk in more detail about some of the numbers for the quarter.

Thanks Pat. As Pat said, I am going to go over the fourth quarter financial highlights and recap some of the things that Pat just mentioned. And we'll be happy to answer any and all questions during the Q & A period at the end of this mornings call.

In the fourth quarter revenue was at $2.4 million, a 7% decline over the comparable period in 2009. This was primarily driven by lower one-time hardware revenue and, as Pat mentioned, our continual transition from a one-time license revenue model to a cloud-based model. And as Pat mentioned, our recurring revenue quarter-over-quarter improved from 73% to 76%. EBITDA for the fourth quarter was $320,000, $0.11 per share. This represented improvement over the prior quarter of 52% and the comparable quarter in 2009 of 29%. Net income for the fourth quarter was positive and within earnings guidance, at $0.02 per share all in. And as Pat mentioned, $0.03 per share excluding one-time items.

On an annual basis, significant progress was made. We improved the full-year P&L by $3.9 million in 2010, excluding one-time items. Significant items for 2010 included the buy out of our Austin headquarters lease, which amounted to a $1.2 million write-off in the second quarter of 2010.

Full-year results for 2010, excluding one-time items, was a gain of about $100,000, or approximately $0.03 per share. From a gross margin perspective we are at 78% in the fourth quarter, which is a slight improvement, 2%, over the comparable fourth quarter in 2009. Operating expenses, excluding one-time items, decreased 24% over the comparable period in 2009, reduced from $2.3 million to $1.8 million. This is primarily driven by the business turn-around efforts begun at the change of management in late 2009, headed up by our CEO, Pat Goepel.

In the first quarter of 2011, and consistent with prior guidance, we are making further investments in operating expenses, particularly in the areas of sales and R&D to facilitate our 2011 strategies for building our base of repetitive customers and upgrading our cloud-based technology solutions.

On the balance sheet there are several notable improvements. From the third quarter, as Pat mentioned, cash has grown to almost $1.1 million. Deferred revenue is up, and actually current liabilities, excluding deferred revenue, have been reduced by almost $400,000. Also of note is we continue to have zero long-term debt on the balance sheet.

Lastly, our quick ratio increased from 0.7 to 0.8 quarter-over-quarter. Excluding deferred revenue, which arguably has a substantially lower actual cost than other liabilities when coming due, our quick ratio for the current quarter would be 2.3, up from 1.3 in Q3 2010 by the same measurement. This concludes our discussion of the financial results of the fourth quarter of 2010, and I'd like to go right into our first quarter outlook for 2011.

As outlined in this morning's press release, Asure is forecasting estimated loss for the first quarter of 2011 of $0.04 to $0.07 per share, with an EBITDA range of positive $0.01 to $0.04 per share. Driving this earnings losses is the culmination of a few things. First of which is the near-term revenue recognition differences associated with switching from a one-time perpetual license focus to a recurring cloud-based solution. Additionally, as Pat mentioned in previous calls, our strategy is to build this larger repetitive customer base and it's driving investment in sales and technology as well.

At this time I'd like to turn the discussion back to our CEO, Pat Goepel for closing comments and to begin the Q & A session.

Great, Dave. Thanks. For everyone here, investors, potential investors, shareholders, employees and analysts, if we step back from it, Asure has made tremendous progress in its transformation. We're now going full throttle from an operating business with two excellent products. We are fixing our products and growing our products on the Internet and really becoming a cloud-based Company. We're setting up our platforms where we can get clients in bunches, which we are really excited about. Stepping back, we have net operating losses of $152 million, we're a public Company listing, we're really poised for growth, we've proven that we can get profitable.

We also feel that we are undervalued, and we feel that we have an opportunity from an acquisition perspective to take advantage of our Board and our management expertise in getting more volume. We're looking for the right acquisitions and, to that end, the Board of Directors have approved a management -- or, an acquisition committee to look for creative acquisitions. We feel we are in a good place to do that, now that we've simplified the business. We are very active in the marketplace and looking for deals and we feel we can assimilate an acquisition this year. And we would like to see that being done and, of course, acquisitions are hard to predict, but we do feel like we have the management team and the Board of Directors in place to do that.

We also feel that our platforms are becoming easy for us to assimilate acquisitions as well, compared to where we were over the last year. We are in big markets, we see big opportunity. We're very excited about the future, and we hope you are as well.

With that, I'm going to turn it over to anybody that would like to ask potential questions.

(Operator Instructions) James Gladney of Liberty Capital.

Good morning, Pat, how are you?

I'm doing very well. Good morning, Jim.

Can you give us any guidance on earnings or EBITDA through the balance of 2011?

Yes, we are going to do that on the next call. But as far as earnings, we had a conference that was on the web, at the Sidoti conference, where we outlined a multi-year plan, and I would refer you to that as guidance for now. We'll update that in the next quarterly call. But clearly, we're guiding towards profitability this next year, and revenue growth that will increase through the quarters for the year as we go to a more repetitive-based model.

Clearly, when we are used to selling, and getting a lot of the revenue all at once, we are now selling more and more repetitive, so it takes time to build up that pipeline again. But that was outlined at the Sidoti conference, and at the next conference call I will talk about the year guidance in greater detail.

Thank you.

Thanks, Jim, and thanks for your support.

(Operator Instructions) I'm showing no further questions at this time. I'd like to turn the conference back over to management for any closing remarks.

Thank you. Yes, again, I just what to highlight, Asure is in large part through a difficult transition that -- and we've come through the other side in a very positive formation. We've simplified the business greatly; we're focused on our two products. We are making tremendous progress in our products, and we are excited about our platforms.

We are looking for growth as 2011 occurs, and growth in the right way, meaning it's in cloud -based solutions and a repetitive nature to build on that for a great 2012 and '13. We're excited about our opportunity; we're excited on the quarter, where we delivered cash growth of 23%, EBITDA of $0.11, deferred revenue at 10%, and our earnings that were positive.

We're excited in the future that we are in big markets, and we do believe that we have some acquisition opportunities, and we're going to put some focus on that. So I think it will be as exciting as 2010 was for Asure in the transformation. 2011 we believe will be just as exciting, as a Company now that starts hitting in stride with new products, revenue growth, getting into the proper model of the cloud-based model, as well as potential acquisitions.

So we'd like to thank you for your support. We do feel very good about the future, and very good about your support, and we're excited to serve you. Have a great day.

Ladies and gentlemen, that does conclude today's conference. You may all disconnect, and have a wonderful day.