Asure Software Inc (ASUR) 2012 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Asure Software's corporate conference call. My name is Tranisa, and I will be your coordinator for today. At this time, all participants are in listen-only mode. We will facilitate a question-and-answer session towards the end of today's presentation.

(Operator Instructions)

I would now like to turn the call over to Cheryl Trbula of Asure Software. Please proceed.

Thank you, Tranisa, 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 other 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 report 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 being recorded on behalf of Asure Software and is copyrighted material. It cannot be re-recorded or rebroadcast without the Company's express permission, and your participation implies consent to the call's recording. After we have completed our view of the quarter, we will open up the call for questions from the financial analyst community. I would now like to turn the call over to Pat Goepel, CEO of Asure Software. Pat?

Thanks, Cheryl. And on behalf of Asure, I'd like to personally welcome all investors, analysts, clients, employees, and other interested parties to our first-quarter conference call. The first quarter was a phenomenal start and a whirlwind of activity to the year. We are reaffirming our guidance right up front of $18 million in revenue and $4 million EBITDA, less some one-time items. We are especially pleased with our multiple activities that we accomplished this quarter.

First of all, we have new branding, and the new branding of Asure is AsureForce and AsureSpace. AsureForce is formally time and attendance. AsureSpace is meeting room manager. And we are especially pleased with the way the look and feel of the branding and the roll-out has gone. This will allow us to have an umbrella of products. As we layer in acquisitions and new clients, we feel AsureForce and Space are the right names for the market, and the market recognizes these names in order to get growth. And 2012 is all about growth. As I mentioned last quarter, we've gone from a turnaround to a growth Company.

Secondly, we have realized new products this quarter. First of all, we had a roll-out of our mobile applications, which we're very pleased with. Market adoption and client adoption is starting to gain momentum, and the mobile apps is obviously the way of the future. And the future is happening right now at Asure. Also, we realized our new product offering, [Ocean], which is being released our partners now, as well as our direct clients. The market excitement for our new product in AsureForce has been exciting to happen, and it's taken us about a year to get there. So we're very pleased, and we think Ocean will do very, very well.

Operationally, we closed India and Canada, and this was a long time coming. When I first started, we were very spread out. We are consolidating around Warwick, Rhode Island and Austin, Texas. This plan has been signaled for quite some time. We completed the operation consolidation in the first quarter.

Finally, on the financial side, the first quarter, we finalized our convertible bond offering and took away the mark-to-market accounting, which really, going forward, will add predictability to the business. We took a charge this quarter. It'll be our last charge, a non-cash charge, and going forward, we'll have much predictability. Finally, we also did a 3-2 stock split. As I have been doing tours on our stock and going to the market, it became apparent that institutions wanted more ability to buy our shares, and they were concerned about our float. So we did a bold move and we went to a 3-2 split, and when the stock was in the $7, $8 range. I think it signals for management that we are bullish going forward. We now have close to 5 million shares outstanding. And what that will do for is Asure will allow not only the retail investors to invest in Asure, but it will also allow institutions to now invest in Asure. And we think will be for good for all shareholders going forward.

Finally, I would be remiss if I didn't talk about our cloud booking. In fact, I invited Mike Kinney on the conference call today. Cloud bookings were up 80% year over year, or excuse me, sequentially quarter over quarter, 40% year-over-year. The big names that we had in the quarter were GE -- and we had a couple of divisions of GE -- Kaiser, KPMG, Ohio Health, Harley-Davidson, Data Financial, J&J, [Maintenance], and [Mobez]. What was exciting about the client names where we really had clients sign up for our services all over the world. GE was in Japan. In Europe, we had KPMG. United States, Harley-Davidson Dealer Services really covered all United States. And then we had regional players as well. What was exciting about our traction in sales, it's really becoming not only US, but it is also the global reach is starting to happen.

I will now go to the specifics and turn it over to Dave. But I want to let you know that we are excited for the platform for growth. We are reaffirming the year. And Dave, why don't you give us the exact financials this quarter?

Thanks, Pat. I'm going to take a few minutes here to go over the first-quarter financial highlights, and I'll be happy to answer any and all questions during the Q&A period at the end of this morning's call. In the first quarter, revenue at $4.15 million grew by 14% over the last quarter, largely driven by the full-quarter effect of the acquisition of Legiant late in the fourth quarter. iEmployee and NetSimplicity revenue increased over the fourth quarter by 4% and 5%, respectively. ADI Time revenue was down sequentially but driven by seasonality and one-time revenue in the fourth quarter. Recurring revenue overall was up 1 point sequentially from 75% to 76%. As Pat mentioned, total cloud bookings were up 8% sequentially and 40% year over year. These cloud metrics represent product lines that only have full-quarter comparative data.

EBITDA for the first quarter was $776,000 excluding one-time items that were driven by our recent acquisitions of ADI Time and Legiant, along with the mark-to-market impacts related to the conversion of $1.15 million in convertible debt. This metric showed a 9% increase sequentially. Net income, excluding one-time items for the first quarter was at $0.03 per share. GAAP net income amounted to a loss of $0.18 per share, driven by $0.21 in one-time items. Gross margins were flat at 75% quarter over quarter. Outside the income statement, we posted some strong metrics as well. Free cash flow was in the range provided at $564,000 for the first quarter.

Stockholders' equity increased by 70% to $3.5 million due to conversions Pat mentioned of convertible debt at the end of March. Lastly, days' sales outstanding improved by 3 points to 32 days in the first quarter. Guidance for the rest of the year was outlined in today's press release. It included confirmation of our previous guidance and some additional information on earnings per share, excluding one-time items. This metric is forecasted to land for the year at $0.24 to $0.32. In the upcoming second quarter, revenue is guided at relatively flat due to a forecast reduction in one-time hardware sales and software sales as we continue to drive our repetitive revenue strategy. At this time, I'd like to turn the discussion back to our CEO, Pat Goepel, for closing comments and questions.

Thanks, Dave. Going forward, I talked a little bit about the first quarter being a whirlwind of activity, and we accomplished a lot. Going forward as I see it, couple of things with Asure. First of all, we are betting on the cloud. We're going to a repetitive model. You have seen the progress over the last 10 quarters. We're going to continue to do that through the year.

Second, we're going to get bigger. We're going to get bigger organically. We're going to drive more clients to our systems and our platforms. And we're also going to look at acquisition opportunities. We think there are a number of different acquisition opportunities that we find very exciting, and we have been very active in the financing market, as well as looking at acquisition opportunities.

On the sales front, we're going to grow, grow, grow. Our client base sales have been very positive. We're going to continue those initiatives, and I think you will see us putting more focus on it in the future. We're going to cross-sell some of our products, and we're going to grow organically, as well as grow from a repetitive revenue. We now, with $18 million in revenue for 2012, right now, it's about 75%, 76% that is repetitive revenue. That is up over when we started about 6 points or so. We're going to continue to drive that metric as well as we transform this Company into a cloud-based growth Company. So with that, we talked a lot about what we are doing and the results of this quarter. We hope you're pleased with those results. We know we are, and we have a plan to continue strong growth going forward. With that, I'd like to turn it over and see if there's any questions.

Thank you.

(Operator Instructions)

Thomas Pfister, RedChip Companies.

Congratulations on another good quarter here. The first thing I want to touch on here was your guidance again. It looks like -- I know you touched on it earlier. You [selected] flat growth here in 2Q. But it looks like you guys have projected a pretty big increase from third quarter fourth quarter. So could you please go over why that is the reason?

On the flat quarter from first to second, it is all about -- we have some seasonality in the business around one-time hardware, specifically in our time and attendance, or AsureForce division. And we had a great fourth quarter and some one-time sales. Our repetitive base is growing nicely, so we're very pleased with that in the second quarter. And we're going to continue to grow. We also anticipate that seasonality in the third and fourth quarter, as clients look to get on the system for January of 2013.

Okay. I know you also talked about the increase in repetitive revenue. Do you guys think that is going to continue to increase in the 76% mark here throughout the rest of the year?

I think as far as we are looking at, and we are active with some sales of cloud-based and partner revenue, we do think that we are going to continue to drive repetitive revenue. It's hard to forecast the mix. But I would say that our goal will be to keep ticking that up 1% or so a quarter if we can get there. So that is anticipated plan.

Okay. And then another question from me here. You guys referenced earlier how you seem to be getting some more sales on globally. Are you guys doing any additional initiatives to help drive global sales or anything there?

You could be my sales manager, Tom. We're actively looking at different partnerships. We are very pleased with our partner in Asia. It has driven a lot of value to the Asian market, and we have been able to do that. We have been active in some discussions in the area of Europe. We are actively going to go with our clients where they're going to take us and where our partners are going to take us. We do feel that the clients that we have want to push us to go globally, and we want to grow right with them. But we also want to do it in a very profitable way.

Right, right. And then one last question here, and then I'll let someone else hop on the line here. I think you guys referenced you had some features here for some of your new products. I think you referenced something called Ocean earlier in the call. Could you go over some of the new features you have introduced in both the time and labor management and also the meeting room software?

Yes, from a product, it's really our next-generation AsureForce product. Really what it does is it allows us -- it is a refresh as far as the user interface. So when you use our product, you will be able to use it in even a much easier fashion. It's modern. It's up-to-date. It interfaces with the mobile applications in a very seamless way. And then as far as functionality, it gives functionality not only at the clock level where some of our employees interface, but also then it is a little bit more robust from our reporting needs for our clients. And it helps them drive value in ROI.

And by the way, on AsureSpace, which we are looking over at least this quarter and the second quarter, a lot of the same similarities. We have really a web-services approach where we can plug into other cloud applications and interface. We have integration in the Outlook, which is Microsoft's products, mobile apps, which we see as the wave of the future. And not only mobile apps, but also mobile apps leading to the iPad or panels that will provide transparency and visibility coming into a meeting room. You can visually see if that space is taken. So we're excited about our product development. We are spending a lot of focus and time on what drives value for our clients, and as of this first and second quarter, our products are starting to pay off. And we think our clients will continue to buy.

Okay, great. Good to hear it, and that's all for me. Congratulations again on the great quarter, and I look forward to seeing your progress.

Thank you for the thoughtful question.

Yes, you're welcome.

Thank you.

(Operator Instructions)

I'm showing no additional questions at this time. I would like to turn the conference back over to Pat Goepel for any closing remarks.

I'm very much appreciative of the time we spent together today. I want to thank you in advance for following Asure, whether you are an employee, a client, an interested third-party, or an analyst. We believe that we are doing something special here. We have been very consistent on our approach over the last 10 quarters or so. And we think the best days will continue to lie ahead as we go from a turnaround Company to a growth Company. And stay tuned to us, because we're going to be very active as we grow the Company going forward. Take care, and have a nice day.

Ladies and gentlemen, thank you for your participation. That concludes the presentation. You may disconnect, and have a wonderful day.