Asure Software Inc (ASUR) 2012 Q4 法說會逐字稿

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

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

Thank you, Sayid, 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 have completed our review 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?

Thank you, Cheryl, and I would like to welcome shareholders, clients, employees, and interested parties in the Asure Software 2012 fourth-quarter and 2012 annual call.

Before we get to the results -- and I'll let Jennifer Crow, our CFO, speak to the results -- I would like to walk down memory lane, if I can, on the year that 2012 was, because 2012 was a historic year for Asure. From a timeline perspective, it was definitely a year of change. We started the year fresh off two acquisitions of ADI Time and Legiant time (sic) that were acquired in the fourth quarter of 2011. So, our first quarter in 2012 we were integrating those time and attendance acquisitions, and we did a phenomenal job. We renamed Asure Time & Labor AsureForce, and we also now have AsureForce and AsureSpace. But in the fourth quarter of 2011, that was the genesis of AsureForce. We renamed our products, and what we did with those products then ultimately was, we went to our next-generation platform, which now is version 11, and that just came out at the end of the fourth quarter.

What we also did in October at AsureForce was we signed an agreement with FotoPunch, where we had rights to the source code. And what's exciting about that is that only -- not only took our development from a perpetual-license product in some areas to a cloud-based product, but now we have the opportunity with facial recognition, voice recognition, to be mobile. That opens up our marketplace for AsureForce quite a bit, and we are excited about the prospects going forward.

Recently we signed our first customer in facial recognition, and that was exciting proof point of the strategy that has been AsureForce.

We had partnerships along the way. In June, we had a big partnership deal with MPAY; and MPAY has been a terrific partner for us, and they've positioned us for growth going forward. So that was another milestone in AsureForce.

On the AsureSpace side, we entered the year kind of relatively quiet. We had a nice SaaS conversion in our flagship product NetSimplicity, and we were making very, very good growth prospects. In the July timeframe, July 5 to be exact, we acquired PeopleCube, and that was a big swallow for our Company. This $8 million company in PeopleCube -- out of Framingham, Massachusetts -- gave us a London presence, so we now have a European office in London and European customers, and we are really excited about that.

What we also did at that point in time was sign our first agreement with Deerpath. And Deerpath, our financial partner, we were able to borrow $14.5 million at the time, and we have a facility at the time which is another $5 million for acquisition. Recently, we announced in our press release today that that $5 million facility is now a $10 million facility. So you see a pattern of growth, change, acquisitions, organic growth, and positioning, and we are really becoming an exciting company.

We also rolled out a new product in our SaaS area, our cloud-based area, as well as a mobile application on AsureSpace. So again, we are really going after the cloud-based repetitive marketplace. AsureSpace started as a conference room scheduling application, and recently we've been broadening out our suite of products into a real estate optimization software. This has been enhanced with the acquisition of PeopleCube, but also, when we go to clients now, we not only talk to them and talk with them about partnering and solutioning around a conference room scheduling, but also integrated hardware, as well as desk sensors to keep track of the utilization of their cubes.

And with cost of real estate being the second highest on the expense behind employee payroll, we feel like we have a solution now that will help companies with both the employees' labor costs as well as their real estate costs.

We now also have broadened out the analytics around our solutions in both TimeForce -- or excuse me, AsureForce and AsureSpace, and we are excited about those opportunities, because now the clients can measure their ROI. And in short, we've acquired, integrated, merged, rolled out new technology and developed a physical presence in Europe. I want to thank the people, the clients, and the investors that made 2012 a memorable year for Asure.

As it relates to the fourth quarter, Asure had a very solid quarter. We are ramping up our sales force to take advantage of our growth opportunities; we are selling our cloud-based solutions and products; we are introducing our mobile products. Success in the quarter -- we welcomed some really nice clients -- Queens School of Business, StoneGate Senior Living, Nielsen, Harvard Pilgrim, and Barrick Gold Corporation.

We are remaking the Company and excited for the prospects of 2013. We also recently filed a shelf, S-3, and amended our facility that I talked about with Deerpath. What those agreements do is position us for growth via further acquisition, and they position us to accomplish quite a bit in the future with a strong capital foundation. It will be exciting to see what 2013 brings us.

And before we go to 2013 and talk about the possibilities, I'd like to turn it over to Jennifer Crow to talk about 2012 and the fourth-quarter financial results.

Thanks, Pat. Good afternoon, everyone. I'm going to take a few minutes here to go over the fourth-quarter financial highlights, and then Pat and I will be happy to answer any questions during the Q&A period at the end of this afternoon's call.

In the fourth quarter, revenue was at $5.9 million, up 63% year over year, and year-to-date revenue was at $20 million, which was up 82% year over year. These increased revenues were driven by the acquisitions of PeopleCube in the third quarter of this year and the Legiant and ADI acquisitions in the fourth quarter of 2011.

Our non-GAAP revenue this quarter was $6.3 million and $20.9 million year to date. The difference in GAAP and non-GAAP revenue for the quarter is $317,000 and year to date is $978,000. This represents the amounts recorded as a result of the business combination accounting rules that require a fair market valuation of the PeopleCube deferred revenue. Recurring revenue as a percentage of overall revenue increased to 79% compared to 80% last quarter, and recurring revenue for the year was 79% compared to 72% in 2011.

EBITDA for the quarter was $948,000, excluding one-times. We incurred $175,000 in one-times this quarter, which consisted of legal and professional fees of $146,000; severance, recruitment and relocation of $26,000; and other one-time fees of $3000.

EBITDA year to date, excluding one-times, was $3.3 million. We incurred $2.4 million in one-times, which consisted of $1.1 million in legal and professional fees, OID, and mark-to-market of $465,000; severance, recruitment, and relocation of $395,000; and then a loss on the debt conversion of $198,000.

Our net loss, excluding one-times for the fourth quarter, was a loss of $0.09 a share. GAAP net loss per share amounted to $0.12 per share in the fourth quarter. The per-share difference of $0.03 was due to the one-time items.

Gross margin for the quarter was $1.6 million or 60% higher year over year. Gross margin year to date was $6.7 million, or 78% higher year over year. Our cash flow from operations for the quarter was $1.3 million and $2.8 million year to date. We had capital expenditures of $737,000 for the quarter and $904,000 year to date. $400,000 of this was due to the acquisition of the FotoPunch technology that we completed in Q4.

For first-quarter 2013, we are guiding a range of $5.7 million to [six point] million in revenue, and EBITDA excluding one-times to be between $400,000 and $600,000. For 2013, we are projecting $25 million to $27 million in revenue, $6 million in EBITDA excluding one-times. We are maintaining our 2013 revenue guidance range, but due to the increased investment in our direct-sales channel and our spending for growth, we have revised our 2013 EBITDA guidance, excluding one-times, to be at the low end of our previously communicated range.

At this time I would like to turn the discussion back to Pat Goepel, our CEO, for closing comments, and then we will open it up for questions. Thank you.

Thanks, Jennifer. In short, 2012 was a memorable year. Again -- acquisitions, remarketing the Company into the two divisions, growth, technology releases, and a lot of success. Our guidance going forward -- $25 million to $27 million. We feel we now have a very predictable, stable, growth-orientated solutions set. We have -- beginning of the year, we're in the low 70%; now we're in the high 79%, 80% range on repetitive revenue and SaaS growth.

From a marketing and sales perspective, we are investing in marketing and sales. You will see a new website this quarter. Our salespeople have grown. A couple of years ago, we were in the area of 10 salespeople; we are now close to the 30 salesperson range, and really, they are going out and getting cloud-based, mobile-based, repetitive revenue. And we feel that that's an excellent model going forward.

We are not finished on costs. The first quarter, we are -- have already executed taking out quite a few hosting costs, or IT costs, with the PeopleCube acquisition and the acquisitions of ADI and Legiant. We have centralized our hosting, bought some equipment, and now we have our clients running out of primarily 2 facilities. That used to be about 5 or 6 when we started the year. That, annually, will achieve close to $1 million of savings.

In short, as we look forward to 2013, we have strengthened the management team. We have a management team now with Jennifer Crow, Jennifer Roth, Steven Rodriguez, Mike Kinney; some of the management folks acquired from the PeopleCube acquisition, Joe, Chuck, Sean, Nigel. We feel really, really good about our management team.

Our products, we feel really, really good about, in the sense that they are next-generation, cloud-based products, mobile-based products. They are using technology that is new to the industry. We feel like the marketplace is coming to us. Our financial positioning we feel is very strong with the S-3 shelf filing. We have the ability to raise money for a future acquisition, should we choose it. We also have an increased facility with Deerpath that, if it's the right accretive acquisition, we have the ability to go get it.

Our people have spent quite a -- tireless hours integrating the company, and we feel that, largely, the integration now is complete and the efficiencies have been gained. Now, it's time to execute in 2013, and the guidance of $25 million to $27 million, and a large amount of that being repetitive, we feel really good about it. On the cost side, $6 million of EBITDA is a nice progression of EBITDA growth. If you look and have been with us since 2009, every year has been a nice increase in EBITDA growth.

And with that, now it's time to execute. Jennifer and I will -- are here to take any questions or comments that you have.

(Operator Instructions). Matthew Paul, Sidoti & Company.

Hi, guys. Congratulations on the quarter. I wanted to ask about the new products you released using your mobile strategy from the AsureSpace and potential timeline on the new products released for 2013.

Yes, Matthew. Thanks, and thanks for the kind words. On FotoPunch -- when we acquired FotoPunch, we liked the technology. We think with the mobile deployment of our applications, we feel that people will use mobile deployment for inputting. Also, with different languages around Europe, etc., ultimately, facial recognition, for example, is a great equalizer. We have released the products in the first quarter around AsureForce using that technology.

AsureSpace, we have rolled out in the fourth quarter an integrated hardware solution. The facial recognition software for AsureSpace will now be targeted towards the summer months. We did enter -- we have business intelligence that we have rolled out with AsureSpace and will continue to roll out through the first half of the year.

In the third and fourth quarter, we will offer, in both products, some enhanced reporting, mostly focused around ROI and workflow to help our companies achieve the ROI that they are looking for on both solutions, as well as use it in a technology that they can get high adoption.

When we look at our rates of utilization, what we are excited about in our client base is, we think there is a heck of an opportunity to grow our client base within divisions of companies and with employees in the client base. Our focus on ease-of-use, reporting, and mobile applications will allow data to get into our clients' hands, and the more people that use the software, the more money ultimately we get paid. So we are excited about that roadmap.

Okay, thank you.

(Operator Instructions). Michael Harrison, private investor.

My question would be relating to the fourth-quarter final earnings-per-share figure of a negative number, when I was under the impression that we were expecting a profit for the fourth quarter. I would like a little bit more insight into how that could happen.

Michael, you know, we got it towards revenue and EBITDA from a negative. We did have some one-time charges, and then with the result of the PeopleCube acquisition, we had more amortization than we had at the beginning of the year. So, we purposefully, with the PeopleCube acquisition, did not have guidance on the EPS number because we wanted to be thoughtful around the amortization number, etc. If you focus on the cash was positive, the EBITDA was a positive growth from the previous quarter, and the one-time items were quite a bit less, which reflects the integration of the acquisition.

So we did originally, before the PeopleCube acquisition, we would have hoped for a profitable fourth quarter. But by the same token, with the PeopleCube acquisition and the amortization, as well as the interest costs, we did not guide to a profitable quarter on the EPS side.

Thank you. (Operator Instructions). I'm showing no one else in the queue at this time.

Okay. Well, closing remarks -- in short, 2012 was a heck of a year. Our revenue growth was close to 82%. We did the right foundational acquisitions to remake the Company and get it going as far as the growth. We are excited about the investments being made in salespeople, management team, the growth of our products. We feel like our positioning has been strengthened organically, as well as by acquisitions with the shelf registration and the increased facility with Deerpath.

We now move into 2013 with quite a few growth prospects that we are frankly excited about. And this Company has undergone a lot of change, but it's change that we are embracing and we are ready for, and we are excited about the future of the Company. We can only be excited because we have great clients, fantastic employees, and very, very strong shareholders.

We'd like to thank you for your interest in Asure, and if you have any questions, Jennifer and I will be available as always. Thanks again for your time. Have a good night.

Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the presentation. You may all disconnect, and have a wonderful day.