Cheryl Trbula – Investor Relations
Pat Goepel – CEO
Dave Scoglio – CFO
Asure Software, Inc. (ASUR) Q1 2011 Earnings Call May 11, 2011 11:00 AM ET
Good day, ladies and gentlemen, and welcome to Asure Software’s Corporate Conference Call. My name is [Marina] 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 toward 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, Marina, 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 expressed 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.
Thanks, Cheryl, and I would like to welcome investors, analysts, interested third-party clients and prospective investors in Asure for the first quarter 2011 conference call. For those of you that are new to the Asure story, about 18 months ago or so, a new management team was put in place to Asure. And for the first 18 months, we really worked hard at right-sizing the business and focusing the business and getting it strategically in the right markets to compete effectively.
This year, in 2011, we are really undergoing the transformation to a cloud-based company. And our operational focus has really been on sales of repetitive revenue and cloud-based products, enhancing our robust products into the cloud and servicing our customers for growth. We're very pleased with the first-quarter results. Some of the highlights that were in the first quarter were, first of all, earnings, we were break even excluding some small one-time items.
Our recurring cloud-based booking's growth was 73% positive, quarter-over-quarter, and 83% positive year over year. Our EBITDA of $200,000 in the first quarter, our cash growth was 29% over quarter-over-quarter, our deferred revenue growth, that speaks well to the recurring bookings, was 26% over year-over-year, 4% quarter over quarter. And finally, our GAAP earnings per share was $0.02 negative, which beat guidance by $0.02 to $0.05.
Some evidence of some of the bookings, first of all, in the iEmployee business, we grew at 27% of cloud-based bookings in the quarter. Some accounts that we were proud to bring on, UBM Global Trade, [Lattings], which is a national party and catering manufacturer and Nixon Peabody, which is a law firm.
In NetSimplicity, we grew 108% in our cloud-based bookings. Some names you might recognize, Random House, ABB, University of Tennessee and the Kansas City Police Department.
Our cash position is positive in the quarter and we are building momentum from a cash base. Our products that we deployed in the first quarter and are selling in the second quarter. First of all in the NetSimplicity, we worked hard to plug in our products with Microsoft Outlook, and we are excited about the development and the adoption rate of our clients to the Microsoft Outlook.
It was a new way for us to integrate with Microsoft. And we partnered where Microsoft threw in some money and we threw in some money to come up with this product. And we think we have a winner in this enhancement.
On the iEmployee side, we worked really hard on mobile devices and allowing our customers to punch in and out from a time-based solution on their Blackberry or on their iPhone and we think that this is a growing market for us in the future. We've also come out for guidance for the year and on a net income basis, we are about breakeven for the year in our guidance.
We're positioning to enhance our growth of top-line revenue, especially in the recurring revenue and our cloud-based bookings. And our EBITDA will be between a range of $851,000 and $1,131,000. So for the year, we are in a positive direction. We are happy to build on the momentum. And for the particular results, I'm going to turn the call over to our CFO, Dave Scoglio.
Thanks, Pat. I'm going to take a few minutes to go over the first quarter financial highlights. Some of the things Pat had mentioned I won't duplicate but be happy to answer any and all questions at the Q&A period at the end of this morning's call.
In the first quarter, revenue at $2.36 million declined 4% over the comparable period in 2010. This was primarily driven by lower one-time hardware revenue and the one-time effect of a settlement agreement we had with a major reseller in May of last year, which, hardware revenue was about $100,000 of that, the one-time effect to the settlement agreement was about $80,000. And these reductions were actually offset by an increase in recurring revenue of about $50,000.
Recurring revenue, I am pleased to report, has increased from 76% last quarter to 80% of total revenue in the first quarter.
EBITDA for the first quarter was $211,000 or $267,000 excluding one-time items. Gross margin grew to 81% in the first quarter, a 7% improvement over the comparable period and a 3% increase quarter-over-quarter. From an expense perspective, total expenses excluding non-recurring items, decreased by 9% over the comparable period in 2010, a reduction of $245,000 in the quarter and this was driven by both hardware cost of goods sold and business turn-around efforts, despite Q1 investments in sales and R&D that we continue to make.
Pat talked a little bit about the balance sheet and cash and deferred revenue. Also want to mention, every quarter we've seen about a 10 basis points increase in our quick ratio. So we went from about 0.8 last quarter to 0.9 this quarter.
This concludes the discussion of the financial highlights. I am going to turn it back over to Pat for closing comments and questions.
Thank you, Dave. From a company perspective, I'd like to remind investors about the Asure story. From a public company perspective, we made a lot of progress over the last 18 months or so. We are a public company. We have net operating losses that are in the $150 million range and that is an asset going forward.
We have a lot of predictability in our business now that we are 80% of recurring revenue. Our future revenues are being pointed towards the cloud and cloud-based sales. We think we have a lot of market adoption win behind us that the market is going to a cloud-based revenue model for software companies. We feel like we are in the early days of that and as you can see by our growth numbers in cloud-based bookings, we feel that that trend is early and will be in favor for us going into the future.
I'd like to remind us that we have no debt. Our cash position has been growing. We've grown approximately $1 million over the last year in our cash position. And we are looking for acquisitions.
We are doing a lot of product and platform work that we feel we are at the place now and in the future, where we can acquire companies and put their customers or their clients on our platform, which gives us operating leverage to grow. We have a management team, including the Board that has run bigger companies in the past and have had a number of different positive experiences with the investor community and larger companies. So we do feel we have the horsepower to grow.
We're excited about the positioning that we are putting the Company in. We hope you are, as well. And, with that, I will turn it over to answer any questions. And Dave and I are available for any details from any one of you.
(Operator Instructions) I am showing no questions at this time. I'd like to turn the call back over to Pat Goepel.
I would like to thank everybody for attending the call today. We appreciate your interest in Asure. We are hopeful that you are pleased with our story. I know we are excited about the future of Asure and we thank you for your time today.
Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. Thank you and have a great day.