Asure Software CEO Discusses Q3 2010 Results – Earnings Call Transcript

Asure Software Inc. (

ASUR

)

Q3 2010 Earnings Call Transcript

November 9, 2010 11:00 am ET

Executives

Lisa Flynn – IR

Pat Goepel – CEO

David Scoglio – CFO

Presentation

Operator

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Good day, ladies and gentlemen, and welcome to the Asure Software Corporate Conference Call. My name is John and I'll be your coordinator for today. At this time all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today's presentation. (Operator Instructions)

I would now like to turn the presentation over to your host for today's call, Lisa Flynn of Asure Software. Please proceed.

Lisa Flynn

Thank you, John. 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're 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?

Pat Goepel

Thanks, Cheryl [ph] and welcome everyone to Asure's third quarter results. We're happy you're joining us on our quarterly call. And today we're going to address the 2010 third quarter, some fourth quarter guidance and our business outlook for 2011, 2011 specifics will be handled on our next quarterly call.

First of all in the third quarter, we had a very busy third quarter. We're proud of our 7% revenue growth, 12% in NetSimplicity 2% in iEmployee. We're positive that we had positive net income and our EBITDA was approximately $0.08 a share.

In iEmployee, we had revenue growth and we did a number of different things that moved the business forward in the third quarter. First of all, client implementation rose 36%. We also gained an additional level of partnership with our channel partner, OASIS where they're going to include us in on more deals and we're proud of the evolution of that relationship.

Key wins in the quarter were Boys and Girls Club, United Labor, International Paper and The National Association of Public Schools. We also completed a significant milestone event in the Ceridian transition was completed this quarter. Our largest client now is approximately 1.5% of our base. That was not true quarters ago. So we're very proud of our independence.

NetSimplicity rose 12% this quarter. Three key wins, Carnegie Mellon, Raytheon and Samsung were the highlights in NetSimplicity. NetSimplicity, also I want to point out deferred revenue grew 10%. So while we're excited about the growth in our business year-over-year from a quarter perspective.

We're also excited that we're beginning to see traction in our deferred revenue or our repetitive revenue. And we're going to talk a little bit more about that as we move forward with this call. Also I want to remind investors that we have zero debt and our cash grew to $837,000 this quarter.

All this is a busy quarter for us, but this doesn't talk about what we did operationally. And operationally in the third quarter we largely completed our restructuring that's been going on for a year. One of our objectives, as you'll recall was to compete with a streamline cost structure and a streamline business.

What we did in the third quarter is, first of all, we moved some of our workforce out of Vancouver and we went into a smaller office in Vancouver this quarter. We moved headquarter offices in Austin this now complete. The HBI relationship where the second quarter we got out of the real estate deal, now we moved headquarter offices, we're in a much more right size sufficient office that allows us for focus and growth. We have now completed those moves.

All the technology, from our standpoint we've been through a process where we've centralized our technology and our IT infrastructure. There is virtually no more technology in each of our locations, i.e. India, Vancouver, Warwick or Austin. It is now in a centralized infrastructure and we feel that we're much more cost effective and we can scale the business in that approach.

We are now approaching our business in a similar structure. We settled a previous management dispute and got that behind us. And we also invested in some client services technology and some web based structure to help our clients and help our retention rates.

Also in the quarter, we divested our equity interest in a hardware business that we had and we completed that transaction. And then we did get a tax return advantage and a financial consideration advantage in our 401-k program.

In addition to all of that, some of our core service metrics remained very positive. In NetSimplicity we did a process change and we have more accountability in line of sight in our renewal processes and very pleased with our individuals that are participating. And our retention rates in some of the months were as high as 94% and 96%, which were very strong metrics for us. iEmployee, as you know we completed the Ceridian transition.

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