ASUR Q3 Deep Dive: Product Integration, Organic Growth, and Profitability Pathway

HR software provider Asure Software (NASDAQ:ASUR) announced better-than-expected revenue in Q3 CY2025, with sales up 23.7% year on year to $36.25 million. The company expects next quarter’s revenue to be around $39 million, coming in 2.3% above analysts’ estimates. Its GAAP loss of $0.19 per share was significantly below analysts’ consensus estimates.

Is now the time to buy ASUR? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Asure Software’s third quarter results showed broad-based revenue growth, with management attributing gains to increased demand across payroll, HR, and tax management solutions. CEO Pat Goepel highlighted the launch of Asure Central and stronger cross-selling momentum as key contributors, noting a sequential improvement in organic growth. The company’s recent Lathem Time acquisition also supported growth, especially in hardware and professional services. Management cited robust client interest in bundled offerings and ongoing investments in technology integration. Despite these positive operational developments, GAAP losses widened, which CFO John Pence explained was partly due to an increased mix of lower-margin nonrecurring sales.

Looking ahead, management expects continued organic growth and margin improvements, underpinned by the full rollout of Asure Central and further integration of acquired solutions. Goepel emphasized, "We believe we are at an inflection point in the business," pointing to the company’s ability to cross-sell more products to its expanding client base. CFO John Pence added that stable costs and higher revenues should position Asure Software for potential GAAP profitability in the next quarter and into 2026. Management also anticipates increased sales and marketing investment to drive adoption, while closely monitoring the macroeconomic environment and interest rate trends impacting float revenue.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to rising demand for integrated human capital management solutions, the impact of recent acquisitions, and higher client adoption of bundled products.

• Asure Central launch: The company introduced Asure Central, a new client interface designed to unify and enhance the user experience across its product suite. Management believes this will accelerate cross-selling and improve workflow efficiency for clients.
• Lathem Time acquisition performance: The Lathem Time acquisition contributed notably to hardware and professional services revenue, with management highlighting early progress in integrating recurring software sales into the acquired customer base. The company is transitioning Lathem’s business model toward bundled offerings, aiming for increased recurring revenue.
• Improved cross-sell attach rates: Management noted sequential improvement in attach rates—the proportion of clients adopting multiple products—citing a 7% quarter-over-quarter increase. Clients are increasingly purchasing three or more products, indicating successful execution of the company’s bundling strategy.
• Organic growth momentum: Excluding the impact of Employee Retention Tax Credit (ERTC)-related churn, organic growth accelerated to 7% in the quarter. Management views this as evidence of strong underlying demand and expects further improvement as integration initiatives take hold.
• Margin trends and cost structure: Gross margins contracted due to a higher mix of lower-margin nonrecurring sales tied to Lathem hardware, but adjusted EBITDA margin expanded on improved operating leverage. The company continues to invest in technology while maintaining a relatively stable cost structure, aiming for future margin enhancement as software penetration increases.

Drivers of Future Performance

Asure Software’s outlook is driven by continued cross-selling, product integration, and technology investments, though interest rate headwinds and integration execution remain watch points.

• Full rollout of Asure Central: Management expects the continued deployment of Asure Central to drive higher adoption rates, improve client workflow, and enhance attach rates, supporting both revenue growth and operating leverage.
• Integration and cross-sell from acquisitions: The company plans to further integrate Lathem Time’s offerings, targeting bundled sales to its 15,000-strong customer base and leveraging this for additional payroll and HR product adoption. Successful integration is expected to increase recurring revenue and margin expansion.
• Interest rate and macroeconomic sensitivity: Float revenue faces headwinds from lower federal funds rates, though management anticipates higher client fund balances will partially offset this. The company models stable employment levels and is monitoring macroeconomic factors that could impact sales cycles or customer budgets.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be closely monitoring (1) the adoption rate and client feedback from the Asure Central platform rollout, (2) progress in integrating Lathem Time and realizing expected cross-sell synergies, and (3) the company’s ability to sustain organic growth while moving toward GAAP profitability. We will also track any shifts in interest rates or macroeconomic conditions that could influence client budgets or float revenue.

Asure Software currently trades at $8.17, in line with $8.15 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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