What Asure Software (ASUR) Said on Its Q3 Earnings Call

Key Points

• Q3 performance improved significantly: Revenue rose 10% year over year to $40 million, recurring revenue increased 16% to $36.9 million, and adjusted EBITDA grew 29% to $10.5 million. The adjusted EBITDA margin expanded to 26%, while the net loss narrowed to $0.6 million.
• Product expansion and cross-selling are accelerating: Asure expanded Payroll Tax Management through AWS and Oracle marketplaces, launched AsureCentral to resellers, and reported a 7% increase in clients purchasing multiple products. Luna AI usage also grew, with more than 26,000 customer conversations during the quarter.
• Acquisition supports a stronger outlook: Asure acquired a Southeastern U.S. payroll processor for $26.5 million and raised its outlook to $42 million-$44 million in Q4 revenue. Preliminary 2027 guidance calls for $183 million-$187 million in revenue and a 26%-28% adjusted EBITDA margin.

Asure Software NASDAQ: ASUR reported third-quarter 2026 revenue of $40 million, up 10% from $36.3 million a year earlier, as the human capital management provider cited growth across payroll, benefits and HR compliance offerings.

Recurring revenue rose 16% year over year to $36.9 million and accounted for approximately 92% of total quarterly revenue, compared with 88% in the prior-year period. Chief Executive Officer Pat Goepel said organic revenue growth was 9%, versus 4% in the third quarter of 2025, while organic recurring revenue growth reached 14%.

“Growth was strong and broad-based with payroll benefits and HR compliance among the key contributors,” Goepel said. He attributed recurring growth in part to the rollout of AsureCentral and continued momentum in Payroll Tax Management.

Margins and profitability improve

Gross profit increased to $27.8 million from $23.5 million a year earlier. GAAP gross margin expanded to 70% from 65%, while non-GAAP gross margin increased to 75% from 70%.

The company’s net loss narrowed to $0.6 million from $5.4 million in the third quarter of 2025. EBITDA rose to $7.9 million from $3.9 million, and adjusted EBITDA increased 29% to $10.5 million. Adjusted EBITDA margin expanded to 26% from 22%.

Chief Financial Officer John Pence said the company is seeing the benefits of operating scale, while artificial intelligence-related productivity gains remain in the early stages. Asure is using AI in operations, call centers, finance and sales, he said, in addition to its Luna AI assistant for customers.

Goepel said Luna conversations increased about 25% during the quarter to more than 26,000, and the platform completed more than 15,000 AI actions for customers during its first year. At the start of the fourth quarter, Asure released time-import agents intended to bring Luna into payroll workflows while retaining human oversight at decision points.

Distribution expansion and product cross-selling

Payroll Tax Management represented nearly 20% of Asure’s revenue, according to Goepel. The company said it has won about 30 major enterprise accounts for the offering.

During the quarter, Asure expanded distribution through marketplace arrangements with Amazon Web Services and Oracle. In August, the company announced a co-selling arrangement for Payroll Tax Management through AWS Marketplace and began actively co-selling to AWS customers in September. The company also made the offering available through Oracle Marketplace, integrated with Oracle Fusion Cloud Human Capital Management.

Goepel said the marketplace relationships provide additional opportunities, though he characterized results as early. He said lead volume at the Workday conference was approximately triple the prior year’s level, and management received positive feedback from industry events involving Workday, HR technology and Oracle customers.

The company also launched AsureCentral to its reseller network in September and brought its first resellers live on the platform. AsureCentral combines payroll, tax, HR, recruiting, time and attendance, retirement, benefits and Luna capabilities in one environment. Goepel said the number of clients purchasing multiple products increased 7% from the year-earlier quarter.

Asure is seeking to increase the average number of products per client relationship from slightly more than two toward four or more over time. Management said improved product attachment rates have also contributed to stronger retention, with updated retention metrics planned for the company’s year-end release.

Sales hiring, acquisition and financing

The company said it was approaching its target of 150 sales representatives by year-end. Goepel described the new hires as full-solution sellers who can market the company’s broader product suite to business owners. The third-quarter mix of existing-customer expansion versus new customer logos was about 47% to 53%, compared with 36% to 64% a year earlier.

Contracted backlog totaled $86.6 million at quarter-end, with Asure expecting to convert approximately 46% of that amount over the following 12 months.

After the quarter ended, Asure acquired a Southeastern U.S.-based human capital management payroll processor for an aggregate purchase price of $26.5 million. The acquired business serves mid-market organizations with cloud-based HR, payroll and talent tools. Pence said it had been operating at about a $10 million revenue run rate when acquired.

The purchase price included $13.5 million in cash at closing, a $3 million promissory note tied to indemnity obligations and other adjustments, and $10 million in stock. Goepel said the acquisition adds technology that could support updates to product offerings, including scheduling, time-related capabilities and reporting.

On Oct. 15, Asure closed a new senior credit facility of up to $115 million led by MUFG Bank. The facility includes an $85 million term loan, a $10 million revolving facility and a $20 million delayed-draw term loan facility. Asure used $62.6 million of the proceeds to repay its existing MidCap Financial Trust credit agreement. The company ended the third quarter with $16.8 million in cash and cash equivalents and $64.7 million in total debt.

Outlook raised for fourth quarter and 2027

Asure updated its outlook to incorporate the October acquisition. The company expects fourth-quarter revenue of $42 million to $44 million and adjusted EBITDA of $10 million to $12 million.

• Full-year 2026 revenue guidance: $162 million to $164 million
• Full-year 2026 adjusted EBITDA guidance: $40 million to $42 million
• Preliminary 2027 revenue guidance: $183 million to $187 million
• Preliminary 2027 adjusted EBITDA margin guidance: 26% to 28%

Pence said the midpoint of the 2027 revenue range implies growth of roughly 13% to 14%, with the majority expected to be organic. He also said the company expects its cost structure, including capital expenditures and capitalized software development costs, to remain relatively stable on a dollar basis.

Management expects fourth-quarter margin results to reflect continued investment in sales hiring, acquisition integration and product and workflow integration efforts. For 2027, Pence said Asure is targeting GAAP gross margin of about 72% and non-GAAP gross margin of roughly 76% to 77%.

About Asure Software (NASDAQ:ASUR)

Asure Software, Inc NASDAQ: ASUR provides cloud-based human capital management (HCM) software and services for small and midsized businesses. Its platform is designed to help employers manage core workforce and administrative processes through a unified suite of online tools.

Asure's products and services include payroll processing and tax services, time and attendance tracking, human resources management, benefits administration, employee onboarding, talent management, and employee self-service.

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