Asure Software Q4 2025 Earnings Call - Asure Central and Luna AI set the stage for a 2026 revenue inflection

Operator: Good afternoon, and welcome to Asure’s fourth quarter and full year 2025 earnings conference call. Joining us for today’s call are Chairman and CEO, Pat Goepel, Chief Financial Officer, John Pence, and VP of Investor Relations, Patrick McKillop. Following their prepared remarks, there will be a question-and-answer session for the analysts and investors. I would now like to turn the call over to Patrick McKillop for introductory remarks. Please go ahead.

Patrick McKillop, Vice President of Investor Relations, Asure Software: Thank you, operator. Good afternoon, everyone, and thank you for joining us for Asure’s fourth quarter and full year 2025 earnings results call. Following the close of the markets, we released our financial results. The earnings release is available on the SEC’s website and our investor relations website at investor.asuresoftware.com, where you can also find the investor presentation. During our call today, we will reference non-GAAP financial measures, which we believe to be useful to investors and exclude the impact of certain items. A description and timing of these items, along with a reconciliation of non-GAAP measures to their most comparable GAAP measures, can be found in our earnings release. Today’s call will also contain forward-looking statements that refer to future events and as such, involve some risks.

We use words such as expects, believes, and may to indicate forward-looking statements, and we encourage you to review our filings with the SEC for additional information on factors that could cause actual results to differ materially from our current expectations. I will hand the call over to Pat in a moment, but I just wanted to take a moment to remind people of our upcoming investor relations activities. In March, we will attend the ROTH Conference in Dana Point, California, on March 23rd and 24th. We are also planning for some non-deal roadshows during March and April. On May 13th, we are attending the 21st Annual Needham TMT Conference in New York. On May 14th, the Houlihan Lokey One Conference, also in New York. On May 28th, we will attend the Craig-Hallum Conference in Minneapolis.

Investor outreach is very important to Asure, and I would like to thank all those that assist us in our efforts to connect with investors. Finally, I would like to remind everyone that this call is being recorded, and it will be made available for replay via a link available on the Investor Relations section of our website. With that, I would now like to turn the call over to Pat Goepel, Chairman and CEO. Pat?

Pat Goepel, Chairman and Chief Executive Officer, Asure Software: Thank you, Patrick. Welcome everyone to Asure Software’s fourth quarter and full year 2025 earnings results call. I am joined on this call by our CFO, John Pence. We will provide a business update for our fourth quarter and full year 2025 results, as well as our outlook for the remainder of 2026. Following our remarks, we’ll be available to answer your questions. We’re excited to report that our full-year revenues were very strong, coming in at $140.5 million, an increase of 17% versus the prior year. Contributors to our success in 2025 were broad-based, with many product lines showing growth, such as payroll, benefits, recruiting, time and attendance, as well as our payroll tax management businesses.

Organic growth in the fourth quarter was 10%, which improved sequentially from the third quarter of 4%, and for the full year of 2025, it was 5%. We believe that we are at an inflection point in the business following the launch of Asure Central last October, with more than two-thirds of our clients upgrading to the new portal. Asure Central offers clients a new experience with a brand new look and feel, improves their workflow, as well as enabling us to amplify items such as event-driven marketing efforts. Our cross-selling or attach rates with more than 100,000 clients have improved throughout last year. The number of clients buying multiple products from us in our payroll business has grown by 10% in the fourth quarter over the prior year.

We believe that the Asure Central portal will continue to help drive further improvements in attach rates and continued acceleration of organic growth. Now, let me take a moment to address one of the most important topics shaping today’s business landscape, AI. First off, we have new slides in our investor presentation, which highlight our approach to AI, and I encourage you to review them. Also, we’re hosting an AI fireside chat with myself and our Chief Technology Officer, Yasmine Rodriguez, on March 11th at 3:30 P.M. Central Time, 4:30 P.M. Eastern Time. We look forward to your participation in this exciting event, where we’ll discuss Asure’s current perspective on artificial intelligence. Much of the public conversation focuses on fears of large-scale labor disruption, our exposure to that risk is far lower than many might assume.

It is worthwhile to mention that our revenue model is not a typical SaaS seat-based model and is instead a function of total employee count and payroll runs, benefit and retirement plan uptake, and recurring services. Furthermore, our clients are primarily blue, gray, and white-collar main street businesses, organizations rooted in essential work that is far more resilient to automation. At the same time, while AI is being deployed across many areas of the economy, we believe that highly sensitive functions like payroll, tax filing remain uniquely protected. These processes involve complex regulations, confidential data, and real-time compliance obligations, areas where the margin for error is effectively zero. Payroll is already one of the most mission-critical and heavily regulated responsibilities inside any business.

When you’re navigating local tax rules, shifting labor laws, and ongoing compliance requirements, accuracy and accountability aren’t optional, especially when you’re moving approximately $20 billion annually like Asure does. That’s why we see AI not as replacement for oversight, but as a powerful tool to enhance precision, efficiency, and decision-making. We have adopted AI assertively but thoughtfully in ways that strengthen our platform while humans remain in the lead to ensure trust and compliance. During 2024, we built a secure model, agnostic AI layer directly into our payroll and tax system of record. In early 2025, we launched Luna, the industry’s first true AI agent for payroll and HR. Unlike traditional generative chatbots, Luna detects issues, resolves them, logs outcomes, and supports both employees through self-service and business owners and administrators across their workflows.

Today, our Luna AI can perform over 50 actions, which are live, auditable, and permission controlled. In the first 90 days of Asure Central’s general availability, conversations with Luna resulted in 80,000+ messages and avoided thousands of support center interactions, which offset the workload of about 3 client service reps and clearly showed how AI is driving our operational efficiency. Internally, we have been using AI to help increase product development, drive revenue productivity, and further operational efficiencies. In terms of product, we can build faster with AI-assisted engineering and quality assurance, resulting in faster release cycles. Within revenue productivity, our SDR agent collects and enriches buyer insights in 3 minutes versus a typical 1-hour discovery, and our list building agent crawls job boards for new HR postings, creating 1,000+ leads.

Operationally, our agent helps with sentiment analysis during phone calls with clients and analyzes support tickets to prioritize product and process improvement. We’re continuing to invest in tomorrow’s AI capabilities for both our client product experience and our internal processes to enable our entire organization to work more efficiently. Moving from AI. Recently, at our sales kickoff in Austin, we introduced a new offering called AsureWorks, which we are launching internally in a limited scope. AsureWorks is our administrative services outsourcing or ASO model. Rather than simply providing payroll and HR software, we take responsibility for running key administrative processes on behalf of the client, supported by our Luna AI and our Asure Central platform. We’re seeing a clear shift in the market.

Small and mid-sized businesses face increasingly regulatory complexity and leaner staffing models and may no longer have the bandwidth to manage payroll and HR compliance internally. With AsureWorks, clients can rely on Asure’s expertise and systems to execute that work, helping reduce compliance risk and allowing them to focus on their core business. Strategically, this expands our share of wallet and deepens client relationships. Clients who adopt managed payroll and compliance services typically represent 2-3x the revenue of a payroll-only client, with further upside as additional models are managed. This is not a PEO model, and we’re not taking on co-employment risk. For businesses that feel constrained by the cost or the rigidity of a traditional PEO, AsureWorks offers a flexible alternative with operational support and greater control.

We will scale AsureWorks thoughtfully as we build sales, implementation, and support capacity based on our early results. Our sales efforts for 2025 resulted in a 35% increase in new bookings. Additionally, we continue to have a very healthy contracted backlog of approximately $100 million, which continues to grow and was up 18% since our third quarter of 2025. We expect to convert approximately 41% of this backlog in the next 12 months, and this, combined with our historic retention rates, gives us a lot of confidence in our 2026 guides. I would like to hand it off to John to discuss our financial results in more detail, as well as our guidance. John?

John Pence, Chief Financial Officer, Asure Software: Thanks, Pat. As Patrick mentioned at the beginning of this call, several of the financial figures discussed today are given on a non-GAAP or adjusted basis. You will find a description of these GAAP to non-GAAP reconciliations in the earnings release that was made available earlier today. The reconciliations themselves are also included in our most recent investor presentation, posted in the investor relations section of our website at investor.asuresoftware.com. On to the fourth quarter and 2025 results. Fourth quarter total revenues were $39.3 million, increasing by 28% compared to the prior year period, while recurring revenue grew by 18% to $33.7 million. For the full year, 2025, total revenue grew by 17% to $140.5 million, and recurring revenue grew by 11% to $127.3 million for the full year.

Our professional services and hardware revenue was $5.6 million for the 4th quarter, compared to $2.3 million in the 4th quarter of last year. For the full year of 2025, our professional services and hardware revenue was $13.3 million, compared to $5.3 million in the prior year. Our organic growth rate for the 4th quarter improved sequentially to 10%, compared to 4% in the 3rd quarter. Organic growth for the full year of 2025 was 5%. Total revenue was down slightly versus prior year due to previous rate reductions made to the federal funds rate, partially offset by an increase in client funds. Our outlook for interest rates, we have modeled 2 more rate cuts during 2026. We believe that as our client fund balances increase, this will help offset some of these rate cuts.

Gross profit for the fourth quarter was $27.2 million, versus $21 million in the fourth quarter of the prior year. Gross margins for the full year were 68%, compared to 69% in the prior year. Non-GAAP gross margins for the fourth quarter were 75%, compared to 73% in the prior year. Non-GAAP gross margins for the full year were 73% versus 74% in the prior year. Our overall gross margins for the year were down slightly due to the revenue mix, as we experienced an increase in lower margin non-recurring sales, primarily driven by the recent Lathem acquisition. However, we are forecasting improvement in gross margins over time as we integrate the Lathem acquisition and transition the Lathem hardware sales into a hardware-as-a-service model over the coming years.

We believe further scale in our business will also help the margins in the future. Net income for the fourth quarter was $0.8 million, versus a net loss of $3.2 million during the prior year. Net loss for the full year was $13.1 million versus a net loss of $11.8 million in the prior year. EBITDA for the fourth quarter was $8.7 million, up from $3.4 million in the prior year. EBITDA for the full year was $18.2 million versus $11.4 million in the prior year. Adjusted EBITDA for the fourth quarter increased 82% to $11.4 million from $6.2 million in the prior year, and our adjusted EBITDA margin was 29%, an increase of 900 basis points compared to the 20% we realized in the prior year.

Adjusted EBITDA for the full year increased 42% to $32 million versus $22.5 million in the prior year. Adjusted EBITDA margin was 23%, up 400 basis points from 19% a year ago. Turning now to the balance sheet. We ended the year with cash and cash equivalents of $25.2 million, and we have debt of $67.6 million as of December 31, 2025. Now on to guidance. We have consistently emphasized on prior earnings calls that we are continuing to invest in our technology and product offerings to support sustained revenue growth and improved profitability. At the same time, we expect our cost structure, including our CapEx and capitalized R&D, to remain relatively stable on a dollar basis throughout the remainder of 2026.

Our first quarter 2026 and full year 2026 guidance is based on our expectation of continued positive momentum in our business. Now, in terms of guidance for the first quarter of 2026, we are expecting the first quarter revenues to be in the range of $41 million-$43 million, and adjusted EBITDA for the first quarter is expected to be between $10 million and $11 million. Today, we are also updating our 2026 revenue, which we believe will be between $159 million and $162 million, with adjusted EBITDA margins of between 23% and 25%. In conclusion, we are excited about 2026 and look forward to 2026 being a major inflection point for Asure’s business, where we expect to deliver double-digit growth and GAAP profitability.

With that, I will turn the call back to Pat for closing remarks.

Pat Goepel, Chairman and Chief Executive Officer, Asure Software: Thanks, John. We are pleased to have delivered strong results for the full year 2025. The integration of the point solutions we’ve acquired, plus the investments we’ve made in AI and improving our technology, are having an impact on our growth trajectory, and we expect that we will continue to deliver improved growth and profitability going forward. Our plan for 2026 includes increased investment in our sales and marketing efforts to continue to drive the improving growth we’re experiencing. We have a target of reaching 150 sales reps in 2026 and believe that with our new technology, such as Asure Central, we can experience improved productivity from the sales force. We believe our margins can continue to expand through natural scaling benefits and the growth of higher margin automated revenue streams such as Benefits, 401(k).

These factors, combined with the potential for AI to reduce the cost of support and onboarding, plus our forecast of lower legacy technology spend, with all support higher margins in the future. We are well on our way to our medium-term plan of $180 million-$200 million in revenues, where we believe we can sustain and achieve adjusted EBITDA margins of 30%+, which we showed in an early preview of fourth quarter 2025. In summary, 2025 was a great year for Asure with lots of accomplishments. We’ll continue to grow the business, roll out new technology and seek out value-creating opportunities, all while expecting to deliver GAAP profitability on a more consistent basis in the future. We remain excited for the remainder of 2026, we continue to work diligently on creating increased value for our shareholders and our stakeholders.

We’ll continue to provide innovative human capital management solutions that help businesses thrive, human capital management providers grow their base, and large enterprises streamline tax compliance. Thank you for listening to our prepared remarks. With that, I will send a call back to the operator for the question-and-answer session. Operator?

Operator: Thank you. With that, we will now be conducting a question-and-answer session. We ask that you please limit yourselves to one question and one follow-up. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing star keys. One moment while we poll for questions. Our first question comes from the line of Eric Martinuzzi with Lake Street Capital. Please proceed with your question.

Eric Martinuzzi, Analyst, Lake Street Capital: Yeah. Congrats on the terrific results for Q4 and on the 2026 outlook. I think I’ve got this right. You bumped up the low end of revenue in the 2026 guidance. Is that correct?

John Pence, Chief Financial Officer, Asure Software: Yeah, we took it up, $1 million.

Eric Martinuzzi, Analyst, Lake Street Capital: Okay. Just curious to know, was anything in particular that caused that to... ’cause the Q1 guides relatively kind of where, we and the rest of the street were, but just wondering where the confidence-?

John Pence, Chief Financial Officer, Asure Software: We-

Eric Martinuzzi, Analyst, Lake Street Capital: incremental confidence was from.

John Pence, Chief Financial Officer, Asure Software: We closed an acquisition a couple weeks ago. We wanted to give a little bit more upside as a result of that.

Eric Martinuzzi, Analyst, Lake Street Capital: Gotcha. Okay. Then, for the attach rates, obviously this is a key to the growth story and that 10% organic number was really kind of eye-opening. You talked about an increase of about 10% in the number of customers that are buying multiple products, and I was just curious to know if you have a target, what you’re shooting for in 2026, for that? I guess however you could comment on the multiproduct, the growth rate for the

Pat Goepel, Chairman and Chief Executive Officer, Asure Software: Yeah. Eric, it’s thanks for the question. It’s a big focus for us. We don’t have a specific target. We just know that, you know, for example, the Asure Central was rolled out in October. You know, we have about 16,000 direct clients. You know, as you know, we acquired Lathem in July. They go under the Asure umbrella here, in the early second quarter or April timeframe. For us, you know, we have some internal goals of going from, let’s say, 2 products to 4 products with every sale. How fast we get there and how long we’ll continue to measure ourselves and report, we think, there’s an opportunity to go up and to the right.

As far as, you know, kind of measuring each quarter, we have a lot of moving parts quite yet that we’re not gonna give specific numbers. I assure you internally and externally, these are key metrics that we’ll report on. As we get in a rhythm right now where we have a number of different kind of moving parts, we’ll start to then declare, you know, more in advance specific targets. We’re probably not quite there yet. We do wanna measure it and show you the progress along the way.

John Pence, Chief Financial Officer, Asure Software: Yeah. I would say, Eric, if you get a chance, I know it’s, we just put it out there about 30 minutes or so ago. We’ve added a couple of slides to the investor deck too. Take a look at those if you get a chance. Let’s talk about it.

Eric Martinuzzi, Analyst, Lake Street Capital: Okay. Thanks for taking my questions.

John Pence, Chief Financial Officer, Asure Software: Sure.

Pat Goepel, Chairman and Chief Executive Officer, Asure Software: Thanks, Eric.

Operator: Our next question comes from the line of Richard Baldry with Roth Capital Partners. Please proceed with your question.

Richard Baldry, Analyst, Roth Capital Partners: Thanks. Post the Lathem acquisition, the non-recurring revenue stepped up pretty meaningfully. When we look out to next year, can you walk us through sort of how to think about the cadence on that line, whether there’s, you know, seasonality types of you know, embedded growth we can do there, or, you know, as you’d move to more of a as a service model, you know, will we see that line come down maybe with the recurring side sort of accelerating in its place? thanks.

John Pence, Chief Financial Officer, Asure Software: I think, Rich, I would expect next year or 2026 to be kind of in that low 90s of recurring revenue. I think it’s pretty even throughout the year. The other thing that’s also rolling up into that line is some professional services and implementation work with some of the large tax deals, which is a little bit more sporadic and not as predictable. I would say, you know, a, a good way to model it or think about it is low 90s next year in terms of recurring. Then I think we’re hoping to have that kinda HaaS model in by the back half of the year and, you know, maybe as we get into 2027, we get to kind of in the 95% recurring revenue again.

It’s probably a little too early to call that one. That’s ultimately what we’re trying to do is move that hardware into a recurring model. You’re right. Spot on. I’m just not sure we’re gonna get there in 26.

Richard Baldry, Analyst, Roth Capital Partners: Great. Your, you know, internal, you know, adjusted EBITDA stepped up to meaningful new record highs now at the same time as, you know, valuations have come down pretty meaningfully for the sector. Sort of curious what your perception is of the private market for acquisitions, whether those valuation expectations have also come down to make that sort of more of a push in 2026, or do you feel like, you know, it should be sort of business as usual and that’s not a major catalyst?

Pat Goepel, Chairman and Chief Executive Officer, Asure Software: Yeah, I think, Rich, you know, we’ll be opportunistic around some of those opportunities. You know, the private company sometimes trails the public company in kind of a reset, et cetera. Then, you know, we think, and believe, and we put a lot of, you know, more meat in the investor deck around AI and valuations, especially in this business. Because, you know, we believe, you know, we’re a system of record business. You know, we work with, the IRS, the banks, you know, we interface with time clocks and hardware. There’s a number of different areas that make this sticky. Unlike some of the large enterprise, you know, we’re on a consumption-based model really anyway, and it’s underserved in a marketplace, so, in small business.

You know, we believe that valuations here in a public company, as people really analyze this space, we think they’ll go up. We’re gonna tell that story and be loud about it, because we see, quite frankly, a lot of opportunity. Then on the private side, we’ll be opportunistic if those private valuations come down. I will say I’ve gotten a couple calls here over the last couple weeks, and a lot of people are trying to figure out, you know, kind of where they see and we feel like we’re a little bit of the one-eyed guy in the blind man’s world right now, where we think we have a really good path. You know, we telegraphed early on that $180 million-$200 million would be 30%.

You’ll see our longer term model has more aspiration than that 30%. We believe we’re in the market segments that really can drive it. We think AI is an accelerator, not a deterrent. We’ll be very focused on valuations continuing. We’re getting at a fun part of the business where scale really matters. We think we can make improvement here in bunches. We’re gonna execute on that plan.

Richard Baldry, Analyst, Roth Capital Partners: Thanks. I’ll ask a third, unfortunately. We agree that for system of record class companies, this should be an accelerator at the top line. We also think that it can increase the long-term profitability because there’s so many places it internally can cut costs for software-centric, tech-centric companies. Can you maybe talk a little bit about how much internally? You talked somewhat about the customer service side helping take the equivalent of 3 reps worth of work off, which is great. How far, how deep do you think that can roll through the internal, you know, cost saving side?

John Pence, Chief Financial Officer, Asure Software: I think we’re in the early days from my perspective, Rich. I mean, we think there’s a lot of opportunity, to make, you know, better experience for the customer and obviously make it, you know, and take some costs out on the cost to serve side. I think early days is my perspective. Pat.

Pat Goepel, Chairman and Chief Executive Officer, Asure Software: Yeah. You know, one of the things, Rich, I agree with you. You know, we added a kind of a longer term outlook slide on where we think this can go and, you know, we mentioned the 180-200 at 30%. We ultimately think we can achieve about 50% margins. We gave the example of, you know, not only the, You know, kind of Luna with the 80,000 transactions and the Q3 customer service reps, but also the retention opportunity with event-driven marketing. As we bring Asure Central together, when a small business goes, let’s say, from 20 employees, they now have COBRA eligibility of services. We can be proactive and lean in on that number. That’s a revenue generator. At 50 employees, it’s worksite reporting.

At certain kind of, you know, savings account, 401(k), we can highlight opportunities for that at different monetary amounts. You know, we’re just beginning, but we see opportunities on the revenue side, on the cost side. We see opportunity long term, you know, where AI can bring more traffic to us. Our marketing people are beyond excited, where they see opportunity to continue to drive people to our platform. Also ease of use. You know, we’re seeing people use AI on voice, and then ultimately using that voice to, you know, make it easier to get in payroll hours.

We also see the opportunity with AsureWorks, where we’ll provide the software for a company to do it all, but if they want us to do it because we have the expertise, we can use AI internally to be more efficient. I think this thing really opens up the model, and that’s why we’re gonna have a separate call March eleventh. He has me, Rodriguez and I, our CTO, because we’re just getting started. I’m really excited about the opportunities this is gonna unleash. You know, we wanna kinda educate, understand and really make sure people understand the opportunities here because, you know, we’re at an opportunity potentially that we’ve been playing for a long time internally, but then externally, this is a catalyst that’s really gonna help us.

Jeff Van Rhee, Analyst, Craig-Hallum Capital Group: Great. Congrats on a great quarter.

Pat Goepel, Chairman and Chief Executive Officer, Asure Software: Thank you, Rich.

Operator: Our next question comes from the line of Jeff Van Rhee with Craig-Hallum Capital Group. Please proceed with your question.

Jeff Van Rhee, Analyst, Craig-Hallum Capital Group: Great. Thanks for taking the questions. Nice to see that organic growth picking up there, guys. Congrats on that. A few quick housekeeping. Pat, you mentioned the target reps. Just where are we now in terms of rep count? Is there anything going on in terms of sales incentives that’s changing the focus more or less towards the existing base versus new customers?

Pat Goepel, Chairman and Chief Executive Officer, Asure Software: You know, we have had, we’ve been fortunate where, we’ve had almost 65%-70% new logos as part of our sales. Clearly, there is opportunity with Asure Central to attach more products and services that’ll help on a volume perspective. We also internally took away some sales friction. You know, we have opportunity for our salespeople to drive, you know, more attach rate and more products right at the point of sale. In some cases, you know, we didn’t wanna penalize them for bringing in, let’s say, in 401(k), a licensed person. You know, we are focusing on getting those four or more products in their bag, which will drive up commissions. That’s important.

What that also will do is over time, where I’d like to be is somewhere around 35% new logos, 65% the base. I think we have that kind of opportunity. With AsureWorks, I wanna have the opportunity to really, you know, include all our products from a software perspective. If the client wants us to actually do the work and have the expertise because compliance, whether it’s the IRS, the local agencies, HR, all that is pretty complex, we can provide that expertise with them. We see a huge opportunity to drive cross-sell in that area. As far as where we are today, I think we’re somewhere around 118 reps or so in that area.

We have a plan to get to 150, and you know, that 150 throughout the year, we’re investing enablement, we’re investing in training. Really, you know, we brought a leader under Eyal Goldstein, that’s really sharp. I’ve had history with him. He recently came from Deel, Steve Cohen. I think he’s gonna do a great job with us in really getting the basics. He’s seen this movie before of what we’re trying to accomplish and, you know, I think he’s gonna make a big difference here.

Jeff Van Rhee, Analyst, Craig-Hallum Capital Group: Very helpful. John, on the, on the guide, what’s the implicit, free cash flow expectation for the 2026 guide? One other, if I could, on Lathem being acquired last year, just refresh me what the expectation was there in terms of revenues and then ultimately what it delivered.

John Pence, Chief Financial Officer, Asure Software: Yeah, it’s also in the K disclosed. On Lathem, I’ll answer that last question first. I think in the quarter, about $4 and a half million of revenue contribution from the acquisition, of which about $2 and a half was recurring and the other $2 million was hardware. It’s actually performing, you know, exactly the way we’d hoped it to perform. We’re really happy with that acquisition. We’re actually getting, you know, a higher cash contribution than we’d actually modeled. We expected that to come in later. It’s been pleasant in terms of that acquisition. In terms of free cash flow, again, the way I think about it, Jeff, is I take the adjusted EBITDA number.

At the midpoint, I think we’re at 24 times 160, right? What’s that math? I’m gonna do it real quick. That puts you at roughly $38 million. Then the way I think about it is I deduct, software CapEx is a major one. We’re going to be roughly software CapEx again, next year is going to be in the $15 million-$16 million range, is what we’ve modeled, so that if you take that deduction, that brings you to, if I’m right, you’re at $20 million, almost.

Jeff Van Rhee, Analyst, Craig-Hallum Capital Group: Twenty-two.

John Pence, Chief Financial Officer, Asure Software: 38 minus 16.

Jeff Van Rhee, Analyst, Craig-Hallum Capital Group: Twenty-two?

John Pence, Chief Financial Officer, Asure Software: Yeah, 22.

Jeff Van Rhee, Analyst, Craig-Hallum Capital Group: 38 minus 16.

John Pence, Chief Financial Officer, Asure Software: Yeah. I take away the interest, right? about $6 million in interest.

Jeff Van Rhee, Analyst, Craig-Hallum Capital Group: Mm-hmm.

John Pence, Chief Financial Officer, Asure Software: we’re going to be in that range, kind of mid-teens, when I think of unlevered free cash flow.

Jeff Van Rhee, Analyst, Craig-Hallum Capital Group: Okay. Got it. Very helpful. Pat, just back to you, very briefly. On, just talk for a second on AsureCentral. You blew past it, but what do you-- I mean, from a user experience, you got some pretty rapid adoption there. Like, what does this look like? I haven’t seen it side by side. What’s the difference in the impression to a user, and how much easier is it to adopt and start taking additional services?

Pat Goepel, Chairman and Chief Executive Officer, Asure Software: Yeah, I think, you know, one of the things we’ll have a demo on this on March 11th, is part of our AI conversation and where we’re taking the product and service. First of all, with Luna, it’s a single pane of glass where, you know, we have a common user interface across all our products. All the data is in one place. You know, for us, from a usability perspective, you know, now you have, you know, whether it’s payroll benefits, your check stub, you know, You want to change your, at the employee level, your direct deposit, et cetera, you have that ability to do it, and Luna will show you how to do it. You know, we think it’s degrees of difficulty easier. It’s a more modern look.

With AI and Luna, it can, you know, help do the work for you or it tell you how to do it and instruct you how to do it. The feedback’s been very positive. You know, if you think about where we’ve been over the last five, six years, we’ve bought point solutions. We started with Asure Identity, where it knows it’s Jeff Van Rhee that’s logging into the system based on your identification and multi-factor authentication. What we’re doing is putting all the products in a single pane of glass, more and more you’ll see, you know, a common look and feel throughout the whole product. What’s interesting about that is now the whole solution combined together is really AsureWorks, where, you know, you have all the products and services available.

You know, now, if you have an event, that Luna will suggest, "Hey, here’s an event that you want to be compliant on. Would you want us to help you get compliant?" You know, we think we’re just getting started in this area. fourth quarter was a big milestone, but, you know, we’ll see improvements, every quarter throughout the year. Really excited about that opportunity.

Jeff Van Rhee, Analyst, Craig-Hallum Capital Group: Yep. Makes complete sense. Thanks on the upcoming fireside. I think it’s desperately... I mean, every time a cloud plugin pops, the whole sector gets destroyed. I think people need help separating winners from losers, so appreciate that event. Look forward to it.

Pat Goepel, Chairman and Chief Executive Officer, Asure Software: Thank you, Jeff.

John Pence, Chief Financial Officer, Asure Software: Thanks, Jeff.

Operator: Our next question comes from the line of Greg Gibas with Northland Securities. Please proceed with your question.

Greg Gibas, Analyst, Northland Securities: Great. Good afternoon, guys. Congrats on the results. Nice to see that attach rate improve, pretty meaningfully there. You know, wanted to ask just about your guidance, and maybe what level of organic growth is implied there, and maybe just your expected pace of acquisitions in 2026.

John Pence, Chief Financial Officer, Asure Software: I think, and I’ll let Pat go. I think, well, we expect to be kind of in the double-digit organic for the full year. I’m not sure we’ll be 100%, every quarter that way, but, I do think we’ll have kind of a, you know, a double-digit, or at least that’s what we’re hoping for in terms of double-digit organic. Pace of acquisitions, as Pat mentioned, I think in an earlier comment, we don’t have anything right now that’s imminent. We’re always going to be opportunistic, but, we’ve not got a lot in our wheelhouse right this second. That’s my perspective, Pat.

Pat Goepel, Chairman and Chief Executive Officer, Asure Software: Yeah, and Greg, thanks. You know, we didn’t model acquisitions in. Clearly, we’re gonna do some with the resellers, et cetera. We don’t have anything imminent, but, you know, also, you know, the world changed a little bit here over the last three weeks, et cetera. I will tell you know, I’ve gotten calls and been pretty active. You know, we’ll kind of inform you each quarter, you know, how we’re doing and what we think in it, about it. Clearly, there will be some opportunities, just based on our pipeline and based on the resellers, but, you know, we’ll let that shake out, and we’ll report to each quarter. You know, clearly, you know, we’ll be opportunistic in this area.

The other thing with the attach rates going up the way, you know, we’re starting to show, and I think we’re really in the early innings, some of these type of acquisitions, you know, look pretty good to us because we have the ability to cross-sell and not only drive the cost line, but we can drive the revenue line.

Greg Gibas, Analyst, Northland Securities: Makes sense. Thanks for pointing that out. wanted to ask just about, you know, you had really nice adoption of AsureCentral. can you remind us maybe what your plans are for, you know, the timing of continued adoption there? Like, when maybe you expect to get to whatever full adoption levels look like, and, you know, it just seems like it could be a continued accelerator of that attach rate.

Pat Goepel, Chairman and Chief Executive Officer, Asure Software: Yeah, I think, you know, first of all, we have a big cohort with, you know, the Lathem acquisition, which is about 14,000. That’ll be available here in early April. Really, you know, if I think about it, the second quarter, you know, we wanna continue to have most of our direct clients, you know, adopted into Asure Central. You know, I think the first huge wave, you know, has already started to happen. You know, by the first half of the year, the second wave really will be there. Then, you know, from our perspective, there’ll be some other stragglers or adoption into the second half of the year. But for the most part, the first half of the year, you know, will be fully adopted.

Vincent Colicchio, Analyst, Barrington Research: Got it. Thanks very much.

Pat Goepel, Chairman and Chief Executive Officer, Asure Software: Thank you, Greg.

Operator: Our next question comes from the line of Vincent Colicchio with Barrington Research. Please proceed with your question.

Vincent Colicchio, Analyst, Barrington Research: Pat, can you discuss the sales cycles, and pipeline levels for your key offerings?

Pat Goepel, Chairman and Chief Executive Officer, Asure Software: Yeah. Pipeline prospects are really good. We, you know, are increasing our marketing spend this year. We think that there’s huge opportunity AI-assisted, as well as, you know, we’ve used some tools here that, you know, we think make a difference in the pipeline creation. We will continue to build pipe. You know, obviously, fourth quarter, you know, you kind of sell for January, and then you’re building pipe a bit. You know, we’re right where we wanna be. I would tell you, though, you know, April, May, I think you’re gonna see pipeline increase quite a bit. The pipeline over the last, let’s say, 25 days or so has been really, really good. From a sales cycle perspective, we haven’t seen any big changes.

I do think some of the noise on the financial community around AI and software, we see it as an accelerant. Short term, somebody reads the headlines, and they kinda say, "Okay, what’s with that?" You know, we’re not typically in the space where our customer is Main Street America, frontline workers, whether it’s plumbers, it’s people that hotel workers, et cetera. They interface with either time or POS solutions. They interface with bankers. They interface, you know, with the IRS, et cetera. They want help.

From our perspective, when they see that need, and they know that we can help them both from a software perspective, but also a compliance perspective, and then ultimately, from a people perspective to provide the people to run the software, they view that as an opportunity. I think pipeline will grow quite a bit. Right now I’m okay with pipeline. It’s about 120% where it was last year. You know, clearly I wanna keep focusing on doing that, and then I wanna hire people, and then our marketing spend, you know, will drive pipeline quite a bit.

I can see already by the programs in place by second quarter, we’ll have a pretty decent pipeline of where I wanna be, which is about 150% where we were last year.

Vincent Colicchio, Analyst, Barrington Research: Thanks, Pat. Question on the competitive landscape. Anything to call out in terms of changes since last quarter?

Pat Goepel, Chairman and Chief Executive Officer, Asure Software: No, not really. I think, you know, people are, you know. From my perspective, you know, I think it’s been. You know, what I would say, and it ties a little bit to our industry is, you know, I think early on, people were saying, "Well, you know, you can embed the calculation," and that is good enough. For, you know, Main Street America, that’s not good enough because, you know, the penalties are tough. The gravity of the data, you know, where you have seven years of history and, you know, you have compliance issues, whether it’s HR, payroll, you have different government agencies, different banking agencies, That complexity, it doesn’t go away in a embedded solution.

From our perspective, you know, what we’re seeing is kinda, hey, you know, how do you provide the expertise, and how do you provide the people, the workflow, the enablement, and the technology through AI and the system of record to really accelerate your value proposition? I think we’re in a position that we have that. So we’re gonna, you know, pound our chest on that and keep getting really clear on our value proposition. I do think that’s resonating with clients and, you know, we think we’re in a really good position here to have an excellent 2026.

Vincent Colicchio, Analyst, Barrington Research: Thanks, Pat.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. That is star one.

Pat Goepel, Chairman and Chief Executive Officer, Asure Software: Well, it looks like there’s no more questions. Hey, first of all, thank you for coming to the conference call March eleventh. Love to see you. We’re gonna talk about AI and a demo of our product and how we’re using, you know, Luna is being helpful to customers and employees as well as our solutioning. You know, when I think back, I’ve been in this industry a long time, and when I see technology shifts, whether it’s DOS to Windows to client server, client server to internet to mobile. Right now, the technology shift that we’re going is really exciting. You know, when you think about opportunities here, we think we have a great moat available. We also think we can use AI in a way that really will accelerate growth.

It’s in these technology shifts that, you know, people really can thrive. We think we’re at a really good opportunity here. We hope you agree with us and come on March eleventh because we think, you know, we have a story that’s unique to us in a world that’s ever-changing and really excited about the opportunity. Really appreciate your time. Thank you.

Operator: Thank you. With that, ladies and gentlemen, this does conclude today’s teleconference. Thank you for your participation, and you may disconnect your lines at this time and have a wonderful day.