Asure Software, Inc 17th Annual Midwest IDEAS Conference

Thank you. Good afternoon, everybody. As Jacobo said, I'm Patrick McKillop. I'm the Vice President of Investor Relations for Asure Software, and thank you for joining me this afternoon, and I'm going to walk you through our slide deck and tell you our story. Before we get started here, just a quick note. Here's our forward-looking statements. Please take a minute to review these, and certainly you can refer to our filings with the SEC, our 10-K and 10-Qs as well. Who is Asure Software? We are a payroll and HR platform for growing businesses. We help business pay their employees, remain compliant, as well as win the war for talent, and give them tools to better manage their workforce. Some quick stats. We're headquartered in Austin, Texas. We have about 641 employees. Excuse me. We serve over greater than 100,000 clients.

About 2 million or more employees are served on our platform. This year we are guiding for revenues of between $159 million and $163 million, and we're predicting adjusted EBITDA margins of between 24% and 25%. We have net retention of about 98% as of the end of 2025. Our revenues are about 91% recurring revenues. We service clients in all 50 states in America. We have a very sticky client base that typically stays with us between 8 to 10 years. We have no heavy concentration in one particular client base. The management team and the board are big owners of the shares, approximately 9% insider ownership. Our platform and our growth has been accelerating over the last couple of years.

This slide depicts a number of point solutions that we've acquired going back to the year 2020, where we acquired a payroll tax management platform, and then in 2024 we acquired PeopleStrategy, which is a HR and benefits brokerage firm. In 2024, we also acquired HireClick, which is a recruiting and applicant tracking technology. Lastly, in July of last year, we acquired Lathem, which is a best-in-class time and attendance product to augment our existing time and attendance product. Again, in a short order of time, we've built this business into an approximately $160 million business. We've only been in the HCM industry for about 10 years now. By way of some background information, it took Paycor 20 years to reach $100 million in revenues, and so we've achieved greater than that status in a shorter period of time.

Here on this slide, this just depicts our operating leverage. This is a business that is a high fixed cost structure. But as we achieve certain revenue targets, you can see that the profitability improves dramatically. If we go back to the year 2020, we were doing about $75 million in revenues, and we had adjusted EBITDA margins of about 10%. As I just referenced, we are targeting about $161 million revenues at the midpoint of our guidance this year with adjusted EBITDA margins of about 25%. And then longer term, as we get up to even further scale, you can see at the $500 million level, we should be able to achieve adjusted EBITDA margins of about 50%. Again, this slide is just depicting our history of where we have been and where we are going.

We have a nice revenue CAGR of about 17%, followed by an adjusted EBITDA CAGR of about 37%. Our revenue base is primarily made up of a couple of different cohorts. If you look here, the light blue section represents about 64% of our revenues. That is our core business is small and medium-sized business payroll clients. Followed by the light green triangle, which is our enterprise tax offering making up about 18% of our revenues. And then we have our darker blue triangle, which represents our HCM or small business platform, which is indirect customers. We go to market two ways. We sell our products directly. We also go through a reseller network where they use our software and pay us a royalty of approximately 8%-10% of their revenues.

We also have a cohort, which equates to 10% of our revenues, which is hardware sales, things like time clocks, for example, and some other non-strategic businesses that we have acquired over time. As I said, we go to market in a couple different ways. We have a direct sales force of a little over, at this point, 120 sales reps. We are looking to add to that team and grow it to about 150 over the back half of this year and into next year. That would be what we call traditional organic growth. This includes any new logos that we acquire as well as driving sales through cross-selling opportunities into that existing client base. And then we have what we call enhanced organic, which is essentially, we are in the motion of acquiring these resellers over time.

We have done a number of these transactions over the last 24 months. We have probably acquired about 20 resellers. The way that we do that is that we pay them about two times their revenue, and then we issue them a seller note for the balance of the purchase price. We lose the royalty revenue from them, but we gain the overall revenue from them, and we integrate them into our existing base, in some instances, in little as 24-48 hours. The business owners sometimes will stay for a longer period of time, depending upon each situation. But it is really a great strategy. The way to think about enhanced organic is we are really just buying books of business. It is not a traditional M&A transaction, if you will. And then lastly, we have what we call strategic inorganic.

This is a situation where we would acquire a new product or a new technology that we did not have in our existing business in order to fill an area that we felt we needed to broaden our portfolio, if you will. These are, again, the definitions of how we describe our paths to growth. Here is a TAM slide. You can see we are playing in a very large market. Approximately a $90 billion total United States HCM market TAM. Here we are basically just depicting a layered economic model, which is built on an infrastructure, which is tied to a regulatory function. We have, on the bottom, you can see that we have payroll infrastructure, which includes enterprise payroll tax, treasury services, as well as data. Then we have brought all of these point solutions together under what we call AsureCentral.

All of the acquisitions that we have completed over the last couple of years have now been integrated. When end user clients log in to use the system, there is one landing page. There is a single sign-on with a multi-factor authentication. The landing page will show the client the products that they are currently using, as well as products that are available to them for consideration. Then this year, we rolled out, in January, a product called AsureWorks. What AsureWorks is a managed services offering. That means that we will take responsibility and do all of the work for the client versus the client doing the work for themselves using our software. It is early days in this, but we have seen some really good traction and great reception to this product. AsureWorks is kind of like a PEO, if you have heard of a PEO.

It is not a PEO in the sense that we do not take ownership of the employees. If you are a small business owner and you have, let us say, 70 employees, and you are considering hiring a full-time HR rep, that HR rep might cost you in the neighborhood of $125,000 per year. With AsureWorks, we are able to do all of these things for you at a much more attractive price point, say, for example, potentially $50,000 per year. There is a cost savings initiative for a business owner to consider this as an option. Small business owners are constantly faced with new regulations and compliance laws, as well as shopping for benefits for their employees. We are able to handle all of this for you and take that work off of your plate so that you can focus on what you do best, which is growing your business.

As you can see here on this slide, it gives you a quick screenshot of what AsureCentral platform looks like when you log in to use the system. It welcomes you. You can see your name there. You can see all of the products that you are taking. There is a menu on the left, which shows you other products that are available to you. As we talk about our product portfolio, you can see over the last six years, we started out with time tracking, payroll, as well as payroll tax. As we sit here now in 2026, it is a much broader product portfolio. We use the industry term PEPM, which is per employee per month, the amount of money that you are able to charge your client per month for each employee that you handle. In 2020, that number was about $15 max.

Now, as we sit here in 2026, we are able to charge at a maximum of $100 plus per employee per month. We have dramatically increased our capability in terms of what we can bill our clients per month. Now the focus is really on getting our existing client base to take more products from us and drive cross-sell or attach rates. We have been reporting out our attach rates over the last couple of quarters. Here in this slide, you can see that during Q2 2026, the number of clients taking two or more products from us increased by about 6%. Our goal here is to get the average client up from using two products to four or more products. We are on the right trajectory here. The numbers are trending in the right direction, and we continue to focus on increasing adoption.

I would say another metric that we look at is our new logo versus existing logo split, meaning the number of new customers versus existing customers that are generating sales. If we went back in a period in time, I would say that was averaging around 70% new clients versus 30% existing clients. As of the end of Q2 2026, that split is 53% new clients versus 47% existing clients. That is a function of us selling more products to existing customers, not the number of new clients declining. These metrics give us confidence that we are heading in the right direction, and this is going to be one of the key drivers of our organic growth going forward. There is a big discussion in the marketplace today. Obviously, the narrative has been that AI is going to destroy or disrupt software businesses. We are not of that thought process.