Asure Software's Path To Growth: Analysts Foresee 2023 Success With Revenues & Margin Upswing

Needham analyst Joshua Reilly reiterates a Buy rating on Asure Software Inc ASUR and a price target of $20.
Reilly expects ASUR to shift its revenue mix to higher-margin services to boost its EBITDA margin in FY23. The analyst expects marketplace revenue to increase its share in the mix in FY23 and be around $5 million in FY23. The analyst expects ERTC revenues to be flat y/y.
The analyst expects marketplace partnerships to generate more material revenues from the first-quarter FY23. The analyst expects the recently announced collaboration with ZayZoon not to generate material revenues until the second half of FY23. According to the analyst, other partnerships, which include retirement and benefit plan partners, should contribute a small amount in 2023.
Reilly expects gross margin improvement to continue following operational and mix/shift changes in the business in FY23. Also, Reilly projects interest income to be about $7 million in FY23, given the current rate.
Reilly anticipates Employee Retention Tax Credit (ERTC) to aid the company in developing new partnerships in the broader HCM ecosystem and drive long-term revenue growth. Also, the analyst sees HR Compliance as an attractive cross-sell opportunity due to lower customer penetration rate (only 1%).
Price Action: ASUR shares are trading higher by 3.01% at $14.39 on the last check Thursday.

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