ASUR Q3 2025: Attach Rates Up 7% as Assure Central Launch Drives Cross-Sell Momentum
Assure Software’s Q3 marked a clear inflection point, with organic growth accelerating and the launch of Assure Central unifying the client experience. Strategic integration of Latham Time and rising attach rates signal that cross-sell and bundled solutions are gaining traction, even as hardware mix and float headwinds temper margin expansion. Management’s 2026 guidance leans on continued organic improvement, cost discipline, and further technology leverage, setting up a decisive year for sustainable profitability and scale.
Summary
- Cross-Sell Acceleration: Attach rates rose sequentially, with multi-product adoption outpacing single-product growth.
- Assure Central Rollout: New unified interface aims to streamline client workflows and amplify bundled solution sales.
- 2026 Profitability Pivot: Operational leverage and technology integration underpin management’s confidence in achieving GAAP profitability next year.
Performance Analysis
ASUR delivered third quarter revenue of $36.3 million, up 24% year-over-year, with broad-based growth across payroll, benefits, recruiting, time and attendance, and payroll tax management. Organic growth improved to 4% sequentially, and after adjusting for lingering ERTC-related churn, underlying organic growth reached 7%. Recurring revenue contributed $31.8 million, while professional services and hardware, boosted by the Latham Time acquisition, added $4.4 million—highlighting a shift in revenue mix.
Gross margin compressed to 64% (70% non-GAAP) from prior-year levels, primarily due to a higher mix of lower-margin hardware sales from Latham. Adjusted EBITDA rose 49% to $8.1 million, with margin expanding 300 basis points to 22%. The business continues to absorb interest rate headwinds in float revenue, but higher client fund balances offer some offset. Net loss widened to $5.4 million, though management emphasized that consistent cost structure and operating leverage position the company for imminent GAAP profitability.
- Revenue Mix Shift: Latham’s hardware sales diluted gross margin but expanded the client base for future payroll cross-sell.
- Attach Rate Momentum: Clients with three, four, or five products represent the fastest-growing cohort, validating the bundling strategy.
- Cost Leverage: Headcount remained stable in operations and G&A, allowing incremental sales and marketing investment to flow through to margin expansion.
Management’s guidance for Q4 and full-year 2025 points to continued top-line and margin gains, with 2026 set as a milestone year for both organic growth and profitability.
Executive Commentary
"We believe that we're at an inflection point in the business. With all the hard work we've done to improve our product offerings, invest in our technology, and integrate acquisitions, we will continue to increase our growth organically while potentially being GAAP profitable in Q4 of 2025 and for the year 2026, both of which are important milestones for the business."
Pat Keppel, Chairman and CEO
"Our cross-selling effort showed good results this quarter with our attach rates, which measure clients that take more than one product, continuing to move higher sequentially in the low single digits versus second quarter."
John Pence, Chief Financial Officer
Strategic Positioning
1. Cross-Sell and Attach Rate Expansion
Attach rates—clients buying multiple products—rose 7% quarter-over-quarter, with three, four, and five-product bundles growing fastest. This validates the company’s strategy to move from point solutions to a unified platform, deepening client relationships and increasing revenue per account (ARPU, average revenue per user).
2. Assure Central Platform Launch
The launch of Assure Central, the new unified client interface, is designed to streamline user experience, accelerate workflow, and enable event-driven marketing. Management expects this rollout to drive higher cross-sell, faster implementation, and broader adoption of bundled solutions across its 100,000-client base.
3. Latham Time Integration and Revenue Synergy
The Latham Time acquisition is delivering both hardware and recurring revenue, with $4.4 million contributed this quarter. The integration plan centers on converting Latham’s 15,000 time and attendance clients into payroll customers, leveraging bundled offerings and shifting the revenue mix toward higher-margin software over time.
4. Technology and AI-Driven Efficiency
Continued investment in technology, including AI workflow automation (Luna agent), is reducing legacy maintenance costs and shifting resources to new product development. Management sees AI as a lever to boost both top-line growth and operational efficiency, especially in compliance-heavy back-office functions for small businesses.
5. Margin Expansion and Cost Discipline
Stable headcount in operations and G&A, combined with incremental sales and marketing investment, is driving margin leverage. Management’s medium-term target is $180–$200 million in revenue with 30%+ adjusted EBITDA margin, underpinned by scalable technology and bundled product adoption.
Key Considerations
ASUR’s Q3 and forward guidance reflect a business transitioning from integration to scalable growth, with strategic focus on product bundling, technology leverage, and operational discipline.
Key Considerations:
- Revenue Mix Evolution: Latham hardware sales are temporarily diluting gross margin, but recurring revenue from bundled solutions is expected to rise as integration advances.
- Cross-Sell Execution: The ability to convert single-product clients to multi-product users will be the primary determinant of organic growth and ARPU uplift in 2026.
- Float Revenue Sensitivity: Federal Reserve rate cuts are pressuring float, though rising client fund balances and long-term investments provide some cushion.
- Cost Structure Management: Flat operational headcount and lower legacy maintenance costs support margin expansion as sales and marketing investment ramps.
- Acquisition Pipeline: While the 2026 outlook assumes no extraordinary M&A, the company retains balance sheet flexibility for opportunistic tuck-in deals.
Risks
Margin pressure from hardware mix and further interest rate cuts could offset some of the anticipated operating leverage, especially if recurring revenue growth lags. Execution risk remains around the full integration of Latham and the adoption curve for Assure Central. Competitive intensity in the human capital management (HCM) market and macroeconomic uncertainty could also slow pipeline conversion or elongate sales cycles, particularly in larger enterprise deals.
Forward Outlook
For Q4 2025, Assure guided to:
- Revenue of $38 million to $40 million
- Adjusted EBITDA of $10 million to $12 million
For full-year 2025, management expects:
- Revenue of $139 million to $141 million
- Adjusted EBITDA margin of 22% to 23%
Initial 2026 guidance calls for:
- Revenue of $158 million to $162 million
- Adjusted EBITDA margin of 23% to 25%
Management emphasized that higher revenue levels and a stable cost structure should drive consistent GAAP profitability, with incremental margin expansion as cross-sell and technology initiatives scale.
Takeaways
ASUR’s Q3 results reinforce its pivot to a cross-sell-driven, platform-centric HCM provider, with technology integration and operational discipline supporting a credible path to profitability.
- Attach Rate Growth: Multi-product adoption is accelerating, especially among clients adding three or more solutions, setting up ARPU expansion in 2026.
- Assure Central as Catalyst: The unified platform is expected to amplify workflow efficiency and cross-selling, with early rollout feedback positive and full integration with Latham on track for early 2026.
- Profitability Inflection: Margin gains and cost leverage underpin management’s confidence in achieving GAAP profitability next year, with further upside tied to successful technology and bundling execution.
Conclusion
Assure’s Q3 marked a decisive step toward scalable, profitable growth, with rising attach rates, technology unification, and disciplined cost management supporting a robust outlook for 2026. Sustained execution on cross-sell and integration will be critical to realizing the company’s medium-term ambitions.
Industry Read-Through
ASUR’s emphasis on platform unification and bundled product adoption echoes a broader HCM sector trend toward integrated solutions and higher ARPU per client. The shift from point solutions to unified platforms is accelerating, with operational leverage and AI-driven workflow automation emerging as key differentiators. Competitors in payroll, benefits, and workforce management should expect increased client demand for seamless, multi-product experiences and will need to invest in technology and integration to compete effectively. Margin pressure from hardware or non-recurring revenue is a cautionary note for peers pursuing inorganic growth through acquisition.